Live Nation is the world’s largest live entertainment company, promoting and producing tours for some of the biggest musicians and bands in the industry. However, in recent years Live Nation has faced scrutiny over the high ticket prices they charge for concerts. There are several factors that contribute to the high cost of Live Nation shows.
Live Nation’s Market Dominance
One of the main reasons Live Nation can charge high prices is because they dominate the live music industry. In 2010, Live Nation merged with Ticketmaster, giving them control over ticketing for the majority of large concerts and venues across the US. According to the Department of Justice, the merged company controlled over 80% of the primary ticketing services market. This lack of competition enables Live Nation to set high fees and service charges on all tickets sold through Ticketmaster.
The DOJ approved the merger on the conditions that Live Nation license its ticketing software and divest some assets to competitors like AEG. However, critics argue these conditions did not go far enough to curb Live Nation’s market power. The company still has no serious rival, and there are very limited options for artists and fans to avoid Ticketmaster fees at major venues. This entrenched dominance over ticketing allows Live Nation to get away with charging higher fees across the board.
Artist & Venue Exclusivity
In addition to their ticketing monopoly, Live Nation has also been accused of coercive conduct in contracting with artists and venues. The company relies heavily on long-term exclusive deals with artists that give Live Nation control over their tours, merchandising, and often even recorded music. Live Nation also owns major venues like House of Blues and brokers exclusive booking deals with third-party venues.
This web of exclusive deals makes it extremely difficult for an artist to find venues and organize a tour without going through Live Nation. Combined with their control of primary ticketing, Live Nation can block artists from shows and tours if they do not agree to the company’s terms. Critics argue this strong-arming of artists enables Live Nation to take bigger revenue cuts, allowing them to hike up service fees and ticket prices.
Increased Service Fees
Service fees are the hidden costs tacked on to the face value of a ticket by the ticketing company. These fees include vague charges like “convenience fees,” “facility fees,” and “order processing fees.” According to a 2018 Government Accountability Office report, Live Nation’s Ticketmaster fees average over 25% the cost of a ticket. For popular shows, fees can balloon costs by up to 75%.
Ticketmaster claims these fees cover their operating costs and reflect the market value of their services. However, critics point out that Ticketmaster faces little competition, giving them free rein to arbitrarily raise fees. There is also very little transparency about how these opaque fees are calculated and allocated. The lack of choice in ticketing providers allows Live Nation to continue ratcheting up fees unchecked.
Higher Costs for Artists
While fans take the brunt of high Ticketmaster fees, artists also pay a price. As the promoter and ticket distributor, Live Nation often deducts its own fees from artists’ gross ticket sales. By hiking up fees, Live Nation is able to extract a larger share of artists’ touring revenues.
Smaller and mid-level artists who lack leverage in contract negotiations take a disproportionate hit. But even major artists receive a smaller percentage of gross receipts from their Live Nation tours compared to self-promoted tours. These bigger revenue takes allow Live Nation to operate tours more profitably while continuing to raise prices.
Dynamic & Platinum Pricing
In addition to service fees, Ticketmaster has adopted variable and surge pricing models that further boost costs. Ticketmaster’s “Official Platinum” pricing uses algorithms to adjust prices based on demand, similar to how airlines change fares. The company claims this provides fair value based on what the market is willing to pay.
However, critics argue manipulative platinum pricing gouges fans and lets scalpers profit off high resale markups. Dynamic pricing also enables Live Nation to capture more of the reseller market themselves. The lack of regulation around these pricing tactics allows Live Nation to flexibly extract more money from fans.
Captive Fans
For superfans of particular artists, there are few alternatives but to pay Live Nation’s premium prices. Unique live experiences create inelastic demand – concert attendees will pay almost anything to see their favorite musicians perform. Diehard fans become captive customers, forced to pay whatever fees and prices Live Nation demands.
Major artists also understand their devoted fans will bear the costs. The higher revenues Live Nation extracts from these captive fans mean artists also benefit from the inflated prices. Live Nation leverages superfans’ price insensitivity to maximize revenues, ultimately driving up costs across the board.
