DOJ Takes On Live Nation/Ticketmaster

• See the original web post and episode “Independent Musicians and the Antimonopoly Movement (Episode 76)” 
• Ron Knox writes in Teen Vogue “Live Nation/Ticketmaster Lawsuit Explained: Why the Justice Department Wants to Break Up the Company“
• ILSR’s Statement on DOJ Antitrust Lawsuit Against Live Nation
• Music industry experts say Live Nation monopoly hurts artists, smaller promoters | Canada Tonight

Kevin Erickson:

I think at this political moment where we have this growing, collective, all-hands-on-deck national anti-monopoly moment, I think that there’s something really important that the music community can contribute just because we’ve got so much direct experience with the impacts of ownership consolidation and monopolies in our own industries.

Reggie Rucker:

Hello, and welcome back to another episode of Building Local Power. I am your co-host, Reggie Rucker, here with my co-host, Luke Gannon. What’s up, Luke?

Luke Gannon:

Hey, Reggie. Doing pretty well. How are you?

Reggie Rucker:

I’m doing well. Sleepy as usual. Still not ready to get back on this coffee kick, but I’m good. I’m good. As you all know, hopefully you’ve been listening all year long. For the first half of this year, we’ve been producing this city series, a deep dive on how folks first in Detroit then in DC have been part of efforts to build local power in those communities. And now that we’re here in summer, everybody’s taking a summer break. We normally take a summer break, but as Luke said, loved it. We shouldn’t just ghost y’all, keep giving you episodes. So what we’re going to do is revisit some previous episodes from the archives of Building Local Power that have renewed relevance today.

But before getting into those episodes, we’re going to provide a fresh perspective with ILSR staff talking a bit about why this issue and the episodes we’re resurfacing matters in today’s landscape.

Luke Gannon:

In 2019, we aired an episode called Independent Musicians and the Anti-Monopoly movement about how concentration has impacted the music industry, so today we are resurfacing that episode in light of the recent news of the Department of Justice suing Live Nation, also known as Ticketmaster, for thwarting competition.

Today we are welcoming Ron Knox, Senior Researcher and Writer at the Institute for Local Software Alliance to the show who has done immense reporting on the impact of the Ticketmaster monopoly. He’s going to give us some brief updates on how the music industry landscape has changed since 2019. Thanks so much for joining us today, Ron.

Ron Knox:

It’s great to be here. Thank you, Luke.

Luke Gannon:

So in 2019 and it’s episode, you’ll hear that we discussed Live Nation having ridiculously high ticketing fees, invasive data practices, they leveraged their power against the few small remaining companies. And they were really the only company that you couldn’t avoid engaging with. Ron, in the past five years, since 2019, how has Live Nation Ticketmaster’s power increased, and what has the public’s response been?

Ron Knox:

Look, I don’t know if the company’s really become more powerful because it was already extremely powerful. Even back in 2011 when the Justice Department allowed Live Nation to buy Ticketmaster, both companies were super powerful. Ticketmaster was powerful, obviously, in concert and event ticketing. Live Nation was super powerful in artist management, tour promotion, venue operation, all those different parts of the live music industry.

So that hasn’t changed, and in fact, this monopoly has just been kind of going full steam ahead, certainly for the last five years, but indeed since that merger. What has changed, I think, is the visibility of that power. Obviously, the way the company botched the Taylor Swift ad and also incredibly public. And everyone jumped on them for that, right, from Swifties to consumer rights advocates, anti-monopoly advocates to lawmakers, and I think that that was important. It led to congressional hearings, lots of writing about the company’s monopoly, and so on.

But there have been more very public screw-ups from the company than just that tour presale, including other presales, and then the ticket prices after the pandemic live music shutdown. Those prices have been horrendously high, as everybody can tell you, and a lot of that is due to Ticketmaster’s power to charge high fees and use dynamic pricing. So I think that’s really what’s new over the last five years, and I think all of that has really led to this lawsuit that we’re talking about today.

Reggie Rucker:

Tell us about the lawsuit. What are the main components of it, and how do you think it’s going to impact the music industry?

