Ticketmaster is the dominant primary ticket outlet for major entertainment events in the United States. According to some estimates, Ticketmaster sells over 70% of all event tickets through its website and subsidiaries. This near monopoly over ticket sales has led to accusations that Ticketmaster engages in anti-competitive practices and charges excessive fees.
What is Ticketmaster?
Ticketmaster is a ticket sales and distribution company based in Beverly Hills, California. It was founded in 1976 and has grown to become the market leader in primary event ticket sales. Ticketmaster sells tickets through its website, ticketmaster.com, as well as through subsidiaries like Live Nation and Ticketweb. It has exclusive contracts with many major venues and artists to sell tickets to events.
How much of the ticket market does Ticketmaster control?
Estimates vary, but most experts agree that Ticketmaster controls between 70-80% of the primary event ticket market in the US. This includes the majority of tickets sold for concerts, sports games, theater shows, and other live entertainment events.
In a 2018 report, the Government Accountability Office found that Live Nation, which owns Ticketmaster, processed over 30% of the primary ticketing market. When combined with other Ticketmaster subsidiaries, its total market share is estimated to be between 60-70%.
Some key facts about Ticketmaster’s dominance:
- Ticketmaster is the exclusive ticket provider for over 80 of the top 100 concert venues in the US.
- They sell tickets for 70 of the top 100 concert tours.
- Over 500 artists have exclusive ticket deals with Ticketmaster.
- The company’s competitors, like AXS and SeatGeek, have less than 10% market share each.
So while Ticketmaster doesn’t have complete control of ticketing, it comes close in major entertainment events. The lack of competition has led to monopolistic conditions in many markets.
Is Ticketmaster a monopoly?
While Ticketmaster dominates ticketing, experts disagree on whether it constitutes an outright monopoly under antitrust law. Some key considerations:
- Ticketmaster doesn’t have 100% control of ticketing for all events. Smaller competitors still exist.
- Artists, teams, and venues willingly enter into exclusive contracts with Ticketmaster. They are not coerced.
- The market still has competitive forces and Ticketmaster doesn’t control ticket resales.
However, Ticketmaster has gained enough market power in enough geographic and product markets to engage in monopolistic behavior. The lack of competition enables Ticketmaster to charge higher fees and control pricing.
Many industry experts argue that Ticketmaster has too much market power even if it doesn’t clearly meet the monopoly definition legally. The US Department of Justice launched an investigation into Live Nation in 2018 centered on this issue.
What are Ticketmaster’s main business practices?
Here are some of Ticketmaster’s key business practices that help maintain its dominance:
- Exclusive deals – As mentioned, Ticketmaster signs long-term exclusivity contracts with venues, teams, and artists to be their sole ticket provider.
- Acquisitions – It has acquired competitors like Ticketweb and Paciolan Systems to take over their ticketing business.
- Lawsuits – Ticketmaster has sued to shut down competitors. For example, it sued Ticketfly and SeatGeek to force them out of markets.
- Dynamic pricing – Ticketmaster utilizes variable and surge pricing algorithms to charge market rates, sometimes disproportionately higher.
- Service fees – Much of their profit comes from tacked on convenience, processing, and delivery fees added to each ticket.
Critics argue these practices stifle market competition, inhibit consumer choice, and allow Ticketmaster to charge inflated prices.
Why does Ticketmaster have so much market power?
A few key reasons how Ticketmaster gained and maintains dominance:
- First mover advantage – As one of the first ticket outlets, they cornered the market early on.
- Exclusive deals – Long-term exclusive contracts with venues lock out competitors.
- Mergers & acquisitions – Buying up rivals like Ticketweb expanded their control.
- Anti-competitive practices – Lawsuits and other tactics hinder competitors.
- Consumer inertia – People default to Ticketmaster out of habit and brand recognition.
- Lack of regulation – Antitrust enforcement has been fairly lax in the ticketing market.
Once Ticketmaster gained critical mass in key venues and events, it became self-reinforcing. Consumers default to the biggest ticket outlet and venues go where the consumers are. Rivals have a hard time breaking in, allowing Ticketmaster to solidify power.
Does Ticketmaster violate antitrust laws?
US antitrust laws like the Sherman Antitrust Act prohibit monopolistic business practices. However, Ticketmaster has avoided sanctions based on these key factors:
- No outright monopoly – Ticketmaster doesn’t have 100% control of ticketing for all events.
- Artists/venues choose them – Exclusive contracts are viewed as mutually desired deals.
- DOJ approved the Live Nation merger – Antitrust regulators allowed the Ticketmaster-Live Nation merger.
- Consumer benefit – They arguably provide service/convenience to consumers.
However, their dominance of primary ticketing still raises anti-competitive concerns. Critics argue:
- De facto monopoly – Their market power produces monopoly-like harms, even if not a technical monopoly.
