Ticketing Monopoly
Recently, a federal jury in New York decided that Live Nation Entertainment, the parent company of Ticketmaster, has been operating as an illegal monopoly. The verdict found that the global and most famous ticketing company has abused its dominance in the live entertainment industry, and specifically in regard to the ticketing services for major concert venues.
The ruling concluded that Live Nation harmed other competitors and that consumers had been overcharged. For context, the estimated overcharged amount per ticket is $1.72. According to NBC News, the states that filed the lawsuit claim that Ticketmaster has 86% of the ticketing market at “major concert venues,” which are defined as arenas and amphitheaters with a capacity of over 8,000. In the US, that is over 250 arenas and amphitheaters across the country.
The total monetary outcome of the ruling is yet to be determined. For now, the DOJ has asked Live Nation to divest its market share from 13 amphitheaters and requires Ticketmaster to cap its service fees at 15%.
Canada has taken an aggressive approach to regulatory oversight and legislative reform to protect consumers from monopolistic behavior. In Ontario, a recently implemented measure imposes a strict limit on resale ticket prices. The new legislation caps the price of resale tickets at the original purchase price, which includes all services fees and taxes originally paid. While the current limit is only applicable to sales in the secondary market, the Canadian government may consider implementing legal limits on high service fees.
Despite the dire ruling for its business model, Live Nation Entertainment’s stock (LYV) is up over 7% YTD. The entertainment giant is structured around three major lines of business: concerts, ticketing, and sponsorship and advertising. LYV’s revenue is mostly driven by the concerts segment (over 80% of total revenue generated over the last 2 fiscal years). This includes the promotion of live music events and tours, as well as the operation of hundreds of global venues. Sponsorship and advertising only account for 5% of total revenue, but it is the most profitable line of business, with the company reporting over 60% in adjusted operating income margin last year.
The next development in the ticketing marketplace is in the hands of Live Nation’s competitors as they adjust to the opportunity created by the legally enforced reduction in Ticketmaster’s ticketing market share. This shift is a marked change from concert and live event enthusiasts’ long-standing tendency to gravitate towards Ticketmaster as the brand name of the ticket industry. Companies like SeatGeek, StubHub, Eventbrite, Vivid Seats, and AXS will no doubt look to take advantage.
One thing remains certain: ticketing service fees for the consumer continue to rise. For the 2028 Summer Olympics in Los Angeles, the service fee being applied by a joint venture between AXS and CTS Eventim is a shocking 24% on top of the ticket price.
The price increases do not seem to discourage the public from attending live events. Music, sports, and other live entertainment all seem to be thriving!
Nirvanna Silva