Jul 24, 2023
On July 20, The Capitol Forum’s Teddy Downey talked with Diana Moss, President of the American Antitrust Institute, about what DOJ enforcement action against entertainment company Live Nation might include and what its implications could be for the live event and ticket resale spaces. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Good morning, everyone, and welcome to our conference call today on Ticketmaster Live Nation. I’m Teddy Downey, Executive Editor here at The Capitol Forum. And joining us today is Diana Moss, the President of the American Antitrust Institute. She is an expert in competition policy and enforcement with a notable track record of speaking engagements, including appearances before Congress and regulatory commissions at the state and federal levels. And recently, Diana and her organization, American Antitrust Institute, published a deep dive on vertical integration of Live Nation and Ticketmaster and proposed remedies. And so, that’s what we’re here to talk about. And Diana, thank you so much for doing this today.
DIANA MOSS: Thanks very much, Teddy. Good to be here.
TEDDY DOWNEY: And so, really quickly, for people in the audience, if you have questions, email us at email@example.com. Or you could go in the questions panel on the go to webinar software and we’ll get to questions at the end of the conversation.
But Diana, if you wouldn’t mind walking, I mean, you’ve been covering Ticketmaster Live Nation for a long time since the merger. AAI came out against that merger. I would love to hear your perspective on what did you worry about? What were you concerned about when the merger happened? And have all those bad things come true? And then I’d love to dive into the remedies from your paper after that.
DIANA MOSS: Sure, sure. And thanks for that great introduction. Yes, AAI has been involved in live events and ticketing issues for probably close to 20 years now. Early papers on paperless ticketing, which now sounds really archaic given where the industry has gone digitally in terms of ticketing. We took a very strong position in 2010 against the merger. That merger, the Live Nation Ticketmaster merger, was part of a triad of other vertical mergers, including Comcast/NBCU and Google/ITA, where the then DOJ waved them through with no conditions or very weak minimal conditions in consent orders.
And then in 2010, it was very clear to AAI that, first of all, a lot of deference was being given to vertical mergers based on thinking that vertical mergers enhance efficiency. For example, they increase coordination between different levels in a supply chain. They reduce transaction costs. The list goes on and on. So vertical mergers were waved through and we have very little case law from challenged litigated vertical mergers. Any competitive concerns were settled essentially with conduct remedies, aka behavioral remedies. Google/ITA contained a licensing requirement; Comcast/NBCU nondiscrimination, and anti‑retaliation commitments. The same thing for Live Nation/Ticketmaster. Small divestiture, but mostly it was about nondiscrimination and non retaliation.
So, we had this whole gestalt around vertical mergers being viewed as pro-competitive, getting a lot of deference by enforcers, and no case law. And that merger, Live Nation/Ticketmaster, was especially egregious because Ticketmaster had about an 80 percent share in primary ticketing. Just look at the guidelines that were just issued yesterday where a 50 percent share would be part of a presumption of anti-competitive outcomes. Well, here’s 80 percent in 2010. And to us, that was honestly an abomination, that the merger was not challenged and that DOJ did not seek an injunction.
Furthermore, DOJ took a conduct remedy, which we now know was easily and persistently violated by Live Nation-Ticketmaster, leading to the reopening of the consent decree in 2020 and the extension of an already ineffective remedy. So, enough’s enough already with a really harmful vertical merger. Since 2010, Live Nation has turned to attempting to stifle competition in the resale market, in addition to the traditional foreclosure of independent venues. It’s time for a case to be brought and we’ve given some thought to what breakup remedy would look like.
TEDDY DOWNEY: And before we get to the remedies, actually, you brought up a really good point and I want to follow up on it. You take a look at the new merger guidelines and you put yourself in the shoes of sort of re‑imagine going through that Ticketmaster/Live Nation again. How many of those do you think it triggers? I mean, it seems like a lot. It seems like a lot.
