Is Ticketmaster a Criminal Conspiracy?
Summary
TLDRThe video script discusses the controversial practices of Live Nation, a company that dominates the live entertainment industry, after its merger with Ticketmaster. It highlights allegations of anti-competitive behavior, secret rebates, and financial manipulation based on leaked documents and expert analysis. The video argues that these practices not only extract profits but also exert control over the industry, creating a climate of fear and potentially warranting a breakup of the company to foster fair business practices.
Takeaways
- 📢 The Live Nation and Ticketmaster merger in 2010 was controversial and allowed by the Obama administration's antitrust division despite concerns over market power.
- 🤨 There are allegations that Live Nation, as a dominant player in the live entertainment industry, may be operating like a criminal conspiracy based on new documents.
- 📚 Matt Stoller, the author of the transcript, is an antitrust policy analyst who questions the practices of Live Nation and its impact on the entertainment industry.
- 💼 Live Nation has been under investigation by the Biden administration's antitrust division, which is a departure from the Obama administration's stance.
- 📈 Dan Wall, Live Nation's hired antitrust lawyer, publicly defended the company, arguing that high ticket prices are due to supply and demand, not monopolistic practices.
- 🎟️ Live Nation reportedly charges lower commissions compared to other online marketplaces, but still faces criticism for its business practices and high consumer prices.
- 💰 Live Nation's CEO, Michael Rapino, earned a significant amount in 2022, raising questions about the company's claims of not being highly profitable.
- 📃 Congressman Bill Pascrell released documents from a court case that shed light on Live Nation's financial operations and the potential for anti-competitive behavior.
- 🕵️ The documents suggest that Live Nation may have engaged in fraudulent practices, including secret side deals with vendors to inflate costs and siphon profits.
- 🚨 Live Nation's control over the live entertainment industry is seen as a threat to cultural and industry power dynamics, potentially stifling competition and innovation.
- 🛑 The video transcript calls for the breakup of Live Nation and a reevaluation of business practices that rely on hidden fees and kickbacks, advocating for a more transparent and fair industry.
Q & A
What was the controversial deal in 2010 in the live entertainment industry?
-In 2010, Live Nation, the leading concert promoter, acquired Ticketmaster, which had a monopoly over ticketing software and was a major player in artist management. This deal was controversial due to concerns about monopolistic practices and market power concentration.
How did the Obama administration's antitrust division handle the Live Nation-Ticketmaster merger?
-The Obama administration's antitrust division allowed the Live Nation-Ticketmaster merger to go forward despite concerns about market power. The division seemed to be proud of this decision, which later led to investigations under the Biden administration.
What role did Dan Wall play in defending Live Nation?
-Dan Wall, an old antitrust lawyer, was hired by Live Nation to represent them against potential monopolization charges. He publicly defended Live Nation as part of a PR campaign, arguing that high ticket prices were due to supply and demand, not Live Nation's pricing strategies.
What was revealed by the documents released by Congressman Bill Pascrell?
-The documents released by Congressman Bill Pascrell, based on Live Nation's own financial data from a 2019 litigation, revealed that Live Nation had secret side deals with vendors to inflate costs. This led to profits being funneled back to Live Nation through secret rebates, which were not disclosed to artists or co-promoters, ultimately resulting in financial ruin for them.
How did Live Nation use its dominance in the industry to affect smaller firms like Juice Entertainment?
-Live Nation used its dominance in artist promotion, ticketing software, and other lines of business to coerce performers into not signing with Juice Entertainment for a concert. Live Nation also threatened to withhold its ticketing services from the venue if it allowed Juice to be a partner, demonstrating its market power and ability to thwart competition.
What was the outcome of the New Jersey State Fair concert dispute between Live Nation and Juice Entertainment?
-Juice Entertainment, unable to reach a deal with Live Nation, was fired from the concert. Live Nation then took over the production. When the smaller firm sued Live Nation for coercion and monopolistic practices, the case revealed Live Nation's alleged secret financial tactics, including inflating costs and receiving undisclosed rebates.
