The Daily - The Government Takes On Ticketmaster

Episode Date: May 30, 2024

Over recent years, few companies have provoked more anger among music fans than Ticketmaster. Last week, the Department of Justice announced it was taking the business to court.David McCabe, who covers technology policy for The Times, explains how the case could reshape America’s multibillion-dollar live music industry.Guest: David McCabe, a technology policy correspondent for The New York Times.Background reading: The government is accusing Ticketmaster’s corporate parent, Live Nation Entertainment, of violating antitrust laws.Here’s a guide to the emails at the heart of the government’s case.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

Hi, everybody. It's Sabrina. Before we start today, we wanted to invite you to something special. The Tribeca Festival is starting a brand new annual gala to celebrate excellence in audio. For this, the inaugural year, they've chosen to celebrate the daily. We know you, our incredible audience, live all over the world, but we'd like to invite you to join us. The gala is in New York on June 9th at 5pm. You can get all the details and buy tickets at tribecafilm.com

slash the daily. That's tribecafilm.com slash the daily. I'll be there, Michael too, along with a bunch of us from the show. Mo Rocca is going to host it. So if you're in the area or you're visiting, we'd love to see you there. Okay, on with today's show. From the New York Times, I'm Sabrina Tavernisi, and this is The Daily. I have got a bone to pick, as usual, with Ticketmaster. The biggest problem that I have

right now is not getting tickets to the Eritor. Loading, loading, loading. One, I'm so bad. One, I'm so bad. One, I'm so bad. Oh, nope. I looked at my account and the tickets are gone. Over the past few years, few companies have provoked as much anger among music fans as Ticketmaster. I literally hate Ticketmaster. Like, there is no company I think I hate more than Ticketmaster. Ticketmaster ought to look in the mirror and say, I'm the problem. It's me. Last week, the Department of Justice announced it was taking the company to court. Today, my colleague David McCabe on how the government's case could reshape America's multi-billion dollar live music industry. It's Thursday, May 30th.

So, David, good to have you back. You have become a beloved guest at The Daily because the government keeps bringing these huge antitrust cases, and we keep turning to you to explain them. Well, it's a pleasure to be back. And today I have a question for you, which is, what was the first concert you ever went to? Oh, my gosh, the first concert I ever went to. Oh my God, I think it was Van Halen in the 1980s, which maybe is before you were born? You know, no comment, but that's a pretty good first concert. And the case that we're here to talk about today is actually all about shows like a Van Halen concert in 1980. Okay, I'm ready. So let's get into it. This case, as you and I both know, is about Ticketmaster. So tell us about this case.

So anyone who attends concerts regularly or even irregularly probably knows about Ticketmaster. It's kind of the ubiquitous digital box office. And those people are probably also familiar with the ubiquitous fan complaints about Ticketmaster. That the company puts high fees that they don't entirely explain onto tickets, that tickets will sell out really fast during these sort of frantic pre-sales for tours, and that the website doesn't always work very well.

And probably the most infamous Ticketmaster incident in recent memory was a couple years ago when the pre-sale began for Taylor Swift's massive Eurus tour. And fans got locked out, couldn't get tickets, and were absolutely furious. And it really put in the spotlight the power of this company over the ability to buy a ticket to a live music event. So the DOJ is pointing the finger at this company for all this consumer angst, at Ticketmaster. Well, and when you say this company, it's not just Ticketmaster. It's the company that owns Ticketmaster, a company called Live Nation Entertainment. We'll say Live Nation for short.

And it's a giant company. And to think about just how gigantic and how expansive Live Nation is, I think it's helpful to think about the fan experience of going to a concert. It starts with buying a ticket. And maybe you buy a group of tickets for you and your friends.

And then one of your friends can't make it, they got other plans, you resell their ticket so you can make your money back. And then one of your friends can't make it, they got other plans, you resell their tickets so you can make your money back. And then the day of the show, you go, it's this big production, it's at a venue, someone has booked the artist to appear, you go, you buy a beer, you have a good time.

Live Nation is involved in many parts of that process. And that starts with being a major concert promoter. They're the one putting it on, arranging the event. They're also selling the tickets through Ticketmaster. Sometimes they're also involved in reselling the tickets when your friend can't make it. And not only that, they actually sometimes manage the artists and they own or operate the venues where the show is happening.

