Last week the Senate Judiciary Committee held a much-anticipated hearing regarding the recent Ticketmaster-Taylor Swift fiasco. During the three-hour meeting titled “That’s the Ticket: Promoting Competition and Protecting Consumers in Live Entertainment,” lawmakers called witnesses and grilled Ticketmaster about the events of Nov. 18, when the online ticket giant’s website crashed within an hour of tickets becoming available for Swift’s upcoming The Eras Tour.
On that day, millions of prospective customers found themselves unable to purchase tickets to the “Shake It Off” singer’s stadium tour, with their screens either freezing before they could make their purchase in time or locking them out entirely. Soon after, Live Nation Entertainment, Ticketmaster’s parent company, was forced to cancel the remainder of its planned ticket sales due to what it attributed to “unprecedented demand” and “insufficient” inventory. The company also issued a public apology to both Swift and her fans for the disruption. However, fans were left outraged, with some quickly filing class-action lawsuits against the company. Several state attorneys general also launched consumer protection investigations into the company and the Justice Department opened a probe into Live Nation Entertainment. Unsurprisingly, the debacle ultimately culminated in last week’s hearing — and rightly so.
The incident raises important questions about what was truly at the heart of Ticketmaster’s website crash. While it’s certainly true that intense consumer demand played a role, as seen by the fact that tens of millions of uninvited customers flooded the website during the first hour, there may also be deeper-seated issues that involve Ticketmaster’s abuse of the market process and the effects that it’s had on competition, prices and ultimately quality of service.
It’s no secret that Ticketmaster controls the majority of the live entertainment market. According to the Government Accountability Office, Ticketmaster controlled more than 80 percent of the primary ticketing market even before its controversial merger with Live Nation in 2010. While having a large stake in a particular market isn’t in itself a reason for worry — other companies have a similar market concentration and still deliver affordable, quality products to consumers — how a company chooses to leverage that stake in the market matters.
Ticketmaster’s pattern of behavior is particularly troublesome. When the U.S government consented to allowing Live Nation to acquire Ticketmaster in 2010, it did so on the condition that the entertainment giant enter a legally binding agreement that establishes certain “structural safeguards” and “behavioral remedies” designed to protect consumer welfare and market competition.
However, a 2019 review of that agreement by the Justice Department found that Live Nation Entertainment — the company born from the merger — wasn’t meeting these commitments. The Justice Department found that Ticketmaster had, on multiple occasions, threatened to withhold concert tours from any entertainment venue that made deals with rival ticket companies. In other words, Ticketmaster had used intimidation and threats of retaliation to maintain its position as the preferred choice of venue. Despite these violations, the Justice Department decided to extend the consent agreement for another five and a half years, with the addition of new safeguards.
Ticketmaster has also been accused of excluding “smaller or independent concert promoters and venues” and manipulating the resale ticket market. A 2019 undercover investigation by Toronto Star and CBC reporters found that a resale division of Ticketmaster had voiced support for helping facilitate “the mass scalping of its tickets,” and using a company software program to help bulk buyers resell their tickets online.
The software allowed Ticketmaster to collect a second commission on every “verified resale” ticket sold on its website, in addition to the commission collected from the original ticket purchase. Not only did the investigation find that Ticketmaster violated its own “terms of use” agreement, which strictly prohibits the “use of automated means to purchase tickets,” but it also contradicted previous company statements which had referred to scalpers as “pirates” and a threat to consumers.
This isn’t the first time Ticketmaster has been accused of interfering in the resale market. Ticketmaster previously received flack for its cozy relationship with several professional sports teams as a result of positioning itself as the “official” reseller of the National Football League and National Basketball Association and aggressively promoting its own Ticket Exchange website as the only safe place customers could go to purchase resale tickets. This strategy has often led customers, unaware that cheaper tickets are available elsewhere on the secondhand ticket market, to purchase tickets at above market prices.
Other examples of Ticketmaster attempting to manipulate the resale market provide more evidence that the company has knowingly worked against consumer interests by limiting choice and establishing artificial price floors. This consumer harm is what raises red flags, as traditionally antitrust enforcement has been advanced through the lens of the consumer welfare standard, which stipulates that markets should encourage competition and deliver consumer benefits like reasonable prices.
With a track record like this, it’s no wonder Ticketmaster’s current ticketing fiasco has generated so much controversy. Fans and policymakers alike are right to question how Ticketmaster could have failed to make adequate preparations for such a highly anticipated event. They’re also right to question whether the role Ticketmaster plays as an event promoter, venue operator and ticket retailer has harmed competition and the availability of affordable tickets.
While lawmakers should refrain from making broad generalizations about the incident, and from proposing anything that may result in a heavy-handed government intervention in the wider consumer market, they’re right to demand that Ticketmaster exhibit better behavior and abide by established agreements. Likewise, lawmakers are right to demand more transparency from Ticketmaster. This recent Senate hearing seems like a good first step.
Nate Scherer is a Policy Analyst at the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.