The US Department Of Justice has filed an explosive lawsuit against Live Nation accusing the live giant of anticompetitive conduct. It asks the court to force Live Nation to sell off - at the very least - its Ticketmaster business.
“One monopolist serves as the gatekeeper for the delivery of nearly all live music in America today”, the 128 page legal filing begins. Noting how Live Nation itself claims to be the “largest live entertainment company in the world”, the “largest producer of concerts in the world” and “the world’s leading live entertainment ticketing sales and marketing company”, the lawsuit adds, "Live Nation is all these things, to the detriment of fans, artists, venues and competition”.
Commenting on the lawsuit, US Attorney General Merrick Garland says, “It is time to break up Live Nation-Ticketmaster. 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”.
Live Nation is already fighting back in the court of public opinion. The company’s EVP Corporate And Regulatory Affairs, Dan Wall, says in a blog post that the lawsuit has been motivated by “intense political pressure” and “a long-term lobbying campaign from rivals and ticket brokers seeking government protection for themselves”.
The DoJ’s legal filing, he adds, “ignores everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity, to 24/7 online ticket scalping that reveals the public’s willingness to pay far more than primary tickets cost”.
When Live Nation and Ticketmaster merged in 2010, the combined business agreed a consent decree with the DoJ which put in place some restrictions on how the different strands of the business would work together. That was to allay concerns that, with Live Nation so powerful in venues, tours and ticketing, its operations would become anticompetitive.
That consent decree was meant to expire after ten years, but was extended for another five amid allegations there had been breaches. Then it emerged last year that the DoJ was again investigating claims of anticompetitive conduct made against Live Nation. It's that investigation that has led to today’s lawsuit.
The legal filing provides various stats about just how dominant Live Nation is in the US live entertainment business.
According to the DoJ, the company manages more than 400 artists; controls around 60% of shows at major concert venues; owns or controls more than 265 concert venues in North America, including more than 60 of the top 100 amphitheaters in the US; and, through Ticketmaster, “controls roughly 80% or more of major concert venues’ primary ticketing for concerts and a growing share of ticket resales in the secondary market”.
It then claims, “Live Nation and its wholly owned subsidiary, Ticketmaster, have used that power and influence to insert themselves at the centre and the edges of virtually every aspect of the live music ecosystem. This has given Live Nation and Ticketmaster the opportunity to freeze innovation and bend the industry to their own benefit. While this may be a boon to Live Nation’s bottom line, there is a real cost to Americans”.
“Live Nation’s anticompetitive conduct has not only harmed fans in the form of more and higher fees”, it goes on, “but also undermines innovation. Competition increases the array and quality of services available and makes it easier for fans to find and see artists they love. Unburdened by competition on the merits, Ticketmaster does not need to invest as much to improve the fan experience”.
Later on in the lawsuit, the DoJ asks the court to confirm the various incidents of anticompetitive conduct that the government department has alleged. The court should also “enjoin Live Nation from continuing to engage in anticompetitive practices”. And then, the most dramatic of the demands, the court should “order the divestiture of, at minimum, Ticketmaster”.
Live Nation has always denied all allegations of anticompetitive conduct. Earlier this week, the company’s CFO Joe Berchtold - speaking at a conference organised by JP Morgan - declared that live entertainment is “a very competitive market, don’t let any of the press reports fool you”.
According to The Hollywood Reporter, he discussed the company's ongoing dealings with the DoJ, before adding, “I think it’s fair to say I continue to believe that we fundamentally have business practices that are fully defensible”.
Elsewhere in his blog post, Wall writes, “It is absurd to claim that Live Nation and Ticketmaster are wielding monopoly power. The defining feature of a monopolist is monopoly profits derived from monopoly pricing. Live Nation in no way fits the profile. Service charges on Ticketmaster are no higher than elsewhere and frequently lower”.
“This lawsuit against Live Nation and Ticketmaster won’t reduce ticket prices or service fees”, he adds, and instead “distracts from real solutions that would decrease prices and protect fans”.
Live Nation has been ramping up its lobbying in the last year as the DoJ investigation has progressed and with renewed interest in the company’s market dominance in US Congress.
Now the DoJ’s allegations are set out in black and white, we can expect even more push back from Live Nation - from lobbyists, in media, and via ‘grassroots’ public opinion influence - as it prepares to fight what could be one of the biggest legal battles ever seen in music, which could have significant ramifications across almost every part of the industry.