Why The Live Nation-DOJ Lawsuit Missed The Mark

Ticket Master does not set ticket prices Ticket Master does not set fees and so as much as fans in particular love to beat up on Ticket Master for high prices and junk fees and so on actually they're not really responsible for any of that I don't think any sensible person ought to assume that by breaking up the largest ticketing platform and the largest concert company will cause ticket prices to be any lower than they are now if this is about pricing let's start with regulating the secondary Market we may have in this case a once in a generation opportunity to reinvent the way the live music business system works it's been a few months since the Department of Justice filed its lawsuit against Live Nation Ticket Master the lawsuit claims that Live Nation Ticket Master monopolizes markets across the live concert industry and is calling for the two companies to be broken up now there's lot to dig into here after reading this lawsuit but it's also a great opportunity to take a step back and look at all of the factors that affect the live entertainment industry and one of the biggest ones is the secondary markets and looking at the role that companies like StubHub and SeatGeek and vivot seats play and the resellers that use those platforms and how they can shift the entire economics of the market but also The Fan Experience when they can buy up tickets that would otherwise go to fans set them for much higher prices which can lead to a very distorted Fan Experience especially for these highly sought after shows like Bad Bunny Beyonce Taylor Swift and more and that's just one of the several factors that influences things we talked about a whole bunch of them on this episode and I'm joined by Larry Miller who is a professor from NYU he runs the steinhardt program which focuses on the music business and he recently wrote a oped in variety which talks about this Live Nation doj lawsuit in col some of the issues into question he was the perfect person to have on to break this all down with I really enjoyed this conversation so let's dive in all right today we're here to talk about Live Nation doj in this ongoing lawsuit and drama and we're joined today by Larry Miller from NYU first time on the Pod welcome yeah I'm so glad to be here Dan what took us so long but here we are we've had so many conversations in other settings so it's about time that we actually had this one and we're having this because you recently put out a oped that you had shared in variety about this lawsuit last year we had did a panel that you invited me to you hosted it down in La Zack eer was on the panel Jonathan Daniel from Crush you had Dana Frank as well and it was a good conversation and your piece reminded me a lot of the Viewpoint you made the argument that the doj's case against Live Nation and Ticket Master breaking up has some holes in it and probably needs a bit more taking a step back to understand what's really going on you got a lot of feedback on it especially on LinkedIn I saw you apply to a lot of the feedback before we get into the merits of the piece let's talk about the feedback you received because I'm sure you probably received a fair amount privately as well what was your take do you feel like it landed the way you expected it to I did when first of all thanks for reaching out and connecting on this topic you and I have talked a lot about lots of issues in recorded music and music publishing and streaming and rates and phandom and all sorts of things probably never would have come around to doing an oped about Live Nation or ticketing were it not for the doj case and I read the case and over the last couple of years in academic classes that we run at NYU about the live business when we talk about ticketing and when we talk about Ticket Master and the other platforms and when we talk about Live Nation as a competitor one of the things that we always have to explain is what live nation's business model actually is and what Ticket Master does and what they're really good at which is selling a lot of tickets really fast in 99% of the time having that work well and implementing the requirements of the artist and the artist team and the promoter in venue Ticket Master which has absorbed the ire of music fans for decades what they get is something on the order of 5 to 7% of the ticket price for the service that they provide Ticket Master does not set ticket prices Ticket Master does not set fees fees are set by venues and promoters ticket prices are set by artists and their managers and agents the artist team Ticket Master is like a massive war room that is really good at implementing all of that stuff really well very fast over and over again at scale and so as much as fans in particular I think love to beat up on Ticket Master for high prices and junk fees and so on actually they're not really responsible for any of that stuff and look it's not like Live Nation isn't a very aggressive competitor a very aggressive competitor they are but but does this Merit the level of uh antitrust litigation that they're needing to deal with now I'm I'm not sure about that I think part of the increase for the height and scrutiny with this too came after the Taylor Swift on sale and the crashing of Ticket Master during that the challenge though was that there were other ticket sellers that had Taylor Swift tickets that they put on sale as well and their systems also crash I'm talking specifically about SeatGeek so this wasn't just a problem