DIANA MOSS: Good question, Teddy, it’s an interesting one. For sure it would have triggered Live Nation/Ticketmaster. If the guidelines set forth as of yesterday were to have be applied to a past vertical merger, I think for sure Live Nation/Ticketmaster would have been a big red flag. More uncertainty on the other ones. Google, at that time, was just innovating and developing an airfare pricing and availability platform and they needed ITA’s back end software to be able to get into that business. But without spending a lot of time analyzing those other cases, absolutely, then and now, even with this new guidance from the agencies, Live Nation-Ticketmaster was a presumptively illegal merger.
TEDDY DOWNEY: It seems like with the new guidelines you have, the foreclosure issue, the entrenching dominance issue or continuing dominance, the trend toward concentration, there are just so many of the guidelines that just got put out that this would to me just immediately have red flags. And to the extent that going forward, when there are these mergers, you’re adding up the violations of those guidelines, it seems like that would make it like sort of a more obvious court case. So I think it’s a fascinating thing to kind of go back and use the new guidelines on old deals.
And now let’s get into the remedies. Because you’re calling for a breakup. And I wanted to sort of ask you how you came up with that being a necessary remedy. Is it enough? You’re talking about how they were just rampantly violating the consent agreement. Is that enough? I mean, it just seems like to me historically, you can’t, you’re not allowed to violate these consent agreements. That’s kind of a pretty good reason to go back and break something up. I’m wondering if that’s what you’re pointing to or how else you came to that conclusion.
DIANA MOSS: Sure. There were some really interesting legal, economic, and policy issues involved in what we’ve written in our commentary. One is that using Section 7 to undo this merger as a consummated deal is a no‑go, right? DOJ had their try. They had two tries actually. And so, that is not a legal mechanism to unwind a consummated deal when it has been approved through settlement and then the settlement was extended.
So our view is the best antitrust mechanism is a Section 2 case–a monopolization case. And it really unpacks into two major prongs. One is the traditional monopoly prong, which is strong incentive for Live Nation to squeeze out, ice out, smaller venues if they don’t take Ticketmaster’s ticketing services. That was the original concern in 2010. That’s what motivated the extension of the consent decree in 2020. Call that a traditional monopoly– squeezing out small independent competitors in the supply chain. And the motivation for that, the incentive for that, obviously comes from this dominant position in primary ticketing. Very simple. It’s really guideline five and guideline six in the new revised guidelines.
Since 2010, something really remarkable happened. The secondary markets developed. Secondary markets are important from an economic standpoint. They are generally efficiency enhancing if they work well and if they are competitive. Why? Because it gives consumers and providers different ways to get matched up, to get access to concerts. More fans get to go and artists get to see their fans. So we want those secondary markets to work well and be competitive.
However, with continued dominance in primary ticketing, and a big incursion into resale – where I think they also have the dominant position – Ticketmaster has this turbocharged incentive to self‑preference, right? Which is to debilitate or make it difficult for fans to access the secondary market, which then steers fans back to their primary and their secondary ticketing platforms.
And so I think, Teddy, the key thing here is, when crafting effective remedies which fully restore competition, you have to go to the beating heart of the anti-competitive incentive, which in this case remains Ticketmaster’s dominance in primary ticketing, and now a large position in the resale market. So that’s the modern monopoly. It’s very digital in its in its contours — ticketing platforms are digital. They involve collecting user data, issuing digital tickets, using digital technology to frustrate or to impede competition.
And so if you look at those two basic problems, squeezing out independent venues, the traditional monopoly, and if you look at the modern monopoly, which is using a dominant position in primary and secondary to self‑preference and drive fans back to Ticketmaster’s platforms, we need two very different remedies to solve those problems.
TEDDY DOWNEY: I want to focus less on the secondary market because I think that’s a lot more complex, right? I could see the secondary market has kind of like got a lot of issues with it. You’ve got these bots. You’ve got this rush for people to buy these tickets. I could see a lot of good reasons to have sort of restrictive policies around the primary ticketing that could be favorable to an independent venue or an independent musician or what have you.
