And how it could kill live music.
People love concerts. Nielsen estimates that 33 million attend at least one show in the US per year, and music fans know that the hype doesn’t start with the music but much before. It starts months or even years before bands announce their tours. So the anxiety begins with buying a ticket, and to do so, chances are you’ll have to deal with one company.
Ticketmaster (a Live Nation brand) dominates the ticket market in the US and the world, but dealing with them can be challenging. As a result, fans have had to pay a high price for a ticket, and it’s not only because it’s Taylor Swift or Bruce Springsteen. This monopoly could be killing live music, and there’s little fans can do.
The Taylor Swfit-Ticketmaster debacle
When Taylor Swift announced her first tour in five years, there was a presale where users had to download a verification code to buy the tickets. Hours after launching the code, 3.5 million requests had come through. After that, the system collapsed, and Ticketmaster had to call off the sale.
In an ironic twist, the presale had left the company with “insufficient ticket inventory.” A ticketing company with no tickets, and with the entertainment world pouring all the hate it could muster. Ticketmaster blamed computer bots, but many had doubts, including the US senate. Their point was: hey, if you’re going to sell tickets at outrageous prices, then you better make it work.
The Taylor Swift situation isn’t the only such blunder that involves Ticketmaster. Many other big names, such as Bruce Springsteen and Pearl Jam, have faced similar problems. However, this speaks volumes of how ingrained in our popular culture Ticketmaster is.
After another series of ticketing fiascos, including Bad Bunny and others, authorities in countries such as Mexico and the United States took action. The Ticketmaster hearings highlighted the power one company has over concerts, venues, and even the secondary market. Still, it also showed that there was little authorities could do except break the company apart. So, how did Ticketmaster become so powerful?
The history of concerts (and concert tickets)
Humans have enjoyed music for thousands of years. It’s one of the earliest forms of entertainment, but the concerts we know and love today are much younger. Plus, to a degree, we owe much of them to war. During conflicts such as WWII, the Korean War, and Vietnam, soldiers from all sides needed a way to vent out frustration and the fear of impending death.
At the same time, technology had advanced enough so that speakers, microphones, and amplifiers could now reach farther with higher quality. As a result, it was now possible to entertain thousands of soldiers with a small stage.
It was only a matter of time until these events spilled over to civilian life. Concerts were getting more massive, louder, and flashier. The fifties and sixties gave us The Beatles, Rolling Stones, and Woodstock. The seventies gave us Pink Floyd and Led Zeppelin, each band with a small revolution in its hands, making concerts wilder and crazier. Still, we owe a lot to one man: Ron Volz.
Ron Volz is an unknown genius outside the musical world, and he began to showcase his work with Alice Cooper. While some bands used rudimentary special effects, Volz took it to another level. He included smoke, pyrotechnics, and even the first laser shows.
Despite this massive concert evolution, one thing about music didn’t change. Getting a ticket was difficult. Camping outside the venue was almost a given; once the booth opened, you had to run and get your ticket.
Then, in January 1977, one event changed everything. Electronic Light Orchestra was promoting its latest album, Out of the Blue, with its typical light shows, classical music, fog machines, and lasers. If you were an ELO fan, there was nothing unusual about it, but the massive change had occurred behind the scenes.
This tour had been the highest-grossing tour up to that year. In January, ELO performed at the University of New Mexico. This was the first time one ticket company, in particular, had made a sale. It was a company that would change the world.
The birth of Ticketmaster
The Primary Ticket Market, or PTM, is the first step in any event. It consists of the rights holder selling tickets directly to consumers. There are two ways of doing this: through a ticketing partner or the venue’s official ticketer.
The Secondary Ticket Market, or STM, is where third parties buy many tickets and resell them at a higher price. The STM has had other names, such as scalpers or resellers, and it’s a flourishing business.
In the 60s and 70s, there wasn’t a clear line between the PTM and the STM. Fans went to the ticket booth, bought their tickets, and that was it. If they were sold out, it was time to try luck with the STM. For fans, it was straightforward, but for the bands, it was much more complicated. Organizing a concert required dealing with each venue, ticket vendor, and local promoter.
This process repeated itself with every location, making it an extremely labor-intensive operation. So naturally, it made perfect sense to have a company tackling live events’ selling aspect.