So even down to that beer you're drinking to enjoy it with the show, they might be involved in picking the person who sells that beer to you. So basically, they're everywhere. They're everywhere. And the Justice Department says that's a big part of the problem, that its power is bad for fans. Good morning. Earlier today, the Department of Justice... And we really heard that come through at the press conference last week

that the Justice Department held to announce this case. People always remember the first time that they were transformed by live music. Where Merrick Garland, the Attorney General, really personalized this issue. I still remember, as a senior in college, going to a Bonnie Raitt concert and seeing... He told this story college going to a Bonnie Raitt concert and seeing... He told this story about going to a Bonnie Raitt concert in college.

Merrick Garland did? Yeah, Merrick Garland did. I don't think of Merrick Garland and Bonnie Raitt together in the same sentence. Well, apparently in college, he attended a Bonnie Raitt show. And the thing he highlighted was that the opener was a young Bruce Springsteen. We all know that we had just seen the future of rock and roll. And in that story, the attorney general seems to be getting at two important threads of this case. The first is that concerts are formative for the people who attend them. And the second is that concerts are an important way that artists reach their fans, that young Bruce Springsteen went on

to now be one of the biggest touring artists in the world. The Justice Department filed this lawsuit on behalf of fans who should be able to go to concerts without a monopoly standing in their way. We have filed this lawsuit on behalf of artists who should be able to... And so the Justice Department is responding here to a feeling that Live Nation, this giant company, has become a gatekeeper for both artists and fans.

And that has allowed it to pay artists less sometimes, but also charge fans those fees that they're so mad about. It is time for fans and artists to stop paying the price for Live Nation's monopoly. Thank you. the price for Live Nation's monopoly. Thank you. So help us understand how things have gotten to this point, where Live Nation is so powerful that the DOJ feels the need to sue them. Well, this company has a long history of tangling with the Justice Department. And that really starts in 2009, when Live Nation and Ticketmaster announced that they were going to merge. And this merger, this big corporate deal, will marry Live Nation's concert promotion business, the business of putting on shows, with Ticketmaster's experience as an online ticketing

platform. And the Justice Department, a big part of its job, is looking at corporate mergers to figure out if they will substantially lessen competition in the economy. So the Justice Department reviews this merger and in 2010 decides we will let this merger go through, but we do have some concerns that it might reduce competition in the industry of ticketing. And so we're going to reach a legal settlement with Live Nation and Ticketmaster that puts conditions on the deal that requires the company to sell some assets to kind of lessen its footprint. And so the merger goes through and that creates the sort of modern day Live Nation Ticketmaster combination. So the government ultimately actually just lets it happen. That's right. They put conditions on the merger, but ultimately they let it go through.

And the company continues to tangle with the Justice Department over the next 15 or so years. But mostly they keep getting bigger. They keep growing their footprint across this ecosystem that creates some of the biggest concert tours in the country. So just how big has the company actually become? Give me some numbers. Well, let's start here. Every year they sell about 600 million tickets. 600 million tickets? That's more than the number of people in the United States of America.

Yeah, and that is a global number, but it's a lot of tickets, right? The Department of Justice estimates that in the United States, Live Nation controls about 80% of ticketing to major venue concerts. Wow. So that's a big percentage. They also own or control like in excess of 250 venues, including a big percentage, the Justice Department says, of major amphitheaters, the kind of big outdoor concert venues that

are ultimately kind of in between a nightclub and the size of like a big football stadium. And they manage hundreds of artists. They have this direct relationship with artists. And so this company is wide and it is deep into this industry. So ultimately, the Justice Department says that, and I'm going to quote here, it's the quote, gatekeeper for delivery of nearly all live music in America today. Okay. It's big. But as we know from other DOJ cases, and this is something that you have taught me, David, the cases, you know, against Apple and Google, just being big is not in and of itself a problem. That's right. Where companies run afoul of the law is when they use their power as a monopoly against their competitors in order to stay powerful or get more powerful.

And the Justice Department says that Live Nation has built a complex machine to do just that. We'll be right back. So what does the DOJ say that Live Nation is able to do because it is so big? How does it use its bigness? So the most prominent allegation is that Live Nation uses its power as a concert promoter to entrench its power in ticketing.

As a reminder, when you put together a concert, a promoter works with an artist to book the show. They book the show at a venue, and that venue, for all of its shows, has to choose a ticketing provider, right? A digital box office where people can buy their way into the shows. And what the Justice Department is arguing here is that Live Nation is able to wield its big artists, the tours that it promotes, as a cudgel to force venues to use Ticketmaster, its ticketing service.