So I’d like to focus on that first because having a messed up primary market leads to a lot of weird variables in the secondary market. So when it comes to the primary market, how is Ticketmaster using its power to harm independent venues and musicians? Because I think that’s kind of like if you’re a real world person, you sort of look at this market like musicians are making less money. Independent venues are struggling. You sort of see the real world effects. But we don’t probably spend a lot of time, I mean, The Capitol Forum might, but the public doesn’t spend a lot of time interviewing independent venues and musicians and asking them what’s going on? What’s wrong? How are you getting squeezed? And I’d love to learn more about that from you, what you’re hearing from these and what you’ve seen in the ensuing years since Ticketmaster/Live Nation was consummated.
DIANA MOSS: Good question. So, again, whenever you look at vertical mergers and incentives and abilities to impair competition, you have to go to the source of the incentive to exercise market power by discriminating against rivals, foreclosing rivals.
Teddy, you make a good point about talking about this in lay terms. How do fans think about it? How do artists think about it? And that is a lack of choice. For any live event to happen, a series of other events need to happen. There needs to be artist management, concert promotion, selection of a venue, selection of a ticketing platform. All of these functions are blanketed by the wingspan of Live Nation/Ticketmaster.
So from an artist standpoint, a fan standpoint, a venue standpoint, there’s no choice. You got to have a ticketing option for a live event, whether it’s sports or music. And there’s no choice in ticketing because of Ticketmaster’s dominance. That means venues have no choice, or very little choice, but to go to Ticketmaster. Artists have very little choice but to go to Ticketmaster for ticketing. Even Taylor Swift had to do this. She was promoted by AEG, which is a competing concert promoter, but Ticketmaster was the only ticketing option. Fans have no options but to go to the Ticketmaster website.
So Ticketmaster has strong incentives to engage in foreclosure. And absolutely, they would lose revenue by denying venues concerts, or good concerts on good days of the week. But they more than make up for those lost revenues by the monopoly prices that they charge on ticket fees. Face value tickets are a little different situation because they are set in conjunction with artists. But the monopoly power is really in ticket fees.
A lack of choice faced by all market participants in the supply chain faces steers everybody back to Ticketmaster. That is the source of their incentive to exercise market power. And if DOJ were to bring a case, it would have to show that foreclosure is a profitable strategy. If so, the only way to minimize or eliminate that incentive is to break off Ticketmaster, sell it off, to de‑integrate Live Nation.
The secondary market is slightly more complex, as you point out. Ticketmaster still has powerful incentive from its dominance in primary ticketing. They don’t want fans off buying in the resale market. They want to steer them back to their primary and secondary ticketing platforms. And the way they impede competition there is through a variety of mechanisms: slow ticketing, ticket hold backs, not releasing ticket inventory so prices go up, revolving barcodes. I was just at a Red Rocks event here in Colorado and dealt with the revolving barcode phenomenon where the barcode revolves every 45 seconds.
These are mechanisms that Ticketmaster uses to make it difficult for fans to effectively purchase and use tickets in the resale market. Of course, Teddy, it’s all pretextual, based on the claim that these restrictive policies are designed to protect fans or to prevent scalping. But they are overtly restrictive practices to debilitate the secondary market. The whole bot thing, by the way, is another conversation, that should be address through legislation to promote ticketing transparency.
TEDDY DOWNEY: I kind of want to go back again to talk about Live Nation a little bit. But before we get too far down the resale market rabbit hole, one of the reasons I think it’s a bit of a red herring is that Ticketmaster, you know, when you’re a monopolist, you can basically take all these things, digital ticketing, timed releases, which in some respect, a normal person might think that ‑‑ or under a normal circumstance, that could be a good thing. Or you’re fighting the bot. You know what I mean? You’re sort of dealing with this messed up market already. And if you’re the artist or the venue, you could see the utility in some of these things.
But because Ticketmaster is so dominant, they can sort of manipulate all of these different little behavioral things to their advantage. I mean, it’s just the complexity. You could see this a lot in monopoly markets where just everything is being made more complex. And so it’s harder to figure out how to get, you know, how to really identify is this inherently a bad thing? Or is it a bad thing because the way that it’s used by Ticketmaster creates this bad outcome?
