DOJ v. Live Nation-Ticketmaster

Episode Notes

Transcript

Lee Hepner:

Go to your independent music venues, go check out smaller artists who are playing shows in your neighborhood. There’s a lot of ways to be sort of an intentional participant, and I think we’ve kind of become accustomed to the only shows that people go to are the Ticket or the Taylor Swift Show or the Bruce Springsteen show. But there’s a lot of music and creativity in this world despite Live Nation’s dominance, and it’s important for consumers to really kind of put their money where their mouth is too. If they’re upset with Ticketmaster, try going to see independent music shows Support the arts. It’s kind of a hard thing to do right now in this economy given Live nation’s control, but it’s an important thing to consider.

Announcer:

Welcome to the award-winning podcast, Lawyer 2 Lawyer with J. Craig Williams, bringing you the latest legal news and observations with the leading experts in the legal profession. You are listening to Legal Talk Network.

J. Craig Williams:

Welcome to Lawyer 2 Lawyer on the Legal Talk Network. I’m Craig Williams, coming to you from Southern California. I write a blog named May It Please. The court have two books out titled How To Get Sued and The Sled. And speaking of books, I’ve got a new book out titled, how Would You Decide 10 Famous Trials That Changed History? You can find it on Amazon and drum roll please. Our new podcast in Dispute, 10 famous trials that changed history is currently featured here on the Legal Talk Network and on your favorite podcasting app. Please listen and subscribe to this mini series. Well, according to the May 23rd, 2024, US Department of Justice press release, the Justice Department, along with 30 state and district’s attorneys general, have filed a civil antitrust lawsuit against Live Nation Entertainment Inc. And its wholly owned subsidiary, everybody’s favorite, Ticketmaster, LLC, also known as Live Nation Ticketmaster, and they’ve been sued for monopolization and other unlawful conduct that thwarts competition in markets across the live entertainment industry.

The DOJ lawsuit alleges that Live Nation Ticketmaster unlawfully exercised its monopoly power in violation of section two of the Sherman Act, along with various state antitrust laws. According to Assistant Attorney General Jonathan Canner of Justice Department’s antitrust division, the live music industry in America is broken because Live Nation Ticketmaster has an illegal monopoly or antitrust lawsuit, seeks to break up Live Nation Ticketmasters monopoly and restore competition for the benefit of fans and artists. High demand for the tickets to Taylor Swift Eras tour and a Rise in Ticket prices for the 2022 Bruce Springsteen concert are just two examples of how Live Nation Ticketmaster actions angered consumers and ultimately led to the DOJ to step into action. So today on Lawyer 2 Lawyer, we will discuss the Justice Department’s lawsuit against Live Nation Ticketmaster. We’re going to talk about this lawsuit, the monopolies antitrust law, and the potential impact this could have on the ticket sales Giant and future ticket sales. And to help us better understand today’s topic, we’re joined by Lee Hepner Lee’s a California-based antitrust lawyer and senior legal counsel for the American Economic Liberties Project. He started his career in civil litigation representing plaintiffs in Labor and First Amendment litigation, and for the last decade, he’s worked in and out of government on policies that address corporate power at the local, state and federal level. Well, welcome to the show, Lee.

Lee Hepner:

Thanks so much for having me.

J. Craig Williams:

Well, let’s get a little bit of background about your role as legal counsel for the A ELP, the American Economic Liberties Project.

Lee Hepner:

Yeah, so I’m senior legal counsel here at the American Economic Liberties Project. We’re a nonprofit nonpartisan organization that advocates for enforcement of the antitrust laws and for policies that promote economic fairness and that really extends to workers, consumers, small businesses, really across the entire American economy.

J. Craig Williams:

Wow. So how did you get into this particular role and what is it that enticed you into it?

Lee Hepner:

Yeah, well, I’ll spare you my full biographic history, but I’ve long been interested in the way that corporate power controls the way that we move through our society and how it impacts our independence in society. And you see this across industries from agriculture to food access to airlines, to you name it. I mean, we’re talking today about live music events. It really is kind of a pervasive problem across the American economy and one that I’m eager to address.

