Bad Blood Between Taylor Swift and Ticketmaster Sparks Government Oversight

On Tuesday, November 5, 2022, 11-time Grammy Award winning singer Taylor Swift began pre-sale on for tickets to her upcoming Eras Tour starting in Spring 2023. To be eligible for the pre-sale event, dedicated fans had to register in advance for the chance to get a code that allowed them to access the pre-sale on Ticketmaster. Ticketmaster is the country’s largest ticket provider. According to Ticketmaster Business, a record 3.5 million registrations were recorded for the pre-sale, with 1.5 million users receiving codes and the remaining 2 million being put on a waitlist for the chance to access the pre-sale once the code holders finished shopping. Demand for the event was expected to be extremely high. Swift’s last tour, the Reputation Stadium Tour, sold out 40 stadiums on the American leg of the tour, with Touring Data reporting 2,168,706 tickets sold, and total revenue of $277,311,343. Considering her Reputation Tour was four years ago, fans were eager to buy tickets for the upcoming event.

On the day of the Ticketmaster-facilitated pre-sale event, long wait times and website crashes frustrated fans and prevented many from accessing tickets. Two days later, which was the day before the tickets were expected to go on sale to the general public, Ticketmaster canceled the remaining sales, citing high demand and a lack of tickets. This left fans unable to secure pre-sale tickets to fend for themselves on resale websites with high markups. 

Expressing her frustration with the situation, Taylor Swift and her team have claimed Ticketmaster assured them multiple times that the website would be able to handle the demand for tickets. To further the frustration, Swift’s tour management claimed in a statement to CNBC that “Ticketmaster’s exclusive deals with the vast majority of venues on the ‘Eras’ tour required Swift to ticket through their system.” Swift’s statements turn the attention to a long-standing concern that a 2010 merger of Ticketmaster and event organizer Live Nation to create Live Nation Entertainment has created an unfair monopoly on ticket sales. 

The Merger of Ticketmaster and Live Nation

The merger of Ticketmaster and Live Nation sparked antitrust worry from the beginning, causing the merger to be brokered by the Department of Justice to ensure there were no antitrust violations. Live Nation President and CEO Michael Rapino testified to the Senate’s Antitrust, Competition Policy, and Consumer Rights Subcommittee that their live event company was struggling to stay profitable on its own in the wake of industry changes and the Great Recession, which saw American’s less able to afford the cost of event tickets. Instead of relying on government bailouts, Rapino claimed that by merging with Ticketmaster they would be able to save themselves by cutting administrative costs so they could provide cheaper tickets, which would allow families hit by the recession to attend more events and in turn stimulate the event and concert industry across America. 

The merger was approved in 2010 under the promise that it would decrease the cost of tickets and increase the general public’s access to event tickets, and the combined entity operated as Live Nation Entertainment. Twelve years later, the public is questioning if Live Nation Entertainment has kept its promise or if they are abusing their market dominance. The federal government is considering multiple oversight avenues to review whether Live Nation Entertainment’s operations are in violation of antitrust laws. These reviews may result the breakup of Live Nation Entertainment.

Oversight Analysis 

2018 GAO Report

In 2018 the Government Accountability Office (GAO) investigated and issued a report on event ticket sales. In the report, GAO explained that this investigation was conducted after state and federal officials’ raised issues about potential antitrust violations. The issues cited covered “ticketing fees, the effect of the secondary market on ticket prices, and the transparency and business practices of some industry participants,” including industry leader Ticketmaster. GAO found that tickets to most major events in America are sold at or below market value on the primary market by a handful of sellers, and then often resold on the secondary market either by professional ticket resellers, or fans that want to recover their money when they can no longer attend the event. Certain processes used by both primary and secondary market ticket sellers raise potential antitrust issues by preventing the public’s access to tickets.

The report listed three consumer protection issues. First, professional resellers, or brokers, have a strong advantage over consumers when buying tickets. Brokers employ numerous staff and specialty software called “bots” to rapidly buy many tickets before the general public has the opportunity. As a result, many consumers are forced onto the resale market to find tickets at a substantial markup. Second, GAO found that most of the websites reviewed did not clearly display ticket fees and disclosed them only after users entered payment information. The third finding was that “white-label” resale sites often charged higher fees than other ticket websites and used marketing that might mislead users to think they were buying tickets from the venue. 

GAO then analyzed three potential approaches to increase ticket accessibility to the public. First, they found that at least three states restrict nontransferable tickets, or tickets whose terms do not allow resale. The benefit of nontransferable tickets is that they allow more consumers to access tickets at a face-value price. However, they can limit a consumers’ ability to sell tickets they can no longer use, can create inconvenience by requiring proof of ID for entrance into the event, and “according to economists, prevent efficient allocation of tickets.” Second, GAO found that several states cap the price at which tickets can be resold to discourage professional resellers, “but according to some state government studies, the caps generally are not effective because they are difficult to enforce.” The third approach analyzed found that stakeholders “generally supported measures to ensure clearer and earlier disclosure of ticket fees.” 

The report found that Ticketmaster is the largest ticketing company in America. At the time of the merger, Ticketmaster held more than 80 percent of the primary market share, and it was still the market leader at the time of the report. On the secondary market, StubHub controlled half of the market, with Ticketmaster’s resale platform holding the second largest share of the secondary market at the time of the report. 

The Government Accountability Office does not have much power to enforce follow-up action on any of their reports. Congress can request the GAO investigate and report on issues, but it is then Congress’ responsibility to take corrective action once the report is published. Until now not much has been done to implement the GAO’s findings, but the information discovered should influence members of Congress as they move through other proposed oversight actions against Ticketmaster. 

Senate Antitrust Hearing

In response to public outcry when Ticketmaster fumbled the Taylor Swift tour sales, U.S. Senators Amy Klobuchar (D-MN) and Mike Lee (R-UT), Chairwoman and Ranking Member of the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights, announced they will hold a hearing to examine the lack of competition in the ticketing industry. Details about the hearing such as the date, time, and witnesses have not been released yet. 

In addition to organizing the hearing, Senator Klobuchar sent a letter to Ticketmaster in which she raised concerns that Ticketmaster and Live Nation Entertainment’s market dominance “insulates it from the competitive pressures that typically push companies to innovate and improve their services which can result in dramatic service failures, where consumers are the ones that pay the price.” She referenced an antitrust consent decree Live Nation Entertainment agreed to as a conditional term of the merger which prohibited it from abusing its market position. Information discovered through the Senate hearing could influence the DOJ to break up Live Nation Entertainment as a violation of the mergers consent decree. 

DOJ Investigation 

The 2018 GAO report and Senator Klobuchar’s letter referenced a consent decree. The consent decree is a set of terms agreed upon by the DOJ and Live Nation as conditions necessary to prevent the antitrust issues they anticipated would arise by allowing two companies with such high market dominance to merge together. Conditions such as the requirement that “Ticketmaster license its primary ticketing software to a competitor, sell off one ticketing unit, and agree to be barred from certain forms of retaliation against venue owners who use a competing ticket service.” Under the agreement, the DOJ reserves the right to inspect Live Nation’s records and interview its employees to determine continued compliance with the terms of the merger. Noncompliance can result in fines or corporate restructuring such as breaking apart the company.