The Justice Department’s antitrust suit against Live Nation Entertainment LYV -7.81%decrease; red down pointing triangle landed in the middle of a live-events boom.
Amid seemingly insatiable consumer demand to see concerts—from Taylor Swift to the Rolling Stones, Bad Bunny and Pink—the federal government alleged Thursday that Live Nation has a monopoly in the live-events markets and uses that power to squelch competition and drive prices higher for consumers.
The company uses its “flywheel” of businesses across concert sponsorship, promotion and ticketing to control the economics of live events and hinder competition, the DOJ alleged.
“The DOJ’s lawsuit won’t solve the issues fans care about relating to ticket prices, service fees, and access to in-demand shows,” Live Nation said in a statement Thursday. The company argued that its ticketing service, Ticketmaster, doesn’t set prices; artists and their teams do. It said most of fees go to venues.
The spoils of a concert ticket are shared by many parties, including the performer, concert promoter, ticketer and venue.
Of the base ticket price, $90 flows to the artist, and the rest to a promoter, like Live Nation.
Customers typically pay additional fees of 20% or more of a ticket’s face value. In this example, a ticket-selling platform like Ticketmaster would collect $5 of those fees, while the rest flows to the venue.
The venue also collects event goers’ parking, food and alcohol spending. Live Nation owns and operates venues nationwide.
Artists typically partner with a merchandiser, who covers the $25 cost of making the item and then splits the profits, keeping $7 and passing $8 to the artist. For a $50 t-shirt, the venue, which staffs merchandise stands, might earn $10.
Note: Agreements between artists, venues, promoters and ticketing platforms vary widely. The example above isn’t specific to any one company or venue.
Source: people familiar with commercial arrangements for live events
Kara Dapena/THE WALL STREET JOURNAL
Live Nation works in each corner of the live-events business and is able to benefit from your event spending, from tickets to food, merchandise and parking.
Consumers resumed their heavy spending on live events as Covid-19 restrictions eased and have continued shelling out ever more for tickets in the years since.
The live-events industry has tried to price tickets more aggressively in recent years to capitalize on growing fan demand and capture money that would be otherwise lost to markups on the resale market. Resellers often drive up the cost of eventgoing, and regulators and ticketers have struggled to stop them.
Concert executives point to the booming secondary market and say artists can and should charge even more for tickets at the outset. That means the cost of nabbing the hottest tickets is likely to continue to climb.
Few companies have benefited more from concerts’ heyday than Live Nation, which is the world’s largest concert promoter and owns hundreds of venues as well as the dominant ticketing platform, Ticketmaster.
In the suit, the Justice Department alleges that the company’s exclusionary practices fortify what Live Nation refers to as its flywheel. The government argues that the company has a “self-reinforcing business model” that captures fees and sponsorship revenue, which it deploys to lock up artists to exclusive promotion deals. It then uses its powerful cache of live content to sign venues into long-term exclusive ticketing deals, “thereby starting the cycle all over again.”
Live Nation owns, operates or books shows for around 370 venues globally, including the House of Blues chain, the Fillmore in San Francisco, the Brooklyn Bowl in New York, the Hollywood Palladium in Los Angeles and the Moody Center arena in Austin, Texas.
Live Nation’s Ticketmaster holds some 70% of the U.S. market for primary ticket sales and 80% of that market in the biggest venues.
It has forged long-term exclusive ticketing contracts with most of the arenas and stadiums where the biggest acts tour. Those pacts generally stipulate that Ticketmaster sells the tickets for any event happening in those venues, no matter the artist or promoter.
The company owns a network of amphitheaters, which are particularly lucrative because Live Nation collects revenue from parking and concessions in those venues. In some cases in which a concert promoter owns a venue, it offers artists 100% or more of revenue from tickets sold for a show and, as the promoter, makes its money from goods and services sold at the event. Live Nation’s ancillary revenue per fan at its U.S. amphitheaters—where it can employ such a strategy—rose to nearly $41, up 10% from 2022.
Since merging with Ticketmaster in 2010, Live Nation has been under a consent decree with the Justice Department that bars the company from forcing venues that want to book tours it is promoting to use Ticketmaster. It also forbids Live Nation from retaliating when venues choose a ticketing competitor instead.
Concert promotion is a notoriously low-margin business. Live Nation makes up for it in part through deals with venues—it can strike agreements that help it make more money when it brings a higher volume of shows through a building. Live Nation’s profits largely come from Ticketmaster as well as its sponsorship and advertising business.
Write to Anne Steele at anne.steele@wsj.com and Kara Dapena at kara.dapena@wsj.com
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