Ron Knox:

For background, the Department of Justice, which is the part of the government that originally approved the merger back in 2011, they have now sued Live Nation and Ticketmaster over monopolization and its abuse of different parts of the live music industry. Like all good monopoly lawsuits, the government’s lawsuit here alleges two key things. First, that Live Nation and Ticketmaster have monopoly power. That one is honestly pretty easy. It’s about as easy as it comes in a lawsuit like this. We talk about market share, that just means how much of an industry one company controls, and for Ticketmaster in event ticketing, it’s like 80%. It’s super clear monopoly and also super clear high market shares for Live Nation in artist management and in tour promotion and so on. That was super clear.

The other part of that lawsuit, or any monopoly lawsuit, but certainly this one, is that the company used its power to exclude rival companies and generally to undermine the ability for other companies to come into the industry and to compete. I think the government did a really compelling job explaining both elements in that lawsuit. So we already talked about the high market share, also super high barriers to entry. That means how easy it is for another company to come into the industry and really compete and really operate a business. You think about rival ticketing companies, for example. How easy is it for another ticketing company to come in, scale up, and actually do what Ticketmaster is doing and compete with them head to head? The government’s saying it’s almost impossible.

So that gets to the tactics. What did this company do to maintain its monopoly? Obviously, it’s a long list in the lawsuit. I’m not going to go over all of them, but one example is the long-term agreements that Ticketmaster forces venues to sign in order to get access to Live Nation artists and tours and so on. Those agreements are like, in some cases it’s like 14 years long.

Reggie Rucker:

Oh, wow.

Ron Knox:

Yep. Imagine you’re a rival ticketing company. It means that you can’t realistically put together the size, the nationwide reach that you would need to really compete with Ticketmaster because so many venues of various sizes, not just the big amphitheaters or anything like that, but all kinds of venues have these deals in place with Ticketmaster. That’s exclusionary when you’re a monopolist, and I think that’s what’s made really clear in the lawsuit.

What are my thoughts about what the result could be? If the government wins, the government has asked for something super specific, and it doesn’t always do this in these monopoly lawsuits. What the government has asked for is for Live Nation and Ticketmaster to be separated from each other. Undo the merger, break them apart so there’s one company and another company. What does this do? This essentially lets competition in, in all the ways. If you’re a promoter, if you’re like an artist promoter, like a tour promoter, you no longer have to be stuck using certain venues and stuck using Ticketmaster for your tours because you can basically go anywhere, go to all kinds of venues, use all kinds of ticketing companies.

The other side of that coin is the ticketing companies. All of a sudden, you have the ability to service all kinds of venues all over the country. You can build relationships with artists without Live Nation getting in the way, so it just adds competition everywhere. What that competition does, hopefully I think from a consumer perspective, is that those fees get lower, the prices get lower, the choices get more abundant, service gets better, all those kinds of great results that we expect from good competition. That’s the hope.

Reggie Rucker:

Thanks for that, Ron. That was a great summary of what we’re looking at here. Definitely wanted to flag Ron recently penned a piece in Teen Vogue that gives at a high level what this is, what’s happening, why Ticketmaster Live Nation is being sued, and some of the ramifications. So we’re going to have the link to that in the show notes.

Before we let you go, Ron, we had you sort of take the listen to this episode we’re going to re-air right now and just wanted to get your thoughts. I mean, speaking of the article that you penned, there was a line in there that I’m going to paraphrase right now, but it said something to the effect of, “This proves that the power is in the hands of the people, as it should be.” I’m probably giving it away a little bit, but what do you think this moment says about how far we’ve come over the last five years and how we go about getting these victories? How do we build local power so that in 2019, we’re talking about what a disaster it is, and 2024, Ticketmaster Live Nation is getting sued? What does this say?

Ron Knox:

Well, I’ll mention two things really quickly about what it says. One, it says, I think to me pretty clearly, that perspective in the policies of the government have certainly changed, and that is incredibly crucial. You have the same part of the government, the Department of Justice’s Antitrust Division. The same part of the government that approved this objectively bad merger more than a decade ago is now going back and trying to undo the thing that it got pretty clearly wrong all that time ago. That’s a sea change in perspective and in policy, and I think that you’ve seen that not just in ticketing and live music, but across the economy, and that is super, super important. So that’s one thing that’s changed.

