Ticketmaster’s Cruel Summer – the potential implications of a DOJ lawsuit against the ticketing platform and why concert fans may not be out of the woods yet.

By: Abbey Block

It looks like it could be a “cruel summer” for the country’s largest concert promoter, Live Nation Entertainment and its subsidiary ticketing platform, Ticketmaster. In early April, the Wall Street Journal reported that the Department of Justice was preparing to file a lawsuit against the promoter, alleging that the company used its monopoly over the industry to prevent competition, harming consumers in the process. Indeed it is hard to deny that Live Nation and Ticketmaster dominate the live event ticketing industry given that they control about 70 percent of the market for ticketing and live events.

The lawsuit comes on the heels of an investigation by the Department of Justice into Ticketmaster and its parent company, Live Nation Entertainment. The investigation was initiated in the wake of Ticketmaster’s total meltdown during the sale of tickets to Taylor Swift’s highly anticipated Eras Tour. As a result of the platform’s crash, thousands (if not millions) of fans were unable to purchase tickets directly, and the resale value of the tickets on the secondary market skyrocketed – with some tickets being sold for as much as $11,000.

Following the fiasco, the Senate Judiciary Committee held a hearing in which members of both political parties criticized the platform’s business practices as anti-competitive. Live Nation’s president and Chief Financial Officer, Joe Berchtold, testified that the platform’s Eras Tour failure was attributable to online bots run by scalpers that sought to buy large quantities of tickets before real consumers could get the chance to purchase them directly. Mr. Berchtold’s explanation was met with skepticism from the senators, many of whom characterized the platform as blatantly monopolistic.

But allegations of anti-competitive practices are something that Live Nation knows all too well. By way of background, Live Nation and Ticketmaster were permitted to merge in 2010, under the condition that they would undertake certain measures, outlined in a consent decree, to improve competition in the ticketing industry. But by 2019, the Justice Department accused the companies of failing to meet the requirements of the consent decree and the parties entered into a settlement agreement whereby the terms of the consent decree were extended until 2025.

Perhaps in an effort to repair the company’s reputation (and avoid further scrutiny by the Government), Live Nation’s Head of Corporate Affairs recently penned an essay in which he defended the platform’s pricing practices. Therein, Wall argued that the high ticket prices for which Live Nation and Ticketmaster have been criticized are not the result of anti-competitive practices, but rather stem from the basic economic principle of supply and demand.

According to Wall, the demand for tickets for the world’s most famous artists has been exploited by ticket scalpers – those who purchase tickets at face value and then sell them at higher prices on a secondary market to make a profit. As a result, Wall concludes, “the identity of the promoter or ticketing company is unrelated to the actual determinants of pricing.”  In other words, it’s the secondary ticket sellers – not Live Nation or Ticketmaster – that hurt consumers.

Given these circumstances, can we rely on the DOJ’s impending lawsuit against Live Nation and Ticketmaster to ultimately lower ticket prices? Probably not.

Undoubtedly, the fees charged by Ticketmaster contribute to the high prices that concert goers are forced to pay for tickets. But the effects of secondary ticket sellers – i.e., those who resell their tickets for a profit on platforms such as StubHub – cannot be ignored. To that end, if the DOJ’s impending lawsuit against Ticketmaster and Live Nation focuses only on those companies’ anti-competitive practices, it seems unlikely that the secondary ticket sellers will be similarly reigned in. Simply put, we’re not out of the woods yet.

So, what can the Government do to provide direct relief to consumers?

The approach adopted by the Europeans is instructive. There, the solution to the sky-high ticket prices that have created bad blood between consumers and ticket selling platforms was the implementation of consumer protection laws, designed to promote transparency and regulate the ticket-buying process by directly targeting secondary ticketing platforms. For example, the EU’s Digital Services Act imposes regulations on ticketing platforms such as StubHub and Viagogo. The law, in pertinent part, (1) requires the platforms to identify and verify professional sellers; (2) prohibits the platforms from using manipulative sales techniques such as pop-ups or design tricks; and (3) imposes annual reporting requirements on the certain e-commerce platforms.

Similarly, several countries have passed laws that explicitly prohibit the resale of tickets at above face-value prices. By way of example, in 2018, Italy passed an amendment to its Budget Law, to address the issue of “ticket touting.” The regulation, which was ultimately subsumed into Italy’s Secondary Ticketing Act, prohibits the resale of tickets above face-value for commercial purposes and requires that tickets only be sold through certified platforms.

The impact of the regulation’s prohibitions was recently illustrated when, in 2022, an Italian Court upheld the Italian Communication’s Regulatory Authority AGCOM’s imposition of a €23.5m fine upon the ticketing platform Viagogo for listing tickets for 131 events at almost six or seven times their face-value.

But what does this mean for consumers? Do these protectionist laws actually provide relief from exorbitant ticket prices offered by secondary ticket sellers?

Ms. Swift’s Eras tour provides an informative illustration of the regulation’s effects. Indeed, many American Swifties purchased tickets to the European leg of the singer’s Era’s tour, finding the European ticket prices to be far cheaper than their American equivalent. For fans who couldn’t purchase tickets to the American shows directly, it was more financially reasonable to purchase tickets and fly all the way to Europe to see the show than it was to purchase tickets through a secondary ticket reseller in America. Thus, at least anecdotally, the regulations are having the desired effect – providing consumers with protection against price gouging by secondary ticket sellers.

It seems that the lesson to be learned from our European counterparts is that direct regulation of secondary ticket sales may be a more efficient way to protect consumers than years of anti-trust litigation. Indeed, if Congress’s end game is to protect consumers, further consent decrees and settlement agreements with Live Nation may not get the job done. However, if the collective outrage voiced by the senators at the Live Nation hearing is any indication, perhaps this particular consumer protection initiative is something both sides of the aisle can agree upon.