So I have a hard time thinking through the secondary market because it feels like a race to the bottom in some respects. And if you wanted to have a functioning market, a lot of that solution might happen in the primary ticketing market. And since we don’t have a solution there, it just becomes hard to think about how that market should be designed, the secondary market. Or to your point, that Ticketmaster is not going to make that easy to make a secondary market not a race to the bottom, in other words. But I do want to ask, do you sort of see a lot of the complexity around the ticketing process as like part of this monopoly problem? I mean, it sounds like you do, but I’m kind of interested to get your thoughts on that.
DIANA MOSS: You make a good point. I do think the competition problems involving the secondary market are more complex than the traditional monopoly problem of icing out independent venues. That’s why early on I referred to it as the traditional monopoly. And then you’ve got the modern digital monopoly.
A lot of the tactics that Ticketmaster has used–slow ticketing, the hold backs, the revolving barcodes, busted tickets–are more difficult to police because they occur in a digital space. Ticketmaster, I think, should be really viewed as a digital platform. They are a dominant digital platform, where in fact they do host competing resellers on their platform and have dealings with rival ticketing platforms. But again, because they are dominant in primary ticketing, and now in secondary ticketing, Ticketmaster has powerful incentives to drive fans back to their own primary and secondary platforms.
A predicate for dealing with competition problems in resale is a policy recognition that secondary markets are generally good for consumers. But they have to work competitively, for the reasons we discussed earlier. Can’t buy a ticket on the primary market? Then go to the secondary, where there is further matching of artists and fans. But the basic incentive to self‑preference is operationalized by digital strategies to drive fans to Ticketmaster through the use of data analytics and algorithmic preference shaping and steering.
The tension is that simply spinning off Ticketmaster through a breakup remedy from Live Nation does not address entirely the secondary ticketing market. For secondary to work really well, there have to be a series of smaller break ups where the breakup remedy injects competition into primary and into secondary. What is needed is a Baby Bell-style break up, resulting in a number of smaller, independent, competitive primary ticketers and secondary ticketers competing hard on the merits, on ticket fees, and on quality and service delivery through digital distribution.
That’s why the commentary is really clear about saying, you know, the traditional monopoly venue problem could be solved by simply spinning off Ticketmaster. The secondary competition problem is not solved by just spinning off Ticketmaster. A consent order would need to take the additional step, which is to break up Ticketmaster into a bunch of little, smaller competing ticketing platforms, much like in AT&T in 1984.
TEDDY DOWNEY: Yeah, right. Because it’s not like Ticketmaster wasn’t already dominant before they bought Live Nation. So I am curious. I agree with you to the extent that there is a competitive ticket market, if it’s Ticketmaster broken up into pieces, how the competition over the primary market would work. And therefore, the secondary market might just look completely different. Because you might have all these different solutions for ticketing that are better for the venue, better for the artists, and then it just kind of looks totally like a totally different market, which is, I guess, what the end goal would be.
And we have a few questions from the audience. I want to get to them in a second. But before we go too far, is there anything going on, from your perspective, when it comes to Live Nation and how they operate that is just sort of like a glaring problem that was totally foreseeable from when the merger happened and examples that you’ve heard about, stories, anything that we can really tangibly, well, this is the problem? This is where the second two is really going to focus their time on in terms of like what we’ve seen happen in these markets.
DIANA MOSS: You’re absolutely right. Our proposals about what the most effective remedies are based on a hypothetical case. And cases involving vertical foreclosure, discrimination–exclusionary conduct in general-are going to hang on market participants coming forward to complain and being comfortable talking to public enforcers. We see the same thing on the private enforcement side.
However, we have found over the last many years in ticketing that the fear factor is sky high. It is sky high. I have had people talk to me from their cars, in closets, from secret spots where they didn’t feel like they could be heard. We know that the artist community is unwilling, because they fear retaliation, to speak publicly about these concerns. We have put on programs at AAI where it has been difficult to recruit representatives from the artist community, and venues, because of the fear of retaliation.
And by the way, Ticketmaster wouldn’t even have to do anything to foreclose rivals. It’s merely the threat that Ticketmaster could engage in a harmful conduct, to retaliate, that keeps everyone in line. Everyone falls into line like a good soldier, knowing that Ticketmaster is their only choice.
