Ticketmaster, Live Nation ‘acting pretty monopolistically,’ analyst says

American Economic Liberties Project Senior Policy Analyst Krista Brown joins Yahoo Finance Live to discuss the DOJ’s probe of Ticketmaster and Live Nation, what the ongoing backlash means for the entertainment industry, and how a breakup would impact consumers.

Video transcript

BRAD SMITH: And in terms of how people might be spending money elsewhere, the concert-ticket catastrophe. Ticket-booking giant Live Nation under intense scrutiny over how it handles prices and allocates tickets, with critics calling for a breakup of the company. These most recent calls follow a recent congressional hearing over Live Nation's mishandling of Taylor Swift ticket sales.

Joining us now, Krista Brown, senior policy analyst at the American Economic Liberties Project. Krista, great to have you here with us today, especially off of the back of another big tour sale. A lot of people-- a lot of Queen Bee fans out there, they've been looking to get tickets. And so all of this adds up as we had already seen the debacle that took place with the Taylor Swift tickets.

So help us lay out the scene here, especially as it relates to Ticketmaster and Live Nation and how these entities have all come together over the years.

KRISTA BROWN: Yeah, thank you for having me. So essentially these two companies have been acting pretty monopolistic for decades at this point. Prior to the 2010 merger, Live Nation had consolidated the concert-promotion business throughout the '90s, started by this man Bob Silverman. And that company initially was named SFX. It got rolled up into Clear Channel, a radio consolidator, and then spun off to Live Nation.

Ticketmaster did the same starting even earlier, rolling up the ticketing industry in the '80s and '90s. And the two, they were acting with exclusive arrangements throughout the '90s. So prior to the merger, they already had this vast control of the industry. Both actually have been probed for antitrust issues by the Department of Justice.

And then in 2010, you know, their informal marriage was formalized, and they merged. And that's kind of what we see today where we have this vast consolidation, and we get one ticketing platform, essentially one-- well, the largest promoter that also has exclusive arrangements with the majority of large venues. And that's why people like Taylor Swift, despite not using them as a service for her promotion of the "Eras" tour, had to go into their venues and use their services.

JULIE HYMAN: Krista, I feel like people are letting the artists off the hook in this whole situation. They're making money from these arrangements. And yes, you had Pearl Jam protest this at one time, but they were really the only one. Radiohead to some degree also. I mean, aren't the artists complicit in this whole system as well?

KRISTA BROWN: You know, I would not say that they're at least close to the same level of complicity here. Back in 2009, Bruce Springsteen came out saying that the merger of Live Nation and Ticketmaster would essentially spell an end to fair competition in the industry. It would be the worst thing I believe is his exact words for the industry.

JULIE HYMAN: Yes, he said that, but he's still playing all of the Live Nation venues. And, you know, while he might say words about the high ticket prices, he has a price that he wants to get paid, right? He has costs and he wants to get paid, and I feel like the artists are not looking too carefully into how Live Nation/Ticketmaster is paying them that money. They're not breaking it down, right? They just say, here's the amount I want to collect. You guys get it the way you need to get it.

KRISTA BROWN: Yeah, I think, you know, Pearl Jam actually did have that approach in a lot of ways. But the band that just testified, Lawrence the Band, did an incredible job actually explaining the breakdown of costs. And they recently were on CBS with a segment showing a term sheet where they were charged for facility fees that were covered supposedly by fees that fans were also paying on the ticketing service.

So although absolutely they are trying to make money, they deserve to make, you know, the bulk sum of what's made up through revenue sales on ticketing. They also have no other, really, room to negotiate with another large promoter like Live Nation. And again, this is because of the control they have over venues, the vast control over the ticketing market, both in primary and now a growing presence in secondary.

So I think it's a little bit misconstrued to think that, you know, the artists are also buying into this whole monopolistic scene. I think historically there has been a much healthier environment for them to pursue different ways of becoming a, you know, artist and a living-wage artist, but Live Nation has really destroyed that at every turn.

And they did so in the early 2000s by eliminating album sales with this kind of scheme called instant live, which, you know, you can read more about. I won't go into too many of the details. But they've kind of stripped the ways that artists make money besides live touring, and they have said that in various lawsuits that live tours make up 95% of the artists' revenue.

I don't think any artist wants to have that be the bulk of their revenue because obviously it's a tiring process. Very hard to have a normal life when you're on tour all the time. But that's what's come of it, and that's partially because that's what makes most money for Live Nation/Ticketmaster.

BRAD SMITH: If it did happen, how would a breakup of Live Nation impact consumers? And where else would they be able to go in order to get tickets for concerts for some of their favorite artists that might fall under entertainment companies that are even owned by Live Nation Entertainment?

KRISTA BROWN: Yeah, so in my mind, a break up would be the simple separation of Live Nation and Ticketmaster, the concert-promotion business and the ticketing service, but also then probably forcing them to not enter into exclusive arrangements with venues for, say, like, 10 years or something just so that other competition can actually enter the market because without these guardrails, it's going to be hard to incentivize investment for smaller companies to actually build up a market presence and have fair competition. Again, like, you can look at what happened in the '90s. They were not a merged company, but they did have exclusive arrangements that gave them kind of total control.

And for fans, you know, I think it might not mean that different of an experience in the ticketing sphere. Potentially Ticketmaster will still have the largest or best service, but there will be a way for other ticketing services to actually vie for, you know, being a ticketing aspect of a various venue or various tour. And that will give artists like the frustrated Taylor Swift fans the choice to pick between Ticketmaster or an alternate platform.

And we see this in Europe where they actually have-- they don't have exclusivity. So you can use various ticketing services for the same concert-- the primary service for the same concert. And it has kept fees down. It's also led to a more competitive sphere, and that's what would likely happen with a breakup.

BRIAN SOZZI: No one wants frustrated Swifties to be sure. Krista Brown, American Economic Liberties Project senior policy analyst, appreciate the perspective this morning. Thank you.

KRISTA BROWN: Thank you.