Ticketmaster, the largest ticket sales and distribution company in the United States, is facing scrutiny from the Senate over its domination of the ticketing industry. The Senate Judiciary Committee has scheduled a hearing in January 2023 to investigate Ticketmaster’s practices and whether they violate antitrust laws.
What prompted the Senate hearing on Ticketmaster?
There are two key events that led to Ticketmaster being called before the Senate Judiciary Committee.
First, there was widespread outrage over the botched sale of Taylor Swift concert tickets in November 2022. When tickets went on sale for Swift’s upcoming tour, Ticketmaster’s website crashed under extremely heavy demand. Many fans were unable to purchase tickets, even after waiting hours in an online queue. Ticketmaster ultimately canceled the general ticket sale, citing insufficient remaining ticket inventory.
The Swift ticket fiasco highlighted some of the chronic issues with Ticketmaster – their platform failures, lack of competition in ticketing, and extremely high fees. It renewed questions about Ticketmaster’s dominance in the ticketing industry.
Second, Ticketmaster recently moved to acquire another major ticketing company, Ovation Ticketing, in a $1.4 billion deal. Critics argued that the acquisition would further consolidate the industry and decrease competition. The Department of Justice opened an antitrust investigation into the acquisition in November 2022.
These factors together led Senators Amy Klobuchar (D-MN) and Mike Lee (R-UT) to announce plans in December 2022 to hold a hearing examining “how consolidation in the live entertainment and ticketing industry harms customers and artists.”
What are the main criticisms and concerns about Ticketmaster’s practices?
Here are some of the major criticisms and antitrust concerns about Ticketmaster’s practices and market power:
- Near-monopoly power – Ticketmaster sells over 70% of major event tickets in the US. This gives them enormous leverage over venues and artists.
- Captive market – Ticketmaster has exclusive ticketing deals with many major venues and promoters. This limits consumer choice.
- High fees – Customers routinely pay 20-30% above face value in Ticketmaster fees. Some allege these fees are abusively high.
- Anti-competitive conduct – Critics argue Ticketmaster stifles competition through exclusivity deals, coercive tactics, and blocking rivals from accessing tickets.
- Barriers to entry – The ticketing market has high barriers to entry like Ticketmaster’s exclusive deals. This prevents viable competitors from emerging.
- Tech failures – Ticketmaster’s sales routinely fail under high demand. Customers are unable to buy tickets despite hours of waiting.
A Senate hearing could explore whether Ticketmaster is violating antitrust laws through monopolistic conduct. It could also prompt reforms of the ticketing industry to increase competition.
What market share does Ticketmaster currently have?
Ticketmaster controls an estimated 70% market share of primary ticketing services for major concert venues and events in the United States. This includes:
- An estimated 80-90% for major concert venues
- 70% for NFL games
- 80%+ for major music festivals
- 80% for Broadway tickets
No other primary ticketing company comes close to Ticketmaster’s dominance.Their closest competitor, AEG Presents, has an estimated 10-15% market share.
Ticketmaster also owns major secondary resale markets like VividSeats and TicketsNow. When combined with their primary sales, they account for over 80% of all ticket transactions for high-profile events.
This lack of competition has allowed Ticketmaster to impose very high fees. Their “convenience” fees average 27% of ticket face value but can sometimes exceed 75%.
How does Ticketmaster use exclusive deals with venues and promoters to maintain dominance?
Ticketmaster’s exclusive long-term contracts with venues and promoters are key to maintaining their monopoly power. Here are some ways Ticketmaster uses exclusivity:
- Multi-year deals – Locks major venues and artists into using Ticketmaster for all events. Deals can extend 5-10 years.
- Revenue guarantees – Guarantees venues will make minimum revenue, blocking competitors.
- Reselling restrictions – Contracts can prohibit venues from selling tickets anywhere besides Ticketmaster.
- Control of pre-sales – Gives Ticketmaster exclusive rights to presales for an event’s best tickets.
- Acquisition of venues – Ticketmaster’s parent company Live Nation owns major venues like House of Blues. These must use Ticketmaster for ticketing.
These tactics make it extremely hard for any competitor to gain a foothold. Critics argue they are exclusionary conduct aimed at maintaining Ticketmaster’s monopoly power.
What are some of the biggest failures and controversies involving Ticketmaster’s sales platform?
Ticketmaster has faced widespread criticism over major failures of their sales platform during peak ticket demand. Some notable incidents include:
- Taylor Swift tour onsale failure – System crash and long delays left millions ticketless for Swift’s 2023 tour.
- Adele presale meltdown – Technical issues made tickets unavailable during presale for Adele’s 2016 tour.
- NHL Stadium Series crash – Ticketing servers failed when tickets went on sale in 2015, prompting lawsuits.
- Mayweather vs. Pacquiao debacle – Technical problems prevented ticket sales for one of boxing’s biggest fights in 2015.
- Bruce Springsteen onsales – Multiple Springsteen tour onsales failed in 2009, 2012 and 2016.
