Music

Ticketmaster gets grilled: 6 takeaways from hearing about Taylor Swift concert fiasco



CNN

Lawmakers grilled a top executive at Ticketmaster’s parent company, Live Nation Entertainment, on Tuesday after the service’s failure to process orders for Taylor Swift’s upcoming tour left millions of people unable to buy tickets late last year.

During the three-hour hearing, senators pressed Live Nation President and CFO Joe Berchtold and some other witnesses on whether his company was too dominant in the industry, hurting rivals, musicians and fans.

“I want to congratulate and thank you for an absolutely fantastic achievement,” Senator Richard Blumenthal told Berthtold. “You have brought together Republicans and Democrats in an absolutely united cause.”

Here’s a look at the big takeaways from the hearing:

When tickets for Swift’s new five-month Eras Tour went on sale on Ticketmaster in mid-November, high demand snarled the ticket site, infuriating fans who couldn’t get tickets. Unable to resolve the issues, Ticketmaster subsequently canceled Swift’s sale of concert tickets to the public, citing “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet this demand.”

In his testimony Tuesday, Berchtold partially blamed the Swift ticket incident on bots.

Ticketmaster, he said, was “hit with three times the amount of bot traffic than we’ve ever experienced” amid the “unprecedented demand for Taylor Swift tickets.” The bot activity “required us to slow down and even pause our sales. This is what led to a terrible consumer experience that we deeply regret.”

Berchtold also defended his company more broadly. He stressed that Ticketmaster does not set ticket prices, does not determine the number of tickets put on sale, and that “in most cases, venues set service and ticket fees,” not Ticketmaster.

He also dismissed suggestions that its dominance has allowed for skyrocketing fees, citing data from market intelligence firm Pollstar showing that Live Nation controls about 200 of about 4,000 venues in the US, or about 5%.

The venues controlled by Live Nation set fees that are “consistent with the other venues in the market,” he said.

Members of the entertainment industry and a rival spoke out against Ticketmaster’s dominance of the industry.

Jack Groetzinger, CEO of SeatGeek, claimed that many venue owners “fear losing Live Nation concerts if they don’t use Ticketmaster” and its services, and argued that the company should be broken up.

“Live Nation controls the most popular entertainers in the world, routes most of the major tours, operates the ticketing systems and even owns many of the venues,” he told lawmakers. “This power over the entire live entertainment industry allows Live Nation to maintain its monopolistic influence over the primary ticketing market.”

He continued: “As long as Live Nation remains both the dominant concert promoter and ticketing provider of major venues in the United States, the industry will continue to lack competition and struggle,” he said.

Bandmate Jordan Cohen, right, listens as singer-songwriter Clyde Lawrence, left, testifies before a Senate Judiciary Committee hearing to examine how to promote competition and protect consumers in live entertainment.

Clyde Lawrence, a singer-songwriter on the witness panel, explained how the company acts as a promoter, a venue and a ticket company that eats into performers’ income. Artists, he said, have no say in Live Nation.

“Since both our salary and theirs are part of the show’s profits, we should be true partners aligned with our incentives – keeping costs low while ensuring the best fan experience,” he said. “However, with Live Nation acting not only as the promoter but also the owner and operator of the venue, it seriously complicates those incentives.”

Lawrence also said with Ticketmaster, “we’ll see a fee of 40% or closer to 50% added on top” of the base ticket price.

The fallout from the ticketing fiasco once again cast a harsh spotlight on Ticketmaster and its power in the industry, more than a decade after it completed its merger with Live Nation despite concerns that the deal would create a near-monopoly in the ticketing sector.

“To have a strong capitalist system, you have to have competition,” Senator Amy Klobuchar, a Democrat from Minnesota, said during her opening remarks. “You can’t have too much consolidation — something that, unfortunately for this country, as an ode to Taylor Swift, I would say we know ‘all too well’.”

Kathleen Bradish, vice president of legal advocacy at the American Antitrust Institute, called Ticketmaster “a very traditional monopoly” and told lawmakers that the lack of competition in the live entertainment industry results in consumers paying higher prices.

“Its dominance in markets up and down the live entertainment supply chain creates the incentive and ability to limit competition and protect its market position,” she explained. “Customers are paying the price for these monopolistic actions with higher fares and fees, lower quality, fewer choices and less innovation.”

On the concert side, the company excludes “smaller or independent concert promoters and venues. In digital ticketing, that includes excluding ticket resellers and brokers who provide important competition through the secondary ticket market,” she said.

Lawmakers repeatedly questioned the U.S. government’s past handling of the Live Nation merger with Ticketmaster. It involved a legally binding consent agreement that allowed the company to merge with Ticketmaster as long as the combined company complied with a number of behavioral conditions.

A 2019 Justice Department review found that Live Nation did not meet its obligations under the order, but instead of suing, the department amended the agreement and extended it for another five years, according to Bradish of the American Antitrust Institute.

“DOJ should pursue new enforcement actions to obtain effective structural relief,” Bradish said, calling for a dissolution of Live Nation under either Section 7 of the Clayton Act or Section 2 of the Sherman Act.

A Senate Judiciary Committee hearing Tuesday examined the promotion of competition and consumer protections in live entertainment on Capitol Hill

Late. Mike Lee said the way the story has unfolded since the Live Nation merger raises “very serious doubts” about the usefulness of consent agreements imposed by the federal government.

If the current Justice Department concludes that the consent decree has been violated, “dissolving the merger should be on the table,” Blumenthal said.

In response to Berchtold’s explanation of the bot problem, some lawmakers questioned the company’s security practices, noting that many small businesses can determine when bad actors are infiltrating their systems.

Republican Sen. Marsha Blackburn suggested Berchtold strengthen its cyber protections, get better advice and hire new IT staff to better protect its systems. (Berchtold said the company has poured billions of dollars into security to protect its systems over the years.)

Another Republican, Senator John Kennedy, went on to criticize the company over the Swift ticket issue. He said that anyone at Live Nation responsible for the incident “should be fired.”

In the back half of the hearing, some of the focus shifted to possible solutions – but there were no easy answers.

Some lawmakers focused on the ability to resell tickets. While this option can be useful for customers who need to change plans, it can also help support the scalping market.

When senators debated whether limiting the ability to transfer tickets would help, Live Nation was in charge. But the SeatGeek CEO said this can only solidify Live Nation’s dominance, as it has the kind of market share that would force consumers to shop there exclusively in the absence of other resale options.

— CNN’s Brian Fung and Aditi Sangal contributed to this report

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