The Justice Department let Live Nation buy Ticketmaster in 2010 on the condition that it not use one business to punish customers of the other. Thirteen years later, after the collapse of a Taylor Swift on-sale, the Senate Judiciary Committee brought the company in alongside an artist manager, a rival ticketing executive, and an antitrust economist. Live Nation’s president opened by explaining what his company does not do.
What Ticketmaster does not do
BerchtoldI do want to take a moment to address some confusion about what Ticketmaster and other primary ticketing platforms do and do not do. Primary ticketing companies, including Ticketmaster, do not set ticket prices. We do not decide how many tickets go on sale and when, and we do not set service fees. Pricing and distribution strategies are determined by the artists and their teams.
BerchtoldService fees, even if they are called ticketing fees, are retained mainly by the venues. And their portion of the service fee that Ticketmaster retains has been falling steadily over time.
BerchtoldWe hear people say that ticketing markets are less competitive today than they were at the time of the Live Nation-Ticketmaster merger. That is simply not true. In 2009, the Department of Justice alleged that Ticketmaster's market share was over 80 percent. It is a different story today.
BerchtoldTicketmaster has lost, not gained, market share since the merger.
BerchtoldWhile the bots failed to penetrate our systems or acquire any tickets, the attack required us to slow down and even pause our sales. This is what led to a terrible consumer experience, which we deeply regret. We apologize to the fans. We apologize to Ms. Swift. We need to do better, and we will do better.
[Hearing transcript, January 24, 2023, opening statement of Joe Berchtold.]
The person who actually sells the tickets
Clyde Lawrence, a musician appearing on the artist side, had a different account of who controls the fees.
LawrenceAnd if we actually ask the venues in advance, which we often do, they say that is a Ticketmaster thing.
LawrenceWe actually do set, sorry, the ticket prices. The base price the artist does have a say in setting for sure. But those added Ticketmaster service fees we have absolutely no say, and the venues claim that it is a Ticketmaster thing.
[Hearing transcript, January 24, 2023, testimony of Clyde Lawrence.]
Who owns the buildings
DurbinMr. Berchtold, do you want to add anything to that?
BerchtoldThank you. Yes.
BerchtoldAs Mr. Lawrence said, the band sets the ticket price. The service fee level is set by the venue. I----
DurbinYou control the venue.
BerchtoldIn----
DurbinDo you not?
BerchtoldOf approximately----
DurbinLive Nation?
BerchtoldOf approximately 4,000 venues in the United States, per Pollstar, Live Nation operates approximately 200. So roughly 5 percent of the venues in the country.
DurbinAre they the biggest?
BerchtoldNo, sir. They are generally not, not the biggest. The biggest tend to be the sports venues, the arenas, the stadiums controlled by the sports teams or the owners of the sports teams.
[Hearing transcript, January 24, 2023, questioning by Chair Durbin.]
Barclays
The chairman turned to a rival ticketing executive whose company had briefly taken a major New York venue away from Ticketmaster.
DurbinMr. Groetzinger, you had an experience at Barclays, did you not, in terms of an opportunity for your company to take over a venue that had been controlled by Ticketmaster. How did that work?
GroetzingerThe New York Times reported a few weeks ago how once we took over ticketing for the Barclays Center in Brooklyn, the Barclays Center saw a marked decrease in the number of concerts from Live Nation that were sent to that venue versus historical averages. So earlier, last year, the Barclays Center management came to us and said we would like to keep using you for ticketing our basketball, but we want to be able to use Ticketmaster to ticket concerts. And we looked into it and could not get the economics to work. So we said to them, listen, let us just part ways amicably, and we did.
DurbinSo they used their power of the marketplace to diminish the number of acts at that venue, and the venue decided they had to go back to Ticketmaster?
GroetzingerThere was certainly, as Pollstar public data shows, a marked increase in the number of shows Live Nation played at that venue after the venue decided to move away from Ticketmaster.
DurbinMr. Berchtold, is that true?
BerchtoldI believe, Senator, that what The New York Times indicated was that another venue opened in the marketplace. So you now had two venues vying for the shows that were not going to Madison Square Garden and that the number of shows going to Barclays from all the major promoters went down as a result of that increased competition. I have not heard of any allegations that we changed in any way our booking of concerts for that venue.
BerchtoldIt is a matter that I watch very closely, given the profile of the New York market. I understand every decision about every show, where it was placed and why. We have records determining that in no cases was there any retaliation against Barclays in the placement of shows.
[Hearing transcript, January 24, 2023, questioning by Chair Durbin.]
Why the case was settled in the first place
Senator Lee went back to the 2010 complaint, and asked the antitrust economist why the government had taken a consent decree instead of going to court.
LeeBack in 2010, the antitrust complaint filed by the Department of Justice against the proposed merger between Ticketmaster and Live Nation alleged, among other things, that Ticketmaster had at the time an 83 percent market share with no competitor, no single competitor having more than 4 percent of the market.
LeeSo with that in mind, why, in your view, did the Department of Justice settle what seems to be a strong case that appears to involve the elimination of head-to-head competition with a monopolist? And would you agree that what we have here is not a shortcoming necessarily of our antitrust laws, but error, perhaps gross negligence in enforcing them?
BradishWell, I think that there are two elements to why the DOJ would take a consent decree rather than pursue a case in court. Obviously, a case in court involves risk, and the fact is that to pursue a vertical merger in court--and recent experience backs that up--is difficult. It is very difficult for DOJ to win a vertical merger case.
BradishThe second issue I think that comes up here is the need for witnesses in a court case. And in a situation where there is a pervasive fear of the dominant firm, where venues and promoters and other independent rivals have--will potentially suffer consequences--and history since then suggests that that is the case--they would have to testify in court. And to get someone to take that risk is not an easy ask.
LeeNow the consent decree includes a divestiture and also prohibitions on tying--on tying the ticketing services and the concert promotion. You want to say anything about how those have worked in practice and why?
BradishWell, obviously, the investigation that culminated in the 2020 modification to the consent decree showed that, in fact, this was repeatedly violated. The DOJ described six instances but also pointed to a pervasive environment of fear of retaliation. And as a result, it shows that when a company has incentives to act in a particular way, a consent decree is not necessarily going to stop them from doing that.
[Hearing transcript, January 24, 2023, questioning by Sen. Lee.]