Ticketron entered the market in 1969 as the first electronic box office to avoid bankruptcy and have a successful run. The company had grown so much that, by the late 70s, it sold tickets by phone. Plus, it dominated the leading markets in the US. In addition, it provided ticketing, back-end structure, phone betting, and more than 600 outlets in half of the US.
In 1976, Ticketmaster was born, but it never intended to compete against Ticketron. Instead, Peter Gadwa, a programmer, and Albert Leffler, a box office specialist, had created software and hardware for ticketing systems. The founders also included a licensed service within the business model, which provided an income by charging for every ticket sold and selling the devices.
Eventually, Ticketmaster was commercially attractive, and the Pritzker family of Hyatt Hotels and Braniff Airways fame purchased it. In 1982, they named Fred Rosen Ticketmaster’s CEO, and the newly-appointed leader was clear about his goals.
“Money is some of it,” he says with a grin when he spoke with the New York Times when he got the job. “But it’s the game. I want to win.”
He fulfilled his prophecy as by the mid-eighties, Ticketmaster was in the US, Canada, and Europe, with no signs of slowing down. What set Ticketmaster apart from Ticketron was Rosen. He wasn’t afraid to go the extra mile. For example, when negotiating with the LA Forum, one of LA’s iconic sports and entertainment landmarks, Rosen was willing to take on the arena’s accounting to land that deal. Ticketron wasn’t.
Ticketmaster would do that one extra thing for customers, whether small or big. Thus, they entered partnerships with cinemas, stadiums, and even specific shows such as the LA Philharmonic.
With such a relentless pace, Ticketmaster had grown to $40 million in sales in 1985. By 1990, it had outperformed Ticketron by having a 50% market share, while Ticketron had 40%. By the way, spoiler alert, in 1990, Ticketmaster bought Ticketron.
That’s how aggressive they were, and still are, in business. This trait would prove essential to Ticketmaster’s success and dominance. Even today.
How Ticketmaster made (and makes) money
Ticketmaster has always charged fees as a way of getting income. Hence, thanks to its willingness to go the extra mile, Ticketmaster charged higher than Ticketron. This became so customary that now, it’s all the company does. The following chart shows how the ticket price has changed over the years.
Ticketmaster ramped up ticket prices right when concerts became much more valuable, almost essential for artists.
Legal battles and growth
By the 1990s, concerts had reached unprecedented heights. From Michael Jackson to the grunge revolution, these events have become a way of connecting with fans and one of the purest forms of income. For every ticket sold, Ticketmaster would be there; that’s not to say everyone loved them.
In 1992, Eddie Vedder asked Ticketmaster to keep tickets cheap after several clashes in which the band and Ticketmaster butted heads over pricing. Pearl Jam wanted venues where the price was $18 and the service fee was $1.8, while Ticketmaster charged $4 to $8.
The band also wanted each ticket to have the specific service fee printed, which was something Ticketmaster didn’t do. So then, the two clashed and even took the case to court. The band had tried to sell tickets at their agreed price of $1.80. Still, when Ticketmaster found out, they threatened to take legal action and shut off the ticketing machine.
There were other boycotts as well. For example, Ticketmaster told anyone who hired Pearl Jam outside its domain that there would be plenty of lawsuits to spare.
Pearl Jam was desperate to find a way to have concerts without Ticketmaster, but the power was too much. The company had managed to boycott Pearl Jam’s efforts. Anyone who’d hired Pearl Jam in conditions that weren’t Ticketmasters faced a lawsuit.
Pearl Jam battled, but a far more immense musical tragedy would take the wind out of Eddie Vedder. Finally, after one last fight, Pearl Jam surrendered to the giant’s conditions. So, there was no slowing down Ticketmaster.
By 1992, the company was already generating $1 billion in sales and sold 52 million tickets yearly. That year, Paul Allen, Microsoft’s cofounder, acquired 80% of the company and took the company to a new level on a digital scale: the internet.
Throughout the 90s, Ticketmaster went through a series of mergers and acquisitions that turned the once simple ticketing company into a fully online entertainment guide company under the massive internet giant IAC. However, the only remaining piece of the puzzle for world domination lies in another aspect.
