Lawmakers grill ticketing industry after Taylor Swift concert fiasco

Democratic Sen. Richard Blumenthal said Live Nation has managed to do the unthinkable: bridge partisan divides in Washington.

“I want to congratulate and thank you for an absolutely stunning achievement: You have brought together Republicans and Democrats in an absolutely unified cause,” Blumenthal said to Joe Berchtold, the president and CFO of Ticketmaster parent Live Nation.

“May I suggest, respectfully, that unfortunately your approach today in this hearing is going to solidify that cooperation,” Blumenthal said. 

The Connecticut Democrat argued Live Nation is essentially arguing “it’s not us, it’s everyone but us” despite the fact that the company is “the 800-pound gorilla here.”

He added: “Look in the mirror and say, ‘I’m the problem. It’s me.’”

Kathleen Bradish, vice president for legal advocacy at the American Antitrust Institute, told lawmakers at a Senate hearing that the lack of competition in the live entertainment industry results in consumers having the pay higher prices.

Live Nation-Ticketmaster is an example of "a very traditional monopoly" and also "a 21st century digital player" like other online platforms, she said Tuesday.

"Its dominance in markets up and down the live entertainment supply chain creates the incentive and the ability to limit competition and protect its market position," she explained.

On the concert side, it excludes "smaller or independent concert promoters and venues. In digital ticketing, it includes excluding ticket resellers and brokers who provide important competition via the secondary ticketing market," she said.

A top Live Nation executive sparred with lawmakers and other witnesses Tuesday over the extent of the company's ability to control the service fees that consumers pay on top of base ticket prices.

Live Nation CFO Joe Berchtold defended the company from suggestions that its dominance has allowed for soaring fees, citing data from the market intelligence firm Pollstar showing that Live Nation controls about 200 out of approximately 4,000 venues in the United States, or about 5%.

"Are they the biggest [venues]?" asked Sen. Dick Durbin.

"No sir, they are generally not the biggest," Berchtold responded. "The biggest tend to be the sports venues, the arenas, the stadiums controlled by the sports teams or the owners of the sports teams."

The venues controlled by Live Nation set fees that are "consistent with the other venues in the marketplace," Berchtold added, reiterating that service fees are set by individual venue operators, not Ticketmaster.

Singer-songwriter Clyde Lawrence testified that despite Berchtold's claim, venues typically profess not to know what the service fees on tickets will be.

"We definitely ask venues before [a show] what the fees are going to be," Lawrence testified. "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.' So I don't know where the answer lies, but no one's taking responsibility."

"Typically with Ticketmaster, we'll see a 40%-ish or closer to 50% fee added on top" of the base ticket price, Lawrence added.

In his opening remarks at a Senate Judiciary Committee hearing, singer-songwriter Clyde Lawrence explained how a fan's ticket money would be shared between a hypothetical concert played at a venue owned and operated by Live Nation, the parent company of Ticketmaster.

"And for the record, we've had them go as high as 82%," Lawrence said. "As with promotion, if an artist plays at a Live Nation venue, then the artist has no choice but to have the show ticketed by Ticketmaster. To be clear, we have absolutely zero say or visibility in how much these fees would be. We find out the same way as everyone else by logging on to Ticketmaster once the show already goes on sale."

While Live Nation's concert organizing costs are accounted for, the band still needs to pay for its tour cost, Lawrence explained.

Lawrence is part of an eight-member band called "Lawrence," which he says is a group of "seasoned artists who have toured extensively over seven years, starting with empty bars, working our way up to headlining sold-out shows for thousands of people and seeing our music chart on top 40 radio."

Lawrence has composed music for motion pictures, including the Disney+ holiday comedy movie “Noelle.” He also told lawmakers that the reality of being in this career has forced him to "embrace the entrepreneurial aspects of pursuing careers as artists."

In his opening remarks at a Senate Judiciary Committee hearing, Clyde Lawrence, singer-songwriter and member of the band Lawrence, explained how a fan's ticket money would be shared between a hypothetical concert played at a venue owned and operated by Live Nation, the parent company of Ticketmaster.

"Live Nation and Ticketmaster often acts as three things at the same time — the promoter, the venue and the ticketing company," he said Tuesday.

Lawrence described a hypothetical sold-out show at a Live Nation-owned and Live Nation-operated venue.