The other thing that gives me a lot of hope and really makes me excited, and not just in this industry, but in others, is that you’re seeing a lot of organizing. Not just among fans or consumers because that’s been happening, but among workers and small business groups. They’re kind of getting together, and they’re realizing that they can really have an impact on policy if they harness that collective power. There’s a group out there of independent venues, and they’re really starting to wade into these monopoly issues because obviously the Ticketmaster Live Nation monopoly and their abuses have affected those independent venues really acutely. So that’s great to see.

And then, you have groups of artists and independent promoters also organizing themselves, having a voice in policy, and really trying to be a weight on the other side of that scale from all of this corporate concentration and monopoly power. Again, that’s not just the live music industry. That’s really in lots of different pockets of the economy, but that’s really building local power, and that’s harnessing our collective power. Power of the people, as you say, so that’s really cool to see.

Reggie Rucker:

As you say, Ron.

Ron Knox:

As I say.

Luke Gannon:

I just want to close out by first thanking Ron. Thank you so much for coming on the show today. I think this was a great conversation in terms of how this will impact the customers of Ticketmaster and Live Nation. The fees get lower, the service gets better, the choices are more abundant. And what I really love about this episode is that we talk about independent musicians and the music industry at large and how this will impact independent musician, what the benefits will be. We hope you enjoy this archived episode, and thank you so much.

Zach Freed:

Today on the podcast, we have Kevin Erickson from the Future of Music Coalition. To start us off, Kevin, why don’t you tell us a little bit about your organization?

Kevin Erickson:

So Future of Music Coalition is a nonprofit activist think tank. We work to ensure that musicians and composers have a voice on all of the range of issues that impact their lives and their livelihoods, and we do that through education, research, and advocacy. We were founded in the year 2000, right about the time that the digital transition in music, in the music industries was really taking hold. And at that moment it became clear that if artists didn’t have an independent voice in those discussions, that all of these industry issues and changes would be framed as a battle between different commercial stakeholders, between different competing business interests.

But musicians themselves as workers have a huge stake in those issues, and so do audiences, diverse audiences and diverse communities. Music is really special. It’s about more than celebrity and commerce and entertainment. It’s a place where community voices and needs are elevated and where shared values are forged. It has this whole range of social and political implications outside of its marketplace value.

And so, one of the things that makes us unique is that we try to take a holistic view of the federal policy landscape and work on some of the issues that other organizations don’t. So sure, we’ve worked on some of the issues that you’d expect, like copyright and licensing and transparency and making sure the money gets to where it’s supposed to go. But we were also early supporters of net neutrality, for example, understanding that issue as a freedom of expression issue, but also as an access-to-audience issue for working musicians. We did the first research into musicians’ access to health insurance and understanding the unique needs and the barriers to coverage that musicians were facing. We’ve done original research into the impacts of ownership consolidation in radio. We continue to work on that issue and work for a media ecosystem that can serve the needs of diverse local music communities. We’ve worked to illuminate and demystify changing business models, and in the face of all of the changes that are happening in the industry every day, we’ve tried to hold the full range of musicians’ business partners accountable and make information accessible.

That accessibility piece is important because our organization has roots in the DIY ethos of the modern independent music movement and specifically the punk communities here in DC. Among the early important folks working at the organization where Kristin Thomson and Jenny Toomey who played in a band called Tsunami, ran an independent record label called Simple Machines, and put out a famous zine called The Mechanic’s Guide to Putting Out Records that broke down the logistics of how a record is released. Just here’s how to contact a pressing plant, and here’s how mastering works, and here’s how distribution works here. Here’s how you can get your release physically into independent record shops around the country, those kinds of practical things. Probably hundreds of little independent labels put out their first seven-inch record because of that zine, and then later CDs.

And so, we try and apply the same idea to policy that you can learn as you go. It’s like this iterative learning process that you can share what you learn, and then you also can just sort of step up and claim your space in these policy conversations. Your voice already matters, and you don’t need permission from anybody in a position of authority. You don’t need anyone’s approval to claim your voice.

Zach Freed:

So can you tell us a little bit about what led you to this work?

