By: Riley Kramer
Volume X – Issue I – Fall 2024
I. INTRODUCTION
Live Nation Entertainment is the world’s largest entertainment company; this conglomerate wields significant influence across various segments in the music industry, such as concert promotion, ticketing, artist management, and venue operations. Notably, Live Nation controls “more than 80 percent of major concert venues [and] over 400 big-name artists are locked into Live Nation’s management services” [1]. This extensive network allows Live Nation to leverage its business lines to maintain dominance in the industry. This domineering power has led many to label it as the “music behemoth.” This massive concentration of power raises critical concerns about whether LiveNation is engaging in unjust monopolistic practices. In late 2022, the US Department of Justice, along with 30 state and district attorneys generals, filed a civil suit against Live Nation Entertainment, alleging violations of Section 2 of the Sherman Act [2]. This lawsuit highlights the detrimental impact LiveNation’s practices may have on the music landscape, greatly affecting competitors, artists, and consumers alike.
II. EVOLUTION OF LIVE NATION ENTERTAINMENT
The first iteration of Live Nation Entertainment took shape in 1996, when Robert F.X. Sillerman began acquiring several major concert promotion companies across the United States, ultimately resulting in the creation of SFX Entertainment. Before Sillerman’s consolidation efforts, other sectors of the entertainment industry—including movies, television, and books—had already been brought under the control of a few dominant companies [3]. What set SFX Entertainment apart was its focus on generating revenue through advertising and sponsorships, rather than just ticket sales, making a shift in the operations of the overall music industry. Sillerman eventually sold SFX to Clear Channel Communications, which in 2005 spun off its entertainment division into what was Live Nation [4]. Over the next few years, Live Nation solidified its dominance by acquiring key players in the music industry, including a main competitor: the House of Blues. This acquisition marked a pivotal transformation, signaling the end of true competition in the live-music industry as only two players remained: Live Nation and AEG Live [5]. Furthermore, Live Nation’s artist management division, Artist Nation, controls some of the biggest musicians in the industry, such as Madonna, U2, Shakira, and Jay-Z, meaning that Live Nation has exclusive control over their albums, ticket sales, and concerts [6].
III. EVOLUTION OF TICKETMASTER
Long before Sillerman’s consolidation in the promotion industry, another critical player in the music industry emerged: Ticketmaster. In 1976, Albert Leffer, Peter Gadwa, and Gordon Gunn created the now world-renowned business [7]. Ticketmaster originally licensed computer programs as well as sold hardware for ticketing systems. Over time, Ticketmaster began collaborating with various venues and switched to computerized ticketing. Much like LiveNation, Ticketmaster expanded its influence by acquiring its primary rival, Ticketron in 1991, cementing its position as the market leader. Over the next twenty years, Ticketmaster made several strategic acquisitions, including Paciolan, a developer of ticketing system applications, and Front Line, an artist management firm [8]. These acquisitions strengthened Ticketmaster’s control over the ticketing and artist management sectors of the entertainment industry. By 2008, Ticketmaster held over 80% of the marketing share for the ticketing service industry through the use of long-term exclusivity agreements, thereby creating significant barriers to entry for potential competitors. [9]
The landscape of the music industry was forever changed in 2009 when Live Nation merged with Ticketmaster, resulting in the establishment of Live Nation Entertainment. Before this merger, Live Nation was Ticketmaster’s biggest customer, selling tickets for events at various Live Nation venues. However, despite this established relationship, Live Nation refused to renew its contract with Ticketmaster and instead began developing its own ticketing platform. At the time, Live Nation was grappling with over $800 million in debt, largely due to venue maintenance fees, and its stock was trading for less than $3 per share. Despite these challenges, there was a potential lifeline: a merger.
IV. LIVE NATION AND TICKETMASTER MERGE
The landscape of the music industry was forever changed in 2009 when Live Nation merged with Ticketmaster, resulting in the establishment of Live Nation Entertainment. Before this merger, Live Nation was Ticketmaster’s biggest customer, selling tickets for events at various Live Nation venues. However, despite this established relationship, Live Nation refused to renew its contract with Ticketmaster and instead began developing its own ticketing platform. At the time, Live Nation was grappling with over $800 million in debt, largely due to venue maintenance fees, and its stock was trading for less than $3 per share. Despite these challenges, there was a potential lifeline: a merger.
