Take, for example, an April 2016 concert in Nashville where Ticketmaster added a $14.75 fee on top of a $36 ticket for a show in an amphitheater Live Nation owned. Even Michael Rapino, Live Nation’s chief executive, called that fee “not defendable,” according to an internal email.
Holding onto venues is critical to a company that relies so much on ticket fees. Mr. Rapino has repeatedly boasted to Wall Street that the number of venues it tickets around the world – a statistic it does not release — is constantly growing.
For the live music market, a larger question going forward is whether Live Nation is now so big, so empowered by the merger, that competition in ticketing at the major venues is effectively blocked. Jared Smith, the president of Ticketmaster in North America, said no, that evidence of vibrant competition can be seen in the innovative technology and better deals that his company must now offer venues to keep them from switching to a rival.
“The space is more competitive than it’s ever been,” he said. “We’re working harder each and every year.”
AEG acknowledges that some part of its difficulty in securing contracts is rooted in its own missteps in developing a competitive ticketing system. And certainly, at the lower reaches of the market, Ticketmaster’s share is not nearly so commanding.
But it’s clear that Ticketmaster, by whatever means, has kept its rivals from gaining a meaningful foothold in the market for major music venues.
Preserving competition in the ticketing market was a chief concern for regulators when the Live Nation-Ticketmaster merger was proposed in 2009. Live Nation, which had long stayed in its lane as a promoter and venue operator, had just begun to sell tickets and was taking on that role at some 110 venues.
If the two companies merged, that competition — a healthy marketplace development, as regulators saw it — would disappear.
So, as part of the consent decree, Justice officials ordered steps that they hoped would enable two new robust challengers. One measure required Ticketmaster to license its ticketing software — the proprietary system that allowed it to service swarms of customers when a popular concert went on sale — to its competitor AEG.
It was also required to divest a ticketing subsidiary, Paciolan, to another competitor.
But, as it turned out, AEG never licensed the Ticketmaster software because, it said, it did not view the technology as cutting edge. The company that Ticketmaster sold off, Paciolan, remained a niche player in the music end of the business.
“It has now been eight years since the merger and the world does not look a lot different,” said John E. Kwoka Jr., a professor of economics at Northeastern University and a longtime critic of the merger.
Ms. Varney declined to comment on the effectiveness of the agreement she had shepherded. But the antitrust division’s former chief counsel, Gene Kimmelman, said the Justice Department had been hampered in what it could do to create competition in an industry already so dominated by one company.
“The people who came in to oversee this transaction were very interested in doing everything imaginable to create more competition in ticketing in the marketplace,” he said, “and were frustrated that the options were unbelievably limited.”
Few buildings in Louisville are as important to the local economy as the KFC Yum! Center, a 22,000-seat arena on the banks of the Ohio River that features a mix of events, from Louisville Cardinals basketball games to concerts by Garth Brooks.
In 2012, Live Nation submitted a joint bid with another company for a contract to manage the arena. Three people who listened to Live Nation’s pitch said in interviews that the company said some of its tours might skip the arena if it lost the deal.
“One of their main selling points was the relationship with the talent that they had and their ability to determine where that talent chose to play,” said Larry Hayes, who was then chairman of the Louisville Arena Authority, which oversees the venue.
The arena picked AEG anyway.
Mr. Fikre and other AEG officials say that two years later, when their company considered replacing Ticketmaster with their own ticketing service, AXS, Live Nation gave a warning.
Over dinner on the night of a Miley Cyrus concert in August 2014, they said, a Live Nation executive told AEG’s local venue manager that some Live Nation tours would likely bypass Louisville if AEG made good on its plan to replace Ticketmaster.
This is one of the incidents that AEG complained about to the Justice Department, pointing out that the consent decree specifically forbids Live Nation from threatening to withhold shows from venues that do not hire Ticketmaster.
The AEG account is supported by an internal email in which its employee reports being warned that the Yum! Center might lose “toss of the coin shows” — the kind that could go to a nearby arena — if Ticketmaster was dumped.
Mr. Hayes said in an interview that he had not been aware of a second warning. He had, in fact, endorsed retaining Ticketmaster, he said: it had served the arena well. But the letter of endorsement he wrote to AEG made plain that he understood there was a nexus between employing Ticketmaster and retaining access to Live Nation talent.
“Due to the relationship between Ticketmaster and Live Nation,” Mr. Hayes wrote, “and knowing how important content is to our financial stability, the Louisville Arena Authority is requesting that AEG receive a formal bid from Ticketmaster to retain its business at the KFC Yum! Center.”
