Live Nation/Ticketmaster is reeling this week, with news breaking Monday that the Department of Justice is reportedly planning to file an antitrust lawsuit against the entertainment behemoth soon. The promotional and ticketing giant, accused of abusing its market share and regularly violating a 2010 consent agreement barring it from certain anti-competitive practices, saw its stock price take a hit on the news, will have its day in court soon enough – but continues to take a beating in the court of public opinion.
On the same day that the Wall Street Journal reported the looming lawsuit, Breaking Points released a video featuring anti-trust policy analyst Matt Stoller going even further than asking whether or not the company was a monopoly. He asks: “Is Ticketmaster a Criminal Conspiracy?”
“You might think that’s a bold question… and it is,” says Stoller, an author and Director of Research at the American Economic Liberties Project. “But some explosive new documents just came to light that suggest that, well, it’s a question worth asking. Lets dive in.”
Live Nation/Ticketmaster has been under investigation by the Department of Justice since at least early 2023. It was investigated and found to be in violation of provisions of its 2010 consent decree in 2019, which led to the decree’s extension to 2025 and the appointment of an independent monitor.
Stoller’s report is centered around the recent “bombshell” report unearthed by Rep. Bill Pascrell, which details allegations of Live Nation cooking the books for events to effectively defraud its own artist and event partners. Sourced from an expert report submitted as part of a lawsuit filed against the giant, the scheme allegedly involves the deliberate inflating of certain vendor costs in event production (which reduce profits that must be shared with partners), while secret “rebate” (aka kickback) payments were going back to Live Nation that did not need to be shared.
READ MORE | Pascrell Shares “Explosive” Ticketmaster Report Alleging Abuses
Naturally, the entertainment giant has defended itself against any and all such claims, typically trying to say that there is already robust competition in ticketing, and that the problems consumers face are all due to ticket resale being legal.
FURTHER READING:
- Department of Justice to File Antitrust Lawsuit Against Live Nation
- Live Nation Brings In Top Antitrust Attorney as EVP
- Live Nation: Privacy Demands “Stonewalling” of Senate Document Requests
- Analyst: Live Nation Stock Would Fall by 50% if Company Split
- Analyst: Ticketmaster, Live Nation Operate “Pretty Monopolistically”
- Live Nation a Monopoly? “Very Smart Assessment” Per Michael Rapino (in 2015)
- Rutgers Processor Calls for Ticketmaster Breakup in OP-ED
- Kid Rock Blasts Ticketmaster for “Monopoly” With Live Nation
- NPR Examines Ticketmaster “Monopoly” Accusations on 1A Show
- Economist Calls on Biden Administration to Break Live Nation “Monopoly”
TRANSCRIPT: “Is Ticketmaster a Criminal Conspiracy”
(Auto Generated courtesy of YouTube)
hi I’m Matt Stoler author of Monopoly
focused newsletter big and an antitrust
policy analyst in this big breakdown I’m
going to ask the question is Live Nation
Ticket Master the company that controls
most of the live entertainment industry
in fact a criminal
conspiracy you might think that’s a bold
question and it is but some explosive
new documents just came to light that
suggest that well it’s a question worth
asking let’s dive in in 2010 the live
entertainment industry was in shock when
Live Nation the nation’s leading concert
promoter bought Ticket Master which
basically had a monopolis a monopoly
over ticketing software and was a major
player in artist management it was a
very controversial deal and Ticket
Master had already bought out most of
its other competitors and ticketing
software and really upset Pearl Jam in
the 1990s was well-known you know Market
power problem but the government’s
antitrust division under Obama allowed
the deal to go forward anyway in fact
seems like they were sort of proud of
doing that
let’s take a look at this public picture
that was put on the doj’s website so
that publicly released photo shows the
head of the antitrust division Christine
Varney or number two William Kavanaugh
and their adviser Jee kimmelman
announcing that they were allowing that
merger and talking to reporters about it
now the Biden Anti-Trust division is
very different than the Obama antitrust
Division and they have been
investigating Live Nation Ticket Master
The Firm that the Obama Administration
allowed to form they’ve been
investigating it for years and when
firms be are being investigated they
tend to lawyer up and so that’s what
Live Nation did hiring an old antitrust
lawyer named Dan wall to represent them
against potential monopolization charges
that could be coming from the Anti-Trust
division wall defended Live Nation
publicly as part of a PR campaign
earlier last month in a blog post he
wrote that you know you might think that
Live Nation charges a lot for tickets
but that’s really just supply and demand
for popular artist the Corporation
itself charges low prices not high ones
he even put up a comparison of
commissions charged by online
marketplaces from twitch to Airbnb to
Uber to show how little Live Nation
charges let’s take a look you see Live