J. Craig Williams:

Well, let’s get talking about that and let’s get your overall reaction to the antitrust lawsuit that the DOJ filed.

Lee Hepner:

I mean, I’m thrilled. We’re very happy to see the Department of Justice bring this lawsuit against what is really one of the most notorious and persistent monopolies in our economy right now.

J. Craig Williams:

Can you tell a little our listeners a little bit about the background of the Sherman Act and what it’s intended to enforce and why it’s particularly relevant in this case?

Lee Hepner:

Sure. The Sherman Act is a federal antitrust law. It’s really the foundational antitrust law in this country is passed by Congress in 1890, so it’s over 130 years old and it’s probably the most significant law in this country for protecting fair competition and preventing abusive conduct by monopolies. There are two sections to the Sherman Act, and I’ll kind of get through this briefly, but section one prevents contracts that restrained trade, and then section two prohibits monopolization or attempts to monopolize any part of a market. And that section two is really what we call single firm conduct when a firm is acting on its own to impose constraints on free market competition.

J. Craig Williams:

Right. So what’s the American Economic Liberty Project doing in response to this?

Lee Hepner:

So we’ve been advocating for this lawsuit for some time. In October, 2022, we launched a coalition called the Breakup Ticket Master Coalition. You can tell we really struggled with that name, but the intent of that campaign was really to bring together live music venues, artists, fans, independent ticket sellers to build political support for the Justice Department to take this action. The Justice Department has limited resources to address corporate abuse across the economy. So we were really trying to build support for bringing a case against Live Nation, and we ended up sending over a hundred thousand letters to the Justice Department. So it was really a massively successful campaign.

J. Craig Williams:

So what is the problem? Why is the Justice Department suing Ticketmaster?

Lee Hepner:

Yeah, at the bottom of the case, it’s that Live Nation is a gatekeeper for the entire live music industry today. I think a lot of people think of Live Nation principally as a ticketing company, and certainly Ticketmaster is a hugely powerful ticketing company that is a wholly owned subsidiary of Live Nation, but the case really is much bigger than that. Live Nation is a concert promotions company. It controls venues either through their direct ownership or exclusive contracts over major concert venues across the country. More than 60 of the top a hundred amphitheaters in the United States are owned by Live Nation. Live Nation is an artist management company, and on top of that, it’s an advertising and sponsorship company. So this lawsuit is really kind of getting at how each of these different business lines are used to reinforce Live nation’s dominance over the entire industry. They manage the artists, they promote the tours that the artists go on, they decide what venues the artists play at. They decide what merchandise and beverages are sold at the venue, and after all of that, they control the largest ticketing company in the world. Ticketmaster with an over 80% share of the market where they set fees. So it really is kind of getting at Live Nation’s control over the entire live music industry.

J. Craig Williams:

How does it adversely affect ticket buyers?

Lee Hepner:

Well, I mean the most direct evidence of the impact on ticket buyers is the fees that Live Nation charges through its ticket selling platform. But again, it really is more pervasive than that, and you see that at each level of the live event industry from the venue level to the cons, promotions level to the advertisement and sponsorship level. Live Nation is essentially assessing a giant tax on each of these business lines. They are driving up costs for venues, for independent venues and independent concert promoters. They are entering into predatory agreements with artists with very high advances that are hard to repay, and all of these costs are being passed through to consumers, and it’s part of the reason why it’s so much more expensive to attend a concert today than it was even 10, 15 years ago, far less than it is in Europe, for instance.

J. Craig Williams:

Well, and what’s the chance of success for this? I mean, not to badmouth this thing, but Pearl Jam didn’t win and they had the Justice Department with them.

