The 124-page antitrust complaint, joined by the District of Columbia and 29 other states, alleges in great detail that Live Nation has engaged in a series of anticompetitive business practices that helped secure its hegemony in the concert industry. The DOJ also went after Ticketmaster’s much-detested ticket fee structure, arguing that it “harmed fans” and “undermines innovation.”
Live Nation denies all this. In a statement released hours after the DOJ litigation made news, the company argued, among other things, that Live Nation Entertainment’s profitability is minimal compared to other Fortune 500 companies. To bolster this point, the company included a graph showing that it had a modest 1.4% net profit margin; Apple's was 25.3%. Live Nation also contended there actually is competition in the concert industry that threatens its market share, and this litigation would only make ticket prices go up.
That last point had been made earlier by music industry analyst Bob Lefsetz, who has something of a reputation as a gadfly in the concert business. In a newsletter sent out Wednesday, Lefsetz wrote, “[T]here will be hosannas in the marketplace on Thursday, or whenever the DOJ files their action. Finally, someone is standing up to Ticketb*stard. But it's a pyrrhic victory. Because Ticketmaster is not responsible for high prices, not whatsoever. As a matter of fact, Ticketmaster takes a de minimis amount of the overall fees.”
He continued, “If you want lower ticket prices address the secondary market. Allow the act and promoter to control the ticket as opposed to the fan. But the fan doesn't want this. The fan wants to be able to resell their ticket and make a profit. Someone's got to suffer in order to bring ticket prices down. And Live Nation and Ticketmaster are not the culprit.”
Hosannas, Cheers and Jeers
As Lefsetz predicted, the accolades for the DOJ's action came swiftly.But beyond that, the litigants made it clear they were out for blood.
“It is time to break up Live Nation-Ticketmaster,” said U.S. Attorney General Merrick Garland in a press release.
Texas Attorney General Ken Paxton said in a similar statement, “Mega-corporations cannot control entire industries to create anticompetitive environments, drive up prices, and take advantage of consumers.” The goal of Texas joining this litigation, Paxton said, is “to ensure fair competition for ticket sellers, concertgoers, venues, and others in the entertainment space who have been affected by this merger.”
The lawsuit received bipartisan praise, including from Sens. Mike Lee and Cory Booker. Robert Reich, a former secretary of labor who has since been a popular political commentator, called it “a big deal.”
Other players in the concert business have been especially receptive to the litigation. Spune Productions is a concert promoter from North Texas that runs the calendars at venues such as Club Dada in Deep Ellum, Tulips in Fort Worth and Andy’s Bar in Denton. It recently organized a pop-up concert by Keith Urban and is handling upcoming local shows for Guided by Voices, The Polyphonic Spree and Pedro the Lion.
In a statement released hours after the complaint made news, Spune announced its support for the DOJ’s action.
“We believe Live Nation's dominant position in the live entertainment market grants it undue influence over venues, artists, and ticketing services, creating barriers to entry for smaller players and stifling competition — this not only limits options for artists and fans but also perpetuates a landscape where creative expression is commodified and controlled by a select few,” Spune said in the release. “By acting against Live Nation's alleged anti-competitive behavior, Merrick Garland is championing the rights of independent booking companies, artists, and music lovers. His lawsuit signifies a crucial step towards leveling the playing field and ensuring that all participants in the industry have a fair chance to succeed based on merit and innovation, rather than monopolistic advantage.”
Gorillas in the Midst
Michael Maslanka is an associate professor at the University of North Texas Dallas College of Law (this writer is a student at that law school, but he has not taken any of Maslanka’s classes) who practiced for 34 years before joining the faculty in 2015. His prior work included a stint as a field attorney for the National Labor Relations Board.After reading the DOJ’s complaint, Maslanka explains, “This entity is being sued because it’s what you proverbially call ‘the 800-pound gorilla.’
“It’s being sued in part because of its size. The size of an entity can be so large, so big that it cuts off any kind of competition.”
But is the size itself a problem? In light of the old adage, “Where does an 800-pound gorilla sit? Anywhere it wants,” maybe it’s not so much the size as it is the way it’s carried.
“[Size] alone is sometimes anticompetitve, but there’s more to it,” Maslanka says. “It’s [alleged] that this entity is engaging in an anticompetitive scheme,” which the complaint claims includes retaliation against potential market entrants, among other things.
In an email sent to various media outlets including the Dallas Observer on Thursday afternoon, Live Nation offered an updated statement that specifically addressed the alleged anticompetitive scheme. The statement was made by Dan Wall, Live Nation’s executive vice president of corporate and regulatory affairs. Wall previously worked as a partner at Latham & Watkins LLP, an antitrust law firm in San Francisco, and before that, for the DOJ’s Antitrust Division.
Wall’s updated statement included denials of specific allegations, including a “competitive détente” with venue management firm Oak View Group (whose cofounder, Irving Azoff, served as Live Nation’s executive chairman and has partnered with Madison Square Garden on its operations) and various alleged threats against them and other companies. Wall called the allegations in the complaint “a grab bag of disconnected alleged practices that could never justify the type structural relief DOJ seeks.”
But one question remains: Where does Live Nation go from here?
“Live Nation can say, ‘You’re making allegations that we’re this terrible 800-pound gorilla, but we’re actually not doing a very good job of it. Look at [the] proof in the pudding: There is, in fact, competition,” Maslanka says. “And I think the retort to that is going to be, ‘Well, we’re taking action now so that you don’t stifle everything in the future. Because if this trajectory continues, there’s just going to be one gorilla, [and] it’s going to be you.’”