that was native to Ticket Master itself but then more broadly that heightened some of the frustration that people had because people talk about how high the ticket prices are and how inaccessible it is but at the end of the day this is a product that is underpriced a lot of consumers may feel that they're high they may feel that The Ticket Master and other primary resellers are selling them at high prices but we haven't even talked yet about the secondary Market which adds a layer onto this that depending on who you ask some people feel like it meets the market where the demand is other feels like it increases the price and it does flip the economics in a way that it's truly hard to think about for any other industry I was looking back at some old articles there was one from 2013 New York Times article that was talking about how there are few other Industries like ticketing where the product itself is so underpriced that you have literally a business next door that is going to double that price and then sell it so essentially you turn the primary seller of the ticket into almost a wholesale or a B2B company that then sells it to the more consumer facing platform which is the secondaries and that just leads to all these issues because the secondary Market isn't regulated if you want to talk about fees those companies often take a higher take rate for the particular service that they have and especially concerts even more so than Sports the frequency of people seeing their favorite artists is much less frequent especially as more and more demand increases for these tickets it's not that I think that any of the merits from doj don't have warrant but I wish that the arguments were more focused on having a true understanding for how this really works and the outcomes that would happen from the intended requests from this lawsuit and other issues and complaints that have been publicized yeah the headline in my variety up at about this was that if the doj is successful in forcing a breakup of Live Nation the concert business and Ticket Master the ticketing business which it has owned since 2010 after the Obama doj approved that merger with some modifications and relative ly light consent decree that we shouldn't expect ticket prices to go down if High ticket prices is one of the drivers of interest in this antitrust case I don't think any sensible person ought to assume that by breaking up the largest ticketing platform and the largest concert company will cause ticket prices to be any lower than they are now I did suggest some other remedies that might more directly cause uh ticket prices to become a little bit more affordable but breaking up Live Nation and Ticket Master is not one of them agreed and if we look at the history of doj and antitrust pushes to break up companies when have they ever led to lower prices you could go back to Standard Oil in 1911 sure there may be some increase competition in different areas but one a lot of those companies just were secretly owned by the same person and two it didn't lead to that intended outcome but then even more recently but 40 plus years ago when AT&T broke up as well there were cheaper calls for long distance but not for the local calls which is where a majority of them were so one business couldn't subsidize the other and I think something that gets missing here is I understand there's thoughts that the lack of competition in certain areas it doesn't necessarily lead to lower prices because the economies of scale of these types of companies allows for the consumer to enjoy the lower prices which is how these companies got scaled to begin with if you go back to the 90s with sfx and before a lot of the concert promotion companies combined together to then form what we now know as Live Nation this was a very fragmented industry that there's a very weak history of breaking up companies and then that then actually leading to lower prices for consumers yeah fair enough I've been thinking a lot about AT&T lately I worked there in AT&T Labs research just after the so-called Tri vesture When AT&T went this way and loosen went that way and of course the longdistance business did what it did and we had the creation of the various Regional Bill operating companies but what is today Verizon was one of those for example but anyway we digress and I don't think anybody's telephone service has has declined in price and maybe that is a topic for another day on the other hand when I went to write the piece and variety agreed to put it out there in Fairly short order I really expected a fair amount of push back especially from my friends in the independent promoter community and the Nea people who are part of my life and part of my network and honestly I didn't hear from anybody in that Community I heard a lot as you pointed out on LinkedIn especially from people who were were supportive and they appreciated the the peace and so on but I expected more direct criticism and I didn't get any at all you really didn't the people that are really in it do understand how the industry works but for some reason that hasn't translated to Congress that hasn't translated to the hill and these are very smart people that understand how bills work how laws work and you need to understand who sets what for pricing but that hasn't translated to lawsuits or push from a legal perspective that reflects an understanding for how this business Works unless I'm missing something but what's your take on that my takeaway is that everybody hates Ticket