Lee Hepner:

I love the Pearl Jam anecdote. It really shows that this is a Gen X story. I’m a millennial, but I remember being very young and having a cool older cousin who was a huge Pearl Jam fan and this distinct memory that even in the early nineties, it kind of sucked to be a music fan. And because Ticketmaster sucked back then too, as to the chances of this lawsuit prevailing. I think that there are a lot of steps that happen between now and then. These cases take a long time to bring to a resolution. It can take years before we get to trial in a case like this. I think what we are seeing though is a well articulated complaint from the Justice Department that is rooted in a deep understanding of how the live music and entertainment industry works and Live Nation’s really dominating role in that entire industry. And so I think that generally what we have here is a very strong complaint by the Justice Department that’s going to take a long time to bring to resolution, but which I think Live Nation is going to have a tough time pushing back against.

J. Craig Williams:

Right. Well, how did we get into this mess in the first place? Why isn’t there competition against Ticketmaster?

Lee Hepner:

Yeah, I mean, the reason that there’s not a competition against Ticketmaster, again goes back to this problem that Live Nation controls each of these different tiers of the music industry. So take for instance, an independent music venue. If they don’t want to use Ticketmaster because Live Nation is controlling so much of the concert promotion business, they might not get the artists coming through to their venues. So you see how venues are essentially bound to live Nation’s Ticket selling service as a condition of getting the popular tours that are coming through town. So that’s just one reason, and those exclusive agreements between Ticketmaster and live music venues are really at the core of this complaint.

J. Craig Williams:

So it sounds like the easy thing to remedy this would be to avoid those exclusive agreements and open them up so that artists can contract with whoever they like.

Lee Hepner:

Yeah, I think that that is a very obvious low hanging fruit in terms of a remedy to this case. I think the other thing that we’re advocating for is just a breakup of Live Nation and Ticketmaster, that merger that went through in 2009 that in hindsight 15 years later probably should never have been approved. I mean, these were firms with enormous market power on their own before deciding to enter into a merger with each other. In fact, live Nation was standing up its own ticket selling business. So really the merger of these two powerhouse concept promotions business and ticket selling businesses back in 2009 was a mistake. And we’re advocating and the Justice Department is expressly calling for actually a breakup of Live Nation and Ticketmaster.

J. Craig Williams:

What about some of the very famous artists like Taylor Swift who has stood up to Ticketmaster? You think that’s going to have any effect here?

Lee Hepner:

I will say that the Taylor Swift phenomenon has been enormous in antitrust circles. When Taylor Swift tickets went on sale and fans were outraged because they either couldn’t get tickets or Ticketmaster’s platform kicked them out of a queue or they ended up getting tickets and they were hundreds of dollars, and then they saw the fees on top of those. I mean, you saw internet platforms and chat rooms pop up for people dealing with the emotional trauma of not being able to get a ticket to a Taylor Swift concert, and you saw a huge boost very organically through our campaign to call for a breakup of Live Nation and Ticketmaster through those incidents. It wasn’t just Taylor Swift as we know it was Bad Bunny, it was Bruce Springsteen, you name it. I mean, this has just been a problem up and down the entire industry and not just those major artists.

J. Craig Williams:

Well, Lee, at this time, we’re going to take a quick break to hear a word from our sponsors. We’ll be right back and welcome back to Lawyer 2 Lawyer. I’m joined by Lee Hepner, he’s legal counsel at the American Economic Liberties Project. Let’s talk about tickets. I can remember when I was younger and much younger than you are, I paid five, 10 bucks for a ticket. Now it’s 500 to a thousand.

Lee Hepner:

Yeah, a lot of things are going on here, and it’s important to put this in perspective. I mean, there’s been a ton of press around how expensive it is to see the Taylor Swifts of the world on tour. Taylor Swift has also made 4 billion off of her eras tour. I am sorry if the Swifties are listening and mad at me for that comment, but really not every artist is making this much money, and a lot of fingers are being pointed at the artist for setting ticket prices too high. But you see bands like Wednesday, that’s another kind of really fun indie rock band. They went viral last year for a post about just how expensive it is to go on tour. Artists are Frontloading Travel, hotel gas, and all sorts of other expenses, and a lot of those artists are getting advances from Live Nation, but then they have to pay back those advances and essentially become Live Nation’s revenue generators. You see Live Nation entering into these split agreements with co-pro promoters and independent venues where again, these co-pro promoters and independent venues are suffering to make their own balance sheets appear in the black, and that’s driving up costs on tickets. So it really is kind of spiraling.