How Ticketmaster finally became a monopoly
Governments such as the United States have antitrust rules. They have been put in place to fight back against takeovers, acquisitions, or even a single company, such as Microsoft. Most regulatory authorities state that if a single company controls more than 25% of said market, it’s a monopoly, but managing that is hard. In fact, according to the US justice department, in real life, it’s more along the lines of 50% of the market share for authorities to infer a monopoly.
In the same document, however, the US Antitrust laws state that, in some cases, 70% of the market share isn¡t enough to infer monopolies. Moreover, even 80% isn’t enough to assume a monopoly. This blurred line has helped Ticketmaster become what it is today.
In the 90s, Ticketmaster isn’t a monopoly. In fact, other competitors, such as StubHub, belonged to eBay. Plus, one company was even going as far as attempting to create its own ticketing service to compete with Ticketmaster. That company is Live Nation, and in the early 2000s, it was busy working on its ticketing service to compete with the company.
Live Nation, a company born in 1996 out the brainchild of this guy, Robert FX Sillerman, a cold, calculating businessman who started selling marketing tips, then bought radio stations during the 70s. By 1998, he already had 71 radio stations all over the country and several event promotion companies, which he called SFX.
He sold this promotion company for $4.4 billion in 2000, after which the core business went through several hands until finally becoming Live Nation Entertainment in 2005. Under the Live Nation name, the company expanded its expansion of music companies all over the world. It also landed massive deals with artists such as Madonna and U2 that would last for more than a decade.
Plus, it didn’t stop there. Live Nation also purchased venues worldwide and operates those it doesn’t own. So, this giant already had a massive hold on artists; now, it needed to dominate the ticket industry right at the same time when its contract was about to end with Ticketmaster.
How the Live Nation and Ticketmaster merger occured
Live Nation had failed attempts to create its own ticketing system, but the idea to merge came about, and in 2009, they announced that they were joining forces.
An investigation ensued on a global scale. Countries such as Norway and Turkey approved it with few complications if any, but the UK and the US stood against it. In the US, artists such as Bruce Springsteen opposed the merger, citing that it would, in fact, become a monopoly.
Authorities in the US aimed to avoid this with certain conditions. For example, the new company, Live Nation Entertainment, would have to ditch some proprietary technology to other ticketing companies to allow for competition. However, it didn’t yield the wanted results. Plus, Live Nation Entertainment was forbidden to retaliate against venues that chose to accept other ticketing services, as had happened with Pearl Jam in the 90s.
While, in theory, it was a big blow to the company, Live Nation Entertainment had signed with the biggest names in the industry. So it was in their control to decide where artists would perform. It seemed there was no escaping this giant. The problem is that Live Nation Entertainment went out of its way to enforce it.
The company continued to threaten competition, even when it was forbidden. In Atlanta, in 2013, when Matchbox 20 was set to perform, the venue chose another ticketing partner. Live Nation Entertainment punished the arena by lowering the prices the following year. That other ticketing company was AEG, which came out of the merger and had the right to compete freely.
Methods such as these have given Live Nation Entertainment massive authority. They sell tickets to 80 of the 100 most important arenas in the US. In addition, they have 500 artists under their name, including U2, Bruno Mars, and Miley Cirus.
In 2019, before the pandemic, Live Nation Entertainment sold 60% of all tickets globally. AEG, on the other hand, had 30%. Plus, LiveNation’s practices have given it a reputation of concern. Since it was born, 200 people have died in its events, the latest being Astroworld Festival, a concert it promoted. Livenation has seen its name mentioned in almost 400 lawsuits from this alone.
The end result is an increase in pricing, thanks to its dominance and the dynamic pricing system. Live Nation Entertainment decided to emulate Uber and other ride-sharing platforms and implement a variable pricing system depending on demand.
This system is responsible for creating tickets worth up to $4000. The artist is none other than Bruce Springsteen, the same artist who has complained about Live Nation Entertainment’s power. So have Taylor Swift and Pearl Jam, but the tickets are under the Ticketmaster/Live Nation Entertainment name if you visit the site.
Why? Because there’s no other choice. It’s the price to be famous, and it says a lot about the future of music.
