FTC vs. Live Nation | Matt Connarton Unleashed

0:00 Speaker 1: We have a little bit of time, I want to get in a music news story. You know, we do like to cover if we have a little bit of time in the show. Some weeks, we'll cover some music industry news going on, especially with the audience we have. We know a lot of musicians listen to the show, a lot of industry people, and I happen to see this pop up. And this relates to a subject that comes up often on the show, and that is Live Nation and it's a ticketing arm ticket Master. It's the same company. If you didn't know Live Nation and Ticketmaster, they are interchangeable, kind of like Comcasts and Exfinity.

0:30 Speaker 1: You can say either one and it's the same company.

0:32 Speaker 2: But again Healthcare Optum owned by the same people. Yeah, everybody's good, Like businesses have like a ton of these days, but it is kind of hard to keep track of the subsidiaries.

0:42 Speaker 1: This is from Music Business Worldwide dot Com And I didn't realize this until this morning, but this just happened. A couple days ago. Live Nation and Ticketmaster sued by the Federal Trade Commission over alleged illegal ticket resale tactics. Because something that we've talked about on the show whenever we talk about Live Nation and Ticketmaster is how you know, because obviously over the years, ticket prices keep going up and up and up, long before there was any hint of severe inflation in the economy, just completely separate from all that, you know, and people feel, people feel gouged, and it gets so expensive.

1:17 Speaker 1: And one of the things that goes on is, you know, we've talked on the show about how these small companies that are effectively ticket scalpers will buy up as soon as Live Nation puts a show on sale, they'll buy up a bunch of tickets and they'll resell them on their own sites at a higher price, especially once Live Nation Ticketmaster runs out of the tickets. But a lot of them have been bought up by scalpers who then resell them. But what a lot of people don't know is some of these companies that are doing that are actually owned to buy ticket Master.

1:50 Speaker 1: So Ticketmaster sells tickets to these own to their own yeah, to themselves effectively, and use this system to jack up the prices. Yeah, most people don't realize.

2:02 Speaker 2: I know about scalpers, and I've always thought that these companies are supposed to have safeguards and please stop all of that. Yeah, so I will say that, not that I'm totally surprised, but heck wow.

2:15 Speaker 1: Yeah, it's a dirty, dirty business.

2:18 Speaker 2: And then selling them back to you for triple the cost.

2:21 Speaker 1: So yeah, So here's the story. This is again, this is from Music Business Worldwide dot Com. The Federal Trade Commission has sued Live Nation and its ticketing arm Ticketmaster, accusing the company of profiting from scalpers operating on its platform. In a complaint filed on Thursday, September eighteenth and the US District Court for the Central District of California, The FTC accused Ticketmaster of failing to uphold its own ticket purchase limits, in effect allowing scale, in effect allowing scalpers to buy up large numbers of tickets and to resell them on the secondary market at markups.

3:01 Speaker 1: So the secondary market, that's these you know, it's them Joe's Tickets dot com or whatever. Yeah, you know.

3:11 Speaker 2: It's only three yeah, yeah, they buy all the tickets and then if you really want to go, Yeah, the only way to go is to pay those guys.

3:19 Speaker 1: And that's why Ticketmaster limits how many tickets you can buy. It once except except they don't actually do it for themselves. Apparently. The FTC says Ticketmaster is motivated to do this because it makes additional fees on the tickets resale. Ticketmaster can triple dip on fees, collecting fees from one brokers when they purchase the tickets on the primary market, two brokers again when Ticketmaster sells their tickets on Ticketmaster's secondary market, and finally three consumers who purchase tickets from Ticketmaster on its secondary market.

3:58 Speaker 1: Unquote, says the complaint. Joining the FTC in the lawsuit are the district attorneys of seven states, Colorado, Florida, Illinois, Nebraska, Tennessee, Utah, and Virginia. The complaint alleges that Ticketmaster violated the Bots Act bots. The Bots Act, the twenty sixteen law forbidding the use of bots to buy tickets in online stores. Live Nation has in the past supported the Bots Act, or at least you know, on the public Publicly. The FTC notes that Live Nation's policy is to allow artists to sell to set ticket purchase limits themselves, but quote in private, defendants have tacitly worked with these very same scalpers, allowing them to unlawfully purchase millions of dollars in tickets in the primary market so that defendants can extract more profit for themselves when reselling those tickets on the secondary market unquote.

5:02 Speaker 2: Rotest created what ruins the world.

5:04 Speaker 1: The FTC alleges that Ticketmaster has been aware for years that certain ticket buyers have violated the limit and turned a blind eye to the practice. The complaint states that in twenty eighteen, Ticketmaster identified five ticket brokers who controlled six three hundred forty five ticket Master accounts and possessed more than two hundred forty six thousands I'm sorry, two hundred forty six thousand tickets to nearly twenty six hundred events Jesus FTC complaint against Live Nation. Okay, so oh, we have to.