J. Craig Williams:

Where is all of this money going?

Lee Hepner:

Yeah, it’s a good question. Live Nation loves to say that they’re not making money, that if we were actually a monopolist, you’d see we are making up much higher margins and they’ll point to the fact that they are making 1.7% margins on their concert promotions business. But really Live Nation is playing a trick here, and Live Nation is taking up a lot of that money. So while they can make a very small margin on their promotions business, which is a capital intensive part of Live Nation’s business, they’re actually leveraging their dominance and concert promotions into other business lines that are easier to scale and much more profitable. So ticket selling, you see them enjoying over 30% margins in sponsorship and advertisements, you see over 60% margins. So Live Nation is actually making a lot of this money and taking it for themselves.

J. Craig Williams:

But some of the artists, I mean, I know that they’re working with Ticketmaster, that they’ve got a role in setting ticket prices and so forth.

Lee Hepner:

Yeah, certainly. And I think that artists have become sort of a punching bag in part because Live Nation is deflecting its own responsibility for this, but artists do set, have a role in setting those ticket prices. But again, artists are receiving advances from Live Nation to go on tours and in order to pay those advances back and make a living themselves, they actually are pressed to set those ticket prices even higher. There’s another kind of compounding element of this, which is the industry has changed. Artists aren’t making as much off of physical album sales, but even when they’re selling merchandise at a concert, they’re engaged in a split with Live Nation. So artists are not really deserving of the adverse energy that they have gotten here. Most touring artists are struggling to get paid while Live Nation is extracting a lot of the money that they would otherwise be making from this industry.

J. Craig Williams:

You may not recall the breakup of at TI think it was probably before you were born, but look how that’s turned out. We used to have one phone system with relatively easy billing and you could call and get a response and get things handled. Now, I don’t know how many telephone companies there are out there and how difficult it is to get customer service. Are we going to benefit from this?

Lee Hepner:

Well, it’s funny that you bring up at and t yes, certainly before my time, but when you study antitrust like I do, that one looms large in history. And actually the breakup of at t was a historic achievement. And in hindsight, a very successful thing that happened. And what you saw in the wake of the breakup of at t was a wave of competition and innovation in that space. You saw local telephone companies being able to engage in the long distance market for the first time, which many people will say is the baby phases of the contemporary internet. So you see the innovation that springs from breaking up companies like this is really kind of a catalyzing event for innovation that we really can’t foresee today. Microsoft is the other big example from the early two thousands when they broke up Microsoft. People credit that with giving rise to Google, becoming a powerhouse in the mid two thousands or Apple’s own surging position in the market. So you see a lot of innovation and competition happen when you shake up an industry through a breakup.

J. Craig Williams:

All right, well, let’s take off your hindsight glasses and put on your future hat here and give us a prediction. What’s going to happen if the DOJ wins? Are we going to see a Google or a Sprint pop out of this thing?

Lee Hepner:

I don’t know if we’ll see a Google or Sprint, but I do think that the whole live event industry benefits if Live Nation is no longer smothering each of these business lines. I mean, I was at a conference with the National Independent Venues Association a few weeks ago in New Orleans and talked to all sorts of independent venue owners who are really under the thumb of Live Nation. And these are companies who get into the business because they are creative people. They like the music industry, but they are barred from selling the products that they want to sell. They are barred from taking or involvement in the way that the fees and the tickets are set. So really the creativity is being sucked out of this industry because of Live Nation’s dominance over it. And I think what you would see in the wake of this, in the form of competition and innovation is a lot more kind of fun, I think happening. I mean, really this is an entertainment industry. I think we should be having more fun and fewer complaints about how hard it’s to get a ticket to a Bruce Springsteen concert.

J. Craig Williams:

So are you telling me that we’re going to go back to the locally printed posters on the telephone poles that everybody collects Now, when Jefferson Airplane was playing at the Fillmore, are we going to see that level of band involvement like it used to be?

