Ticketmaster is the largest ticket sales and distribution company in the United States, selling tickets for many major concerts, sporting events, and other live entertainment events. With its dominant position in the ticket sales market, there has been ongoing debate as to whether Ticketmaster constitutes a monopoly.
While Ticketmaster does have a very large market share in ticket sales, there are arguments on both sides as to whether this constitutes an illegal monopoly. Factors such as high barriers to entry in the ticketing industry, lack of viable competition, and allegations of anti-competitive practices point towards Ticketmaster having monopolistic control. However, Ticketmaster does still face some competition and claims to engage in competitive practices that benefit consumers.
What is a monopoly?
A monopoly refers to a company that has total or near-total control over a particular market, giving it substantial leverage over consumers. Legally, monopolies can form when a company corners over 75% market share.
Some key features of monopolies:
– Lack of competition – The monopolist is essentially the sole provider of a good or service in the marketplace. There are no close substitutes available.
– High barriers to entry – It is very difficult or impossible for new competitors to enter the market and challenge the monopoly. Things like patents, control of resources, economies of scale make entering the market prohibitively expensive.
– Price maker – The monopolist gets to set prices for its goods or services without fear of competition undercutting prices. Prices tend to be higher than a competitive market.
– Lack of incentive to innovate – Without competitors pushing innovation, monopolists can focus on maximizing profits over improving products or services.
Ticketmaster’s market share
Ticketmaster sells tickets for concerts, sports games, theater shows, and other live entertainment events. By looking at its share of ticket sales in these markets, we can analyze its monopoly power. Some key facts about Ticketmaster’s dominance:
– Concert tickets: Ticketmaster sells tickets for over 80% of major concert venues in the U.S. This gives it tremendous power over both concert venues and consumers looking to purchase tickets.
– Sporting events – For major league sports like MLB, NBA, NHL, and NFL, Ticketmaster has deals in place to be the exclusive ticket provider for the majority of teams.
– Broadway & theater – Ticketmaster owns TicketWeb, which sells tickets for over 95% of Broadway shows. It also sells tickets for many smaller musicals, plays, and other theater productions.
– Other entertainment – Ticketmaster provides ticketing services for music festivals, motorsports events, rodeos, state fairs, and more.
Across all live entertainment verticals, analysts estimate Ticketmaster controls 70-80% of the primary market ticket sales. While competitors like AXS and Stubhub have a fraction of the market share, none come close to Ticketmaster’s dominance.
Ticketmaster’s market share
Market | Ticketmaster’s estimated market share |
---|---|
Major concert venues | Over 80% |
Major league sports | 60-90% range for MLB, NBA, NHL, NFL |
Broadway & theater | 95% via TicketWeb |
Barriers to entering the ticket sales market
One major factor in determining monopolies is examining the barriers to entry for potential competitors in the marketplace. In the ticket sales industry, there are significant barriers inhibiting companies from rivaling Ticketmaster:
– **Exclusive deals** – Ticketmaster frequently signs long-term exclusive contracts with venues, sports teams, and event organizers to be their official ticketing provider. This instantly locks out competitors.
– **Established infrastructure** – Ticketmaster has an established platform for ticket sales, distribution, security measures, advertising, analytics, etc. Competitors need massive capital to develop their own systems.
– **Consumer habits** – Consumers are used to purchasing through Ticketmaster, especially season ticket holders and fan club members. Brand loyalty is hard to overcome.
– **Lobbying** – Ticketmaster along with other ticketing companies have lobbied state governments to implement paperless ticketing and anti-scalping laws. This further solidifies Ticketmaster’s power.
These barriers make it extremely difficult for potential competitors to gain a foothold in the market. Companies like AXS and StubHub have managed to capture small portions of the market, but do not have the resources to truly challenge Ticketmaster’s dominance.
Ticketmaster’s anti-competitive practices
Ticketmaster has frequently been accused of unfair, anti-competitive practices that reinforce its stranglehold on the ticket sales market:
– **Excessive service fees** – Ticketmaster tacks on hefty convenience fees, processing fees, order fees and more to every ticket purchase. Some of these fees are thought to be much higher than Ticketmaster’s actual costs, representing an abuse of monopoly power.
– **Price floors** – In many exclusive deals, Ticketmaster contractually requires venues to charge minimum ticket prices, even if the venue wants lower prices. This inflates costs for consumers.
– **Restricting ticket resales** – Ticketmaster lobbies for legal limits on ticket resales and transfers, forcing all sales to go through its platform.
– **Captive pricing** – Under some venue contracts, Ticketmaster requires consumers to purchase mandatory add-ons like parking passes solely through Ticketmaster.
– **Predatory exclusivity agreements** – Contracts with exclusivity terms make it impossible for venues, teams, or artists to use competitors even if they want to.
While these practices favor Ticketmaster, they restrict options and access for consumers and venues. This demonstrates the power imbalance that a monopolistic player can exert.
Counter-arguments that Ticketmaster is not a monopoly
Despite Ticketmaster’s dominance in ticketing, some argue they do not constitute an illegal monopoly due to the following factors:
– **Ticketing requires major infrastructure** – Providing ticketing services necessitates major upfront investments in software, hardware, security, staffing, and more. This infrastructure makes competition economically unfeasible.
– **Presence of competitors** – Though small, companies like AXS and StubHub do compete for a share of Ticketmaster’s business in ticketing certain events. Their existence proves there is some competition.
– **Artists choose Ticketmaster** – Some claim large artists and organizations willingly choose Ticketmaster because they provide the best service and have the resources to handle massive demand for popular events.
– **Ticketmaster adds value** – By offering analytics, dynamic pricing tools, and marketing services, Ticketmaster claims to provide meaningful value-adds to venues that benefit consumers.
However, while these factors may explain Ticketmaster’s dominance, they do not disprove their significant market power and anti-competitive tendencies.
Is Ticketmaster a legal monopoly?
Given the high barriers to entry, lack of competitors, and market share over 75% in ticket sales for major concerts and events, Ticketmaster does appear have monopoly control of the primary market. However, monopolies are not inherently illegal under U.S. antitrust law.
The key provisions used to determine illegal monopoly power are:
– **Sherman Antitrust Act of 1890** – Outlaws any efforts to create monopolies that restrain interstate trade or commerce. Has been used to break up monopolistic trusts and cartels.
– **Clayton Antitrust Act of 1914** – Bans specific anti-competitive practices like price discrimination, tying, and exclusive dealings. Violations can lead to divestiture of assets or business divisions.
– **Consumer harm** – If a monopoly is found to use their market power to harm consumers through higher prices, inferior service, or limiting choices, regulatory action may be taken.
Ticketmaster has faced numerous lawsuits over the years alleging violations of the Sherman and Clayton Acts. Though it has never been broken up, it has paid significant legal settlements in response to these suits. Ongoing monitoring is necessary to ensure consumers are not harmed by any future anti-competitive actions as Ticketmaster continues to hold monopolistic power.
Conclusion
Ticketmaster holds a dominant share of over 70% in the primary market for major event tickets in the U.S. This level of market control, combined with high barriers to entry for competitors, exclusive dealing contracts, and ongoing anti-competitive practices, indicate Ticketmaster has monopolistic power. However, despite lawsuits claiming abuse of this power, Ticketmaster has not definitively been found guilty of illegal monopoly. As the primary ticket seller for millions of consumers, Ticketmaster should be scrutinized to ensure it is not leveraging its market power to overly harm consumer interests. Careful evaluation of any mergers and acquisitions, exclusivity agreements, and resolution of unfair practice allegations is warranted.