In the wake of Monday’s report by the United States Government Accountability Office on the ticketing ecosystem, David Dayen published a scathing piece in The New Republic on the findings of the report Tuesday. Titled The Ticket Monopoly is Worse Than Ever (Thanks, Obama), Dayen’s piece argues that the government’s findings confirmed the worst fears of unfair market power that opponents of the merger of Live Nation and Ticketmaster, approved by the Obama administration in 2010, have come true.
His analysis centers on the fact that two giant companies – Live Nation/Ticketmaster (NASDAQ: LYV) and StubHub, which is a subsidiary of eBay (NASDAQ: EBAY) have such an overwhelming share of the market, there is none of the “air and sunlight in [ticketing] for strong competitors to take root, grow and thrive,” as Christine Varney – head of the Justice Department’s antitrust division at the time of the merger – put it in 2010. Instead, Live Nation and Ticketmaster dominate the primary ticketing market and serve as the second-largest secondary market operator, behind only StubHub.
Live Nation has made record profits for seven straight years. StubHub, a subsidiary of eBay, is similarly thriving from its dominance of the secondary market. Meanwhile, people wanting a little entertainment are getting screwed. “Coveted ticketed events are more expensive, harder to obtain, and larded with hidden fees as fans are being by squeezed for every nickel,” said Congressman Bill Pascrell (D-NJ), who had requested the GAO investigation. “Congress must step in to impose true oversight on an industry that makes its way ripping off customers.”
Pascrell, you may recall, was very vocal in the wake of the New York Times’ report that the Department of Justice was examining complaints that Live Nation Entertainment has abused its market power, calling for a “crackdown on monopolies” in a letter to the editor published by the New York Times on April 6. Since that report on the first of April, Live Nation stocks have more or less completely recovered to their previous state, but the brief nosedive spurred some investors to file a class action lawsuit against the company.
It is unlikely those investors will feel any better about the New Republic piece than they did following the Times’ reporting. Dayen discussed some potential remedies for consumers suggested by the report – capping resale prices, improving fee disclosure, inconveniencing consumers with non-transferrable tickets, etc. – but goes a step further.
A big step.
“The clearest solution is for the government to reverse its position: to effectively undo the merger, breaking the companies apart again,” he writes. “Promotion, ticketing, and artist management should be separate. Furthermore, no single company should be able to control 80 percent of the ticket sales market. That ought to be broken up as well, enabling competition on price and quality. You could do the same for the secondary market by limiting the number of event tickets for sale at any one exchange.”
“In other words, the bullying and deception at the heart of this industry would end if the market were structured to benefit ticket buyers, not giant companies.”