What did the expert report on Live Nation's operations reveal about their accounting practices?
-The expert report revealed that Live Nation had secret side deals with vendors to inflate costs, which would then be funneled back to Live Nation through rebates. This led to a lack of profits for co-promoters and artists, despite the events making money. The report also suggested that Live Nation kept two sets of books, showing losses in public statements while internally recognizing profits.
How does Live Nation's alleged business model impact the broader live event industry?
-Live Nation's alleged business model creates a climate of fear in the industry, where cooperation with Live Nation's dishonest practices is rewarded with hidden revenue, while non-cooperation can lead to being worked against or being excluded from events. This model consolidates power and control over the live event industry, stifling competition and fair business practices.
What is the significance of Live Nation's CEO, Michael Rapino's $139 million earnings in 2022?
-Michael Rapino's substantial earnings in 2022 contradict the narrative that Live Nation is not a highly profitable business, as argued by Dan Wall. It suggests that the company is indeed generating significant revenue, which is inconsistent with the claims of poor financial performance.
What is the argument for breaking up Live Nation and addressing similar business practices in the economy?
-The argument for breaking up Live Nation is to prevent the concentration of power and the negative impact on competition and fair business practices. Addressing similar practices across the economy can help promote a more equitable and transparent business environment, reducing the influence of dominant middlemen firms and encouraging healthier market dynamics.
How does the behavior of Live Nation, as described in the script, compare to other dominant firms in various industries?
-The behavior of Live Nation is consistent with the behavior of other dominant middlemen firms in various industries, such as pharmacy benefit managers, Amazon, big banks during the financial crisis, and the advertising technology industry. These firms use fees, kickbacks, and complex business structures to extract profits in ways that are hard to see, creating a climate of fear and inefficiency in their respective markets.
Outlines
🕵️♂️ The Controversial Merger of Live Nation and Ticket Master
This paragraph discusses the contentious acquisition of Ticket Master by Live Nation in 2010, which led to Live Nation gaining significant control over the live entertainment industry. The merger was controversial due to Ticket Master's existing monopoly over ticketing software and its influence in artist management. Despite public outcry and historical issues with market power, the Obama administration's antitrust division allowed the merger to proceed. The paragraph also introduces the Biden administration's antitrust division, which has been investigating Live Nation Ticket Master for potential monopolization. Live Nation's response to these investigations includes hiring a former antitrust lawyer, Dan Wall, who publicly defended the company by arguing that Live Nation's charges are a result of supply and demand and not excessive pricing.
💸 Live Nation's Financial Practices Under Scrutiny
The paragraph delves into Live Nation's financial practices, which are under scrutiny due to allegations of anti-competitive behavior. It describes a specific case involving a concert at the New Jersey State Fair in 2011, where Live Nation allegedly used its market dominance to coerce performers and threaten the venue. The situation led to a lawsuit, and the subsequent expert report revealed Live Nation's practice of secret side deals with vendors to inflate costs, which would then be rebated back to Live Nation, effectively defrauding co-promoters and artists. The report suggests that Live Nation maintains two sets of books to hide the true profitability of events and to extract revenue through rebates rather than ticket sales, which is a practice that is inefficient, immoral, and creates a climate of fear in the industry.
🚨 The Broader Implications of Live Nation's Business Model
This paragraph explores the broader implications of Live Nation's business practices on the entertainment industry and the economy as a whole. It compares Live Nation's alleged behavior to that of other dominant middlemen firms in various sectors, highlighting a pattern of using fees, kickbacks, and complex financial arrangements to extract profits in ways that are difficult to detect. The paragraph argues that such practices are not only harmful to individual businesses and consumers but also contribute to a culture of fear and dishonesty within industries. It calls for Live Nation to be broken up and for a shift away from these extractive and secretive business practices, emphasizing the need for greater transparency and fairness in the economy.
