Music

To Understand Live Nation’s Real Antitrust Issue, Look to Microsoft

Sorry, kids — Live Nation’s antitrust issues have nothing to do with how hard it is to get Taylor Swift tickets. Those are expensive because there just aren’t enough for everyone who wants to see the show, and the antitrust lawsuit against Live Nation won’t change that — and it might not even change the cost of tickets. What it could do, though, is reshape the way the U.S. concert and ticketing businesses work — as well as how they work together.  

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The lawsuit, filed by the Department of Justice and more than two dozen states, alleges that Live Nation colluded with the venue management company Oak View Group, threatened potential rivals, locked venues into long-term agreements with Ticketmaster in a way that shuts out competitors, restricted promoters’ access to its venues, and acquired companies to reduce competition. There’s a lot there. 

Live Nation, at least according to the lawsuit, operates less like a concert promoter than a live entertainment platform — one that uses its dominance in some sectors to secure or further its dominance in others by making it hard for other companies to separate out its services. The most relevant comparison, at least in legal terms, might be the Microsoft antitrust case. Almost all of the behavior described in the lawsuit takes place outside of public view, but the Department of Justice argues that it reduces competition, and indirectly raises ticket prices for consumers. The first of these seems very likely, at least based on the descriptions of company policy in the lawsuit, but the second is less clear. Based on the thriving secondary market, concert tickets still seem to be underpriced. 

The common complaint about Live Nation is that it controls too many venues, and that Ticketmaster has too large a share of the ticketing business, especially in ways that annoy the hell out of consumers. Those factors may be less important than they seem, though. Most areas only have so many venues, and it’s not entirely clear how much sense it might make to have more than one ticket retailer handle each show. (It’s far easier to argue that companies in the primary market shouldn’t enter the secondary market, and vice versa.) And since a share of Ticketmaster fees end up going to promoters or venues anyway, cutting them could just end up shifting costs to the face-value price of tickets. I hate the extra charges on budget airlines, but eliminating them would just make tickets more expensive.  

The more serious issue is how Live Nation uses its market power. Ticketmaster signs long-term contracts with venues in exchange for exclusive ticketing rights, which has been an issue since Pearl Jam took on the practice three decades ago. But the most damning parts of the lawsuit, to which Live Nation will respond before the end of summer, involve issues that haven’t received as much attention. The Department of Justice alleges that Live Nation restricts artists from performing in its venues unless they also use the company as a promoter and presses venues to sign exclusive deals with Ticketmaster. This kind of behavior is an important part of what antitrust law is designed to prevent — wielding the leverage that comes from dominance in one market to gain an unfair advantage in others. The government would need to prove its case, though — and antitrust cases can be hard to win. 

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The lawsuit alleges that Live Nation works that way by design. It references a 2019 statement by CEO Michael Rapino that “we have to put the show where we make the most economics,” and that venues that use other ticketing companies could be at a disadvantage. (Under the terms of an antitrust consent decree, Live Nation has a court-appointed monitor tasked with preventing this.) The question is whether Live Nation operates this way, and whether what might be thought of as its platform is intended to do so.

Hence the comparison to Microsoft, which the Department of Justice sued in 1998 for trying to use its dominance in operating systems, and its resulting leverage over PC makers, to control the market for web browsers. (Microsoft lost in district court; that decision was partly overturned by the court of appeals; and the case was eventually settled.) In that case, though, the compatibility issues were intuitive and the harm to consumers was obvious.

For years, antitrust law focused on protecting consumers from higher prices, and it’s not entirely clear that tickets would get cheaper — or that there would be more or better concerts — if Live Nation were constrained or broken up. Some judges and scholars now take a broader view, though, and it’s easier to imagine that more competition would lead to more innovation.

Apart from the legal issues, the lawsuit portrays Live Nation as a minefield of conflict of interest, where the best side of a deal to be on is both of them. Thinking about the company means appreciating the significant synergies among its different businesses while somehow also believing that those different businesses can negotiate fairly with one another. Think of Live Nation’s talent management operation, where agents that represent artists sometimes negotiate deals for concerts against another division of the company. The artists must be satisfied with the service they’re getting, but you also have to wonder if the House always wins.

This is just the opening salvo in what’s likely to be a long conflict — antitrust cases tend to be long and complicated, and this one could have eras, like Swift. By the end of it, though, whichever side wins, Live Nation will either be constrained from having its various divisions work together in a way that disadvantages competitors or it will have to take more care that they don’t — and this can only be a good thing for the rest of the business. 

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