"When an artist plays these venues, they are required to use Live Nation as the promoter. Far from simply advertising, the promoter coordinates and pays the upfront costs to put together a concert, such as renting and staffing and the venue and striking a deal with the performer. Since both our pay and theirs is a share of the show's profits, we should be true partners aligned in our incentives — keep costs low while ensuring the best fan experience," he said. "But with Live Nation not only acting as the promoter, but also the owner and operator of the venue, it seriously complicates these incentives."

In negotiating, artists have no leverage over Live Nation, he said.

After these costs have been accounted for, Lawrence said the remainder of the show revenue is split between Live Nation and the band. He explained why this is a problem:

"In the world where the promoter and the venue are not affiliated with each other, we can trust that the promoter will work to get the best deal from the venue. However, in this case, the promoter and the venue are part of the same corporate entity. So these line items are essentially Live Nation negotiating to pay itself. Does that seem fair?" he asked.

Tuesday's hearing could give the Justice Department significant political support for an eventual antitrust suit against Live Nation, after multiple lawmakers and witnesses backed intervention against the company.

That appetite for action dovetails with the current DOJ's assertive approach to enforcement. The head of the antitrust division, Jonathan Kanter, has pushed to bring more lawsuits to trial, and more lawsuits advocating unconventional legal theories.

On Tuesday, lawmakers repeatedly questioned the US government's past handling of Live Nation, which involved a legally binding consent agreement that allowed the company to merge with Ticketmaster so long as the combined company abided by a number of behavioral conditions.

A 2019 Justice Department review found that Live Nation was not meeting its commitments under the order, but instead of suing, the Department modified the agreement and extended it for another five years, according to Kathleen Bradish, VP for legal advocacy at the American Antitrust Institute.

The latest allegations against Ticketmaster should not lead to a repeat of history, Bradish said.

"DOJ should pursue new enforcement action to obtain effective structural relief," Bradish said, calling for a breakup of Live Nation under either Section 7 of the Clayton Act or Section 2 of the Sherman Act.

Sen. Mike Lee said the way that history has unfolded since the Live Nation merger raises "very serious doubts" about the usefulness of consent agreements imposed by the federal government.

"While DOJ undoubtedly wants to know whether Ticketmaster is violating the consent decree, Congress should be asking whether the consent decree was the right decision in the first place," Lee said.

If the current Justice Department concludes that the consent decree has been violated, "unwinding the merger ought to be on the table," said Sen. Richard Blumenthal.

SeatGeek, a rival to Ticketmaster and its parent company Live Nation, alleged that many venue owners "fear losing Live Nation concerts if they don't use Ticketmaster" and its services.

Live Nation's tightly integrated operation puts it in a prime position to exercise undue influence, and the company must be broken up, argued Jack Groetzinger, CEO of SeatGeek.

"Live Nation controls the most popular entertainers in the world, routes most of the large tours, operates the ticketing systems and even owns many of the venues," he told lawmakers. "This power over the entire live entertainment industry allows Live Nation to maintain its monopolistic influence over the primary ticketing market."

"As long as Live Nation remains both the dominant concert promoter and ticketer of major venues in the US, the industry will continue to lack competition and struggle," he said.

In his opening testimony, Live Nation CFO Joe Berchtold suggested that venues enjoy significant leeway to run their operations. He testified that Ticketmaster does not set ticket prices, does not determine the number of tickets put up for sale and that "in most cases, venues set service and ticketing fees," not Ticketmaster.

In his opening remarks at a Senate Judiciary Committee hearing, a top Live Nation Entertainment exec apologized for the Taylor Swift concert tickets sale fiasco.

"As we said after the onsale, and I reiterate today: We apologize to the fans. We apologize to Ms. Swift. We need to do better and we will do better," said Joe Berchtold, the president and CFO of Ticketmaster parent company Live Nation Entertainment.

Berchtold blamed the fiasco on a bot attack and said it forced the company to "slow down and even pause our sales," which led to a "terrible consumer experience that we deeply regret."

Sen. Amy Klobuchar, a Democrat from Minnesota, emphasized the importance of competition to uphold a capitalist system in her opening remarks at the Senate Judiciary Committee hearing on the event ticketing industry's market practices.

While criticizing the practice of consolidation in the market, she used Taylor Swift's lyrics, saying it's a practice that the country knows "all too well."

"To have a strong capitalist system, you have to have competition. You can't have too much consolidation — something that, unfortunately for this country, as an ode to Taylor Swift, I will say, we know 'all too well.'"