The fear factor would impede an investigation. We know the resellers to be more vocal, and very articulate, about how Ticketmaster’s practices stifle competition in the resale market and make it very hard for fans to get tickets and drive them back to Ticketmaster’s platform. The feat factor is a real concern, not only in this case, but with other monopolies in the economy.
With all of that said, Teddy, I think it’s really important to emphasize that this is a problem that requires multiple tools. We need strong antitrust enforcement, but we also need legislation that will promote transparency in the secondary ticketing market. Proposals to shut down or prohibit ticket transfer ability would just disable the secondary market.
So things like ticket transferability, transparency on the buyer and the seller and ticketing fees–those are all best dealt with by legislation that ensures greater levels of transparency in the secondary market. That’s not so much a job for antitrust enforcement. Antitrust enforcement is designed to get at the root of the anti-competitive incentives and conduct and, potentially, through a breakup remedy to eliminate those incentives. So there’s definitely a multi-pronged approach to deal with this problem.
TEDDY DOWNEY: You mentioned fears. I think part of the fee issue that makes it more politically — I mean, we’ve seen this from the White House. They really want to crack down on fees, this sort of fee driven economy, junk fees. And so I think that that is something that adds a little bit of obvious White House support for any initiative that’s going to tackle anti-competitive fees.
So we’ve got a couple of questions from the audience here before I let you go. First is round exclusive contracting with venues. What if there were laws that precluded exclusive agreements between venues and promoters or up to a cap like in Europe?
DIANA MOSS: I appreciate that question. A lot of folks working in the resale space have looked at the problem in exclusivity and they’ve actually studied empirically how fees are different when you have exclusivity versus non‑exclusivity. In our commentary, we included the example of the crypto arena and the Lakers and the Clippers tickets. Ticketmaster fees are lower on those tickets than they are, on average, for NBA games as a whole. So that would indicate some competitive pressure associated with having non‑exclusivity attached to a certain venue.
I think non‑exclusivity is a really important and key element of promoting competition at various levels in the supply chain because it all gets back to a lack of choice for artists, for venues, for promoters, et cetera. The question, I think, is through what mechanism, should non‑exclusivity be ensured? Is it done through an antitrust remedy? Which to me sounds like a conduct remedy. We’re not big fans of conduct remedies because they’re not effective. They don’t change incentives to exercise market power. They’re easily worked around. They require small market participants to step forward and they fear retaliation. So non‑exclusivity might best be introduced through legislation, which it has in a number of states. But I do not think it’s the ultimate fix. It’s part of a portfolio of fixes that come from the antitrust side and the legislative side.
TEDDY DOWNEY: We’ve got another question here. Breaking up the big vertically integrated industries. Can this truly be done? Is it realistic to advocate for?
DIANA MOSS: Absolutely, it is realistic to advocate for. AAI has been doing this for 25 years–it’s like pushing boulders up the hill. I do think that we have to continue to advocate for competition and to propose tractable solutions based on really good, high quality economic, legal and policy and business analysis. I think the guidelines, the revised guidelines, might help in this regard. They do contain more detail on the incentives created by vertical mergers, but also presumptions around vertical mergers that are new.
So, yes, it’s absolutely worth doing. But I have to say, the antitrust establishment is ten years behind the game. And there’s a lot of catchup to do when you’re dealing with well-heeled, deep pocketed defendants who are willing to go to court and litigate their fixes and present attractive stories about how their mergers are going to improve efficiency.
TEDDY DOWNEY: I think you need to look no further than the ongoing FTC and DOJ cases against Google and Facebook. They’re asking for breakups. I mean, it’s plain right out there. So, some of that litigation is a years long effort. The ad tech cases is a one year rocket docket case. We’ll get a result on that in the coming months.
So I think absolutely in this era, you know, this is totally on the table. I mean, to say it’s not, you’re just ignoring what’s happening in the courts right now. Now, DOJ and FTC may not win, but they’re certainly pursuing a breakup of both of those companies.
And then the last thing before I let you go, the guidelines again, coming back to that, just in terms of those are for mergers, but you can also look at it in terms of like conduct problems. You can look at that and say, hey, you are entrenching your monopoly with this type of conduct. You are foreclosing against competition. You are preventing new entrants. I mean, I’ve heard there are new entrants trying to get into the ticketing space. I mean, obviously there’s lots of efforts always for independent venues to try to, you know, that’s a more difficult proposition. But there’s lots of people trying to do that. It’s a hard game to win. It’s a hard game to enter, I should say.