Lee Hepner:

Well, I can’t speak to that. There’s a certain nostalgia for that kind of thing I’ll admit. But what you might see is venues selling their own tickets right now. They are not allowed to do that. They’re subject to Live Nations ticketing rules and schemes, and there used to be kind of a quaint aspect of going to a box office to buy a ticket to a show. I dunno, maybe you see stuff like that. Again, what I think structurally should happen here is not just a breakup of Live Nation and Ticketmaster and an end to those exclusive agreements, but you might see what you saw with the Baby Bells, right? Like a regional breakup of the venue business, a regional breakup of the concert promotions business, which would open up a lot more competition for ticket sellers. It would open up better agreements with artists who are coming into town, competition for those artists to come to town from regional concert promoters. You’d see a lot more kind of newness in an industry that has really become calcified by Live Nation’s monopoly.

J. Craig Williams:

Are we going to go back to $20 tickets?

Lee Hepner:

Certainly. I mean, there are some shows that you can go to. I mean, there’s a dive bar down the street where I can go see a show for 10 bucks. Those artists aren’t the shows that you think of because Live Nation is not necessarily incentivized to promote those kinds of tours. But I think ideally what you would see is a decrease in prices as well that might require some regulation of the resellers market, which is a separate conversation, but also the same. And as much as Ticketmaster is a huge player in the reselling market for live events.

J. Craig Williams:

Well, Lee, it’s time for another quick break to hear a word from our sponsors. We’ll be right back and welcome back to Lawyer 2 Lawyer. I’m back with Lee Hepner. We’ve been talking about a Live Nation lawsuit. So Ticketmaster has this thing called dynamic pricing, and honestly, when I’ve, I’ve tried to buy a ticket from Ticketmaster or any kind of ticket service, I’m never able to buy directly from the venue. I can only buy from someone who’s a reseller. Is that going to stop?

Lee Hepner:

Yeah, I mean, look, so realistically what’s going to come out of this complaint if the Justice Department is successful will largely apply just to Live Nation and Ticketmaster. I think if you want broader reform of the reselling industry, you would have to achieve that through a broader regulation. And you see some of that in European Union. You see efforts to that effect in Maine and California efforts to sort of cap the margin on reselling so that you don’t end up with Bruce Springsteen tickets jumping to $5,000 and really kind screwing over, for lack of a better term, the working man who’s trying to see their hero in concert. So I think from this lawsuit, you you’ll see sort of a shakeup of Live Nation and Ticketmaster, which will open up different types of competition, but for regulation of dynamic pricing, which is a huge problem in this industry, I think you’re going to need to see Congress Act or State Legislatures Act

J. Craig Williams:

And how are listeners going to get involved and push that? I mean, is there anything pending now

Lee Hepner:

For people listening and for consumers and fans who are trying to go to a show, go to your independent music venues, go check out smaller artists who are coming to see venue or playing shows in your neighborhood. There’s a lot of ways to be sort of an intentional participant, and I think we’ve kind of become accustomed to the only shows that people go to are Ticket the Taylor Swift Show or the Bruce Springsteen show. But there’s a lot of music and creativity in this world despite Live Nation’s dominance, and it’s important for consumers to really kind of put their money where their mouth is too. If they’re upset with Ticketmaster, try going to see independent music shows support the arts. It’s kind of a hard thing to do right now in this economy given Live Nation’s control, but it’s an important thing to consider.

J. Craig Williams:

It is a very important thing to consider. Do you think that the American Economic Liberties Project is going to put forth some kind of legislation to kind of help with this?

Lee Hepner:

We have advocated for regulatory breakup of Live Nation and Ticketmaster, that structural separation, which has antecedents dating back to the way that we structured railroads so that if you owned the railroad, you couldn’t also own the coal that was carried by the railroad because it was going to snuff out competition for those lines. So we’ve advocated for regulation to structurally separate Live Nation and Ticketmaster. Certainly there are a lot of good ideas floating around there that I think as a regulatory matter we would get into. Right now, we’re very focused on building up additional evidence around this complaint and learning more about the industry ourselves so that we can highlight some of the stories that we’re hearing about this industry.