Kevin Erickson:

Music has always been really central to my life. In college, I got involved with my college radio station, KWCW 90.5 FM Walla Walla, and through that, got involved in booking shows for touring musicians who were coming through town, mostly centered around the independent music community of the Pacific Northwest, and then making friends with those folks and discovering that there was just this vast networked intersecting set of music communities all around the country, working musicians, sharing ideas and sharing what was going on in their local scenes. But there was a real gap between the way that popular media was talking about those musicians in their lives and the reality that I saw amongst my new friends. And I think this was like peak MTV Cribs era. Do you remember that show?

Zach Freed:

Oh, yeah.

Kevin Erickson:

Okay. So MTV Cribs, for anybody who’s younger than us I guess, was this show that you got to tour the mansion of the guy from Smash Mouth or something like that. And so, everybody had this perception that musicians were just doing really, really well economically, and it obscured the real conditions of labor that most people are experiencing. I think that’s changed now, but at the time, that gap was really pronounced and really deeply felt.

So after that, I ran an all-ages venue and art space in a small town while working in a music retail job and got to understand more of the mechanics and logistics of what was happening in the industry. Got to do some organizing work, trying to make it easier to start and run those kinds of spaces and make sure that more local communities had access to live music, especially for young people. And from there, got into the policy aspects of it because starting at the local level, to make a space like that work, you kind of have to make friends with the local fire department and take the mayor out to lunch. And then, recognizing that people are facing the same kinds of policy dynamics in different local communities, that there can be shared strategies and resources that we’re stronger working together. And then, ultimately, I was invited to come out and speak at the Future of Music Coalition conference and met a bunch of people out here and not long after joined with the team. It was like 2012.

Zach Freed:

That’s really interesting. Thanks for that, Kevin. So at ILSR, a lot of the work that we do is in this space of anti-monopoly policy. Why should a working musician care about monopolies and competition policy? What bearing does this have on the lives of working musicians?

Kevin Erickson:

So I guess one way to think about it is what kind of a marketplace makes it possible for broad participation to happen and for markets to be structured in ways that allow for the greatest amount of participation and for cultural diversity. Participation in the sense that music isn’t just limited to the kinds of people that have the right connections or the right relationships with the right corporations to be able to get their music to audiences, to be able to tour sustainably. Participation in the sense of looking at all different kinds of metrics of diversity. Historically, the industry has been exclusionary to different kinds of voices and different kinds of genres based on what the predominant market actors want to elevate. And I think similarly, there’s this thread that connects diversity of expression to diversity of business models.

So there isn’t one business model for how you make a living as a musician. There’s always been lots of different business models, and today there are more than ever. And what’s important in the face of that is to have a range of choices to let communities and individual creators decide what kinds of business models work for them, rather than having one size fits all models imposed from the top.

And so, my first encounter with ILSR’s work was when I was living in a small town. And after I’d moved away from that small town, there was a controversy about big box stores coming in and wanting to drop a big, I’m not sure if it was a Walmart or what, in the town that I was living in. And we were thinking about, well, what possibilities does that preclude for independent retail for the indie record store that I used to work at and the impacts on the communities, and how could markets instead be structured? How could policy choices instead be structured to keep things community centered?

When that conversation shifts to music, we have observed consolidation in almost every part of the music industry and in adjacent industries. And in almost every example that we can think of, that’s had negative implications for musicians themselves, both in terms of their ability to reach audiences on their own terms, and it’s had negative implications for musicians’ ability to earn fair and sustainable levels of compensation and for the working conditions that they’re operating under. And that’s in addition to other kinds of public interest harms and problems that consumers and music listeners and music fans are facing.

The anti-monopoly piece and the idea that you want to structure markets in ways that maximize real choice and real diversity, it’s always been a thread that’s run through all of our historical work, like looking at digital economies, looking at policies like net neutrality, looking at the ticketing marketplace back when the Ticketmaster Live Nation merger was under consideration. It’s always been a thread, but I think at this political moment where we have this growing, collective, all-hands-on-deck national anti-monopoly moment, I think that there’s something really important that the music community can contribute just because we’ve got so much direct experience with the impacts of ownership consolidation and monopolies in our own industries.

Zach Freed:

Yeah, that makes a lot of sense.

