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The Ticketmaster Debacle

Ticketmaster, America’s top online ticket vendor, is taking heat because it has angered one of the world’s most vocal interest groups: Taylor Swift fans (AKA “Swifties”). Tickets for the pop star’s American tour next year—her first since 2018—were due to be released to the general public on the website. But on November 17th, the company abruptly cancelled the sale, saying it had too few tickets left and problems with its ticketing system after a slipshod early release sale on November 15th. In an attempt to crack down on bots and scalpers, Ticketmaster had an invite-only pre-sale for verified fans. But the best-laid plans of both mice and men can go terribly wrong; the sale was a disaster. Ms Swift said her fans who got tickets had to “fight a bear” to do so. Ticketmaster said over two million tickets were sold, but many soon appeared on resale sites for above 50,000 USD.

Swifties are not the only people infuriated by Ticketmaster. Ms Swift herself articulated her annoyance with Ticketmaster on social media, detailing how she had been assured by the company that they could handle record demand. Jonathan Skrmetti, the Republican AG of Tennessee, a state with a massive music industry, said he would look into the fiasco. On Friday, Amy Klobuchar, the Democratic chair of the Senate antitrust subcommittee, said Congress would hold a hearing on Ticketmaster in December. The New York Times reported that the Department of Justice (DOJ) has been investigating whether Live Nation Entertainment, Ticketmaster’s parent company, is a monopoly.

Is it?

Despite heavy criticism, in 2010, the DOJ chose to approve Ticketmaster’s merger with Live Nation, a venue operator. There were stipulations that Live Nation would have to agree to pro-competition measures, including the requirement for Ticketmaster to divest some of its business to competitors. But those safeguards failed, and Ticketmaster only gained more market share, especially during the pandemic. According to antitrust expert Michael Carrier of Rutgers University, a market share above 70% is enough to control a market. According to a report by the Government Accountability Office published in 2018, Ticketmaster controlled more than 80% of the primary ticketing market before the merger and was “still the market leader as of 2017”. But Live Nation’s CFO says it is not as big as it is often thought: he recently told NPR that though Ticketmaster does not have an exact figure, its estimated market share is 20-30%. That huge discrepancy probably means that LNE is defining the industry more broadly, which is a common tactic among companies opposing antitrust suits. To make this calculation, they are likely including a related but irrelevant-for-this-analysis industry, concert promotion, which makes their share seem smaller.

Monopolies can exist legally. The FTC approves of those monopolies obtained through “superior products, innovation, or business acumen”. The problem comes when a perceived monopoly engages in anti-competitive behaviour to exclude other companies from the market. Ticketmaster and LNE have faced numerous accusations of this exact behaviour. Back in the mid-1990s, Pearl Jam, a rock band, working with the DOJ, alleged that by buying up its competitors, Ticketmaster left artists and fans with no alternative and subjected them to exorbitant fees. That case was quietly closed in 1995. Earlier this year, a class-action lawsuit alleged that Ticketmaster and Live Nation use their market power to force fans into arbitration with a new mediator they accuse of having financial links with the companies. Ticketmaster and LNE responded by denying the accusations, saying the plaintiffs were overstating the impact of the new arbitrator.

America’s regulators are approaching trust-busting with renewed vigour under the current administration. President Joe Biden has bemoaned the rise of monopolies, including in the ticketing industry. In 2021 he appointed Lina Khan, who is known for wanting to break up tech’s biggest firms, as chair of the FTC. But even with agencies more willing to pursue antitrust cases, irate Swifties would need proof of anti-competitive behaviour. Shoddy service is not enough. Still, the ticketing debacle emphasises the chilling effect of limited competition. A bigger range of large vendors could increase the pressure on Ticketmaster to improve its sales platform. Then, maybe fans could cheer.