To understand Live Nation’s real antitrust problem, turn to Microsoft

Sorry, kids – Live Nation’s antitrust issues have nothing to do with how hard it is to get Taylor Swift tickets. They’re expensive because there simply isn’t enough for everyone who wants to see the show, and an antitrust lawsuit against Live Nation won’t change that – and maybe won’t even change ticket prices. But it could change the way U.S. concert and ticketing companies operate and work together.

The lawsuit, filed by the Department of Justice and more than two dozen states, alleges that Live Nation collaborated with venue management company Oak View Group, threatened potential rivals, tied its venues to long-term non-competitive contracts with Ticketmaster, restricted promoters’ access to its venues, and acquired companies that to limit competition. There’s a lot there.

Live Nation, at least according to the lawsuit, operates less as a concert promoter than as a live entertainment company platform — one that uses its dominance in some sectors to secure or deepen its dominance in others, making it difficult for other companies to spin off their services. The most appropriate comparison, at least from a legal perspective, may be the Microsoft antitrust case. Nearly all of the conduct described in the lawsuit takes place outside the public eye, but the Justice Department says it reduces competition and indirectly raises ticket prices for consumers. The former seems very likely, at least based on the description of the company’s policy included in the lawsuit, while the latter is less clear. Given the booming secondary market, concert tickets still seem to be the case undervalued.

A common complaint about Live Nation is that it controls too many properties and that Ticketmaster has too much of a stake in the ticketing industry, especially in a way that irritates the hell out of consumers. However, these factors may be less important than they seem. Most areas only have a certain number of venues, and it’s not entirely clear what sense it would make to have more than one ticket seller covering each performance. (It’s much easier to argue that primary market companies shouldn’t enter the secondary market, and vice versa.) And since some of Ticketmaster’s fees go to promoters or venues anyway, cutting them could simply shift costs onto the nominal ticket price. I hate extra fees on low-cost airlines, but eliminating them would only make tickets more expensive.

A more serious issue is how Live Nation uses its market power. Ticketmaster signs long-term contracts with venues in exchange for exclusive ticketing rights, which has been a problem since Pearl Jam took over the practice three decades ago. But the most damning parts of the lawsuit, which Live Nation will respond to before the end of the summer, involve issues that haven’t received much attention. The Justice Department maintains that Live Nation restricts artists from performing at its venues unless they also use the company as a promoter and pressures those venues to sign exclusive deals with Ticketmaster. This type of behavior is an important part of what antitrust law is designed to prevent – using the leverage of dominance in one market to gain an unfair advantage in another. But the government would have to prove its case, and antitrust cases can be difficult to win.

The lawsuit alleges that Live Nation operates this way by design. He refers to the CEO’s statement from 2019 Michael Rapino that “we need to put the show where it’s most economical” and that venues that use third-party ticketing companies may be at a disadvantage. (Under the provisions of the antitrust decision, Live Nation has a court-appointed monitor whose task is to prevent such phenomena.) The question is whether Live Nation operates this way and whether what could be considered a platform has this purpose.

Hence the comparison to Microsoft, which was sued by the Department of Justice in 1998 for trying to use its dominance in operating systems and the resulting advantage over PC manufacturers to control the web browser market. (Microsoft lost in the district court; this decision was partially reversed by the appellate court and the case was finally settled.) However, in this case, the compatibility issues were intuitive and the harm to consumers was obvious.

For years, antitrust law has focused on protecting consumers from higher prices, and it’s not entirely clear whether tickets will become cheaper or whether there will be more or better shows if Live Nation is scaled back or discontinued. But some judges and scholars now have a broader view and it’s easier to imagine that more competition will lead to more innovation.

In addition to the legal issues, the lawsuit paints Live Nation as a minefield of conflicts of interest where the best part of the deal is both parties. Thinking about a company means appreciating the significant synergies between its various businesses, while at the same time having faith that these different businesses can negotiate fairly with each other. Think of Live Nation’s talent management operation, where agents representing artists sometimes negotiate concert deals with another division of the company. Artists must be satisfied with the service they receive, but we must also ask ourselves whether the Chamber always wins.

This is just the beginning of a conflict that is likely to be long – antitrust cases are usually long and complicated, and this one may be as old as Swift. But at the end of the day, whichever side wins, Live Nation will either be left without the ability for its various divisions to work together in a way that disadvantages its competitors, or it will have to be more careful to ensure that doesn’t happen – and that can only be a good thing for the rest of the business .