Ticketmaster also faced a critical juncture: it could either compete against its biggest former customer or pursue a merger. Ultimately, Ticketmaster opted for the latter, and the unprecedented merger, valued at a staggering $2.5 billion in stock, positioned Live Nation Entertainment to capture “70 percent of the concert ticket market” [10]. Over the next decade, Live Nation Entertainment continued to expand through numerous acquisitions and partnerships, including acquiring the remaining 25 percent stake in FrontLine Artist Management firm and Live Nation Productions, a film and television division. Moreover, Live Nation Entertainment secured stakes in several prominent festivals, such as the Bonnaroo Arts Festival. Live Nation Entertainment’s revenue streams span four main business lines:
Concert Promotion — ticket sales for concerts
Venue Operation — concessions, parking, premium seating, rental income, and ticket rebates or service charges earned on tickets
Artist Management —commissions on earnings of artists and other clients
Ticketing (Ticketmaster) — convenience and order processing fees, or service charges [11]
Despite widespread opposition to this merger’s potential to create a dominant, uncontested force in the industry, Christine Varney, then head of the DOJ Antitrust Division, approved the deal with minimal restrictions. In defending the DOJ’s decision, Varney emphasized that the merger review process focused primarily on whether the transaction would substantially lessen competition rather than addressing broader industry concerns. While she acknowledged widespread dissatisfaction with heightened ticket fees and consolidation within the industry, Varney argued that these issues fell outside the scope of antitrust enforcement. Essentially, reviewing a merger does not grant the DOJ the authority to fundamentally reshape an industry or a firm’s business model to make it more consumer-friendly. Moreover, she clarified that the DOJ cannot reverse broad industry trends and that their examination is focused solely on whether a specific transaction will harm competition
In essence, Varney minimized the DOJ’s rule, suggesting that it is up to other federal agencies to address consumer fairness while allowing the market to dictate outcomes for consumers. Despite recognizing that Live Nation Entertainment could, and does, restrict access to talent for competing venue owners, the DOJ allowed the transaction to proceed. Based on her decree, Varney believed that Live Nation Entertainment could not wield monopoly power in artist management and promotion due to the fragmentation in the industry, noting that artists are typically signed for just one tour at a time. This practice should create ample opportunities for new agents and promoters to bid for artists, meaning that Live Nation Entertainment would not truly effectively lock-up the industry. [12]
Regarding the DOJ’s settlement, the terms of approval included a consent degree mandating fair practices, as well as requiring the sale of ticketing subsidiary Paciolan to Comcast and the licensing of Ticketmaster’s ticketing software to AEG. However, it is crucial to note that the divestiture of Paciolan only granted Comcast a 2% share of the ticketing marketing, mainly limited to college athletics. In addition, the licensing agreement with AEG only lasted five years and allowed Live Nation Entertainment to collect significant royalties. Despite Varney’s assertion that this settlement represented “vigorous antitrust enforcement,” critics argue that neither the divestment nor the licensing arrangement resulted in meaningful market competition. Most concerningly, Live Nation Entertainment swiftly violated the consent decree, further entrenching its monopolistic position in the music industry [13].
V. SECTION 2 OF THE SHERMAN ACT
Section 2 of the Sherman Acts renders it illegal to:
“Monopolize, or combine or conspire with any other persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations” [14]
In essence, Section 2 prohibits the acquisition or maintenance of monopoly power through unjust means. It is imperative to distinguish that conduct harming competitors alone is not necessarily an antitrust violation—what is prohibited is conduct that harms competition itself. In the landmark case U.S. vs Microsoft, the court clarified:
“A firm violates [Section 2] when it acquires or maintains, or attempts to acquire or maintain, a monopoly by engaging in exclusionary conduct as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident” [15]
The Supreme Court recognizes that competition is inherently aggressive, and successful businesses often achieve their dominance at the expense of less successful rivals. However, the court aims to prevent illegal conduct that leads to monopolistic power, not to stifle legitimate business growth. The challenge lies in differentiating between competitive practices and exclusionary conduct, which intentionally blocks others from entering or succeeding in the market.
In the DOJ’s suit against Live Nation Entertainment, the government asserts that the company has engaged in exclusionary and anti-competitive behavior. Specifically, the DOJ claims that Live Nation Entertainment, has “unlawfully maintained monopolies in several concert promotions and primary ticketing markets and engaged in other exclusionary conduct affecting live concert venues” [16]. The crux of the issue is not whether a monopoly in the music industry is inherently good or bad, but whether Live Nation Entertainment obtained and maintained its dominance through illegal and exclusionary practices that undermine competition in violation of Section 2 of the Sherman Act.
