The DOJ files suit against Live Nation...
Hi!
Let’s take a look around at some of the commentary about the DOJ’s lawsuit against Live Nation.
I’ll share some of the coverage and then give you a few of my thoughts.
Sahaj Sharda has a great analysis of the lawsuit: This is great. And, is in-depth.
Matt Stoller looks at the case: Matt points out the ‘flywheel’ and the fact that the case doesn’t even hit on the other potential misdeeds that have been reported recently.
CNBC has on the DC AG and Bob Lefsetz to talk about the lawsuit: The interesting thing here is that Bob says something to the effect that “the customer doesn’t matter”.
Front Office Sports calls this a “Taylor Swift Ticket Fiasco”, which isn’t correct: The Taylor Swift situation was just a flashpoint, but the complaint details years of behaviors that the DOJ thinks need to be remedied.
The Wall Street Journal has a cool graphic breaking down the prices and distribution of the price of tickets. The WSJ makes it simple but leaves out some of the important parts of the complaint.
Jack Stephens posts about how Live Nation was aware of it being an ‘unregulated monopoly’ and proud came out of discovery for a lawsuit: Geez! I’ve only been using that line for years and it isn’t like I pulled it out of thin air.
Live Nation an unregulated monopoly? Here is the piece from 2015. Just to be clear, “moats” means that you have a monopoly or duopoly in an industry. It is like the secret code.
Dan Wall offers up Live Nation’s rebuttal of the lawsuit: PR stuff is PR stuff. He talks a lot about the 2010 consent decree but forgets about the decree being re-opened in 2020 and updated. (Re-opening a consent decree is very rare.)
Brian Merchant says Ticketmaster and Google are the worst examples of monopolies in today’s economy: What do you think? Let me know in the Slack Channel!
Our friends have some takes:
Here is the full case: It is 120+ pages, but it is double spaced and the last 30 or so is just legal stuff you don’t need to read. But do check out the remedies and the detailed account of the allegations.
So…what do I think about this whole thing?
That’s after the break!
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Yesterday’s filing by the DOJ came with a lot of examples. Many of the examples highlight actions that folks have alleged but never been willing to publicly state, for years.
While it was a big news day in the ticket business, this doesn’t mean we are likely to see change happen quickly.
What do we have?
The DOJ dropped a pretty big case.
At a minimum, this means that we have a public accounting of the many allegations that are often whispered.
This puts Live Nation in a position where they have to publicly account for their business practices.
This means that we are likely going to see many more examples of Live Nation’s PR efforts like Dan Wall’s blog posts defending the company’s business practices.
In the court of public opinion, the case has already been decided.
So, these PR efforts are likely to have little impact.
Minus people dragging Live Nation on the internet.
That leaves us having to judge the case on its merits.
The first area is case law.
Live Nation’s case is based firmly in the Chicago School of thinking.
The Chicago School was built around an idea called “consumer welfare”.
Generally, this means that even if a monopoly was present if customers didn’t pay more…everything was cool.
That’s where Dan Wall’s example of Ticketmaster being a low-margin business comes in.
He’s saying that because Ticketmaster doesn’t have huge profit margins, they can’t be overcharging and harming the customer.
Somewhere around 2010, a new thread began called “The New Brandiesan Movement”.
This was named in honor of former Supreme Court Justice, Louis Brandeis.
It is an anti-monopoly movement built on the idea that too much power in too few hands is harmful to the economy, society, and democracy.
The three big names to know in this new take on antitrust thinking:
Tim Wu
Jonathan Kantar
Lina Khan
All three of these lawyers are at the heart of the Biden administration’s view on antitrust enforcement.
And, the case against Live Nation fits into the more aggressive antitrust regulation of the Biden administration, but this movement started to take root during the Trump administration when there were rumors about actions against Google, Apple, and Amazon.
What does this mean?
I’ve almost exhausted my knowledge of antitrust and competition law, but you’ll likely see the government’s case revolve around some of the issues of consumer harm that they highlighted in their filing like:
The allegations of collusion with the Oak View.
The limiting of competition and innovation that can happen due to exclusive contracts.
The reality of the fees that aren’t transparent, non-negotiable, and can’t be comparison-shopped because of the lack of competition.
The opportunities to double-dip brought on by owning multiple pieces in the ecosystem.
The marriage between the primary market side of Ticketmaster’s business and the resale parts of the business.
What do I think?
It took about 8 years for the government’s case against Ma Bell to make its way through the legal process.
The US government’s work against Microsoft’s monopoly started in 1990 and ended up in court in 2001.
So, my thinking is that we aren’t likely to see a resolution in this matter for 6+ years.
If you look at the history of Standard Oil, it is possible that we could see a primitive split off of different parts of the business like:
Turning Ticketmaster Resale into its own standalone business.
Breaking Ticketmaster out independently, but maintaining exclusive contracts with the other parts of Live Nation’s business.
Does this mean that the government would feel that this remedy was enough?
Probably not.
We could also see a scorched earth approach.
I’m going to look for behaviors to see what impact this lawsuit has on the ticket market.
I wouldn’t be surprised if there is a significant PR campaign against the secondary market in an attempt to highlight any possible conflicts or instances of bad behavior by resellers.
I would also watch the reseller fees on Ticketmaster’s resale platform.
I will also be curious to see if more stories come out of anticompetitive behavior by Live Nation.
In many cases, once the door is open, people feel much more comfortable coming forth with their own experiences.
But will prices come down?
That seems to be the point that folks in tickets keep hanging on…
Why?
Because Amy Klobuchar and others are talking about the price of tickets.
The suit lays out a case that Live Nation’s practices as a whole are anticompetitive and drive up pricing.
I think you have to look at the whole basket of purchases to get an accurate understanding of the cost.
But two points to close this out:
1. You can take a long weekend in London or Paris to see Taylor Swift and have it still be cheaper than going to Miami or Philadelphia to see a show.
Tickets are cheaper in Europe because of many factors such as stronger consumer protection laws, stricter resale regulations, and competition.
This means that you can’t say that tickets will instantly be cheaper. In truth, they may be more expensive in the short term.
We just don’t know for sure.
2. Any conversation about the price of tickets is going to turn attention back to the secondary market.
The case as it is laid out touches lightly on the secondary market, but this is something to keep an eye on because the second-order effect of this lawsuit is that the government looks at other parts of the ticketing business like consolidation deals, resale caps, and more.
What is going to happen now?
Who knows…but this is where I’m at right now.
What about you?
Let me know.
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