Modern ‘Monopolies’
10/09/2023
Anyone who has recently attempted to buy tickets from Ticketmaster to any popular event will likely agree that ticket purchasing has become an expensive Olympic-level competition. This competition was evident last November when a record 14 million users logged on to Ticketmaster to buy tickets to Taylor Swift’s Eras Tour. The unprecedented demand caused the ticketing platform to crash. Ticketmaster and their parent company, Live Nation Entertainment, were immediately in the media spotlight. Eventually, Congress took an interest, and Live Nation Entertainment is now facing charges of breaking antitrust law.
Fans of Taylor Swift might wonder why she does not pick a different ticketing company. Unfortunately, that is not really an option. Since 1995, Ticketmaster has had over 80% of the market share for primary ticketing. In 2010, Ticketmaster and Live Nation merged to form Live Nation Entertainment. This merger created a vertical monopoly of live entertainment. Live Nation Entertainment has contracts with most of the top performers in the world, owns venues, has exclusive relationships with most major stadiums, and operates the largest tours. Therefore, the group controls all the points of entry for a live event, from the venue to exclusive deals with the artists to promotion and ticketing. There is no real curb on the service fees charged to eventgoers by Live Nation Entertainment.
When Ticketmaster and Live Nation announced their plans to merge, the Justice Department sued along with several states, but the merger was allowed to proceed. In hindsight, maybe the Department of Justice should have challenged the Live Nation and Ticketmaster merger more strongly. Ticketmaster’s dominance of ticketing has only continued to grow, and competition has declined, so it is not surprising it is under review again.
Pre-1980, this merger would have been all but unthinkable, but the philosophy surrounding antitrust law shifted significantly with the popularity of the ideas of legal scholar Robert Bork. He argued that the earlier antitrust laws were put in place to protect consumers and that bigger companies create efficiencies that will eventually mean consumers will pay lower prices. This new approach to antitrust law was endorsed by a Supreme Court case in 1979.
Live Nation Entertainment is not alone in the attention it is receiving from Congress and the executive branch. Major tech companies, including Google, Amazon, Microsoft, and Meta, are also under review. The first major lawsuit against a Big Tech company began in September when the DOJ sued Google for its search engine monopoly. Amazon was subsequently sued by the Federal Trade Commission for illegally maintaining monopoly power over online retail. It will be interesting to see the outcome of these cases and how antitrust laws written before modern technology enabled dominance of whole business sectors can be applied to the corporate behemoths of the digital age. These lawsuits have the potential to substantially change the operations of companies that have become a part of the daily life of most Americans and represent an outsized share of the U.S. stock market.
Meghan Pearson