Ticketmaster’s tactics may have finally met their match as millions of Taylor Swift fans reel from the botched Eras Tour ticketing rollout.
Fame is a relative concept. There is mainstream famous, internet famous, infamy, and then there is “Taylor Swift Famous.”
Swift is in a different stratosphere — a rarified air that is reserved for names like The Beatles and Elvis. Swift is “Wear a Disguise to Go Out In Public Famous.” Her legions of fans are so great in both numbers and will that they single-handedly took down Ticketmaster’s website several weeks ago and may have unwittingly put the wheels in motion on ending one of the biggest and longest-standing monopolies in live entertainment.
The Ticketmaster Method
If you purchased a ticket to a major live event at any point in the past 30 years, there is a good chance you did so through Ticketmaster — and chances are it was memorable for the wrong reasons. Before Ticketmaster was the villain of the live entertainment industry, it was a humble start-up founded by a couple of Arizona State staffers in 1976, slinging tickets at a time when most purchases took place in-person, through the mail, or over the phone. By virtue of being a first mover in the space, the upstart effectively created a business model that would become the norm for primary ticketing companies — while also becoming one that regularly has fans up in arms.
When Ticketmaster signs on to handle the ticketing needs of a team, venue, or artist, it pays those clients large upfront lump sum fees (typically in the eight-figure range) in exchange for the exclusive right to handle all primary ticket sales for the client. The way Ticketmaster makes money is from the dreaded (and ironically named) “convenience fees,” which are split with the venue or performer. Essentially, Ticketmaster trades upfront money in exchange for long-term exclusivity to earn a percentage of the fees that get tacked on to every purchase, which is then passed on to you, the fan.
Because they have been doing business this way for so long, venues have become accustomed — and even dependent — on the upfront fees Ticketmaster and its competitors pay to secure the right to distribute their tickets. The convenience fee is also set in part by the client, so in many ways, Ticketmaster is their “bad guy for hire.”
But they have also done enough on their own to warrant the “bad guy” label. Let’s explain.
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The Ticketmaster Empire
Since its inception, Ticketmaster has been uber-aggressive in gaining and maintaining market share, ultimately solidifying its stranglehold on the primary ticketing market through the acquisition of then-market leader Ticketron in 1990. Once Ticketmaster reached this critical mass, it started to use its outsized power to crush competition and make performers capitulate to their will.
The rock band Pearl Jam was the first major artist to rebel against Ticketmaster’s tactics in 1994 when it waged a now-famous campaign, aptly-named “Ticket Bastard.” That culminated with the band testifying against the ticketing monolith in front of Congress. Pearl Jam, led by frontman Eddie Vedder, took exception to the tax and attempted to work around Ticketmaster’s contracts with venues by routing a completely outdoor tour, but to no avail. Though the band was at the height of its powers and was able to get an audience with Congress, Ticketmaster remained unchecked.
Several years later, it agreed to merge with the country’s largest concert promoter and live entertainment venue operator, Live Nation. The 2009 merger was met with a fair amount of scrutiny from the public and regulators alike.
At the time, Ticketmaster was already estimated to have controlled as much as 80% of the primary ticketing market for major live events in the United States. In turn, combining it with a company like Live Nation, which owned and operated a portfolio of some of the most iconic live entertainment venues in the country, would create a situation whereby live performers had no choice but to route their tours through Live Nation venues, forcing them to use Ticketmaster. The Federal Trade Commission took the two companies to court to block the merger, resulting in a settlement known as a “Consent Decree,” where the soon-to-be merged company would divest some assets and agree to allow its competitors to license its ticketing technology.
This settlement, of course, did little to balance the resulting competitive inequities as everyone’s worst fears were realized. Now, the newly coined and publicly traded “Live Nation Entertainment, Inc.” not only controlled the lion’s share of the ticket market but also the vast majority of the venues and the most popular acts in the world.
The result was easy to predict: a net loss for consumers in the form of higher ticket prices and fewer options to see their favorite performers.