Master and Live Nation is in the minds of many regulators and politicians and perhaps many fans too darn big and that somebody should do something about that with all due respect to Senator clob Bashar and the others on the committee and their staffs that Live Nation is being used as a political football to score points in this Administration and although I am not an expert in antitrust law I'll be surprised as this litigation goes on to see whether in this Administration or perhaps the next one whether the suit is successful and forces a breakup or not and again if primary ticket pricing is a primary complaint here then nobody should expect uh tomorrow to look very uh different from today and to be clear uh I do believe that uh regulating the secondary Market is essential in reigning in prices in the primary market and although I have not done a gigantic amount of research and Analysis on that point it stands to a reason that artists want to play to full houses that are packed full of real uh authentic fans and that many artists especially many larger artists tend to underprice in the primary Market tickets to ensure that that the the on sale goes clean and that they're playing to real fans on the other hand the secondary Market in the United States is uh almost completely unregulated the secondary Market including StubHub and SeatGeek have organized very well on Capitol Hill and in state capitals to ensure that secondary market sales of sports and concert tickets can happen in an utterly and uncontrolled way and when that happens especially in music I think it's clear how much value is being hoovered up by the secondary Market players who are taking no risk they are investing no capital in building better buildings or in providing better fan experiences in the venue they're just operating a two-sided Marketplace and in some cases like when the biggest artist in the world goes on tour and the demand for those tickets is virtually infinite we get the result that we got and I think the many fans and many parents of fans wrote to their local uh Congress person or uh senator in uh especially in uh Minnesota and we are now seeing the result of that the regulation on the secondary Market especially on the price cap for tickets is something that we've seen in other countries in other parts of the world Australia has this UK has this to some extent but the strongest example is probably in Australia where the secondary market prices are capped at 10% above the primary ticket value there and they had Taylor Swift tickets less than $200 for some of the shows which is maybe a fifth or a tenth of the price of what we saw in other markets and there are reports of tayor Tourism that was fueled by by that pricing imbalance and that there were people who bought plane tickets to Western Europe or to Sydney or to someplace in Asia and went to C Taylor and those places and actually spent less than they would have had they gone to see her in say New York or Los Angeles and I think we're going to continue to see that just based on the way things are going the demand for these once in a generation artists that go on every 3 to four years in these Mega stadiums around the world those events become more exclusive and the price for those just continue to increase as a result and one of these things where there's constant options and more and more artists trying to go on tour more things in general competing for your attention that just drives more attention to these Taylor Swifts and beyonces these Mega Stars so unless there is regulation there I don't see that happening or changing but I do want wonder if we will see some type of shipped and Tide about the secondary resellers too but as you mentioned as well their lobbyists are strong I think part of the history and journey of StubHub is having success getting these laws change in Pennsylvania in New York in Florida and major States like that I think there are many parts of the entertainment world that you could Circle and lean back to okay why does this challenge still exists because of strong lobbyist and I think that ticketing can remain one especially if we continue to direct attention in the areas where if we're trying to solve the problem are we really focusing on the right area because another thing that I think about too is we talk a lot about the supply and demand piece so let's say Taylor Swift went on tour four times a year as opposed to once every four years the ticket prices will probably look a little bit different but she's one person it's hard for her to be like the New York Yankees and play 81 home games a year it's just not how these things work but still even if you increase the Supply I do think that would help to an extent but we're still in rare territory where I think that live concerts experience this even more than sporting events do yeah yeah and I think we understand what some of the drivers are for why that is the case at the very top end of the live concert Market especially now that music itself is like a utility to quote and plug my friend Lars Murray's podcast Unlimited Supply music is just just it's everywhere and it's in everything and David Bowie once said that music would flow like water and it certainly flows more like a waterfall today we are drowning in it and yet to have that unique unduplicated unless you go on tour with the artist experience is something that fans value a lot but I don't think this is just the case for the the tailor and Beyonce of the world this is what the live