J. Craig Williams:

So if our listeners have some stories, they want to tell you some horror stories in their purchases, how would they do that?

Lee Hepner:

Absolutely. You can find my contact information on my website. It’s l [email protected]. Reach out to me. I meet with people all the time to listen to stories and frankly, I think individuals underestimate the value of their own stories, really can form the basis of change if they’re told in the right way. And we’re certainly here to listen.

J. Craig Williams:

So who’s the real beneficiary here? Is it going to trickle down to consumers who are buying tickets?

Lee Hepner:

Yeah, I do think it’s going to trickle down to consumers who are buying tickets and it’ll probably manifest in a lot of different ways. I mean, one of my favorite ways to talk about this is the independent movie house industry where you see a lot of movie houses, the larger ones struggling for various reasons, but you do see this kind of surging energy around kind of truly independent venues for watching movies. I mean, that should be the case with independent concert venues too, where you are actually going for a tailored experience that feels unique and feels curated and matches the artist and is run by a concert promoter who has the freedom to put together the event that they want to put together, a venue that is excited to invite people into their venue for the experience that they are curating and not an industry that is just being dictated by Live Nation.

J. Craig Williams:

Are you thinking this is going to happen soon? I mean, if I want to go see Earth Wind and Fire in concert this fall, am I going to be able to get less expensive tickets, or is it going to be several years from now?

Lee Hepner:

Yeah, I mean, I hate to be the bearer of bad news on this front, but these lawsuits do take a long time to bring to conclusion. You see the lawsuit against Facebook that was filed by the Federal Trade Commission in 2020, and we’re still waiting for a trial date in that case four years later. So these cases do take a long time. We also advocate at American Economic Liberties Project to shorten those timelines, to bring these cases to resolution more quickly. So litigating a case like this is going to take some time. It’s going to be some time before we see a true shakeup of this industry that I think consumers and artists deserve, but we’re in it for the long haul and we will be following this very closely.

J. Craig Williams:

Great. Well, Lee, we’ve just about reached the end of our program, so it’s time to wrap up and get your final thoughts, and you’ve already given our listeners your information on how to reach out to you, but maybe you can tell ’em how they can reach out and support your organization as well.

Lee Hepner:

Yeah, go check us out. We’re at Economic liberties.us. We advocate in all sectors of the economy. I mean, if you’re annoyed that you didn’t get a refund for your flight cancellation, that’s the kind of work that we do is advocating for those reforms. And in fact, the Department of Transportation just adopted a rule to that effect. This kind of work is taking a place across the economy, and we are very excited to be a part of it and helping to improve the fairness of participating in this society.

J. Craig Williams:

Well, thank you. It’s been a real pleasure to have you on the show today. Thank you very much.

Lee Hepner:

Thank you.

J. Craig Williams:

Well, here are a few of my thoughts about today’s topic. Obviously, like everybody else, I’m a ticket buyer who goes to concerts. I think my last one was ZZ Top couple hours Drive from my home, but the ticket prices were outrageous, 500, 600 bucks for two tickets, and as I mentioned on the podcast earlier, I would’ve paid 5, 10, 15, 20 bucks for those back in the day. Well, nothing is back in the day anymore, but hopefully this Department of Justice lawsuit will rain down and give us some relief sooner rather than later. Hopefully not four or five years from now, but it’s not going to solve the problem alone. You as listeners want to get involved with this a little bit further. Let’s encourage Congress to get a better control and a better grip on this from both the artist’s perspective and the consumer perspective. Well, that’s it for Craig’s Rant on today’s topic. Let me know what you think. If you like what you heard today, please rate us on Apple Podcasts or your favorite podcasting app. You can also visit us at legaltalknetwork.com, where you can sign up for our newsletter. I’m Craig Williams. Thanks for listening. Please join us next time for another great legal topic. Remember, when you want legal think Lawyer 2 Lawyer.

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