Communications and Technology

Taylor Swift, Ticket Sales and the Importance of Free Market Competition

Last week, Ticketmaster announced they will be taking further steps to target scalpers and “educate” consumers on ticketing fees after facing allegations of antitrust violations from a new coalition of free market champions: Taylor Swift fans. Over the past few months, “Swifties” have learned the hard way that lack of competition disincentivizes companies, like Ticketmaster, from improving their services, ultimately hurting consumers.

This all started in in November 2022 when Ticketmaster made headlines as the “Anti-Hero” of Taylor Swift’s “Eras Tour” presale.

Ticket sales for Swift’s were administered almost entirely through Ticketmaster, and despite assurances to Swift and her team that they could handle this high of a demand, the sale was a disaster. Website glitches prevented fans from purchasing tickets after waiting in an hours-long queue. Tickets were also listed on resale sites for up to $94,950 shortly after.

Because Ticketmaster knew their website could not handle the massive demand for the small number of tickets left after the presale, they canceled the general sale of Eras Tour tickets.

This failure by Ticketmaster caught the attention of the Department of Justice and attorneys general in North Carolina and Tennessee, who have launched investigations into Ticketmaster and its parent company, Live Nation Entertainment, for alleged consumers’ rights and antitrust violations. The Senate Judiciary Committee recently held a hearing where Live Nation President and CEO Joe Berchtold testified.

While Taylor Swift brought light to this problem, lack of competition in the live entertainment industry has been an issue for years. In 2010, the DOJ approved the Live Nation-Ticketmaster merger, and by 2022, Ticketmaster ticketed 87% of Billboard’s Top 40 performances and held exclusive ticketing contracts with 87% of NBA and NHL arenas and 97% of NFL stadiums.

According to artists and venues owned by Live Nation, it is very difficult to administer their ticket sales through a provider other than Ticketmaster. In 2019, the DOJ identified six instances of Live Nation threatening venues who attempted to use another ticketer. This behavior makes it difficult for any competitor to gain any market share.

Ticketmaster cited bot attacks and high demand as the reason for the Eras Tour ticket sale disaster. However, these problems have existed for years with little incentive to fix them since it is nearly impossible for venues with Live Nation contracts to use any other ticketer aside from Ticketmaster for their live events, which prevents competition in the live ticketing market. This has also allowed Ticketmaster to charge exorbitant fees that are on average about 30% of the ticket price, although some fees have been as high as 82% of the original ticket price. At ALEC, we believe in the free market in part because it allows for competition, which should incentivize companies to improve their services.

Some lawmakers want to change current guidelines to make it easier to break up companies they do not like. However, we already have clear antitrust guidelines, known as the consumer welfare standard, that are designed to protect consumers. The Department of Justice has already opened an investigation into Ticketmaster, and if they are found to have engaged in anti-competitive behavior that hurts consumers, such as raising prices above market equilibrium or hindering innovation and the quality of their service, they will be penalized. Through what we have seen through the Eras Tour presale and the Senate hearing that followed, they may have a case.

Sal Nuzzo, Senior Vice President at the James Madison Institute and ALEC’s Communications and Technology Private Sector Task Force Chair, who testified in front of the Senate Judiciary Committee asked, “[S]uppose a robust, vibrant, and competitive market for ticketing had been allowed to evolve and innovate over the past 20 years. Would the Taylor Swift debacle have occurred?”

It is possible the answer may be, “no.”