So we have a lot of the merger guidelines kind of hint at this being a market that really needs antitrust enforcement to tackle a lot of these problems. Do you think that makes it like a higher priority or sort of more likely or sort of more obvious that the DOJ should or will or might bring a case here. I think there’s other things, obviously, the whole Taylor Swift movement and things like that bringing public attention to this. The fee thing that we have already addressed, I think that’s out there. But just in terms of that we have the new guidelines, we can use them as an analytical frame. Is that a fair thing to do when you’re sort of assessing, well, should there be a case here? Or are they going to see a case here?
DIANA MOSS: Well, that’s a good question. If a Section 2 case against Live Nation/Ticketmaster were to be brought, obviously, standards for bringing monopolization cases are high, almost insurmountable actually, at this point. But what you see in the guidelines actually bootstraps and supports desired reforms that we would want to see on the Section 2 side, which is to lower these sky high burdens that plaintiffs face in proving monopoly power and demonstrating leveraging or maintenance of monopoly.
So I view the guidelines as a really important step in the pro‑enforcement movement to strengthen, clarify, modernize–to really bring the guidelines up to speed with the learning that’s occurred and the observations from increasing concentration and the emergence of dominant firms. Ultimately, the guidelines provide transparency and predictability for businesses and for the government. But while the guidelines are non‑binding on the courts, the courts pay really close attention. And so if these guidelines are adopted in this form or whatever ultimate form, pending all the processing of the comments, we can view this as a really important step in providing needed support and clarity for what a what a pro‑enforcement regime would look like.
Teddy, just one last comment. You know, part of the concern here is the Biden enforcers have been in for a few years. We’re almost up against the one year mark to the next election. Getting a pro‑enforcement regime into place, getting enough traction for making it going to stick is a challenge. There’s good case law coming out and recognition in the courts that times are changing. But we want it to carry forward into the next administration, the next DOJ and FTC, state enforcers, the whole antitrust enforcement enterprise I think we’re at a critical juncture right now in that process.
TEDDY DOWNEY: One last really, really quick question. You brought up states. One thing has occurred to me that some of the conduct, as I learn more and more about Ticketmaster/Live Nation, it does sound almost like unfair methods of competition in some ways. When it comes to the states enforcing on this ‑‑ and there are states investigating this as well ‑‑ could you see almost some of the states like California or something where their statute is a little bit more flexible, has a little bit more of that unfair method of competition, being actually kind of a critical pillar of a case here? I think, obviously, we’ve talked about the ways that it could be a Section 2. But some of it does sound just like unfair method of competition, a little bit broader lens would help. What’s your quick 30 seconds ‑‑ I know you have to go ‑‑ comment on that?
DIANA MOSS: I think you’re right. Take California and the Cartwright Act and other states that have their own antitrust statutes. I think these issues are totally pursuable under state level statutes. I think the bigger question is, if there is movement in DOJ bringing a case under Section 2, if DOJ were to be successful and a breakup remedy were to evolve, this monopolization case would set a marker, a really important marker moving forward for addressing other monopolistic conduct in the economy.
And that’s how our commentary starts out. What about Monsanto and AG Biotech? What about Autodesk, which has been on an acquisition spree, building dominance in the building software industry? What about other monopolies that are out there? So getting a good result in this case, I think would set an important marker. And part of that success, I think, is getting as many states on a complaint as possible as a show of unity and the complementarity between federal and state enforcement.
TEDDY DOWNEY: Well, Diana, I can’t thank you enough. Everyone who hasn’t read the paper, I encourage you to take a look at the remedies and the breakup call. Very interesting stuff from AAI. And Diana, thank you so much for doing this. It was a pleasure chatting today.
DIANA MOSS: Thanks very much, Teddy.
TEDDY DOWNEY: And thanks to everyone for joining the call. And this concludes the call. Thanks again. Bye‑bye, everyone.