- Abuse of position – They use their power to charge higher fees and block rivals.
- Consumer harm – Lack of alternatives enables overcharging of consumers.
The DOJ is now investigating Live Nation/Ticketmaster again. Their findings could determine if an antitrust case is warranted.
What are the effects of Ticketmaster’s market power?
Ticketmaster’s dominance of primary ticketing produces several effects critics argue are anti-competitive:
- Higher fees – Lack of competition lets Ticketmaster tack on high convenience and processing fees.
- Artificially high prices – Dynamic pricing and other algorithms can be used to inflate ticket prices.
- Reduced innovation – No need to improve user experience due to weak competition.
- Captive consumers – Fans of big artists/teams have few alternatives to Ticketmaster.
- Venue control – Venues lose control of pricing and distribution channels.
While Ticketmaster claims the effects are overblown, most economists agree their market power enables behaviors that wouldn’t exist under normal competitive conditions.
How much in fees does Ticketmaster collect?
Ticketmaster generated over $10 billion in revenue in 2021. The bulk of this comes from service and convenience fees, which can add 25-50% to the base ticket price.
Some example data points on Ticketmaster’s fees:
- Around 30% of every ticket goes to service fees on average.
- $25 tickets can incur $15 or more in fees.
- Dynamic pricing has increased fees for premium events like playoff games.
- Fees generated $5+ billion in revenue for Ticketmaster in 2021.
These fees often shock and anger consumers who see $50 tickets jump to $75+ after fees. The lack of competition arguably lets Ticketmaster charge higher fees than a normal competitive market would bear.
What are the arguments that Ticketmaster does NOT have monopoly power?
While Ticketmaster is clearly dominant, some argue it’s not an illegal monopoly based on these counterpoints:
- Many competitors – Stubhub, SeatGeek, AXS and others still have ticketing platforms.
- No barriers to entry – Anyone could create a ticketing platform if they wanted to.
- Contracts are optional – Venues/teams choose Ticketmaster willingly, they are not forced to.
- Benefits consumers – Their scale lowers costs and fees would potentially be higher under competitors.
- Controls limited vertical – Ticketmaster doesn’t control the venues, sports leagues, or artists.
Additionally, some economists argue Ticketmaster’s model is naturally monopolistic. One big ticketing platform captures efficiencies of scale and network effects. Having multiple platforms is inefficient.
However, most experts agree Ticketmaster’s power still produces anti-competitive impacts and inflates costs. Their dominance clearly dampens normal market forces even if not an outright monopoly.
What can be done to increase competition with Ticketmaster?
Some measures that could potentially increase competition in ticketing markets include:
- Preventing mergers and acquisitions of competitors.
- Limiting exclusive long-term venue/artist contracts.
- Forcing Ticketmaster to divest some assets like Ticketweb.
- Capping percentage of ticket fees and price surging.
- Improving consumer transparency around fees.
- Prohibiting anti-competitive behavior that blocks rivals.
Stronger enforcement of antitrust law is likely needed, although breaking up Ticketmaster would face hurdles. Better consumer education is also important so fans understand fee breakdowns and shop around more. Streamlining the ticket resale market could also pressure Ticketmaster’s primacy.
Should Ticketmaster be broken up?
Some advocates argue Ticketmaster should be forcibly broken up or separated from Live Nation to stimulate competition. However, this faces some significant challenges:
- No clear case of consumer harm – Current law requires clear damage to consumers, not just market dominance.
- DOJ already approved the merger – Unwinding the established Live Nation/Ticketmaster merger would be difficult.
- Would not affect exclusive deals – Artists and venues could still choose Ticketmaster, even if broken up.
- Hard to separate assets – Which parts of the company get spun off or sold would be complicated to determine.
- Economies of scale – One big company has some cost efficiencies a fragmented market would lose.
Since Ticketmaster benefits artists and venues in many ways too, government-forced break up could face pushback and lawsuits. Market competition still hinges heavily on ending exclusive long-term contracts and opening markets up more broadly.
Conclusion
In conclusion, Ticketmaster dominates primary ticket sales for major concerts, shows, and sporting events in America. Estimates place their market share between 70-80%. Their market power enables Ticketmaster to charge higher fees, dictate terms to venues, and minimize innovation.
However, their dominance doesn’t clearly constitute an illegal monopoly under antitrust law. Artists, teams, and venues willingly enter into contracts with them. There are also still competitors, though much smaller, in ticketing markets.
Nonetheless, most economists argue Ticketmaster’s dominance has tangible anti-competitive effects. Better antitrust enforcement and preventing further mergers and acquisitions could help stimulate more competition. This could lower fees and give consumers more choices. But breaking up Ticketmaster faces challenges. The core issue remains exclusive dealing contracts keeping rivals out of ticketing markets. Increased options for event ticketing and greater transparency around fees would benefit fans and event organizers.