AEG officials say they ultimately ditched the plan to replace Ticketmaster because they worried the venue might lose show revenue.
Live Nation disputed the account of warnings and supplied data showing that since 2012 the number of tours it has sent to the KFC Yum! Center has only increased. (Even at the Gwinnett Center outside Atlanta, now known as the Infinite Energy Center, the number of Live Nation shows rebounded after dropping off in 2014.)
There is little evidence, actually, of Live Nation retaliation. Competitors say that is because venues so rarely stray.
Critics say enforcement of the consent decree has been complicated by what they call its ambiguous language. Though it forbids Live Nation from forcing a client to buy both its talent and ticketing, the agreement lets the company “bundle” its services “in any combination.” So Live Nation is barred from punishing an arena by, say, steering a star like Drake to appear at a rival stop down the road. But it’s also allowed, under the agreement, to redirect a concert if it can defend the decision as sound business.
Mr. Buffier, of the New York Attorney General’s office, said the ambiguity creates “high burdens to prove violations in court.”
Competitors assert that the bundling lets Live Nation pressure venues without ever uttering a threat.
“They don’t need to,” said Marc Leibowitz, co-owner of One Percent Productions, an independent concert promoter in Omaha. “It’s just implied.”
David Willis, a former ticketing executive who left Ticketmaster in 2014, said the company was always careful to instruct the sales staff to respect the rules as to how talent could be mentioned when pitching an arena for business.
“We were not saying, certainly, ‘If you don’t go with us you are losing that,’” he said. But he acknowledged, “I would imagine that that is what they assumed to be the case.”
A Regulator’s Quandary
Live Nation and AEG both have their headquarters in Los Angeles, and last summer the companies faced off in a contract dispute over a new Major League Soccer team there, the Los Angeles Football Club.
Trouble began brewing when the team began looking for someone to ticket its new stadium downtown, due to open later this month.
Ticketmaster put in a bid. But the team insisted that Live Nation bring in some concerts as well. Live Nation balked — soccer stadiums, executives said, were a poor fit for concerts — but it struck a preliminary deal that included ticketing and a commitment to provide a handful of shows each year.
Then the plan hit a snag. AEG owned another professional soccer team in Los Angeles — the Galaxy — and had an agreement with Major League Soccer: if another franchise from Los Angeles joined the league, AEG had the right to match any competitor’s ticketing offer.
Wielding that clause as leverage, AEG blocked the selection of Ticketmaster, and the contract instead went to SeatGeek, an upstart company that had deals with a number of M.L.S. teams.
The Ticketmaster executives were furious and threatened to sue.
They told the team owners that, if there was no Ticketmaster contract, they would not be getting the promised Live Nation shows. The team then complained to Major League Soccer that Live Nation had threatened to withhold talent, according to a statement by the league.
Live Nation denied it had made any kind of threat and pointed out that the soccer league has a small equity stake in SeatGeek.
It said the arena had simply pulled out of a package deal that covered both ticketing and concerts — just the sort of bundling, it said, the Justice Department settlement had allowed. Without ticketing, according to Live Nation officials, it simply made no economic sense to put concerts in a space built for soccer.
But the consent decree, which expires in 2020, also says Live Nation cannot “condition or threaten to condition the provision of live entertainment events” if a venue decides to use another company for ticketing.
So is this a case of bullying, or just a business decision?
“Live Nation and Ticketmaster,” the company said in a statement “do not ‘condition’ the placement of concerts at venues on becoming the venue’s ticketing provider. Venues, on the other hand, often condition the ticketing contract on guaranteed content.”
Antitrust experts said this was the kind of thicket that Justice officials must navigate as they reviewed the antitrust complaints.
Since the dust up Live Nation has returned to the table and is discussing bringing acts to the stadium. The team declined to comment on the dispute. SeatGeek ended up holding onto the contract.
But the perception that Live Nation might withhold talent is prevalent enough that SeatGeek now structures some bids to address the concerns of venues who fear losing big stars, and revenues.
For example, last year, when SeatGeek tried to unseat Ticketmaster from its contract at the TD Garden in Boston, it included in its bid a promise to pay the arena $250,000 for every show that Live Nation pulled, according to a bid document reviewed by the Times and three people with knowledge of the negotiations.
Ticketmaster still won. TD Garden officials said the contract was awarded on the merits and that they had not received any threats.
A SeatGeek spokesperson declined to discuss the negotiations. But Russ D’Souza, a founder of the company, said he has seen evidence that competition in the market is less than open.
“When we sell to teams,” he said, “we have heard fears about losing concerts if they choose us.”
Continue reading the main story