Nation charges less than twitch StubHub
Uber Airbnb etc etc concert promotion
wall wrote is not a highly profitable
business even for Live Nation end quote
so look at that commission it’s a measly
7% for Live Nation Ticket Master now for
sure Live Nation charges consumers a lot
of money and doesn’t pay much to artists
I this was Wall’s argument but they
don’t he wrote Set the ticket price and
even worse for Live Nation shareholders
at least it’s just not a very good
business wall concluded quote The
Narrative that Ticket Master fees are
responsible for high ticket prices makes
no sense according to wall the middleman
giant affects at most 2% of the price of
a ticket for its trouble still all of
that that argument from Dan wall from
from Live Nation Ticket Master feels
weird it sounds like it’s not true
considering that Live Nation CEO Michael
rapino made $139 million in 2022 that’s
a lot of money for someone in just such
a terrible business well the reason it
sounds like it’s not true is because
well it’s not true or at least it’s not
true according to new documents released
by Congressman Bill pascrell from
litigation in 2019 based on live
nation’s own financial data these
documents are from a court case uh
involving a concert at the New Jersey
State Fair in 2011 now I just want to
tell you where these documents came from
because it’s kind of funny um we often
think about monopolis as sort of
dominant and and powerful and all
knowing and that litigation has been
going on for 13 years at a certain point
the uh the plaintiff’s hired an expert
his name is Richard Barnett he’s one of
the top scholars in the business and and
he looked at live nation’s confidential
records and he wrote about how the
operation actually works and the
plaintiffs then submitted that report to
the court and the judge unfortunately
ordered it sealed so that no one could
read it saying oh it’s got confidential
information or or whatnot and that
should have been that except and here’s
where the stupidity of a of a monopolist
comes in Live Nation or someone’s on
live on live nation’s legal team or Dan
Wall’s team or someone like that they
screwed up and they accidentally
uploaded the report to a public court
site Pacer where pasel got his hands on
he just downloaded it
then he sent it out in a press releasee
and that’s how we have the documents
okay so what’s the case all about that
shows how Live Nation really works well
it starts with a concert when in 2011
the head of the New Jersey state feris
Nam is Al dorso hired a company called
juice entertainment run by two
experienced concert promoters to put on
a concert now Live Nation they they told
Live Nation do you want to do this Live
Nation wasn’t interested but as soon as
I got when that juice entertainment was
doing it and started to book acts Live
Nation demanded to C produce the show
and and dorso who was running the the uh
State Fair was just like okay you guys
work it out and he later put it you know
Live Nation they were the the 800 PB
gorilla I said go see if you can work
out a deal that that’s what he was
saying to juice now juice and Live
Nation couldn’t work out a deal and then
Live Nation managed to get juice fired
how well the smaller firm sued Live
Nation claiming the giant coerced
performers into not signing with juice
to appear at the and threaten to
withhold its ticketing services to The
Venue the state-owned metaland sports
complex if it were not allowed to be a
partner that’s from public reporting in
other words Live Nation used dominance
in other lines of business artist
promotion and ticketing software to
thwart arrival which is exactly why the
Obama staffers like Gene kimelman should
have blocked the merger in the first
place but this situation leaves a
question why didn’t Jews consent to let
Live Nation Co produce the event I mean
half the profit is still better than no
profit right well the reason is
according to to juice that Live Nation
offered a deal that would have saddled
the firm and an artist with the costs
while Live Nation itself took the
profits in this purported Arrangement
Live Nation and Juice would have split
the cost of putting on the event like
renting the venue The Sound Stage and so
forth they would have also share profits
from ticket sales with artists and with
each other and that sounds good so far
the problem is what came next it’s in
the accounting here’s the expert report
Live Nation negotiated third party
expenses like rental cost and with the
venues directly with vendors in exchange
for exclusive Financial gains not
disclosed to their artists or their
agents managers or independent
co-promoters in the form of rebates so
in other words Live Nation had Secret
side deals with vendors to inflate costs
by overpaying those vendors and venues
which meant that any profit from the
event would evaporate it would look like
a loss co-promoters and artists who
share and profits would lose out but and
would be told that the show just wasn’t
profitable but the thing is those
vendors those venues who had gotten
extra money by being paid inflated costs
would in turn remit that money back to
Live Nation in the form of secret
rebates in other words juice would pay
the inflated cost that would get
furtively funneled back to Live Nation
along with all the profits from the show
now Live Nation didn’t disclose any of
