Neil Malik
Is Ticketmaster an illegal monopoly or just good business?
Anton Gvozdikov / Shutterstock.com
The Topline
- The U.S. Department of Justice (DOJ) argues that Live Nation – which owns Ticketmaster and controls at least 40 of the top 50 amphitheatres in the United States – has built an illegal monopoly.
- Prosecutors accuse Live Nation of forcing artists to use its concert promotion services if they want access to its amphitheatres, then leveraging those artists to pressure other venues into signing long-term exclusive contracts with Ticketmaster.
- Live Nation denies the allegations, saying it faces intense competition and that no law requires it to allow rival concert promoters to use its venues.
Switch sides,
back and forth
It's an illegal monopoly
If you’ve ever purchased a concert ticket, you know the feeling.
You eagerly log into Ticketmaster hoping to buy concert tickets, then see your $60 ticket has ballooned into $100 after a barrage of "service," "handling," and "facility" fees. The U.S. Department of Justice (DOJ) calls it the “Ticketmaster tax,” the product of an illegal monopoly that has suffocated ticket buyers for decades.
The DOJ says Live Nation gets away with it thanks to its alleged illegal stranglehold on ticketing, concert promoting and venue ownership. They use their overwhelming dominance in one area to crush competition in another. Consumers are just collateral damage.
First, Live Nation controls 40 of the top 50 music amphitheatres in the U.S. If a musical act wants access to those desirable venues, Live Nation forces the artist to sign Live Nation as its promoter for the entire tour.
That means if an artist wants to play the best amphitheater in a city, and Live Nation says, "Only if you let us promote the whole tour,” they are leveraging their dominance in the venue business to block out any competition in the promotion business. That’s illegal.
Second, there’s the ticketing side. Ticketmaster monopolizes the box office by locking major concert venues into long-term exclusive contracts to use Ticketmaster for anywhere from 3 to 14 years.
But these contracts aren't won because Ticketmaster has the best software. The DOJ alleges that Live Nation threatens to pull lucrative concert tours if venues dare to use rival ticketers.
It’s classic coercion. The ultimate result is a downstream ticket tax, where fans become the ultimate victims here. Venues are forced to use Ticketmaster, fees become artificially inflated, and technology remains stagnant.
We've all heard stories of Ticketmaster’s app unable to handle a massive presale. And no matter what Ticketmaster claims, bots continue to scoop up all the tickets before fans have a chance.
Because Ticketmaster doesn’t face much risk of losing venues to more innovative competitors, they have zero incentive to invest in making the online side any better.
If venues were free to utilize multiple ticketing platforms or switch providers without fear of retaliation, competitors would fight for the venue’s business by offering lower baseline costs, which naturally translates to lower fees for fans.
Beyond lower fees, more competition would also bring the kind of innovation that fans actually want, like transparent pricing models from the start, flexible refund policies, and interfaces that don't crash when demand spikes.
It's just good business
It’s easy to point the finger at Live Nation and Ticketmaster as the villains of the music industry. But even if the government wins its case, that doesn’t mean ticket prices will fall.
Start with the amphitheatre claim.
Live Nation, like any other business, is simply choosing not to rent the venues it owns or controls to rival promoters. Antitrust law generally doesn’t require a company to do business with its competitors.
You can’t force Coca-Cola to strike a deal with PepsiCo, or Apple to partner with Samsung.
Forcing Live Nation to rent its privately owned venues to rival promoters like AEG, the company argues, would effectively punish Live Nation for taking the financial risk to acquire and operate those venues in the first place.
As for the ticketing side, Live Nation says exclusive ticketing contracts are simply the industry norm. In fact, venues themselves often demand exclusivity for operational reasons.
Managing ticket sales for hockey fans on Tuesday and concertgoers on Friday across multiple ticketing platforms could be a logistical nightmare for a venue box office.
Even importantly for venues, exclusivity allows them to negotiate a better revenue split of the service fees.
From Live Nation’s perspective, this is simply the free market at work. Venues routinely auction their ticketing rights to the highest bidder through competitive bidding processes. Live Nation argues Ticketmaster often wins because it offers the best technology and the strongest financial package.
There’s also the accusations about inflated service fees on tickets.
According to Live Nation, venues – not Ticketmaster – set most of the service fees. In court filings, the company says Ticketmaster retains only about 5 per cent of the overall ticket price on average.
Venues lean on those service charges to cover massive operating costs: security, ushers, maintenance, electricity, and staffing.
Even if Ticketmaster disappeared tomorrow and a dozen new ticketing platforms replaced it, venues would still charge those same fees just to keep the lights on. If anything, costs could increase because venues lose the economies of scale.
On top of that, the base ticket price itself is largely driven by the economics of touring – the trucks, staging, crews, and overwhelming demand from fans.
That’s why even if the government wins the case, fans shouldn’t expect ticket prices to suddenly collapse. The real drivers of those sky-high prices – demand, touring costs, and a limited number of venues – will remain exactly the same.