In many cases, fans endured hours-long online queues only to be left empty-handed when sales crashed. The failures have led to lawsuits and raised questions about Ticketmaster’s capabilities and accountability.
How much are Ticketmaster’s fees and how have they changed over time?
Ticketmaster’s fees are a major source of consumer complaints. They have steadily risen over the past two decades.
Here are some key facts about Ticketmaster’s fees:
- Convenience fees – Average around 27% currently and can exceed 75% of ticket cost.
- Processing fees – Typically around $5 per ticket purchased online.
- Facility charges – Added fee often $5-20 claimed to be for venue upkeep.
- Service fees – Range widely based on event type and ticket cost.
According to reports, Ticketmaster’s average fees have grown from about $2 per ticket in the mid-1990s to around $25 per ticket currently. Fees have risen despite no clear increase in costs to justify them.
Average Ticketmaster Fees Over Time
Year | Average Fees per Ticket |
---|---|
Mid 1990s | $2 |
Early 2000s | $10 |
2010 | $18 |
2020 | $25 |
These rising fees have far outpaced inflation and led to accusations that Ticketmaster abuses their position to impose unreasonable costs. A Senate hearing could explore whether fee caps or other consumer protections are warranted.
How difficult is it for competitors to challenge Ticketmaster’s dominance?
It is extremely difficult for new competitors to gain market share against Ticketmaster due to the company’s exclusivity agreements and other anticompetitive practices.
Some key barriers to entry for ticketing competitors include:
- Long-term exclusive venue deals – Most major venues are locked into Ticketmaster contracts for 5+ years.
- Upfront guarantees – Ticketmaster provides revenue guarantees that new entrants cannot match.
- Established client base – Ticketmaster has legacy partnerships with promoters, bands, and venues.
- Consumer inertia – Many consumers default to Ticketmaster out of habit.
- High costs – New systems require significant investment in sales platform and security features.
- Lack of inventory – Even if a new platform is built, it lacks inventory due to Ticketmaster’s exclusive deals.
These factors create extremely high customer acquisition costs for any competitor. They have prevented viable competition from emerging, allowing Ticketmaster to control 70%+ market share for decades.
A Senate hearing may consider if antitrust actions like blocking anti-competitive contracts and forced divestments are warranted to open the market. But established players like AEG and upstarts like SeatGeek still face steep challenges gaining share against Ticketmaster currently.
What are some of the alternatives people have tried to avoid using Ticketmaster?
With rising discontent over Ticketmaster’s fees and services, consumers have tried various strategies to avoid using them. Some alternatives that have emerged include:
- Direct venue purchases – Buying tickets directly from smaller venues’ box offices to avoid fees.
- Fan-to-fan exchanges – Using secondary exchanges like Craigslist to buy from other fans.
- Artist presales – Buying tickets directly from artists during presales before general public onsales.
- Scalpers – Turning to ticket resellers to find tickets, despite high markups.
- Giveaways – Entering contests and giveaways to try to win free tickets.
- Season tickets – Buying season ticket packages from venues to get guaranteed access to seats.
However, most of these alternatives have limited effectiveness. Ticketmaster’s exclusive deals with major venues and artists mean it is unavoidable for many top concerts and events. Some alternatives like scalpers also have their own drawbacks for consumers.
Ultimately, increasing competition through antitrust enforcement may be the only reliable means for consumers to gain choices beyond Ticketmaster.
What are the main arguments that Ticketmaster is expected to make in its defense at the Senate hearing?
Ticketmaster will likely defend itself against antitrust scrutiny on several grounds at the Senate hearing:
- They provide value and services to venues through their technology platform and expertise.
- Exclusive contracts are mutually beneficial business arrangements, not monopolistic tactics.
- Fees help pay for costs of operating a secure ticketing system.
- High ticket demand and bots are responsible for many sales issues, not Ticketmaster.
- Artists and promoters choose Ticketmaster willingly as the best ticketing solution.
- There are low barriers to entry in ticketing, evidenced by new entrants like SeatGeek.
- Breaking up their company or contracts would hurt consumers and industry stakeholders.
Essentially, Ticketmaster will argue they gained their position through fair competition and business relationships. They will likely warn against regulatory overreach while proposing internal improvements to address concerns like fees and bot activity.
But critics contend Ticketmaster’s arguments do not address fundamentally anti-competitive actions to block rivals and exploit consumers. The Senate hearing will have to weigh whether to accept Ticketmaster’s defense of their dominant position in ticketing.
Conclusion
The upcoming Ticketmaster Senate hearing will bring intense scrutiny on their monopolistic position in event ticketing. Persistent platform failures, skyrocketing fees, and anti-competitive moves like acquiring competitors demonstrate deeper problems with their dominance of the industry. While Ticketmaster defends their success as earned fair and square, the reality suggests otherwise. Consumers, venues, and artists may all win if the hearing leads to breaking up Ticketmaster’s stranglehold through antitrust enforcement and industry reforms. With live events continuing to grow in popularity, ensuring a fair and functional ticketing market is vital.