Thanks so much for tuning into this episode of Building Local Power. Now, this is the part of the podcast where you usually hear something about a mattress company issuing loans for audiobooks or something like that, but that’s not really how it works here at ILSR. We’re a national organization that supports local economies, which means we don’t accept national advertising. Please consider making a donation to ILSR instead. Not only does your support underwrite this podcast, but it also helps produce all the resources and research we make available for free on our website, like the one we’re discussing today. Please take a minute and go to ILSR.org/donate. Any amount is welcome and sincerely appreciated. That’s ILSR.org/donate. Thank you so much, and now back to the interview.

So moving from the more broad summary level, I thought we could spend some time talking about different sectors of the music industry and to just sort of break it down and make it more real for our listeners. In terms of the label sector, how has that space undergone concentration, and what has that meant for musicians?

Kevin Erickson:

Yeah, so historically people have talked about record labels as a kind of gatekeeper. And in 1995, I think there were six major labels, and today we’re down to three. It’s just Sony, Warner, and Universal Music Group are the three remaining major labels. The challenges that come with that level of consolidation in that sector is that those three companies have the ability to use their market power in ways that shape the marketplace for everybody else, and that’s especially true as we’re moving more and more into a digital environment.

I think that, in the nineties, there was an extent to which, if you didn’t like the way that the major labels were running their business, you could just start a little independent label and run your business differently. You’d run into some distribution bottlenecks, and you’d run into challenges getting your record on the shelf in stores. But if their business model, for example, that was based on moving lots and lots of units and paying out a smaller royalty rate to artists, but if it worked out for that particular artist, if they could make it up in volume, then it’s okay that the royalty rate is smaller.

So independent labels in that era we’re able to say, “Well, we’re going to just spend less on overhead and do a 50-50 profits split, and that way we’re not required to operate at such a massive scale.” That worked especially well because they were often offering music that was not targeting mass audiences. Instead of just doing pop hits that had the chance to sell millions or hundreds of thousands of copies of records, you could put out records that would sell 10,000 copies, 20,000 copies, and that would be one of many meaningful income sources for the artist if it was happening on a 50-50 profit split. The word that we use in the industry is recoup so that you’d be able to recoup on your investment and make sure that the artists were actually earning royalties earlier.

When you have a handful of companies controlling the marketplace, and it’s shifting more and more towards centralized digital platforms, the market gets constructed in ways that work well for the biggest stakeholders, but might not work as well for the little guys, the smaller entrants in the marketplace. And so, we’re stuck with a sort of a one size business model at a time when these technological innovations should be diversifying the kinds of business models that are available to artists.

Zach Freed:

Yeah, that’s kind of the story of platform capitalism writ large, really. And when you say platforms, do you mean Spotify? What are you referring to?

Kevin Erickson:

Platform is sort of a slippery word, and I think that’s something that has come out in these FTC conversations that it can be applied in a bunch of different contexts. I think that in terms of some of the biggest and highest profile conversations right now, certainly the structure of the on-demand full catalog streaming services like Spotify, like Apple Music, like Amazon’s new offering and Google’s offering, are one of the central places that battle plays out because they do have a kind of gatekeeper power. And more and more, it varies from service to service, but they haven’t been shy about using that gatekeeper power in ways that advance their interests and limit the amount of leverage that independent creators have, especially in an environment of cross-ownership and consolidation across different parts of the industries. Everything’s turning into platforms. Ticketing companies are platforms.

Zach Freed:

Let’s just take that opportunity to kind of transition into the live music space. Do you think you could tell our listeners about some of the big mergers that have taken place in the live space and the ticketing space and what that has meant for people who go to live music events and for people who perform live?

Kevin Erickson:

Sure. So the ideal situation is you have a bunch of different promoters in a city, and you have a bunch of different ticketing partners, and the ticketing companies are all working to compete to better serve audiences and better serve the artists and better serve the promoters. And the promoters are working similarly to better serve artists and better serve the communities. And so, you have this healthy, virtuous ecosystem.

When consolidation happens, it creates incentives to use the kind of gatekeeper power that they have in anti-competitive ways. And so, it means different things in different markets and for different stakeholders, but certainly one of the reasons that we have ridiculously high ticketing fees is because there’s not real robust competition in that space. With the merger of Live Nation and Ticketmaster, which I think is one that merits reconsideration, especially now that the conditions on that merger are expiring, there’s powerful incentives to drive things more and more in the direction of using their gatekeeper access point, so it’s like the one company that you kind of can’t avoid working with.