So the Justice Department says that in an instance in which a venue switched away from using Ticketmaster, that Live Nation routed tours around that venue, which of course means less money for that venue and a problem for their business. Interesting. So basically Live Nation saying, look, if you want Taylor Swift in your little amphitheater over there, you're going to have to use Ticketmaster. It's Ticketmaster or no Taylor Swift.

That is effectively the behavior the Justice Department is arguing has happened here. They're saying that Live Nation does this in veiled ways and that more importantly, it's really understood by venues throughout the industry that if you don't use Ticketmaster, that you really risk out on losing important Live Nation managed tours. And that once these venues do choose Ticketmaster, Live Nation locks them into these long, exclusive ticketing contracts, which can last for as long as 14 years.

14 years? That's pretty long. What else is DOJ alleging that Live Nation has done? Another thing the Justice Department says that Live Nation does is use its power as an owner of venues to get away with paying artists less money for their tours.

So how does that work? Basically, the argument is that because Live Nation controls so many of certain types of venues, that there are instances in which an artist tour might largely be dominated by Live Nation- so many of certain types of venues that there are instances in which an artist tour might largely be dominated by Live Nation-owned venues. And the Justice Department is saying that Live Nation knows that artists don't have a lot of other options

for where to play their concerts, and as a result, is able to pay those artists less because there's not competitive pressure when they're booking those tours. That seems pretty unfair to artists who would really benefit from other venues owned by other people competing for them. And that's exactly what the Justice Department is saying, that artists lose out, not just fans. And there's a striking story in the complaint that I think crystallizes how the Justice Department sees these streams of power coming together. And it concerns a concert,

which the lawsuit doesn't name, in 2021. My colleague Ben Cesario has reported that it was a Kanye West concert featuring Drake. It was a benefit show, and it was taking place at the L.A LA Coliseum in Los Angeles. Okay. One of the companies involved in putting on the show was a firm called TEG. They do promotion and ticketing of the kind that Live Nation does. And the government says that Live Nation saw this as a threat, that they saw this company, TEG, involved in the show, and they were worried about what it would mean for them. And that they then undertook steps to put pressure on TEG and

make their life difficult in a couple ways. The first was that TEG had reached a deal to sell some tickets, according to the complaint, through StubHub. StubHub, it's a secondary resale market. You know, you can buy tickets to shows when people aren't going to use them. Right. And competitor to Ticketmaster, right? And competitor to Ticketmaster. And the Justice Department says that Live Nation found out about that and said, well, we have the exclusive ticketing contract for this venue. And so we will make sure that if you bought your ticket on StubHub, you won't be allowed to come into the show. Really? Like they couldn't come into the concert?

Well, and ultimately, the complaint says that StubHub had to work with Ticketmaster to fulfill the tickets that had already been sold. They stopped selling new tickets and that hundreds of people who bought their tickets on StubHub didn't get into the show. That seems very unfair. Like they bought a ticket. Well, and according to the Justice Department, it didn't stop there. That Live Nation used its industry connections to pressure an investor in TEG, this company that it viewed as a threat, and that it pushed that investor to pull back from its relationship with TEG, which obviously would have weakened this potential competitor.

So these are very strong armed tactics. What is the DOJ saying is the result of all of this? Like, what does all of this amount to? It says that all of this adds up to higher fees for consumers and a worse product, a worse quality ticketing experience when fans go to buy. Because Live Nation doesn't have to compete with anyone. It doesn't have to innovate in response to competitors. So among other things, the Justice Department wants to break this company up at the very least by separating

Ticketmaster, the ticketing unit, the box office unit from the rest of Live Nation that does all these other things, promotes concerts, owns venues, etc. So in other words, go back to the way it was in the beginning. Yeah, or as much as you can. And why does that fix the problem? Well, the Justice Department doesn't say a lot on this point, but it's clear that what they want to do with this lawsuit is disrupt this cycle where Live Nation's power reinforces itself again and again and again.

And what does Live Nation say in response? I imagine they disagree with all of this. They do. They've said a lot. And they start out by saying something that will be familiar to you because other companies that have been accused of antitrust violations say it as well, which is that they don't fit the profile of a monopoly. That their overall profit margins are lower than those of companies like Meta or Apple or Google.