5:38 Speaker 2: Have the ticket prices up so high.

5:41 Speaker 1: So, the complaint states quote. In public, defendants maintain that their business model is at odds with brokers that routinely exceed ticket limits. In private, defendants acknowledge that their business model and bottom line benefit from brokers preventing ordinary Americans from purchasing tickets to the shows they want to see at the prices artists set unquote. The FDC also alleges that ticket Master is engaged in bait and switch tactics in which the company displays deceptively low ticket prices to consumers and ends up charging much more at checkout.

6:17 Speaker 1: And by the way, anyone who's ever bought tickets from Ticketmaster knows exactly what that's about. You look at the price of the tickets and you think, Okay, they're going to cost this. I'm gonna get two tickets. They're gonna cost this, probably some sort of extra fee involved, so it might be a little bit more. And then you get to check out and it turns out it's like, you know, you thought you were spending two hundred dollars on tickets, you're actually spending over three hundred dollars on tickets with all the fees and everything else.

6:41 Speaker 1: And is this fee and that fee and you know, anyway, so it says your Live. Nation announced in twenty twenty three that it was switching to an all in pricing model at its owned venues in the US, under which the final price, including fees but excluding sales taxes, is shown at the very beginning of the ticket percha process. CEO Michael Rapino has said that the switch to all in pricing has proven to be a success, and the company has backed efforts to make all in pricing the law. Despite this, the FTC alleges that quote, over the last decade, the first price the consumer has seen on Ticketmaster's platform has almost never been the price the consumer pays.

7:23 Speaker 1: According to internal Ticketmaster documents, the average percentage of fees charged on tickets ranges from twenty four to forty four percent of the total price. From twenty nineteen through twenty twenty four, consumers paid over sixteen point four billion in mandatory fees on ticket purchases from Ticketmaster unquote. That's from the complaint. The lawsuit is separate from the anti trust action which I think we talked about on the show before that the US Department of Justice launched against Ticketmaster and Live Nation in May of twenty twenty four.

7:57 Speaker 1: That lawsuit alleges that the company engaged in quote monopolization and other unlawful conduct that swarts competition in markets across the live entertainment industry unquote. The DOJ lawsuit is seeking to break up Live Nation and Ticketmaster, undoing a year's old agreement that allowed the two to merge despite concerns over the company potentially employing monopoly power in the live entertainment business. The DOJ has accused Live Nation of violating the terms of that agreement. In its lawsuit.

8:25 Speaker 1: The FTC says Live Nation slash Ticketmaster controls quote roughly eighty percent or more of major concert venues primary ticketing for concerts, and a growing share of ticket resales in the secondary market unquote. As of noon on Thursday, Live Nation shares were down three point six percent on the New York Stock Exchange, trending at around one hundred and sixty three dollars per year. So there you go. So that's the newest. And you know, look, I'm a I'm a free market capitalist, and and I think that, you know, I'm not into you know, the idea of the government coming in and controlling uh pricing for for concert tickets, certainly, but I'm also not in favor of you know, these companies being able to blatantly violate the law and slitch like baying switch, which is illegal obviously.

9:20 Speaker 1: And look, I mean, even if even if you're someone who takes the position that if you're if you're a true free market I mean I say free market capitalist, but I say that loosely because I do believe that government has to regulate some things, not to not to get in political because we don't do that on this version of the show. But even if you're someone who who thinks that all this is fine, because you don't think that, uh, the government should have anything to say about it, legally or otherwise, and the FTC shouldn't be getting into this.

9:49 Speaker 1: Even if you think that, don't you at least want to know as a consumer? Don't you want to know why ticket prices are so? I just as a consumer, isn't it good to be informed about it?

10:00 Speaker 2: But in the very least shouldn't I think there there's law involved in the fact that they shouldn't be able to violate their own rules, like you're not. The whole point of having these laws that you can't buy X number of tickets is to stop scalping, is to stop people getting ripped off. But if they make the rules and then they're sending it, selling it to themselves and then selling it to you, Yeah, this whole triple dip thing, like that's criminal. In my mind's eye, that's criminal.

10:31 Speaker 1: Well, there won't be any criminal, but there might be fines. But I mean Ticketmaster.

10:38 Speaker 2: That that's the other thing and the very least they should have to be it should at least be held accountable to their own rules and regulation.

10:43 Speaker 1: Yeah, absolutely so, So that's the newest wrinkle with that.

10:48 Speaker 2: Remember where else can you get a ticket? It's they have a monopoly on the market. It's it's very hard to get tickets to venues outside

10:56 Speaker 1: Of them, of course, of course, and it is a monopoly, absolutely,