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.”

TFL and ATBS for ticketing professionals

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:

Learn more about the Insomniac web browser, designed for ticket resale professionals

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

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