Senators Grill Live Nation Leader Over Taylor Swift Ticketing Fiasco

Ticketmaster defended itself publicly for the first time since the concert promoter's highly publicized meltdown late last year during ticket sales for Taylor Swift's "Eras" tour.

Joe Berchtold, the president and chief financial officer of Live Nation, which owns Ticketmaster, made the case to the Senate Judiciary Committee on Tuesday that the live concert industry is more competitive than it was a decade ago, when Live Nation merged with Ticketmaster, and that the ticket seller doesn't control capacity or pricing.

"Primary ticketing companies, including Ticketmaster, do not set ticket prices, do not decide how many tickets go on sale and when they go on sale, do not set service fees," he said in opening remarks. He attributed the Taylor Swift meltdown to overwhelming demand, saying the site saw three times its usual amount of bot traffic during the sale.

But fellow witnesses — and senators on the committee — weren't buying it. 

"Live Nation is so powerful that it doesn't even need to exert pressure, it doesn't need to threaten, because people just fall in line," said Sen. Amy Klobuchar, the committee's acting chair.

Anti-monopoly scholars and consumer advocates point to Ticketmaster's role as a ticket seller, an owner or operator of event venues as well as a promoter for events. The company both fronts the costs for an event and advertises it. Live Nation's reach allows it to exert pressure on performers and lock them into subpar deals, scholars testified. 

"Major venues in the United States know that if they move their primary ticketing business from Ticketmaster to a competitor, they risk losing the substantial revenue they earn from Live Nation concerts. They know this because Live Nation has told them so, directly and indirectly — through its public pronouncements, private communications and subsequent retaliation against venues that have defied Ticketmaster," SeatGeek CEO Jack Groetzinger testified.

Berchtold contended that Live Nation owns only a small portion of the 4,000-some event venues in the U.S. — about 5%, he said. However, critics note that the events giant's portfolio includes the largest and most profitable venues, while its Ticketmaster division has exclusive ticketing contracts with an overwhelming majority of sports venues.

Last year, 87% of Billboard Top 40 performances were ticketed by Ticketmaster, and the company holds exlusive ticketing contracts with 87% of NBA and NHL arenas and 97% of NFL stadiums, testified Jerry Mickelson, head of independent event producer Jam Productions.

"This merger is vertical integration on steroids. Using dominance in one market to decrease competition in another," he said. Jam, which has produced nearly 1,500 live events in the 40 years since its founding, produced only one since 2015, Mickelson said.

"Arena concerts used to be Jam's most profitable business," he said. But since the merger, "Live Nation succeeded in driving independent promoters out of that sector."

Independent music group Lawrence, whose recent song "False Alarms" contains the phrase, "Live Nation is a monopoly," illustrated Live Nation's power with an example. 

"Live Nation acts as three things at the same time: The promoter, the venue, the ticketing company," Clyde Lawrence, a member of the band, told the committee. Because Live Nation owns the venue, fronts the the money for the show and sells the tickets, they have outsized power when negotiating with artists, Lawrence said.

"If they want to take 10% of the revenues and call it a facility fee, they can, and have. If they want to charge $30,000 for [facility rent], they can and have. If they want to charge us $250 for a stack of clean towels, they can, and have," Lawrence said.

He illustrated the disparity with an example of a show for which Lawrence set ticket prices at $30. After Ticketmaster added on a 40% fee, fans paid $42 per ticket. After paying for facility costs, the band made $12 per ticket — about half of which went to cover the costs of touring.

"That leaves us with $6 for an eight-piece band, pretax, and we also have to pay our own health insurance," Lawrence said.

He added, "We truly don't see Live Nation as the enemy. They are just the largest player in a game that feels stacked against us as artists, and often our fans as well."

Another point of frustration is the fees added to concert tickets' face value. Sometimes called "junk fees" or "drip pricing," these added costs often appear after a buyer has picked a ticket and entered all their information but before they've bought it.

"LiveNation has added as high as an 82% fee on our tickets," Lawrence testified. "We have absolutely zero say or visibility in how much these fees will be, and we find out the same way as everybody else, by logging on to Ticketmaster once the concert is on sale." 

Klobuchar asked Live Nation why the company hasn't used its clout to reduce the cost of those fees. Berchtold answered that Live Nation does not set those prices, but that fees "are set by the venues," an answer that ignored the fact that Live Nation owns and operates many of the most popular event venues.

"The Live Nation venues have fees that are consistent with other venues in the marketplace, and cover the cost of the operation of those venues," Berchtold said.

Lawrence replied that venues the group performs at have denied responsibility for those fees.

"We ask that question to the venues, and they say, 'Not only do we not choose what it is, we don't even know what it is, we can't even tell you what it's going to be,'" he said.

The widely anticipated hearing was called shortly after Ticketmaster in November canceled a sale for Taylor Swift's concert tour when the service experienced technical glitches and what it called "historic" customer demand for seats. Swift had planned her "Eras" Tour for 52 concerts across 18 venues, with Ticketmaster the primary ticketer for all but five of those shows. During a pre-sale event on November 15, the Ticketmaster site crashed after 14 million fans and bots tried to buy tickets. Thousands of fans who thought they were cleared to buy tickets were unable to purchase them, leading some to sue Ticketmaster.

Interested parties started lining up for the hearing well before 9 a.m., more than an hour before its start. By the time the doors opened, the line snaked down the hallway.

Sal Nuzzo, a witness from free-market think tank The James Madison Institute, commented that his daughters informed him this hearing would be "the most important" thing he does in his career, adding that he drove through a crowd of protesters on the way to the hearing.

The episode has led to calls to split up Ticketmaster, with critics charging that the ticketing platform, promoter and venue owner monopolizes the market for events. Attendees from the American Economic Liberties Institute, an anti-monopoly group, passed out flyers in the hearing room calling for a breakup of the company.

Ticketmaster is estimated to have a market share of more than 70% of the U.S. ticketing industry, and is the primary ticketer for over 80% of professional sports teams and venues for the NBA, NHL and NFL. Live Nation disputes those claims, saying that its market share has shrunk since the 2010 merger.

"Ticketmaster has lost, not gained, market share, and every year competitive bidding results in ticketing companies getting less of the economic value in a ticketing contract while venues and teams get more," Berchtold said. "U.S. ticketing markets have never been more competitive than they are today, and we read about new potential entrants all the time."

The Senate also heard from ticketing platform SeatGeek and live-event producer Jam Productions, as well as scholars who study antitrust.

Live Nation put much of the blame on bots and scalpers who scoop up tickets in order to resell them at higher prices. At least some artists agree with this assessment. In a letter supporting Live Nation, country music star Garth Brooks asked the committee to make scalping illegal.

"The crush of bots during an on-sale is a huge reason for program failure NO MATTER WHO THE TICKET SELLING COMPANY is. And the one who ALWAYS pays for this atrocity is the customer, the LAST one on whom that burden should fall," Brooks wrote in a letter submitted to the committee.

Live Nation claims it has invested millions developing anti-bot technology on the platform.

The Department of Justice is investigating Live Nation over whether the company's market power violates antitrust law and hurts competition, and the Tennessee Attorney General's office is investigating the Swift incident, as well as what some fans allege was subpar customer support during the snafu.