VI. EFFECT OF MONOPOLISTIC PRACTICES ON TICKET PRICES
Concert ticket prices have surged dramatically in recent years, with the average concert ticket price rising 26 percent over the past five years. However, this figure only reflects first-time sales, yet the majority of tickets are sold through resales, where price gouging often occurs. Disturbingly, Ticketmaster has played a significant role in facilitating these inflated prices by allowing scalpers to purchase millions of tickets annually, despite policies that supposedly prohibit such practices. Scalpers often operate hundreds of Ticketmaster accounts which enables them to buy and resell a plethora of tickets at steep markups.
Ticketmaster profits more from fees earned on secondary market sales than from direct sales, creating a clear conflict of interest. This incentivizes the company to limit access to tickets in the primary market, either by restricting sales or allowing scalpers to exploit the system. [17] This dynamic creates a principal-agent problem, wherein Ticketmaster profits from practices that harm consumers, driving up prices artificially.
Additionally, Live Nation Entertainment has openly admitted to engage in practices that further inflate ticket prices. Chiefly, the company has been known to help artists sell tickets at inflated prices through resale platforms. In one instance, Metallica transferred 88,000 tickets to a resale account managed by a Live Nation Entertainment broker to maximize profits. This practice boosts revenue for both the artists and Live Nation Entertainment by capitalizing on higher resale prices, again at the expense of fans. [18]
Dynamic pricing has further exacerbated this crisis. By tying ticket prices to real-time supply and demand, Ticketmaster is able to charge the maximum amount consumers are willing to pay. This issue is largely unique to the United States, where antitrust enforcement has been relatively weak. As a result, many fans find it more affordable to travel internationally for concerts—covering the cost of tickets, airfire, and hotels—rather than attend local events, yet again demonstrating the detrimental impact of Live Nation Entertainment’s monopolistic practices on its consumers [19]
VII. RAMIFICATIONS FOR ARTISTS AND VENUES
According to the DOJ, Live Nation Entertainment’s exclusionary practices fuel a self-reinforcing “flywheel” that solidifies its dominance in the music industry. This flywheel refers to the company’s business model, wherein it “captures fees and revenue from concert fans, uses that revenue to lock up artists to exclusive promotion deals, and uses its powerful cache of live content to sign venues into long term exclusive ticketing deals” thereby perpetuating the cycle. [20]
One of the key ways Live Nation Entertainment maintains control is through its ownership of 265 concert venues, including many of the most popular amphitheaters. Artists who wish to use these venues for their tours are often required to use Live Nation Entertainment’s promotion services, such as Artist Nation. If artists attempt to resist, as bands like Pearl Jam have tried in the past, they are relegated to playing smaller, less appealing venues, diminishing their tour’s profitability
For live concert venues, the situation is equally worrisome. Choosing a promoter or ticketing service other than Live Nation or Ticketmaster can, and does, result in severe repercussions. Venues know that opting out of Ticketmaster also means they risk losing access to the most lucrative Live nation concerts and the audiences that come with them. This pressure is particularly evident for venues managed by AEG, Live Nation’s only remaining competitor; AEG venues that dare to refuse Ticketmaster’s services face losing top-performing events, possibly hindering that venue’s ability to survive.
A concrete example of this retaliatory behavior occurred in 2021 when TEG artist management held a concert at the Los Angeles Coliseum and chose StubHub as its ticketing partner, even though the venue had an exclusive deal with Ticketmaster. In response, Live Nation Entertainment threatened to deny entry to any fan who purchased tickets through StubHub. The company further escalated this retaliation by leveraging their relationship with Oak View Group, whose private equity owners also held a large stake in TEG, through pressuring the company to stop competing against them. [21] This poignant example underscores the extreme lengths to which Live Nation Entertainment will pursue to protect its monopoly and deter competition.
These practices of exclusionary behavior not only limit competition but also harm the diversity and vibrancy of the live concert industry. As a vertical merger, Live Nation Entertainment has prevented rival ticketing companies from accessing “critical scale benefits, including individual concertgoer data [needed] to secure third-party venue contracts.” [22] As a horizontal merger, Live Nation Entertainment eliminated the potential for competition between Ticketmaster and the newly formed ticket-selling service at the then Live Nation. Consequently, artists, venues, and fans are faced with fewer options, higher costs, and a lack of genuine alternatives, as Live Nation Entertainment continues to violate Section 2 of the Sherman Act.
VII. 2019 COURT FILINGS AND INITIAL DOJ RESPONSE
In response to the increasing scrutiny concerning Live Nation Entertainment’s business practices and alleged violations of the 2010 merger consent decree, the DOJ filed a civil suit against the corporation. These court filings were significant not only due to the sheer amount of violations but also for the fact that the names of the alleged victims were anonymized, shielding them from further retaliation. This underscores the enormous fear that Live Nation Entertainment instilled in dozens of key industry stakeholders, who were concerned about being blacklisted if they spoke out against the company.