business has become and when we layer on the tools and communication platforms that we have today in social media and everybody wants everybody else to know what great places and experiences they're having it metastasizes the entire Dynamic and so I don't see that changing anytime soon but to be fair Taylor Beyonce Springsteen the handful of other artists who face virtually infinite demand still represent only a tiny fraction of the artists who go on tour every year and I think much of the content in the case is less about the Superstar touring acts and the way ticketing works for those people as it is for how it works with promoters and venues and how booking actually works and trying to cure a very complex highly Dynamic live music ecosystem I don't know that this case is going to be able to do that one of the things that I point out in the oped is that if this is about pricing let's start with regulating the secondary market and then reverse engineer the the rest of this but we may have in this case a once in a generation opportunity to maybe reinvent the way the live music business system works and for me I would rather do it in the marketplace than see it forced as a result of any trust litigation and maybe you can talk to an actual lawyer about that someday but I don't really see the merits of the antitrust case as it's as it's written and about to be prosecuted agreed you mentioned the venues and the contracts that the primary ticketing companies have and the one part of the case that they did allude to was the barklay center situation and for those listening that was one of the examples where a Ticket Master had a ongoing relationship with the barklay center in Brooklyn as the primary ticketing company for that venue this is the area that has become much more competitive since the 2010 merger and in 2021 the group that owns the Barclays announced that they would be switching from Ticket Master to SeatGeek seek of course started as a similar competitor to Stubhub by focusing primarily on the secondary Market but sgeek wanted to disrupt the primary as well and they had the exclusive partnership with barklay Center to do that but after just over a year they announced it in an early 2023 Barclays was going to be switching back to Ticket Master which it has and has now been The Ticket Master for over a year now there's a few things to dig into here because on one hand the folks at SeatGeek claimed that there were some retaliatory efforts because there were a number of arena show level concerts that could have been promoted and hosted at the Barkley Center but weren't because the years before there were dozens of shows that had happened through the calendar year but there were only 13 that had happened in that time span that sege had the exclusive partnership with Barclays there the push back on that which Live Nation and others have said is that se Geeks technology wasn't up to the task and up to the requirements that the barlay center owner group would have wanted what's your thoughts on that whole situation so on the Barkley's case one we learned and I think sege learned that primary ticketing is harder than it looks this is not easy folks do not try this at home especially if you're a secondary market player trying to move into the primary Market the second part of this I think addresses the consent decree that was part of the approval for the original merger and there has been a monitor looking over live nation's shoulder to help ensure that retaliatory measures were not being taken and that Live Nation was in fact complying with the consent decree and I don't know if I'm Michael rapino or anybody at Live Nation or Ticket Master New York although I'm going to compete hard to ensure that my services of available at every venue and at every point of presence possible that I'm also going to make sure that I'm not going to trip over my own feet and and cause the the doj or anybody else to cry and I'd be curious to hear what se's other partners in this business had to say they have a few exclusives with the Dallas Cowboys with the Washington commanders but you're right I think that the ease of creating events on online and having people purchase events on Eventbrite or even on Luma and platforms like that had people overestimate how easy it is to just say oh here's the inventory here's how many tickets I'm selling to this event and this is where the venue is and I do think that ticket masters technology to pull this off gets a bit overlooked it doesn't have that same connection where I think that the average consumer could probably understand I may not be able to create the network effects of an Amazon Walmart plus has tried to do it for years and is gotten better but still hasn't quite gotten there I just can't create my own Shopify page and replicate Amazon but for whatever reason people think that it's easier than it looks and I know that whether it's song kick and other companies have came through and challenged the Live Nation Ticket Master but more specifically Ticket Master in this space but I'm with you I think this is a hard business and it isn't as black and white as yes these concerts that would have otherwise been at Barclay's in 2023 we're not there in 2023 because of retaliatory efforts I don't know if that's necessarily something that's as easy to prove I know that is probably one of the points of the case that they feel like may be stronger than others but it'll be interesting to see how that one plays out yeah and while we're talking