Five Things to Know About Competition in Ticketing, Eight Years After Live Nation-Ticketmaster Merger

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Ticketing has changed since the DOJ approved the vertical integration, but not in ways many people think.

On Sunday, the New York Times published an investigative report by Ben Sisario and Graham Bowley examining the impact of the 2010 merger between Live Nation and Ticketmaster and the effectiveness of the Department of Justice’s consent decree in ensuring continued competition in the ticketing space. 

Created to foster competition, the consent decree bans Ticketmaster from using the threat of withholding shows from buildings in retaliation for their signing with a competing ticketing service. Because Live Nation is the largest promoter in the world, it was important to officials like former DOJ antitrust division head Christine Varney to create a level playing field for other ticketing companies to compete on the merits of their technology and financial offer and not because of fear that venues will be punished for choosing a vendor other than Ticketmaster. In the first day of trading after the story's publication, Live Nation's stock dropped 9 percent, wiping out six months of gains for the promoter giant.
 
The article, "Live Nation Rules Music Ticketing, Some Say with Threats,” looks at several contract signings that the authors say indicate Ticketmaster made subtle but explicit threats to protect market share or sign new clients. 

Some of the examples cited don’t paint the full picture. The article discusses the 2013 Matchbox Twenty tour, for instance, which skipped the Infinite Energy Center in Duluth, Georgia, after it signed with AXS. In an email, an unnamed Live Nation coordinator told the building’s GM they lost the date because of “three letters,” alluding to AXS, Ticketmaster’s competitor. But the story doesn’t mention that the 2013 run was an amphitheater tour, and while a couple dates were played in arenas, the majority of the tour was outdoors, suggesting there may have been another reason for skipping Duluth.

The piece also cites a decision by Los Angeles Football Club to enlist SeatGeek for ticketing -- following a three-way battle that also included AXS and Ticketmaster -- as evidence that the promoter was making threats over content to lock down a deal.

A rep for the team told Billboard that LAFC wanted to sign with Ticketmaster and asked it to guarantee several shows at their new stadium in exchange for the contract, which is allowed under the consent decree. When the league intervened and killed the deal because of a complex rights issue, an LAFC rep tells Billboard it understood the Live Nation shows were off the table, but has since developed a new agreement with the promoter to provide content for the soccer stadium and tells Billboard the dealings with the company have been fair and respectful.
 
Still, the piece raises an important question in the ticketing space about the continued dominance of Ticketmaster, which maintains an 80 percent market share per NYT estimates. Below are five things to keep in mind about the state of competition in ticketing.

1. Ticketmaster Is Very Aggressive at Signing and Keeping Clients
 
The 2015 Songkick lawsuit shows us that Ticketmaster’s senior executives spend a substantial amount of time thinking about how to protect the company's market share. Like any sales environment, there is significant pressure on staff to hold onto clients, and at least two have been caught cheating. Last year Zeehan Zaidi and Stephen Meade were fired from Ticketmaster after they admitted to accessing competitor Songkick’s internal computer systems (Meade previously worked at Songkick and kept his passwords) and ultimately Live Nation settled a lawsuit for $110 million with the Warner Music Group-owned platform.

Like other ticketing companies, Ticketmaster is also willing to pay large upfront advances to lock in business and, like SeatGeek, has an integrated secondary ticketing platform it can use in conjunction with its primary ticketing platform to maximize revenues. That integration has helped Ticketmaster sign a number of league-wide deals with the NBA and the NFL that strengthen its market share and win away business like the Utah Jazz and the Detroit Lions who signed with Ticketmaster in recent years after previously utilizing the AXS platform. 

Anecdotally, most teams and ticketing professionals will say the Ticketmaster platform has more technological advantages than competing platforms, and in the Times article, AEG acknowledges "part of its difficulty in securing contracts is rooted in its own missteps in developing a competitive ticketing system.” In a blog posted shortly after the Times article published, Ticketmaster president Jared Smith said his company’s dominance "is the result of Live Nation’s ongoing commitment to invest hundreds of millions of dollars into Ticketmaster” adding, "and let’s be honest, these investments are significantly larger than any other provider in the space by a wide margin.”

Billboard can't independently confirm that Ticketmaster invests more than others, but several sources say that no other ticketing company offers features like Verified Fan or Ticketmaster Presence. As well, Ticketmaster has one of the largest third-party distribution platforms with companies like Goldstar and Costco helping TM sell inventory.

