Live Nation Settled Its Lawsuit With the Feds. Don't Expect Concert Tickets To Get Any Cheaper.
Fans are responsible for sky-high ticket resale prices, not primary ticket sellers.
Live Nation Entertainment and the federal government have reached an agreement to end a yearslong antitrust lawsuit. If you think that's going to make your Bad Bunny tickets cheap, think again.
On Monday, Politico reported that Live Nation, the largest producer of live music concerts, settled with the Justice Department. This settlement ends the lawsuit filed against the company following public outrage at dizzying resale ticket prices for Taylor Swift's Eras Tour, alleging that Live Nation had monopolized the markets for primary ticketing services.
In addition to paying $200 million in damages to 39 states and the District of Columbia, Live Nation accepted a handful of structural remedies: the company must divest itself from more than 10 amphitheaters, reduce the length of long-term exclusivity contracts between Ticketmaster and event venues, allow "venues to allocate a portion of their tickets to competing platforms," and "open parts of its platform to rival ticketing companies," reports Politico.
Following its 2010 acquisition of Ticketmaster, Live Nation became "the world's leading live entertainment ticketing sales…company," according to the Justice Department, achieving an 86-percent share of the primary ticketing market for live events, excluding sports. Given this massive market share, one might assume that Live Nation is responsible for jacking up ticket prices to concerts.
But this isn't how the primary ticket market works. Performers themselves set the price, which ticketing companies sell for a fee of about 7 percent of the ticket's face value. Even including venue and ticket fees, which increase the all-in ticket price by as much as 30 percent, there are far more tickets demanded than available at this low price. Scalpers resolve this shortage by auctioning tickets to the highest bidder, which performers rationally refuse to do out of reputational concern.
In the case of the Eras Tour, tickets were sold for $130, but resold for thousands of dollars. One mother asked The New York Times if it was OK to sell her daughter's extras on a Facebook group for $2,400, considering they were selling for $3,900 on secondary markets. (While concert ticket resale generally accounts for about 2 percent of Ticketmaster's revenue, the company only facilitated the primary sale of Eras Tour tickets.)
Requiring Live Nation to unbundle its venue and ticketing services, and forcing it to host rival ticket sellers on Ticketmaster, may reduce primary ticket fees. "Shorter exclusivity contracts give venues a more credible threat to switch ticketers, competitive pressure on Ticketmaster reduces venue-facing fees, and some portion of that reduction passes through to consumers as lower service charges," explains Brian Albrecht, chief economist at the International Center for Law and Economics. However, "requiring Ticketmaster to open its platform to SeatGeek and Eventbrite will not suppress resale prices," says Albrecht.
The Justice Department might notch Live Nation's settlement as a win in the war on affordability, but as long as performers price tickets markedly below what their fans are willing to pay, scalpers will be strongly incentivized to purchase these tickets at this below-market rate and get them in the hands of the fans who value them the most. The answer is not more government intervention, but allowing prices to work.
