Department of Justice Seeks to Shatter Live Nation's Monopoly on the Live Music Industry

The Department of Justice, along with 30 states and attorneys general there, yesterday filed a long-expected legal action against Live Nation, the company which owns Ticketmaster, the most powerful entertainment ticketing corporation in the world.

The suit alleges that the company constitutes an illegal monopoly which uses that monopoly power to threaten concert promoters and entertainment venues if they refuse to use Ticketmaster’s global ticketing system, and to pay the often very high fees and profit percentages associated with those tickets.

With the company currently controlling over two-thirds of all ticket sales at the most important and biggest entertainment complexes in the country, and by its own admission in Live Nation’s quarterly investors presentation last month having sold over 620 million tickets last year, covering over 50,000 separate concerts and musical gatherings, this is a company with a stranglehold control over the most profitable aspects of the music community.

“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” U.S. Attorney General Merrick Garland as he announced the suit yesterday. “The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster.”

According to the case legal filing, “Live Nation-Ticketmaster has unlawfully maintained monopolies in several concert promotions and primary ticketing markets and engaged in other exclusionary conduct affecting live concert venues, including arenas and amphitheaters.”

The DOJ maintains that Live Nation deliberately implemented practices designed to lock up performers and venues and lock out other ticketing systems from operating. Those practices, the DOJ explained, constitute “exclusionary practices” which secure what the company refers to as its “flywheel”.

“The flywheel,” the DOJ explained, “is Live Nation-Ticketmaster’s self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals, and then uses its powerful cache of live content to sign venues into long term exclusive ticketing deals, thereby starting the cycle all over again.”

As illustrations of how that “flywheel” operates in practice, the DOJ cited as examples:

Signing concert venues “into long-term exclusive contracts” which make it impossible to switch to other ticketing companies which offer either better deals on fees or more modern ticketing technologies.

Preventing concert venues from using multiple ticketing agencies. The DOJ maintains the ability to for venues to sell tickets in multiple ways almost always results in more competitive offerings from those agencies.

Making strategic acquisition of regional ticketing promoters a priority for the company, effectively wiping out competition from smaller enterprises which are able to beat Ticketmaster at its own game

The company’s connection with Oak View Group, “a potential competitor-turned-partner that has described itself as a “hammer” and “protect[or]” for Live Nation”. Oak View Group chose to back out of attempting to compete with Live Nation for fear of retribution, and instead aided and abetted the company by encouraging artists to sign with Live Nation in return for gaining access to venues Oak View Group itself promotes.

In addition to its Ticketmaster ticketing monopoly, the DOJ suit also notes that its parent Live Nation, which calls itself the “largest live entertainment company” for good reason, also operates a monopoly via its ownership of many of the most important places music performers might want to appear.

Live Nation “owns or controls more than 265 concert venues in North America, including more than 60 of the top 100 amphitheaters in the United States,” the DOJ statement announcing the case continued.

Live Nation logs over $22 billion in revenues every year thanks to Ticketmaster, its ticketing agency, as well as from music festival operations and direct management of concert venues. Live Nation is a registered Delaware Corporation.

Ticketmaster LLC, a wholly owned subsidiary of Live Nation and a major target of the litigation, is a Virginia limited liability company with headquarters in Beverly Hills California.

Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division, who is leading the case against Live Nation, said in the DOJ briefing that, “The live music industry in America is broken because Live Nation-Ticketmaster has an illegal monopoly,”

“Our antitrust lawsuit seeks to break up Live Nation-Ticketmaster’s monopoly and restore competition for the benefit of fans and artists,” he added.