Mindmap
Keywords
💡Live Nation
💡Ticketmaster
💡Antitrust
💡Monopoly
💡Contribution Margin
💡Rebates
💡Market Power
💡Financial Engineering
💡Secret Side Deals
💡Two Sets of Books
Highlights
Live Nation, the nation's leading concert promoter, bought Ticket Master in 2010, which controlled most of the ticketing software and was a major player in artist management.
The merger between Live Nation and Ticket Master was controversial and was allowed by the government's antitrust division under Obama.
The Biden Ant-Trust division has been investigating Live Nation Ticket Master for years.
Live Nation hired an old antitrust lawyer, Dan Wall, to represent them against potential monopolization charges.
Dan Wall defended Live Nation by arguing that high ticket prices are due to supply and demand, not because of Live Nation's charges.
Live Nation's CEO, Michael Rapino, made $139 million in 2022, raising questions about the company's profitability.
New documents released by Congressman Bill Pascrell suggest that Live Nation's operations may not be as they seem.
Live Nation allegedly coerced performers into not signing with Juice Entertainment and threatened to withhold its ticketing services.
Live Nation and Juice Entertainment had disagreements over the production of a concert, leading to Live Nation demanding to co-produce the show.
Live Nation offered a deal to Juice that would have saddled the firm and artists with costs while Live Nation took the profits.
Live Nation had secret side deals with vendors to inflate costs, which would then be funneled back to Live Nation through secret rebates.
Juice Entertainment's lawyer claimed that Live Nation essentially defrauded everyone involved in the concert production.
Live Nation kept two sets of books, posting large losses in profit and loss statements while events actually made money.
The expert report found that Live Nation's behavior is consistent with other dominant middlemen firms in various industries.
The report suggests that Live Nation's practices could lead to the company's breakup and a reevaluation of similar business practices across the economy.
Transcripts
hi I'm Matt Stoler author of Monopoly
focused newsletter big and an antitrust
policy analyst in this big breakdown I'm
going to ask the question is Live Nation
Ticket Master the company that controls
most of the live entertainment industry
in fact a criminal
conspiracy you might think that's a bold
question and it is but some explosive
new documents just came to light that
suggest that well it's a question worth
asking let's dive in in 2010 the live
entertainment industry was in shock when
Live Nation the nation's leading concert
promoter bought Ticket Master which
basically had a monopolis a monopoly
over ticketing software and was a major
player in artist management it was a
very controversial deal and Ticket
Master had already bought out most of
its other competitors and ticketing
software and really upset Pearl Jam in
the 1990s was well-known you know Market
power problem but the government's
antitrust division under Obama allowed
the deal to go forward anyway in fact
seems like they were sort of proud of
doing that
let's take a look at this public picture
that was put on the doj's website so
that publicly released photo shows the
head of the antitrust division Christine
Varney or number two William Kavanaugh
and their adviser Jee kimmelman
announcing that they were allowing that
merger and talking to reporters about it
now the Biden Anti-Trust division is
very different than the Obama antitrust
Division and they have been
investigating Live Nation Ticket Master
The Firm that the Obama Administration
allowed to form they've been
investigating it for years and when
firms be are being investigated they
tend to lawyer up and so that's what
Live Nation did hiring an old antitrust
lawyer named Dan wall to represent them
against potential monopolization charges
that could be coming from the Anti-Trust
division wall defended Live Nation
publicly as part of a PR campaign
earlier last month in a blog post he
wrote that you know you might think that
Live Nation charges a lot for tickets
but that's really just supply and demand
for popular artist the Corporation
itself charges low prices not high ones
he even put up a comparison of
commissions charged by online
marketplaces from twitch to Airbnb to
Uber to show how little Live Nation
charges let's take a look you see Live
Nation charges less than twitch StubHub
Uber Airbnb etc etc concert promotion
wall wrote is not a highly profitable
business even for Live Nation end quote
so look at that commission it's a measly
7% for Live Nation Ticket Master now for
sure Live Nation charges consumers a lot
of money and doesn't pay much to artists
I this was Wall's argument but they
don't he wrote Set the ticket price and
even worse for Live Nation shareholders
at least it's just not a very good
business wall concluded quote The
Narrative that Ticket Master fees are