However, instead of imposing meaningful remedies, the DOJ’s response was remarkably tepid; Live Nation Entertainment was fined a mere $3 million dollar fine and forced to extend the existing consent decree by another five and a half years. Considering that the corporation’s revenue in 2022 totaled $17 billion, the threat of these fines are disproportionately small. Nevertheless, the DOJ yet again failed to address the deeper structural issues allowing Live Nation Entertainment to maintain their monopoly. As a result of this lack of aggressive enforcement, the company was able to exploit the same loopholes that were present in the 2010 consent decree, thereby doing nothing to benefit venues, artists, and fans. [23]
IX. ANALYSIS OF THE CURRENT LANDSCAPE AND PROPOSED SOLUTIONS
In my opinion, the DOJ’s approval of the Live Nation and Ticketmaster merger in 2009 represented a significant and irreparable oversight of their duties to protect consumers and ensure fair competition. While Christine Varney argued that the agency’s focus should be on whether the merger would substantially lessen competition in the specific transaction rather than broader industry concerns, this narrow interpretation fails to recognize the interconnectedness of market dynamics; mergers of this magnitude reshape entire markets. In essence, the DOJ should have considered not just the immediate antitrust implications of the merger but also the long-term impact on consumer welfare, such as the extraordinarily high ticket prices in recent years.
Nevertheless, the DOJ approved the merger, so it is crucial to now examine its current role in upholding the integrity of that decision and how I believe it can rectify their exorbitant misstep. Foremost, the DOJ’s lackluster response to Live Nation’s ongoing violations of the consent decree underscore a failure to effectively address structural industries within the music industry. A mere $1 million dollar fine for violations does almost nothing to deter a corporation with over $22 billion in annual revenue. [24] This sheer lack of aggressive enforcement enables Live Nation Entertainment to continue to engage in anti- competitive practices at the expense of consumers, artists, competitors, and independent venues.
To genuinely restore competition and protect consumers, the live entertainment industry must undergo substantial structural reform. In particular, Live Nation Entertainment’s four main segments— Concert Promotion, Venue Operations, Artist Management, and Ticketing—must be broken up into separate and independent entities. These segments are currently vertically integrated and interdependent, allowing Live Nation to dominate the market and stifle competition. [25] Typical antitrust remedies involve the sale of businesses and/or assets. In this case, Live Nation Entertainment should be required to divest Ticketmaster, effectively undoing the 2009 merger. [26] However, this divestiture alone is not sufficient to restore competition. Instead, Live Nation Entertainment must also spin off its Venue Operations, Concert Promotions, and Artist Management lines into three independent businesses. Each divestiture must also be accompanied by the transfer of critical intangible assets, allowing rival ticket sellers, such as AEG, to compete on a level playing field.
In addition to structural reforms, the fines for violations of antitrust provisions must be significantly increased to deter future misconduct. Again, the current $1 million penalty for civil competent violations is grossly insufficient for a company of Live Nation Entertainment’s size. Meaningful deterrence can only be achieved with fines that impose a substantial financial burden on the company and thereby force it to reconsider its unjust behaviors.
By implementing these reforms, the DOJ can finally ensure fair competition within the live entertainment industry, protecting artists, venues, and consumers from further harm. It is imperative that the DOJ fulfills its mandate as both a regulator of competition, but also as a protector of consumer welfare in an industry that is becoming increasingly inequitable.
Endnotes
[1] Goldstein, Luke. 2024. “How Live Nation’s Monopoly Works.” The American Prospect. May 24, 2024. https://prospect.org/power/2024-05-24-how-live-nations-monopoly-works/.
[2] U.S. Department of Justice. 2024. “Office of Public Affairs | Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets across the Live Concert Industry | United States Department of Justice.” Www.justice.gov. May 22, 2024. https://www.justice.gov/opa/pr/justice-department-sues-live-nation-ticketmaster-monopolizing-markets-across-live-concert.
[3] F.X, Robert. 2015. “Robert F.X. Sillerman and the Roots of Concert Consolidation | MichaelCorcoran.net.” MichaelCorcoran.net. June 10, 2015. https://www.michaelcorcoran.net/robert-f-x-sillerman-and-the-roots-of-concert-consolidation/.
[4] Wall Street Journal. 2005. “Clear Channel Gives Details on Spinoff of Live Nation Unit,” December 15, 2005, sec. News. https://www.wsj.com/articles/SB113460359053522836.
[5] Duhigg, Charles. 2006. “House of Blues Sold to Live Nation.” Los Angeles Times. July 6, 2006. https://www.latimes.com/archives/la-xpm-2006-jul-06-fi-live6-story.html.