And that even if you look at Ticketmaster specifically, they take a smaller percentage of every sale than a lot of other digital platforms. So they say, basically, the numbers show that we don't have the kind of power you would normally associate with a monopoly. And then they say, listen, we know that there are things that fans don't like about the ticketing experience. There may be fixes to those, but largely, it's not Live Nation's fault, they say.

They say that artists generally set the prices they want people to pay for tickets. Really? So artists themselves do it? Right. That artists sign off on how much a ticket will cost to their shows. Uh-huh. And they also say that demand sometimes drives ticket prices up. If there are more people who want to see a show than there are seats or standing room to see that show, the prices will be higher. And finally, they say that there's this kind of pernicious outside force of scalpers, people who resell tickets that use bots to hoover up way more tickets than they could possibly use and then resell them at a higher price. And so they say that all these things

may contribute to a fan experience that people don't like, but that it's not necessarily Live Nation's fault. I mean, to me, this makes certain sense. I guess if you think of, you know, a Taylor Swift show and lots of people trying to buy tickets, you know, one reason why those tickets are expensive is not necessarily because there's something nefarious going on, but because lots of people want to buy tickets and there's a market and, you know, supply and demand has a role here. that I have that other people have asked is, how much does the Justice Department think ticket prices have gone up because of this alleged Live Nation monopoly? And the Justice Department hasn't answered that question. They haven't disentangled it with all of the other stuff that's around, market forces, everything.

That's right. And there's another element of Live Nation's response that we should mention, which is that the company basically says this lawsuit is politically motivated, that this administration, the Biden administration, is bringing lawsuits that don't hold a lot of water but are anti-business. That's what Live Nation is saying. I mean, it does sort of ring true in some sense, right?

This has been the tilt of this administration toward cracking down on big companies. The DOJ has changed in this respect. They're filing a lawsuit to break up a merger that a previous DOJ had actually approved. Well, you're right. This Department of Justice, this administration more broadly, has a different view about antitrust.

They think that antitrust law can be a more expansive tool to address problems in the economy. And they've put that into practice. They've sued Google for violating anti-monopoly laws. They've sued Apple for violating anti-monopoly laws. But I think ultimately what they believe is that they're responding to a change in the economy. That these companies have gotten much bigger, that they have gotten more powerful, and they are responding

to the way the companies broke the law on their way to becoming that big. So David, when you and I talked about Google and Apple, you referenced them here, you know, we talked about how there were broad repercussions for the future on American society. What would you say the implications are in this case? This case, ultimately, for the Justice Department, is about the market for culture and creativity. You know, a few years ago, the Justice Department successfully blocked

Penguin Random House, a big publisher, from buying Simon & Schuster, another publisher. And they said that one problem with this merger was that it would reduce how much authors got paid and that it would create a market where fewer books and fewer types of stories broke through. This Justice Department is embracing an idea that the more concentrated the economy gets, the more it stifles creative expression, the ability of artists to make art and get it to the public,

and the ability of the public to consume it. And that, they say, is a central question of democracy. Because things like music are how we talk about big social issues or big political issues. So that is, they say, what's at the heart of this case. That it is not just about the fees. It's not just about how much an artist gets paid.

But it's about whether or not there is a fair marketplace for ideas. And whether or not consumers are able to access it. David, thank you. Thank you. We'll be right back. Here's what else you should know today. On Wednesday, Supreme Court Justice Samuel Alito declined to recuse himself from two cases arising from the January 6th, 2021 attack on the Capitol. After the Times reported that flags displayed outside his houses appeared to support the Stop the Steal movement. In letters to Democratic members of Congress who had demanded his recusal, Justice Alito said that the flags at his home in Virginia and a beach house in New Jersey were flown by his wife, Martha Ann, and that he had had nothing to do with it. And a group of 12 New York jurors deliberated for more than four hours in the final stretch

of the criminal trial of Donald Trump, in which the former president is accused of falsifying business records. The jurors asked for portions of the testimony from two witnesses to be read back to them, as well as the judge's instructions. They were then dismissed for the day and will resume deliberations today. Today's episode was produced by Will Reed, Rob Zipko, and Rochelle Bonja. It was edited by Michael Benoit and Brendan Klinkenberg. Contains original music by Marian Lozano,

Dan Powell, and Will Reed. And was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. that's it for the daily i'm sabrina tavernisi see you tomorrow