responsible for high ticket prices makes
no sense according to wall the middleman
giant affects at most 2% of the price of
a ticket for its trouble still all of
that that argument from Dan wall from
from Live Nation Ticket Master feels
weird it sounds like it's not true
considering that Live Nation CEO Michael
rapino made $139 million in 2022 that's
a lot of money for someone in just such
a terrible business well the reason it
sounds like it's not true is because
well it's not true or at least it's not
true according to new documents released
by Congressman Bill pascrell from
litigation in 2019 based on live
nation's own financial data these
documents are from a court case uh
involving a concert at the New Jersey
State Fair in 2011 now I just want to
tell you where these documents came from
because it's kind of funny um we often
think about monopolis as sort of
dominant and and powerful and all
knowing and that litigation has been
going on for 13 years at a certain point
the uh the plaintiff's hired an expert
his name is Richard Barnett he's one of
the top scholars in the business and and
he looked at live nation's confidential
records and he wrote about how the
operation actually works and the
plaintiffs then submitted that report to
the court and the judge unfortunately
ordered it sealed so that no one could
read it saying oh it's got confidential
information or or whatnot and that
should have been that except and here's
where the stupidity of a of a monopolist
comes in Live Nation or someone's on
live on live nation's legal team or Dan
Wall's team or someone like that they
screwed up and they accidentally
uploaded the report to a public court
site Pacer where pasel got his hands on
he just downloaded it
then he sent it out in a press releasee
and that's how we have the documents
okay so what's the case all about that
shows how Live Nation really works well
it starts with a concert when in 2011
the head of the New Jersey state feris
Nam is Al dorso hired a company called
juice entertainment run by two
experienced concert promoters to put on
a concert now Live Nation they they told
Live Nation do you want to do this Live
Nation wasn't interested but as soon as
I got when that juice entertainment was
doing it and started to book acts Live
Nation demanded to C produce the show
and and dorso who was running the the uh
State Fair was just like okay you guys
work it out and he later put it you know
Live Nation they were the the 800 PB
gorilla I said go see if you can work
out a deal that that's what he was
saying to juice now juice and Live
Nation couldn't work out a deal and then
Live Nation managed to get juice fired
how well the smaller firm sued Live
Nation claiming the giant coerced
performers into not signing with juice
to appear at the and threaten to
withhold its ticketing services to The
Venue the state-owned metaland sports
complex if it were not allowed to be a
partner that's from public reporting in
other words Live Nation used dominance
in other lines of business artist
promotion and ticketing software to
thwart arrival which is exactly why the
Obama staffers like Gene kimelman should
have blocked the merger in the first
place but this situation leaves a
question why didn't Jews consent to let
Live Nation Co produce the event I mean
half the profit is still better than no
profit right well the reason is
according to to juice that Live Nation
offered a deal that would have saddled
the firm and an artist with the costs
while Live Nation itself took the
profits in this purported Arrangement
Live Nation and Juice would have split
the cost of putting on the event like
renting the venue The Sound Stage and so
forth they would have also share profits
from ticket sales with artists and with
each other and that sounds good so far
the problem is what came next it's in
the accounting here's the expert report
Live Nation negotiated third party
expenses like rental cost and with the
venues directly with vendors in exchange
for exclusive Financial gains not
disclosed to their artists or their
agents managers or independent
co-promoters in the form of rebates so
in other words Live Nation had Secret
side deals with vendors to inflate costs
by overpaying those vendors and venues
which meant that any profit from the
event would evaporate it would look like
a loss co-promoters and artists who
share and profits would lose out but and
would be told that the show just wasn't
profitable but the thing is those
vendors those venues who had gotten
extra money by being paid inflated costs
would in turn remit that money back to
Live Nation in the form of secret
rebates in other words juice would pay
the inflated cost that would get
furtively funneled back to Live Nation
along with all the profits from the show
now Live Nation didn't disclose any of
this Revenue diversion with the artists
to whom it had a legal obligation to
whom it with with whom it had contracts
which is why Juice's lawyer said that
