Live Nation is the largest live entertainment company in the world. They promote, operate, and manage ticket sales for live events. Over the last decade, Live Nation has acquired several of the biggest companies in the live entertainment industry including Ticketmaster, House of Blues, and AEG Worldwide. This consolidation of power has allowed Live Nation to gain a tremendous amount of control over the industry. Many argue that Live Nation’s practices have made them an illegal monopoly.
Live Nation’s Market Share
Live Nation currently controls around 70% of the primary ticketing market through their ownership of Ticketmaster. This gives them power over the majority of major concert venues and artists. They also own, operate, or exclusively book around 200 major venues around the world. According to some estimates, Live Nation sold around 500 million tickets in 2021, which equals about 75% of the total market.
This level of market share effectively allows Live Nation to set prices and exert control over the entire industry. Smaller competitors simply can’t match the scale and vertical integration Live Nation has established. The lack of competition means Live Nation has the power to implement policies that benefit their bottom line at the expense of fans and artists.
Anti-Competitive Practices
Critics accuse Live Nation of abusing their market power in several ways:
Venue Restrictions
Live Nation has been accused of implementing radius restrictions which prevent artists from performing at nearby rival venues. These clauses force artists to work exclusively with Live Nation venues during tours. Radius restrictions make it harder for regional promotions companies to compete.
Unfair Ticketing Fees
As the owner of Ticketmaster, Live Nation controls the majority of primary ticket sales. Ticketmaster has received criticism for hidden fees that hugely inflate ticket prices. Some reports indicate these fees can equal 25% of the base ticket price. These inflated costs are shouldered by fans and make it difficult for competitors to challenge Ticketmaster on cost.
Bundling
Since Live Nation owns the venues, promoters, and ticketing service, they can leverage this power to bundle services in anti-competitive ways. For example, some artists have claimed Live Nation only allows them to perform at their venues if they use Ticketmaster and their promotion services. These types of exclusive deals further strengthen Live Nation’s vertical monopoly.
Price Floors
Live Nation uses their ticket distribution power to enforce minimum ticket price floors. This prevents artists and competitors from offering discounted tickets that could potentially undercut Live Nation’s prices. Enforced price floors help Live Nation maximize their profit margins.
Shutting Out Competitors
The sheer size and scope of Live Nation makes it almost impossible for competitors to challenge them in any sector of the industry. Smaller promotion companies simply can’t offer the roster of venues and services Live Nation can provide. Artists also have no choice but to work with Live Nation and Ticketmaster if they want access to large venues and national tours.
Government Investigations
Live Nation’s practices have not gone unnoticed by government regulators. The company has been investigated by both the Department of Justice and the Federal Trade Commission.
Year | Action |
---|---|
2009 | DOJ approves Ticketmaster and Live Nation merger but requires they abide by antitrust regulations for 10 years. |
2018 | DOJ extends Live Nation’s consent decree by 5.5 years after determining they violated the agreement’s terms. |
2019 | DOJ launches formal antitrust investigation into Live Nation’s practices. |
2021 | FTC Chair notes antitrust concerns with Live Nation’s dominance and calls for stricter oversight. |
2022 | DOJ reportedly expands antitrust investigation and issues civil investigative demands for documents. |
Despite the investigations, meaningful action has not yet been taken to curb Live Nation’s power. However, pressure is ramping up, and experts say significant antirust enforcement could be on the horizon.
Potential Antitrust Actions
If regulators determine Live Nation is illegally monopolizing the live music industry, there are several actions they could take to restore competition:
Breaking Up the Company
The most extreme option would be dismantling Live Nation into smaller, independent companies. This could entail splitting the promotion businesses from the venue operations and divesting Ticketmaster. Smaller Live Nation spin-offs would still be major players but would allow rivals to compete.
Restricting Acquisitions
Regulators could ban Live Nation from acquiring additional companies. This would prevent them from further expanding their power through vertical integration.
Repealing Exclusive Dealing
Banning exclusive bundling deals and radius restrictions would reduce Live Nation’s ability to lock-in artists. Rivals could then compete for talent.
Regulating Ticketing Fees
Capping Ticketmaster’s processing fees could make ticket prices fairer for fans. Limits could also potentially reduce Live Nation’s margins.
Divesting Ticketing Platform
A less extreme option would be to only force Live Nation to sell Ticketmaster. This would remove their control over primary ticketing and allow more competition in that sector.
Declaring Monopoly
Merely declaring that Live Nation holds an illegal monopoly could discourage anti-competitive behavior for fear of future break-up actions.
Live Nation’s Defense
Live Nation defends their practices and market share in several ways:
– They argue their size allows them to organize more large, elaborate tours than competitors.
– They claim vertical integration reduces costs and friction for fans, artists, and venues.
– They note competitors like AEG and independent promoters still have substantial market share.
– They say Ticketmaster fees are justified to provide security and convenience.
– They claim they use artist exclusivity deals very rarely.
– They posit that ticket prices and fees would be the same or higher if the market was less consolidated.
Potential Challenges to Breaking Up Live Nation
While antitrust action could potentially restore competitiveness, there are also challenges:
– Live Nation would aggressively fight any break-up effort in court.
– Unwinding Live Nation’s vast assets and agreements would be complex.
– Forced divestments may not result in viable independent businesses.
– Regional promoters lack resources and infrastructure to fill the void nationwide.
– Ticketmaster alternatives lack brand recognition, technology, and security.
– Consumers may see service reductions if the industry is fragmented.
– Other big players like AEG could become de facto monopolies in the absence of Live Nation.
Conclusion
Live Nation has clearly amassed a great deal of power through aggressive acquisitions and anti-competitive tactics. Their practices exploit fans, artists, and competitors. However, breaking up such an enormous consolidated company would prove very difficult. Meaningful antitrust enforcement faces an uphill battle. Live Nation will likely fight hard to maintain their dominant position in live entertainment. Ultimately, regulators face a tough choice between allowing an illegal monopoly or engaging in a messy, complex battle to restore competition to the industry. There is no simple solution, so it remains to be seen if any major action will actually be taken against Live Nation anytime soon.