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Op-Ed: Live Nation Ticketmaster Merger Is Too Good To Be True

(Hypebot) –
David Balto is an antitrust attorney who testified before the Senate Judiciary Committee on the Ticketmaster-Live Nation merger. Previously, he was the Policy Director for the Bureau of Competition of the Federal Trade Commission and a litigator in the Antitrust Division of the Department of Justice.

GUEST EDITORIAL: With great fanfare a couple months ago Ticketmaster and Live Nation announced their proposed marriage. They suggest this union will result in savings to consumers, greater choice and even greater revenue to artists. It appears to be a deal that is too good to be true. That’s because it is.

The history of Ticketmaster and Live Nation’s past acquisitions gives one no reason to hope for a rosy future. Their past acquisitions have not resulted in either lower prices or better services so consumers have not received benefits from the deals. Ticketmaster’s use of the recently acquired TicketsNow to manipulate the ticket distribution for Bruce Springsteen concerts demonstrates the company’s proclivity to use acquisitions to manipulate the market, dampen supply and ramp up prices. Moreover, Live Nation’s addition of venue ownership and management to its concert promotion services has led to exclusivity arrangements that diminish alternatives for artists and audiences, as well as significantly increase prices. Combining a ticketing monopolist with the dominant firm in concert promotion hardly seems like a recipe for anything pro-competitive for consumers.

Moreover, the parties have not offered much in cost savings or efficiencies. When asked about the alleged efficiencies in the Congressional hearings, Ticketmaster responded that the merger would result in $40 million in savings, a truly paltry amount for a merger of two companies with billions in revenues. And why should we assume any of those costs savings would benefit consumers — without rivalry what incentive will there be for Ticketmaster to achieve these savings or pass them on to consumers? None.

"Artists should not allow starry eyed promises
of benefits to cloud the reality of this merger."

Ticketmaster claims that the merger will help unite the interests of the fans and the artists. At the Congressional hearings a handful of Ticketmaster and Live Nation affiliated artists’ dutifully submitted letters of support. Among the artists, Billy Corgan attested the merger “is a new model that puts power into the hands of the artist, creating a dynamic synergy that will inspire great works and attract healthy competition.” Artists should not allow starry eyed promises of benefits to cloud the reality of this merger. The only hands with power after this merger will be the combined Live Nation/Ticketmaster entity and it will determine the price of access to venues, concert promotion, ticketing and other services.
Permitting a single firm to dominate any market, especially one where choice and innovation is so vital seems a large check to write for these limited benefits. History tells an important lesson. For years we had a single phone company – Ma Bell – and if one wanted to develop new products or innovate, it was only after Ma Bell gave her permission. As people used to say in those days you could get any phone you wanted, as long as it was “black.” Once the Justice Department broke up Ma Bell there was a flood of innovation and new product development. The simple message is that competition is essential to the greatest level of innovation and creativity.

And this merger raises the same kind of concerns. Live Nation recent entry to the ticketing market, posed a serious threat to Ticketmaster’s dominance in the market. That alone is reason enough for the Justice Department to block the merger, considering the excessive fees consumers pay every day in ticket fees. Ticketmaster has 80% of the ticketing business in the United States. Though smaller companies currently offer ticketing services, Live Nation’s entry would have evened the playing field and provided more choices for both consumers and venues. Ticketmaster and Live Nation compete head to head in other services such as fan management and concert promotion and the merger could dampen competition in these markets.

"the combination…will dampen competition"

Even if one argues that there is no overlap in the services Ticketmaster and Live Nation provide because ticketing and concert promotion are complementary, the combination of the companies will dampen competition in the concert industry as well as ancillary music related businesses. To create a successful music business, whether concert promotion, fan management applications or ticketing services, requires access to key raw materials: artists, venues and ticketing services. By controlling these inputs the combined company could force artists to choose to use its concert promotion and management services, along with ancillary services, including venues, ticketing services, merchandising companies or fan club management solutions.

A combined company of Live Nation and Ticketmaster would possesses critical access to artists and venues, choking access or creating barriers to competitors that would make it hard for existing companies to exist and new companies to enter. The combined company can raise barriers to entry, making it harder for new companies to enter. It may also raise competitors' costs in an anticompetitive manner, or reduce the incentives to compete in the industry. Perhaps most importantly the merged firm will have access to the most competitively sensitive information of its rivals, with an almost boundless ability to use the information to its benefit.

"the Department of on the case… “

Fortunately, the Antitrust Division of the Department of Justice is on the case, investigating the merger and its potential anti-competitive impact on the fans, musicians, and the industry. During the campaign then-candidate Barack Obama decried the previous administration’s failure to challenge anti-competitive mergers. President Obama’s nominee to head the Antitrust Division, Christine Varney, has vowed to be a tough cop on the merger beat. There is no better place to start than by blocking this merger.

David Balto is an antitrust attorney in Washington, D.C . He frequently represents parties in government merger investigations and has successfully opposed several mergers. If you have any questions or are interested in learning more about the proposed merger, David can be reached at .