the Corporation quote essentially
defrauds every every one involved now
these kinds of secret Kickbacks ensured
what Juice's lawyer called the quote
Financial ruin end quote of co-promoters
now of course Live Nation claimed it was
losing money or not making very much
money on any particular event and it
wasn't but that's because the profit was
coming in through rebates which
according to this expert Barnett went on
to align in the accounting statement
called quote contribution margin end
quote so juices experts found uh so
interestingly Barett even found that
Live Nation kept two sets of books so in
in one case they posted an entry of
$90,000 rent for settlement but only
$755,000 internally for the same item
they routinely put in profit and loss
statements large losses while admitting
that events actually made money so
that's just one event all right that's
one uh State Fair New Jersey how much
was this contribution margin across all
of Live Nation I don't precisely know
and you can throw other things into that
accounting uh line but there are hints
of amounts so in the third quarter of
2021 which is the last time they used
the term contribution margin that I can
find it was
$747 Million probably in the billions
today and that's where CEO Michael
Rino's nine fig payday is probably
coming from Live Nation is generating a
great deal of Revenue but somehow shows
low margins lots of events where they're
not making money but somehow the cash is
coming in now that's just a price hike
right it's a it's a way of extracting
more Revenue but it's also hidden and
hiding the price hikes is important
because monopolization which is about
controlling a market and then extracting
by your pricing power is harder to prove
if you show low margins if you show that
you're not charging very much their
antitrust lawyer Dan wall can just write
poor little Live Nation our business is
terrible yeah and we all know that you
Bill by the hour Dan on your lovely silk
sheets
now let's take a step back and recognize
what we're really looking at it's not
just an extractive scheme this is about
power power over our culture power over
an entire industry basically Live Nation
can present venues or other people in
the business anyone in the business
pretty much with a choice if you
cooperate quietly you'll get extra
hidden revenue and that means
cooperating with with knowing dishonesty
in the business if not well Live Nation
will maybe work with your rival or may
just buy into the market to compete with
you directly may not let artists come to
your
shows at any point too I mean it's not
just the the the blunt instrument at any
point Live Nation can dial up or down
rebates to reward or punish and that's
increasingly true as Live Nation buys
more and more corporations in and around
the live event space with each one
presenting a additional options for fees
and rebates and what is essentially
Financial engineering
okay is this report true I mean why like
you know Live Nation would say oh they
they they got it totally wrong they
didn't disprove it because I don't think
they can but you know the question is
reasonable is the report true we don't
know um it's the expert is well
respected he looked at live nation's
financial
data and it's it is easy to believe the
worst about Live Nation Ticket Master
they have a really bad reputation in the
industry and then among consumers but
the reason I think it's true and I'm I'm
not sure but the reason I buy it is
because this particular story is
consistent with the behavior of a lot of
firms many dominant middlemen firms in
our economy from Pharmacy benefit
managers to Amazon and their
relationship with third party sellers
how they mediate between third party
Sellers and consumers to Big Banks who
securitized mortgages in the financial
crisis to the advertising technology
industry and so on and so forth now they
don't most of them don't use two sets of
books that's kind of like you know
that's a little bit you know above the
I'm not saying everyone's a criminal
conspiracy two sets of books kind of a
red flag um but in
general it's a business model middlemen
who have Market power they use fees and
kickbacks often hidden through a complex
Maze of subsidiaries or or overlapping
lines of business to extract in ways
that are really hard to see it's
inefficient it's immoral and more
importantly it creates a climate of
fear the problem is it's also just the
way that we do business
today fortunately Live Nation is under
investigation and there are a bunch of
companies that are under investigation
but this lesson if this is true and I
think it is but if it's true this is why
Live Nation needs to be broken up and
more broadly why we need to get rid of
these this way of doing business these
secret Kickbacks and rebates throughout
the whole economy thanks for watching
this big breakdown on the breaking
points Channel if you'd like to know
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