On Tuesday, November 15, thousands of Taylor Swift fans (“Swifties”) sat down at their computers ready to purchase tickets to a concert they have been anticipating for years: the Taylor Swift Eras Tour. However, just a few minutes after the pre-sale window opened these Swifties would find that their highly anticipated purchase became their worst nightmare. Ticketmaster received a record high 3.5 billion system requests that day, more than 4x their previous record. After frozen queues and error codes, only a few pre-sale fans got tickets. Thousands of others were left out in the cold with nothing, unless of course they wanted to spend five-figure sums on a re-sale ticket. But what happened? Ticketmaster sold over 2 million tickets, a record number for a single artist in one day. What left these Swifties ticketless, and Taylor Swift calling the situation “excruciating”? How does a seemingly botched technological ticketing system lead to an anti-trust lawsuit?
To understand the problem means to travel back to 2008, when Taylor was just beginning her “era” of hit albums and when Live Nation merged with Ticketmaster, creating one of the most powerful entertainment companies in the business. Prior to the merger, Ticketmaster had roughly 70% of the ticketing business in the United States and Live Nation hosted 50 million fans across its 127 owned venues each year. The merger allowed for Ticketmaster to gain control of the primary sales market and the secondary re-sale market, especially for the venues owned by Live Nation. Not only does Ticketmaster collect a fee from any ticket purchase in the primary ticket sale, but they collect a second fee when a fan purchases a re-sale ticket in Ticketmaster’s secondary market. According to the latest SEC filings, Ticketmaster’s resale business generated over $1 billion in Q3 of 2022 alone. Ticketmaster’s ability to capitalize on the primary and secondary ticket market had fans concluding that Ticketmaster is incentivized to allow “bot” purchasers in the primary market to spike fees and make the secondary market even more lucrative.
Fast-forward to 2022, thousands of Swifties saw this concern become a reality when they were left with no other choice but to buy from the re-sale market if they wanted to see their favorite artist. This isn’t a new problem for music lovers. Harry Styles fans were faced with a similar situation for the Harry’s House tour, finding that ticket prices were abnormally high, with the average price of $600 for a secondary ticket. One explanation is that Ticketmaster holds back 90% of the total tickets for credit card companies, promoters, radio stations, and others. The other 10% of tickets, and those that most of the public qualifies for, are sold to professional brokers who can markup ticket prices anywhere from 50-7,000%.
In response to the Eras tour fiasco, Swift fans across 13 different states filed a class action lawsuit in LA County Superior Court against Ticketmaster and Live Nation for fraud, misrepresentation, and antitrust violations. The plaintiffs allege that Ticketmaster has a monopoly in primary and secondary markets and engaged in fraudulent practices and antitrust violations including price discrimination and price fixing. The plaintiffs are seeking $2,500 for every violation of California’s Unfair Competition Law, which prohibits false advertising and illegal business practices. This suit has yet to be accepted by the court, however, and most cases are dismissed and sent to arbitration due to a clause in Ticketmaster’s user agreement. There is still a chance for the case to be heard in court, however, as the plaintiffs are challenging this arbitration clause as substantively unfair and unconscionable.
If the case goes to trial it might help Swifties with their Eras tour problem, however all music lovers might be better suited not to fight Ticketmaster’s arbitration clause but to call upon legislatures for long-term change. Music fans should encourage Congress to decide whether this is an antitrust problem or just a case of overwhelming demand for finite supply. Both members of the House and Senate are calling on the Department of Justice and the FTC to investigate Live Nation and Ticketmaster. The House Energy and Commerce Committee addressed a letter to Live Nation CEO Michael Rapino demanding a briefing explaining what went wrong in Eras ticket sales, along with how the problems will be addressed. Rapino is meant to respond by December 15.
While fans can seek long-term legislative change, Ticketmaster can work to lessen the need for change by inviting fans to participate more effectively in the ticket market. The centralized ticket hub that Ticketmaster controls is beneficial: it creates one place to find primary and secondary ticket sales and can ensure that no fake tickets live in the market. However, it cannot lead to a monopoly on ticket pricing. This could be solved by Ticketmaster maintaining their primary market share but relinquishing their controlling stake in the secondary market. For example, Ticketmaster could utilize Web3 to allow fans more control of the secondary market. Web3 can create a public ledger to identify “bots” in the primary and secondary markets and could alert users of these “bots” in real time. Web3 would give some of the power back to ticket buyers and act as a vehicle for Ticketmaster to become a better advocate for their customers. The adoption of Web3 in the marketplace gives ticket buyers the virtual “seat at the table” they’ve been longing for in the ticketing business.
In order to meet the demand for tickets, Swift would have to perform over 900 stadium shows on her tour, or in other words, a show every night for the next 2.5 years. While we await the fate of the class-action suit and Congress’ investigation one thing is clear, Taylor Swift continues to set records in the music industry.
Sources:
Ramishah Maruf, More than two dozen Taylor Swift fans sue Ticketmaster, CNN Business (Dec. 5, 2022).
Eleanore Tyler, ANALYSIS: Ticketmaster, TSwift, and Antitrust’s Role in Markets, Bloomberg Law (Nov. 23, 2022).
Jeremy Gilberetson, Your Ticket to Ride: Why Web3 is Poised to Create a Persistent Bridge Between Artists and Concertgoers, Variety (July 13, 2022).
David McCabe and Ben Sisario, Justice Dept. Is Said to Investigate Ticketmaster’s Parent Company, The New York Times (Nov. 18, 2022).
David Segal, Calling Almost Everyone’s Time, The New York Times (Apr. 24, 2010).