As one can imagine, the allegations of anti-competitive business practices only continued after the merger. One notable example came when Ticketmaster routed unsuspecting Bruce Springsteen fans in 2009 to a secondary Ticketmaster-owned website to purchase the same tickets for as much as ten times face value.
In the ensuing years, Ticketmaster/Live Nation would go on to be sued by a number of high-profile names in the live entertainment world, including the Golden State Warriors, Cleveland Cavaliers, and a little-known company called SongKick. If you have never heard of SongKick before, it’s a tool that would inform subscribers when their favorite performers were coming to town and would later go on to facilitate fan club presales for artists such as Paul McCartney and Adele.
SongKick was able to exploit a standard carve-out in Ticketmaster’s artist contracts, enabling artists to distribute up to 8% of the ticket inventory for a concert directly to members of their fan clubs. After garnering traction vis a vis the sales of these 8% allocations, Ticketmaster began to leverage its power to choke off SongKick’s inventory. It rewrote contracts to eliminate the ticket allocation and strong-armed artists by threatening to make their tickets harder to find on the Ticketmaster website.
With few options left at their disposal, SongKick filed suit against Ticketmaster/Live Nation in 2016, alleging that Ticketmaster was exercising monopoly power over the major live event market. With the case days away from being heard by a jury, the two sides reached a settlement in which Ticketmaster acquired SongKick’s assets in one transaction for $110 million and an additional undisclosed sum of money.
To date, Ticketmaster/Live Nation have never truly been held accountable for their anticompetitive antics that have either priced out or iced out the average fan from seeing their favorite acts. That is, until they decided to mess with Taylor Swift fans, also known as the devoted Swifties.
The Wrath of the Swifties
Several weeks ago, the live entertainment giant drew the ire of millions of Swift fans after a debacle of an initial on-sale for Swift’s upcoming Eras Tour. For the past few years, Ticketmaster has made use of a system it calls the “Verified Fan Program,” which requires would-be ticket purchasers to register with Ticketmaster ahead of time for the opportunity to purchase tickets for popular tours. The form that fans are required to fill out prompts them to rank the shows they would like to buy tickets to in an effort to provide alternative options if they are not selected to purchase tickets for their desired date. Only those who are selected are allowed to purchase tickets as part of the initial on-sale date for a specific tour and each fan is given a unique code that gives them access to the sale.
In the case of the Eras Tour, only 1.5 million out of the 3.5 million people who registered as part of the Verified Fan Program were selected to participate in the initial sale of tickets. However, many of the 1.5 million people were left sitting in an online queue as inventory quickly dried up with those who were first in line scooping up a total of 2.5 million tickets. The sheer volume of traffic caused parts of Ticketmaster’s site to break and there were numerous reports of bots jumping the line ahead of real people and snagging tickets that went right to the secondary or re-sale market.
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The millions of aggrieved Swifties who were left out in the cold without so much as a cardigan took to social media to lambast
The US Department of Justice and the House of Representatives have since launched investigations into Ticketmaster’s monopoly status. Furthermore, the Tennessee Attorney General is investigating whether Ticketmaster violated any antitrust or consumer protection laws with respect to the botched sale.
Federal Trade Commission Chairwoman Lina Khan joked that Ticketmaster’s bungling of the Eras Tour sale “ended up converting more Gen Z’ers into anti-monopolists overnight than anything I could have done.” Swift’s fans’ bad blood with Ticketmaster has ratcheted up over the past few days as a group of Swift devotees filed a class action lawsuit against Ticketmaster/Live Nation for violations of California’s antitrust and consumer protection laws. If that wasn’t enough, a separate group of fans filed a complaint with the FTC alleging that Ticketmaster/Live Nation are exercising monopoly power over the major live event market.
The ongoing saga between Swift’s army of frustrated fans and Ticketmaster is like watching a Netflix documentary unfold in real-time, only this time it feels like the good guys have a real opportunity to win. The irony of it all is that the company’s most empirically successful tour in both ticket sales and popularity may ultimately lead to its downfall.
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