The United States Department of Justice and the attorneys general of 30 states have brought 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.
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. For example, Live Nation has scolded Oak View Group multiple times for trying to compete. In one instance, Live Nation asked, “Who would be so stupid to…play into [an artist agent’s] arms,” and on another occasion, Live Nation stated, “Let’s make sure we don’t let [the artist agency] now start playing us off.”
• 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.
• 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.
“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.
“[The lawsuit] announcement reflects the latest efforts by the Justice Department to combat corporate misconduct. Our fight against corporate wrongdoing includes an intense focus on anticompetitive conduct – which disadvantages consumers, workers, and businesses of all kinds. Today’s complaint alleges that Live Nation-Ticketmaster have engaged in anticompetitive conduct to cement their dominance of the live concert market and act as the gatekeeper for an entire industry. Today’s action is a step forward in making this era of live music more accessible for the fans, the artists, and the industry that supports them,” U.S. Deputy Attorney General Lisa Monaco added.
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 the Southern California Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com