this Revenue diversion with the artists
to whom it had a legal obligation to
whom it with with whom it had contracts
which is why Juice’s lawyer said that
the Corporation quote essentially
defrauds every every one involved now
these kinds of secret Kickbacks ensured
what Juice’s lawyer called the quote
Financial ruin end quote of co-promoters
now of course Live Nation claimed it was
losing money or not making very much
money on any particular event and it
wasn’t but that’s because the profit was
coming in through rebates which
according to this expert Barnett went on
to align in the accounting statement
called quote contribution margin end
quote so juices experts found uh so
interestingly Barett even found that
Live Nation kept two sets of books so in
in one case they posted an entry of
$90,000 rent for settlement but only
$755,000 internally for the same item
they routinely put in profit and loss
statements large losses while admitting
that events actually made money so
that’s just one event all right that’s
one uh State Fair New Jersey how much
was this contribution margin across all
of Live Nation I don’t precisely know
and you can throw other things into that
accounting uh line but there are hints
of amounts so in the third quarter of
2021 which is the last time they used
the term contribution margin that I can
find it was
$747 Million probably in the billions
today and that’s where CEO Michael
Rino’s nine fig payday is probably
coming from Live Nation is generating a
great deal of Revenue but somehow shows
low margins lots of events where they’re
not making money but somehow the cash is
coming in now that’s just a price hike
right it’s a it’s a way of extracting
more Revenue but it’s also hidden and
hiding the price hikes is important
because monopolization which is about
controlling a market and then extracting
by your pricing power is harder to prove
if you show low margins if you show that
you’re not charging very much their
antitrust lawyer Dan wall can just write
poor little Live Nation our business is
terrible yeah and we all know that you
Bill by the hour Dan on your lovely silk
sheets
now let’s take a step back and recognize
what we’re really looking at it’s not
just an extractive scheme this is about
power power over our culture power over
an entire industry basically Live Nation
can present venues or other people in
the business anyone in the business
pretty much with a choice if you
cooperate quietly you’ll get extra
hidden revenue and that means
cooperating with with knowing dishonesty
in the business if not well Live Nation
will maybe work with your rival or may
just buy into the market to compete with
you directly may not let artists come to
your
shows at any point too I mean it’s not
just the the the blunt instrument at any
point Live Nation can dial up or down
rebates to reward or punish and that’s
increasingly true as Live Nation buys
more and more corporations in and around
the live event space with each one
presenting a additional options for fees
and rebates and what is essentially
Financial engineering
okay is this report true I mean why like
you know Live Nation would say oh they
they they got it totally wrong they
didn’t disprove it because I don’t think
they can but you know the question is
reasonable is the report true we don’t
know um it’s the expert is well
respected he looked at live nation’s
financial
data and it’s it is easy to believe the
worst about Live Nation Ticket Master
they have a really bad reputation in the
industry and then among consumers but
the reason I think it’s true and I’m I’m
not sure but the reason I buy it is
because this particular story is
consistent with the behavior of a lot of
firms many dominant middlemen firms in
our economy from Pharmacy benefit
managers to Amazon and their
relationship with third party sellers
how they mediate between third party
Sellers and consumers to Big Banks who
securitized mortgages in the financial
crisis to the advertising technology
industry and so on and so forth now they
don’t most of them don’t use two sets of
books that’s kind of like you know
that’s a little bit you know above the
I’m not saying everyone’s a criminal
conspiracy two sets of books kind of a
red flag um but in
general it’s a business model middlemen
who have Market power they use fees and
kickbacks often hidden through a complex
Maze of subsidiaries or or overlapping
lines of business to extract in ways
that are really hard to see it’s
inefficient it’s immoral and more
importantly it creates a climate of
fear the problem is it’s also just the
way that we do business
today fortunately Live Nation is under
investigation and there are a bunch of
companies that are under investigation
but this lesson if this is true and I
think it is but if it’s true this is why
Live Nation needs to be broken up and
more broadly why we need to get rid of
these this way of doing business these
secret Kickbacks and rebates throughout
the whole economy thanks for watching
this big breakdown on the breaking
points Channel if you’d like to know
more about how big business and our
economy really works go to the link in
the description below and sign up for my
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and have a good one hey guys if you like
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