A top executive at Ticketmaster’s parent company Live Nation Entertainment was questioned by lawmakers Tuesday after the service’s inability to process orders for Taylor Swift’s upcoming tour left millions of people unable to purchase tickets late in the month. last year.
Over the course of the three-hour hearing, the senators and some of their fellow witnesses pressed Live Nation Chairman and CFO Joe Berchtold about whether his company was too dominant in the industry, hurting rivals, musicians and fans.
“I want to congratulate and thank you for an absolutely amazing achievement,” Senator Richard Blumenthal told Berthtold. “You have united Republicans and Democrats in an absolutely unified cause.”
When tickets for Swift’s new five-month Eras Tour went on sale on Ticketmaster in mid-November, high demand gripped the ticketing site, angering fans who couldn’t get tickets. Unable to resolve the issues, Ticketmaster subsequently canceled the sale of Swift concert tickets to the general public, citing “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand.”
The fallout from the ticketing fiasco once again highlighted Ticketmaster and its power in the industry, more than a decade after it completed its merger with Live Nation despite concerns the deal would create a near-monopoly. in the field of ticketing.
“In order to have a strong capitalist system, you have to have competition,” said Sen. Amy Klobuchar, D-Minnesota, during her keynote address. “You can’t have too much consolidation, which, unfortunately for this country, as an ode to Taylor Swift, I’ll say, we know ‘very well’.”
Here’s a look at the big takeaways from the audience:
In his testimony Tuesday, Berchtold partly blamed bots for Swift’s ticketing incident.
Ticketmaster, he said, was “hit with three times the amount of bot traffic we’ve ever experienced” amid “unprecedented demand for Taylor Swift tickets.” The bot’s activity “required us to slow down and even stop our sales. This is what led to a terrible consumer experience that we deeply regret.”
Berchtold also defended himself more broadly about his company. He He emphasized that Ticketmaster does not set ticket prices, does not determine the number of tickets that go on sale, and that “in most cases, ticketing and service fees are set by venues,” not Ticketmaster.
He also pushed back on suggestions that his domain has allowed for sky-high fees, citing data from market intelligence firm Pollstar showing that Live Nation controls about 200 of about 4,000 venues in the United States, or about 5%.
Venues controlled by Live Nation set rates that are “consistent with the other venues in the market,” he said.
Entertainment industry insiders and a rival spoke out against Ticketmaster’s dominance of the industry.
Jack Groetzinger, CEO of SeatGeek, claimed that many venue owners “fear they will lose Live Nation concerts if they don’t use Ticketmaster” and its services, and argued that the company should be dissolved.
“Live Nation controls the most popular artists in the world, routes most of the big tours, operates the ticketing systems and even owns many of the venues,” he told lawmakers. “This power over the entire live entertainment industry allows Live Nation to maintain its monopoly influence over the mainstream ticketing market.”
He continued: “As long as Live Nation remains the dominant concert promoter and ticket seller to major venues in the US, the industry will continue to lack competition and struggle,” he said.
Clyde Lawrence, a singer-songwriter on the witness panel, explained how the company acts as a promoter, venue, and ticketing company, consuming revenue from artists. Artists, he said, have no influence on Live Nation.
“Since both our pay and theirs is a part of the show’s profits, we need to be true partners aligned on our incentives – keeping costs down and ensuring the best fan experience,” he said. “But with Live Nation not only acting as a promoter but also as the owner and operator of the venue, these incentives are seriously complicated.”
Lawrence also told Ticketmaster, “we will see a fee of 40% or closer to an additional 50%” of the base ticket price.
Kathleen Bradish, vice president of legal advocacy at the American Antitrust Institute, called Ticketmaster “a very traditional monopoly” and told lawmakers that a lack of competition in the live entertainment industry forces consumers to pay higher prices. .
“Their dominance in markets up and down the live entertainment supply chain creates the incentive and ability to limit competition and protect their market position,” he explained. “Customers pay the price for these monopolistic acts with higher ticket prices and fares, lower quality, less choice and less innovation.”
On the concert side, the company excludes “smaller or independent concert venues and promoters. In digital ticketing, it includes the exclusion of ticket resellers and brokers who provide significant competition through the secondary ticket market,” he said.
Lawmakers repeatedly questioned the US government’s previous handling of Live Nation’s merger with Ticketmaster. It involved a legally binding consent agreement that allowed the company to merge with Ticketmaster as long as the combined company met a number of behavioral conditions.
A 2019 Justice Department review found that Live Nation was not living up to its commitments under the order, but instead of suing, the department modified the agreement and extended it for another five years, according to Bradish of the American Antitrust Institute.
“The DOJ must take further enforcement action to obtain effective structural relief,” said Bradish, who filed for the dissolution of Live Nation under Section 7 of the Clayton Act or Section 2 of the Sherman Act.
Sen. Mike Lee said the way the story has unfolded since the Live Nation merger raises “very serious questions” about the usefulness of federally-imposed consent agreements.
If the current Justice Department concludes that the consent decree has been violated, “undoing the merger should be on the table,” Blumenthal said.
In response to Berchtold’s explanation of the bot problem, some lawmakers questioned the company’s security practices, noting that many small businesses can tell when bad actors infiltrate their systems.
Republican Senator Marsha Blackburn suggested that Berchtold strengthen its cyber protections, get better advice and hire new IT workers to better protect its systems. (Berchtold said the company has invested billions of dollars in security to protect its systems over the years.)
Another Republican, Senator John Kennedy, went further to criticize the company over the issue of Swift’s tickets. He said whoever was in charge of the incident at Live Nation “should be fired.”
In the back half of the hearing, some of the focus was on possible solutions, but there were no easy answers.
Some lawmakers focused on the ability to resell tickets. While this option can be useful for customers who need to switch plans, it can also help boost the reselling market.
When the senators discussed whether it would help to restrict the ability to transfer tickets, the Live Nation executive was in favor. But the SeatGeek CEO said this could only entrench Live Nation’s dominance, as it has the kind of market share that would compel consumers to only transact there in the absence of other resale market options.
– CNN’s Brian Fung and Aditi Sangal contributed to this report.