about the other primary ticketing platforms I think dice is a fantastic product do you use dice yeah I do and they've been partners of the show and their whole concept which which came from the UK is there is no extra margin to capture on the resale whatever you pay you're going to sell it for that price and you're going to sell it for that price to another fan and I think they've gotten good Traction in a number of different cities since they've launched it's an approach that I think is much more common in other countries than than here it's a fantastic product dice works very well if what you want to do is just ensure that your ticket goes to another fan and that you're not making a living off of the Delta between what you paid for the ticket and what somebody else may be willing to pay so kudos to dice let's say that you were the live event Cesar and you had the ability to wave a magic wand and fix one thing about this business what do you think you would change boy uh there's a long list but I I would start with regulating the secondary Market honestly uh I do think that there is a strong correlation between secondary market demand pricing and its impact back in the primary market and that will do more than anything else to make for a fairer live music ecosystem so I would if I had to pick one thing I would probably start there and then I would move on to food and beverage and like making the overall Fan Experience quite a lot better than than it is in some places would artists raising their prices to meet the demand more so than underpricing the demand and in many ways by raising their prices eliminate the margin that the secondary resellers can have does that fall anywhere in your line in terms of what a potential solution could look like I don't think so because on the one hand artists want to price their tickets fairly but they also want them to be accept ible to people who don't run their own gigantically successful podcasts or work at a hedge fund and I think it's in it's in the artist interest to ensure that your average fan can afford to go to a show rightly or wrongly if it was only about Revenue maximization then we might be talking about a different answer but I don't think it's just that I think that they want to ensure that there are real fans in the seats and and authentic fans who care about them and their music and know something about it can actually get a ticket I think that's fair and I lead there too because I do know that raising prices is probably a pure economic answer that doesn't take into account the broader experience with this because then you price it out and then it doesn't necessarily become your most passionate fans it becomes your wealthiest fans who also have enough passion to want to see you if the prices are too high then it becomes something like the Super Bowl where it just becomes a bunch of corporate tickets if I was live event Zar as well I do think that capping the resale is the best way to do this and I know that would take a considerable hit to the secondary business but again those businesses don't have as much stake in the game we recently did a StubHub breakdown episode on trapital in the beginning those businesses were started because of how inefficient and Shady the resale process was if you had season tickets to something you couldn't go to a show you either had to Hope a friend could do it or have someone scalp a ticket on your behalf in front of the stadium and then people don't know if they can trust that person it's a shady type of business so I get that was the intent at the time but it's now morphed into this thing where in terms of the revenue that's generated from those businesses I think more of it comes from the Bots and the touts that are looking for profit and arbitr opportunities more so than a genuine fan that can no longer go and now wants to sell it to someone else I noted that the StubHub IPO has been delayed again until after Labor Day I saw it was the day labor day yeah sometime later this year and I wonder if this Live Nation litigation and the possibility of any regulation of the secondary Market might be having any kind of an overhanging effect on on the StubHub IPO I don't know that's a good question the public reason that they've given is that it's a tough IPO market right now which is fair interest rates are high this isn't 2020 and 2021 anymore companies like stripe and others have been waiting on their hands as well for their own IPOs but Reddit had a pretty successful IPO this year so it clearly isn't impossible to do but the irony of a potential StubHub IPO wild Live Nation Ticket Master getting sued by the government for something that the secondary Market is also responsible for is a very unique level of irony yes just wondering about it out loud here on the trapital podcast Larry before we close things out anything else on Live Nation Ticket Master doj oh let's see we covered a lot of territory I don't know if you're good I'm good would be happy to hear from trapal listeners on this who might whether agree or disagree yeah I'm interested too we'll definitely plug this one with Sharon the newsletter get a sense for where people stand on this as well and on all aspects of it the seeking piece of it the consent decree whether we'll see the extension of that there's so many layers to dig into this and it's an ongoing topic we'll be interested to see where it continues but Larry thanks again for coming on this is a pleasure thanks for having me Dan see you soon [Music]