2. The DOJ Has Monitored the Ticketing Business, But Never Seriously Intervened

While the article never explicitly says Ticketmaster is being investigated by the DOJ, the piece notes that federal authorities "are looking into serious accusations about Live Nation’s behavior in the marketplace.”

Several sources at AEG have been in regular contact with officials at the DOJ for years, and frequently file complaints whenever they feel Ticketmaster has violated the consent decree. These complaints are often filed after Ticketmaster either wins a highly competitive contract or steals away one of their clients. Ticketfly (which was purchased by Eventbrite last year) has also raised the issue in the past, although a spokesperson for the company said it has not filed a complaint with the DOJ.

But while the decree bars Live Nation from threatening to withhold content, it doesn’t block them from offering shows as part of a bundle offer pairing content with a ticketing deal. And although Live Nation can’t use content to punish venues, it can use content to incentivize them.

Still, despite complaints from competitors, DOJ officials have never intervened or amended the original document. And without a significant enforcement component, many believe the agreement is ineffective. 

3. The Consent Decree Was Never Designed to Lower Ticket Prices

In announcing the signing of the consent decree, the DOJ’s Varney said the deal meant “there will be enough air and sunlight in this space for strong competitors to take root, grow and thrive.” She even hinted that ticket prices might drop as a result of increased competition.

The idea that competition drives down ticket prices is largely a myth -- in fact the opposite is typically true, competition generally leads to higher fees. Why? Often when ticketing companies go head-to-head to win a venue client, they offer up large upfront payments to win the deal. The six- and sometimes seven-figure payouts have to be recouped and in order to repay the large advances, ticketing companies have to charge higher fees, a cost that is passed on to fans. As competition continues to rise with SeatGeek getting aggressive for more deals, expect the payouts and the ticket fees to continue to rise.

4. The Landscape Might Be More Competitive Now Than It Was in 2010

The executive who represented AEG in its negotiations with Ticketmaster and the DOJ is now AEG’s biggest competitor. Former AEG CEO Tim Leiweke was a key player in the consent decree negotiations, which ultimately required Ticketmaster to license its technology to AEG for free while it built the AXS ticketing platform with the help of Cirque du Soleil-owned Outbox.

But today, Leiweke is a thorn in the side of AEG. In 2013 he was fired by owner Phil Anschutz and, after a brief stint with Maple Leafs Sports and Entertainment, created his own company OVG that has partnered with Live Nation and now competes with AEG for shows and arena development deals. 

So was the deal negotiated by Leiweke and others effective in increasing competition in ticketing? It depends who you ask. Major League Baseball-owned Tickets.com was making a big push to enter the arena business around the time of the merger, but was largely sidelined as a result and now focuses solely on baseball. Same goes for Paciolan, which was spun off by Ticketmaster as part of the merger agreement and has largely avoided the arena space to focus on college athletics and performing arts.

There are also more players in the ticketing space with larger client bases now than there were prior to the merger. Before 2010, there was no competitor to Ticketmaster that had as many major arena clients as AXS. Nearly all of AEG’s venues now use AXS and it was the first ticketing company to sign an exclusive agreement with Red Rocks in Colorado.

Same goes for Ticketfly, which after merging with Eventbrite in 2017, is the most dominant ticketing company in music’s middle market of independent venues, festivals and theaters. Ticketfly has seen exponential growth over the last decade by positioning itself as the alternative to Ticketmaster and encouraging promoters and independent music executives not to do business with a ticketing firm owned by their competitor Live Nation. 

And, finally, keep in mind that since the merger, secondary ticketing companies StubHub and SeatGeek have emerged as players in the secondary market. In the last year, SeatGeek has signed away Major League Soccer, the Dallas Cowboys and the New Orleans Saints and Pelicans from Ticketmaster.

5. Promoters Make More Money Playing Buildings Where They Control the Ticket Software

Taylor Swift’s Reputation Tour will be one of AEG’s biggest tours this summer, but it’s not being ticketed through the company’s AXS system. The entire tour was ticketed using Ticketmaster.

After all, it’s Ticketmaster that has the contract with 31 of the 32 teams in the NFL and Swift is mostly playing football stadiums this summer. And, unlike AXS, Ticketmaster has deployed the high profile Verified Fan program which helped Swift bank millions in ticket sales while also moving millions in merch and scoring the only album in 2017 to sell over 2 million units.

Both AEG and Live Nation regularly use each other’s ticketing systems when playing the other’s buildings, although there are significant incentives for each promoter to play as many buildings as possible where they control the ticketing system. By controlling the ticketing platform, promoters can collect additional fees, utilize data from their system to market tickets to fans and have a better understanding of who is attending their concert.