Lack of Transparency
A final factor enabling Live Nation’s high prices is an overall lack of transparency. Customers face difficulty tracking precisely where all the various fees tacked onto each ticket go. Critics argue the complexity of Live Nation’s business model and convoluted fee structures obscure where revenues are really allocated.
Without clear explanations, customers cannot accurately assess the value of the services they are paying for. Live Nation faces little public pressure to justify or lower costs when few outside the company understand their pricing models. Greater transparency could expose gratuitous costs and force Live Nation to rationalize prices.
Impact on Fans
The burden of Live Nation’s high prices predominantly falls on fans. Concert attendees ultimately pay substantially inflated costs for tickets. Fees can turn a supposedly affordable $50 ticket into a $100+ ticket. Fans bear the brunt of Live Nation’s market power, exclusivity, and lack of oversight.
Many music lovers can only afford to see a few shows per year due to the costs. Younger fans and lower-income households face exclusion from concerts entirely. Even middle-class households must make difficult choices on which artists they can justify splurging to see. High prices restrict access and reduce overall consumer welfare.
Calls for Change
In response to these issues, critics and activists have proposed various policy changes:
Break Up the Ticketmaster/Live Nation Merger
The proposed structural remedy is reversing the 2010 merger between Ticketmaster and Live Nation that created today’s dominant giant. This could introduce competition and give artists and venues more power to negotiate fair deals. However, unlikely the companies would accept a breakup without extensive legal battles.
Fee Caps
Federal, state, or local governments could consider capping maximum fees on all ticket sales. This would limit the amount venues, promoters, and ticketing companies could tack on to face ticket prices. However, critics worry caps would simply cause venues to raise initial ticket prices to make up the difference.
Fee Transparency Laws
Regulations could require detailed disclosure and explanation of all fees upfront during ticket sales. This would increase oversight and make it easier for media, watchdogs, and artist to call out unreasonable fees. However, Live Nation would likely lobby aggressively against such laws.
Price Controls
Some argue tickets for live entertainment are public goods that merit price controls, similar to public utilities. However, implementing this would require legislation designating venues as public accommodations. Legal challenges would also argue this unconstitutionally restricts Live Nation’s rights.
Artist & Venue Alliances
Top artists could wield their leverage to broker better deals with Live Nation and improve conditions for smaller acts. However, few superstars are willing to risk profits and relationships to lead this fight. Venue owners could also collaborate to counter Live Nation’s power, but conflicting interests impede such alliances.
Fan Boycotts
Grassroots movements like #TicketBeast encourage fans to boycott shows with excessive fees. But these have struggled to gain momentum as most fans prioritize seeing their favorite act over broader principles. A major superstar leading a boycott could prove more effective by leveraging their fanbase.
Is Change Realistic?
Despite widespread complaints, there are still open questions regarding feasible reforms. Live Nation has only tightened their grip on the industry since the Ticketmaster merger. Their extensive lobbying clout and legal resources would pose obstacles to any serious attempt to check their power. Fans and activists remain frustrated by the lack of political will to regulate ticket sales.
Artists also benefit from Live Nation’s model enough that few have incentive to seriously challenge the status quo. Only an alliance between top artists and elected officials seems likely to overcome institutional resistance. But creative new arrangements like blockchain ticketing or decentralized event promotion may emerge as true disruptors.
The core challenge is the unique power artists have to compel fans into paying virtually unlimited prices for live access. As long as enough people are willing to bear costs, Live Nation and artists can continue to extract maximum revenues. Until structural changes reshape artist-fan relationships, the high price of live music looks unlikely to fade.
Conclusion
Live Nation’s dominance over the live music industry enables the company to charge exorbitant fees with little oversight. Their merger with Ticketmaster, restrictive contracts, and manipulative pricing tactics all allow Live Nation to inflate costs for concerts. Fans bear the brunt through inflated ticket prices and fees.
Meaningful reforms face major legal and institutional roadblocks. However, a combination of activism, regulation, and innovation may help counter Live Nation’s market power. Until the ticketing monopoly is broken up, costs will likely remain prohibitive for many music lovers. The core dilemma is the unique connection between artists and fans that makes live events indispensable – a force Live Nation continues to profit from.