The People Vs. Live Nation
Or how I learned to stop chilling and hate monopolies
Hello Everyone!
This week, we explored one of the most interesting music industry stories from the past year—namely, the massive lawsuit that the DOJ (along with, at time of writing, 39 states) have lodged against Ticketmaster/Live Nation. For those not keeping score at home (or, I guess exclusively going to DIY live events): Ticketmaster sells tickets for venues, Live Nation owns venues and books/promotes tours. The two merged in 2010, when Live Nation bought Ticketmaster, because what could go wrong with that kind of vertical integration?
Turns out…all kinds of stuff—most notoriously the infamous “junk fees” that can add up to 50% to the price of some tickets, an incredibly corrupt resale market, “dynamic” pricing for the biggest acts, and an opaque and frustrating website that managed to piss off a nation of Taylor swift fans. Now, we’ve actually looked at quite a bit of this previously. Check out, for example, our episodes on the history of Ticketmaster, or the battles around Bruce Springsteen concert pricing. Or see the recent Oasis reunion ticket debacle over “dynamic” ticket pricing. Yeah …ahem…we were on that 3 years ago.
BUT…what’s particularly interesting about this lawsuit— and the perspective brought to it by our guest Kevin Erickson, the director of the Future of Music coalition—is the extent to which it takes a systemic view of the harm’s caused by Ticketmaster/Live Nation. And by doing that, it’s possible to see an array of large-scale impacts beyond the consumer-facing grievances that normally dominate the space.
The key (unsurprising given that this is an anti-trust action) is scale. Because Ticketmaster/LiveNation has overwhelming control over large elements of the marketplace, they’re able to exert their influence in all manner of non-logical ways, connecting the apples of ticketing to the oranges of promotion for the detriment of everyone else. The power of this market control is made particularly clear in a chart released as part of the lawsuit, which breaks down the sectors of the Ticketmaster’s business by their profit margins.
Live music is, famously, not a great business. It’s often risky, it requires a huge amount of sunk capital, and just doesn’t generate that much profit. The same is not true of the other elements of the “flywheel”—at least according to this (company-filing derived) graphic, advertising dollars and VIP packages are significantly more attractive.
The reason why this matters, however, only really becomes clear when you take a step back and think sectorially. In a system in which there wasn’t a monopoly, these high-margin activities would be distributed across multiple firms—likely some promoters, some affiliated with specific venues, etc. You could imagine all kinds of ways that music-focused advertising dollars could get distributed, many of which would end with with some of that money flowing into businesses closer to the ground (so to speak) of the musical economy. However, because of scale, all of this money goes to one place.
And this is where monopoly comes in again—say you want to advertise against a specific tour, or at a specific venue. Maybe Live Nation owns it (not at all unlikely given their degree of penetration at the stadium level in the U.S.). Now, you’ve already signed a deal with them for the big room—how about the smaller club down the road? Versus the even smaller indy venue up the street? Which do you think you’ll end up connecting with—whether by the implication, or simply through the power of existing business relationships?
Multiply that across an innumerable set of decisions, at essentially every level of the business, and the real, culture-shaping impact of Live Nation’s practices becomes apparent. This gets a bit ahead of the data, but it’s hard not to wonder about whether or not the conservative, profit-hoarding (or rent-seeking) behavior common among monopolies has at least something to do with the relatively static nature of live music’s current Mount Rushmore—or indeed, of pop’s (only recently slipping) same-old-superstar focus?
You can listen to that hear (iTunes) or hear (Spotify), or wherever you do your podcastin’.
Department of Actual Music
Sam: Currently obsessed by this 2016 track from Japanese producer Yoshinori Hayashi. Restrained club rumbles and acid base slip around melting strings, with Can style chanting on top. And that’s just the beginning of an honest sonic journey. So in. And what a title!
Saxon: Weirdo, 11-minute, folk-sampling strangeness I know nothing about but love. Shout-out to The Quietus for this one. Their tireless work of consistently championing weird records is almost unmatched.
Saxon and Sam