An antitrust legal action brought by the United States Department of Justice and the attorneys general of now 40 states against Live Nation Entertainment, Inc. and its subsidiary Ticketmaster – charging that the companies have created an anticompetitive environment in the live entertainment marketplace – has an amended filing with updated charges, and seeks triple damages under federal anti-monopoly statutes.
In May, the United States Department of Justice and the attorneys general of 30 states first filed antitrust legal action against Live Nation Entertainment, Inc. and its subsidiary Ticketmaster, charging that the companies have created an anticompetitive environment in the live entertainment marketplace.
The lawsuit, filed in the U.S. District Court for the Southern District of New York on May 23, alleges that Live Nation-Ticketmaster violated the Sherman Act through exercising monopolistic power – and looks to bring competition back to the live concert industry, offering fans better entertainment options at lower prices and provide more venues for working musicians and other performance artists.
An amended version of the complaint was filed on Aug. 19.
Among its numerous updates, Indiana, Iowa, Kansas, Louisiana, Mississippi, Nebraska, New Mexico, South Dakota and Utah have joined the suit, bringing the total number of states litigating versus Live Nation-Ticketmaster to 40; or 80 percent of the U.S.
According to the suit, Live Nation-Ticketmaster has instituted monopolies in concert promotions and primary ticketing markets, and engaged in exclusionary conduct affecting live concert venues, including arenas and amphitheaters – all done to protect what it refers to as its “flywheel”.
The flywheel is Live Nation-Ticketmaster’s self-sustaining business which obtains fees and revenue from concert fans and sponsorship, uses those funds to secure artists to exclusive promotion deals, and then uses its accumulation of artists and performers to lock venues into lengthy and exclusive ticketing contracts, before the process starts all over again.
The suit claims that Live Nation-Ticketmaster utilized a series of tactics to further its flywheel business model:
• Relationship with Oak View Group: Live Nation-Ticketmaster uses its longtime relationship with Oak View Group, a possible competitor-turned-partner that has described itself as a “hammer” and “protector” for Live Nation. In recent years, Oak View Group has not bid against Live Nation for artist talent and influenced venues to sign exclusive agreements with Ticketmaster.
The amended version of the suit has elaborated further on this relationship.
“For Oak View Group-managed venues currently under exclusive ticketing agreements with Ticketmaster, the agreement obligates Oak View Group to advocate to the venues for extensions of those agreements on the existing terms, with an annual increase to Ticketmaster’s portion of the per-ticket fee for primary tickets,” per the amended complaint.
“Oak View Group’s compensation for its ‘advocacy’ includes a substantial ‘incentive payment’ from Live Nation, plus significant annual payments. Through these payments, Oak View Group is able to share in the Ticketmaster monopoly profits it helps protect.”
• Retaliating Against Potential Entrants: Live Nation-Ticketmaster was able to threaten financial retaliation against another company, unless the latter group stopped one of its subsidiaries from becoming a competitor to Live Nation-Ticketmaster in the U.S. concert promotions market.
• Threatening and Retaliating Against Venues that Work with Rivals: Live Nation-Ticketmaster’s exclusivity in concert promotions means that each venue is aware that selecting another promoter or ticketer may raise the ire of Live Nation-Ticketmaster, which would result in losing concerts, revenue and fans.
• Locking out Competition with Exclusionary Contracts: Live Nation-Ticketmaster locks concert venues into long-term exclusive contracts, so that venues cannot select rival ticketers or switch to better or more cost-effective ticketing technology. Such deals allow Live Nation-Ticketmaster to reduce competitive pressure to improve its own ticketing technology and customer service.
The amended complaint also included updated examples of how Ticketmaster uses exclusive agreements, to the alleged detriment of its competition.
“As one internal Ticketmaster presentation from 2021 recognized: ‘When We Compete with [SeatGeek] on an Open Bid, We Can Lose…GM [Gross Margin]/Ticket.’ To prevent competition, Ticketmaster analyzed top sports leagues and venues to identify ‘key clients to renew early and ensure continued concert revenue and block SeatGeek,” the amended complaint stated.
“It recognized that fans could benefit from open venues because it would be ‘easy to find & purchase tickets anywhere (e.g., [StubHub, SeatGeek], Groupon)’ and fans could find ‘competitively priced tickets across various touch points.’ Venues too could benefit, because having multiple ticketers would enable venues to ‘limit risk of unsold inventory, ‘pack the house,’ ‘maximize revenue among primary inventory (reduce resale),’ ‘limit bad PR from resale arbitrage attributed to sell-outs,’ and ‘reach new audiences/better know their fans.”
• Blocking Venues from Using Multiple Ticketers: Live Nation-Ticketmaster’s conduct and exclusive contracts prevent competitors from emerging, as they block venues from being able to utilize competing ticketers who would offer the best deals to fans.
• Restricting Artists’ Access to Venues: Live Nation-Ticketmaster has increasingly gained control of key venues, including amphitheaters, through acquisitions, partnerships and agreements, and restricts artists’ use of those venues unless those artists also agree to use their promotion services.
• Acquiring Competitors and Competitive Threats: Live Nation-Ticketmaster strategically acquired a number of smaller and regional promoters that it had internally identified as threats, which undercut competition and impacted artist compensation.
The amended complaint further explained how the defendants labeled SafeTix as a way in which to “reduce economic risk.”
“One document from a Ticketmaster executive meeting in 2014, for example, describes the ‘non-transferrable digital ticket’ as ‘a game-changer.’ Another document from 2017 describes the rotating barcode as a “product enhancement for market share’ and an opportunity to ‘REDUCE TM’S ECONOMIC RISK,” according to the amended complaint.
Finally, the amended complaint quoted Live Nation as admitting the importance of acquisition to its business model.
“In its own words: ‘Live Nation is a company founded on acquisition. At its inception, Live Nation began rolling up the regional world of promoters and venues and has not stopped since.’ Over the past decade, Live Nation has acquired dozens of companies across the industry to expand its reach and entrench its positions,” the amended complaint said.
The new version of the complaint also seeks treble (or triple the amount of) damages from the defendants, citing their alleged violation of federal, anti-monopoly statutes.
Federal authorities behind the suit have emphasized its importance in dismantling what it believes is a monopoly at the heart of the live entertainment business in the United States.
“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters and venue operators. The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster,” U.S. Attorney General Merrick Garland said.
Live Nation owns or controls more than 265 concert venues in North America, including more than 60 of the top 100 amphitheaters in the United States, which generates over $22 billion globally in annual revenue from three business segments: Concerts (e.g., promotions, venue management, and music festival production), Ticketing (e.g., Ticketmaster business), and Sponsorship and Advertising.
Ticketmaster is a wholly-owned subsidiary of Live Nation, which sells concert tickets to fans on first-run and resale platforms, and is by far the largest concert ticketing company in the United States, multiple times the size of its closest competitor.
U.S. District Court for the Southern District of New York case 1:24-cv-03973
From Legal Newsline: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com