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Taking on Ticketmaster
A California bill would eliminate a key tactic Ticketmaster uses to rip you off.
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Ticketmaster has been facing the music a lot recently, for good reason. Its high-profile collapse during the initial sale of tickets for Taylor Swift’s latest tour led to a congressional hearing, several state attorney general investigations, and some prominent artists speaking out about its outsized power, which it uses to levy massive fees on tickets, as anyone who has purchased one in recent years can well attest.
But anger isn’t much if it isn’t turned into policy eventually. A couple of weeks ago I wrote about state efforts to eliminate junk fees, which would force Ticketmaster and other sellers to disclose up front the full price of their goods. Today I want to draw attention to another piece of legislation born out of that Swift meltdown and other ticketing debacles: This one, in California, cuts right to the heart of Ticketmaster’s monopoly power.
The bill, SB 829, sponsored by Republican Sen. Scott Wilk, would ban exclusive contracting in the ticketing service industry. “Exclusivity clauses,” as they’re known, are a part of the contracts signed between venues and ticket sellers such as Ticketmaster. They require venues to use just one seller — giving that seller exclusivity, hence the name — meaning venues can’t contract with multiple sellers that can compete for consumers on factors such as fees or ease of access.
While of course the bill would apply to all ticket sellers, fostering competition across the industry, Ticketmaster has the most to lose, because it has an outsized ability to demand exclusivity clauses. That’s due to the fact that its parent company, Live Nation Entertainment, also manages venues and represents performers through Live Nation, with which Ticketmaster merged in 2010. Venue owners can’t really turn down Ticketmaster’s demands for lengthy exclusive contracts, lest they risk being unable to book many of the most recognizable and popular artists on the touring circuit, because those acts are controlled by Live Nation.
As one lawsuit against Live Nation alleged, “venue operators must take into account the very real possibility that Live Nation Entertainment will not route tours through their venues if they do not select Ticketmaster as their primary ticketing service provider.” Essentially, Live Nation Entertainment benefits one arm of its business (Ticketmaster) because of the threat that another arm of its business (Live Nation) could retaliate against owners who stand their ground.
And it works: Ticketmaster is the ticket seller for more than 70 percent of the venues in the nation, because so few competitors can lock down venues of their own. Ticketmaster’s exclusivity clauses last anywhere from five to more than 10 years, which is a very long length of time during which Ticketmaster simply does not have to compete on quality and can just bank monopoly profits, built on the fees that consumers and artists hate but that they can’t avoid.
Exclusivity clauses were a competition issue long before Ticketmaster merged with Live Nation — a 1995 article in the Journal of Civil Rights and Economic Development said that, “While Ticketmaster has legitimate business reasons for their exclusive agreements, such goals are far outweighed by their stifling effect on competition” — but those issues are hyper-charged by the joining of Ticketmaster with Live Nation and the leverage that merger gives the conjoined corporation over everyone else in the live events ecosystem.
“Ticketmaster’s exclusive deals with the vast majority of venues on the ‘Eras’ tour required us to ticket through their system,” said AEG, Taylor Swift’s tour promoter. “We didn’t have a choice.” (AEG has a reason to gripe, as it is also the parent company of a ticketing firm that presumably gets boxed out by many exclusivity clauses.)
Wilk is not alone in zeroing in on exclusivity clauses as a key source of power in the ticketing industry. A New York State Senate investigation into ticket market abuses proposed at least investigating the elimination of these clauses, though as far as I know legislation was never formally proposed. And Ticketmaster itself agreed to eliminate exclusivity clauses as part of a 2020 settlement with Irish antitrust enforcers over anticompetitive tactics.
Recently, at the federal level, Democratic Sens. Amy Klobuchar and Richard Blumenthal proposed a bill that would limit the duration of exclusivity clauses to just a few years. “Right now, one company is leveraging its power to lock venues into exclusive contracts that last up to ten years, ensuring there is no room for potential competitors to get their foot in the door,” said Klobuchar. “Without competition to incentivize better services and fair prices, we all suffer the consequences.”
This debate, while focused on live music now, is part of a long tradition in American law and policy. For decades, United States policymakers treated so-called “exclusive dealing” – i.e., demanding exclusivity as a way of eliminating current or nascent competition – as an anticompetitive tactic that should be regulated or banned. In industries as diverse as telegraphs, tobacco, and telephones, exclusive contracts were used to harm consumers and local businesses, and regulators, lawmakers, and antitrust enforcers stepped in to do something about it.
However, a series of court decisions from the 1960s through the 1980s blunted much of that public power. Today, exclusive contracts are everywhere, from tickets to insulin to internet search engines, preventing new and innovative competitors from ever being able to gain a foothold in a market.
“By simply prohibiting those exclusivity clauses, perhaps some much needed competition can enter the industry so things can begin to balance out,” Wilk wrote in an op-ed promoting his bill. “I may be pro-business, but I am not pro-monopoly.”
Indeed, while it’s no substitute for breaking up Ticketmaster and Live Nation, SB 829 is a very good first step and should be a model for the rest of the country. By allowing venues to contract with more than one ticket seller, it will encourage new or existing industry players to compete with Ticketmaster for venues, including (hopefully!) with lower prices and fees, which will ultimately benefit everyone who is just trying to see some live music. Rock on.
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— Pat Garofalo