And so, they get to set the terms of engagement for the marketplace, and so they’re able to move things more and more the direction of more invasive data practices about audiences. They’re able to use their reach across all of the different markets to create these consolidated data sets, so they are able to know how artists are going to do in different markets, then leverage that data against the few remaining small independent promoters in other markets. And so, they have a kind of competitive power that only comes with operating at that big scale. So even if the little guys are able to start collecting more data and try and use their data about attendance to calibrate how they put on a show and what kind of offers they make bands and how they do the ticket price, because they’re not able to have access to what’s happening in all of the other markets, they don’t have the advantages of operating at scale.

I don’t want to only single out Ticketmaster here. We think in a lot of cities. We’re lucky in DC that we still have some strong independent promoters, but in a lot of cities we have an effective duopoly between Ticketmaster Live Nation and AEG, both in owning the venues themselves, but also on the festival circuit. The festival circuit more and more is an important, important source of revenue for the kinds of artists who can get those gigs and are playing them. To the extent that it’s fewer and fewer companies owning more and more festivals, there’s less space for risk-taking. There’s less space for actually staying in touch with what’s happening in a local or regional scene and wanting to elevate those kinds of voices. And so, the negative incentives kind of accelerate each other. You get kind of a negative feedback loop.

Zach Freed:

So from the way that you’re describing the transformation of the music industry, it sounds like with the changing marketplace and increasing consolidation across different spaces, live, ticketing, labels, it’s becoming harder and harder for independent musicians and music fans to escape the sort of clutches of these large monopolies, so like Spotify, Apple Music, Live Nation, AEG, the four majors that are… the three majors, sorry, that are still left. So outside of the consolidation space, what other policy areas would you say impact working musicians the most?

Kevin Erickson:

Well, I think a huge one is just healthcare. I think that there are a number of things that have really improved as a result of the passage of the Affordable Care Act. The essential benefits provisions are especially… The inclusion of preventative care, substance abuse and mental health treatments, that’s really important for populations that have elevated risks of substance abuse, elevated risks of mental health issues. Those things have been really meaningful, but access remains a problem. Affordability remains a problem. Whether a plan is actually affordable can still vary so much based on geography, based on whether you’re in a state that has accepted Medicaid expansion.

And so, as we’re looking forward towards what’s next for the health policy debate for working musicians, I think we have to look very seriously at Medicare For All. We have to look at models that no longer tie access to healthcare to a particular employer relationship, and that’s just because musicians are a great example of a population that doesn’t have a traditional employment relationship. There are exceptions, like a symphony orchestra player is employed by the symphony, and so they can have a traditional insurance plan or have a union-negotiated insurance plan. Or recording artists for major labels can have access to a union health plan, which is negotiated by the union as part of those deals. That’s great, but many, many musicians don’t have access to those kinds of things and don’t have access to the employer-provided care. So a single-payer approach, a Medicare For All approach would just be infinitely easier and more humane.

Even the process of shopping for a plan for people who are on the road so much of the year can just be super challenging. Finding a plan that covers out-of-network care. If you’re on the road, and you have an injury on tour, it’s a big question whether you’re going to be able to find a provider that’s covered when you’re in Cleveland or whatever. Those are unique considerations that this population deals with, that I think it’s common for other kinds of gig workers as well. But there’s things that are unique to music, and that’s what’s driving us more and more towards the payer conversation.

Zach Freed:

Thank you all for tuning into this episode of Building Local Power from the Institute for Local Self-Reliance. You can find all the links to what we discussed today at ILSR.org and clicking on the show page for this episode. That’s, again, ILSR.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. Finally, you can help us out with a gift that helps produce this very podcast, gets us great guests like Kevin, and produce original research on the way monopolies are impacting our economy.

Once again, please help us out by rating this podcast and sharing it with your friends on iTunes or wherever you find podcasts. This show is produced by Lisa Gonzales and me, Zach Freed. Our theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I am Zach Freed, and I hope you join us again in two weeks for the next episode of Building Local Power.