[6] News.bbc.co.uk. 2008. “Singer Shakira Joins Live Nation,” July 3, 2008. http://news.bbc.co.uk/2/hi/entertainment/7487572.stm.
[7] “More than 30 Years of Connecting the World to Live Entertainment. The Legacy of Ticketmaster.” n.d. https://media.ticketmaster.com/en-us/img/static/aboutus/tmTimline08.pdf.
[8] Buskirk, Eliot Van. 2008. “Ticketmaster Acquires Majority of Front Line Management.” Wired. October 23, 2008. https://www.wired.com/2008/10/ticketmaster-ac/.
[9] Dyck, Katherine, and Lee Hepner. 2024. “The Case against Live Nation-Ticketmaster a BRIEF HISTORY of the LIVE NATION- TICKETMASTER MERGER A. HOW LIVE NATION IS STRUCTURED.”https://www.economicliberties.us/wp-content/uploads/2024/01/20240104-AELP-Livenation-Brief-FINAL.pdf.
[10] Segal, David. 2010. “Ticketmaster Joins Live Nation, and Industry Quakes.” The New York Times, April 24, 2010. https://www.nytimes.com/2010/04/25/business/25ticket.html.
[11] Dyck, Katherine, and Lee Hepner. 2024
[12] “Redirect Notice.” 2024. Google.com. 2024. https://www.google.com/url?q=https://www.justice.gov/atr/speech/ticketmasterlive-nation-merger-review-and-consent-decree-perspective&sa=D&source=docs&ust=1729889375829349&usg=AOvVaw3Un1hMQ--sXlbfiXiB-gFb.
[13] Brown, Krista. 2023. “The Depth of Live Nation’s Dominance: A Data Analysis of the Corporate Capture behind Top Concert Venues Worldwide.” https://www.economicliberties.us/wp-content/uploads/2023/06/052023_AELP_Ticketmaster_PolicyBrief.pdf
[14] “Competition and Monopoly: Single-Firm Conduct under Section 2 of the Sherman Act : Chapter 1.” 2015. Www.justice.gov. June 25, 2015. https://www.justice.gov/archives/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#N_1_.
[15] “U.S. V. Microsoft Corp., 253 F.3d 34 | Casetext Search + Citator.” 2001. Casetext.com. June 28, 2001. https://casetext.com/case/us-v-microsoft-corp-6#p58.
[16] “Competition and Monopoly: Single-Firm Conduct under Section 2 of the Sherman Act : Chapter 1.” 2015. Www.justice.gov. June 25, 2015. https://www.justice.gov/archives/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#N_1_.
[17] Krista Brown, and Zach Freed. 2022. “How Antitrust Enforcers Helped Create a Live Events Monster.” https://www.economicliberties.us/wp-content/uploads/2022/10/LiveNation_QuickTake_R3-3.pdf.
[18] Tiffany, Kaitlyn. 2019. “The Latest Weird Music Industry Scheme: Artists Scalping Their Own Tickets.” Vox. July 22, 2019. https://www.vox.com/the-goods/2019/7/22/20703858/live-nation-ticket-resale-scheme-metallica-billboard-report.
[19] Millman, Ethan. 2024. “Inside Live Nation-DOJ’s Blockbuster Monopoly Lawsuit.” Rolling Stone. October 2024. https://www.rollingstone.com/music/music-features/live-nation-ticketmaster-monopoly-lawsuit-doj-justice-department-1235114969/.
[20] U.S. Department of Justice. 2024. “Office of Public Affairs | Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets across the Live Concert Industry | United States Department of Justice.” Www.justice.gov. May 22, 2024. https://www.justice.gov/opa/pr/justice-department-sues-live-nation-ticketmaster-monopolizing-markets-across-live-concert.
[21] Goldstein, Luke. 2024.
[22] Dyck, Katherine, and Lee Hepner. 2024
[23] “Attorney General Neronha, Department of Justice Sue Live Nation | Rhode Island Attorney General’s Office.” 2024. Ri.gov. 2024. https://riag.ri.gov/press-releases/attorney-general-Neronha-department-justice-sue-live-nation.
[24] “Live Nation Entertainment - Revenue 2019.” n.d. Statista. https://www.statista.com/statistics /193700/revenue-of-live-nation-entertainment-since-2006/.
[25] Dyck, Katherine, and Lee Hepner. 2024
[26]“California v. American Stores Co., 495 U.S. 271 (1990).” 2024. Justia Law. 2024. https://supreme.justia.com/cases/federal/us/495/271/.