Live nation
Page: 3
Given the glacial pace at which federal antitrust litigation moves, the U.S. Department of Justice’s historic lawsuit against Live Nation and its wholly owned subsidiary Ticketmaster is expected to take years to wind its way through the legal system whether it’s fully adjudicated or the live-event Goliath agrees to make changes to its business, which the government often terms “behavioral remedies.”
And though it’s clearly too early to predict how the case will play out, legal expert and antitrust attorney Lawrence J. White from New York University’s Stern School of Business says the potential winners and losers have already been largely pre-determined based on hints found in the 128-page complaint that the DOJ filed May 23 in U.S. District Court in the Southern District of New York.
“The companies mentioned in the complaint as being the most harmed by anti-competitive behavior are typically the same companies that stand the most to gain in the solution,” White says.
Trending on Billboard
In the case of Live Nation, the winners will very likely be the company’s main concert promotion rival, AEG Presents; secondary-market ticketing competitor SeatGeek; and a handful of major independent promoters like Chicago’s Jam Productions. The losers would likely be Live Nation; Irving Azoff and Tim Leiweke’s venue owner, management and hospitality company, Oak View Group — which the DOJ alleges “has described itself as a ‘hammer’ and ‘protect[or]’ for Live Nation” — as well as, potentially, major artist management companies and talent agencies, depending on the government’s solution for more competitive ticket pricing.
“The government tends to rely on private companies to carry out its policy goals during the remedy phase of an antitrust case,” explains White, pointing toward the original consent decree drafted around the 2010 merger of Live Nation and Ticketmaster. That agreement unsuccessfully propped up two private companies — AEG and Comcast Spectacor — to serve as competitors to Ticketmaster.
Whether the DOJ wins in court or ends up settling with Live Nation, White says it will lean on large corporations to assist with enforcement of the ruling. As Live Nation’s only major competitor for ticketing and concert promotion, AEG, which owns AXS Ticketing, is an obvious choice as a DOJ partner because of the company’s large scale, which will be critical for the DOJ’s long-shot goal to lower ticket prices. (The DOJ is believed to have interviewed more than 100 individuals from the live-music industry as part of its recent antitrust investigation into Live Nation.)
In a May 23 press release that announced the lawsuit filing, Attorney General Merrick Garland said, “We allege that Live Nation relies on unlawful, anti-competitive conduct to exercise its monopolistic control over the live-events industry in the United States at the cost of fans, artists, smaller promoters and venue operators.” He contends that increasing competition among Live Nation’s ticketing rivals and in the artist promotion space will lower the face value prices of tickets.
Prior to the 2010 merger of Live Nation and Ticketmaster, four or five ticketing companies were capable of competing with the latter at the arena level. In 2024, only two remain: AXS and SeatGeek, the secondary site that also happens to own one of the only primary ticketing products capable of servicing major arenas and stadiums.
In a statement released to Billboard, SeatGeek said, “We are hopeful that the Department of Justice’s antitrust lawsuit to break up the Live Nation-Ticketmaster monopoly will restore fair market competition to live entertainment.” On the concert promotion front, there are far fewer major independent promoters now than there were prior to 2010 and only a handful capable of touring major arena acts across the country. In addition to Jam Productions, they include Nashville’s Outback Concerts and Another Planet Entertainment in the San Francisco Bay Area. All three promoters declined to comment for this story.
In a May 31 letter to his staff, AEG chairman/CEO Jay Marciano outlined how the DOJ could make concert promotion fairer and drive down the cost of ticketing by dismantling Live Nation’s “flywheel” business model, which is cited in the DOJ’s complaint and described in its May 23 press release as “a self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals and then uses its powerful cache of live content to sign venues into long-term exclusive ticketing deals, thereby starting the cycle all over again.”
Marciano’s letter said Live Nation’s flywheel model “deploys the excessive profits of its ticketing monopoly to outspend what the concert market can profitably sustain.”
Under this theory, ticket prices would drop if Live Nation was prevented from using its other revenue sources to overpay artists and compete with other promoters offering artists an 85/15 or a 90/10 split on ticket sales.
Although the theory is not widely accepted by most major talent agents or managers — IAG executive vp/head of global music Jarred Arfa calls it “unrealistic” and “illogical” — it is gaining popularity among large indie promoters and DOJ lawyers, sources tell Billboard. White notes that whether the government settles or takes Ticketmaster to trial will depend on “the time and resources the DOJ wants to expend on the case and the evidence against Live Nation it has collected.”
Two Madonna fans have now dropped their lawsuit complaining about delayed starts to her concerts, but the star’s lawyers are emphatic that the move was “not the result of any settlement” and are warning they might even seek penalties over the “frivolous” case.
In a motion filed in federal court Wednesday (June 19), lawyers for the aggrieved fans said they would permanently drop the case, in which they accused Madonna and Live Nation of breaking laws by making fans wait for hours at December concerts in Brooklyn on her Celebration Tour.
But later that same day, Madonna and Live Nation’s lawyers fired off a letter to the judge advising him that the move to drop the case had been made “unilaterally” by the other side — and that they had not reached any kind of agreement to end a case they say should never have been filed.
Trending on Billboard
“Defendants believe that this action was a frivolous strike suit designed to force them to incur legal expenses,” the star’s lawyers write. “Plaintiffs have now abandoned this lawsuit when it became clear that this approach would not result in a settlement payment and that they would need to oppose defendants’ motion.”
The motion to drop the case said that each side would “bear its own fees and costs,” but Madonna’s lawyers said in their letter that they had never agreed to that — and that they might still demand that the plaintiffs repay the money they were forced to spend litigating the short-lived lawsuit.
“Given the legal expenses that defendants were forced to incur to defend this action … defendants reserve the right to move for sanctions, attorneys’ fees, and costs,” lawyers for Madonna and Live Nation write.
An attorney for the plaintiffs, Michael Fellows and Jason Alvarez, did not immediately return a request for comment on Thursday (June 20).
Madonna and Live Nation were first sued in January over the Brooklyn shows — a case that made headlines because it claimed the fans “had to get up early to go to work” the next day. She was later hit with a similar case in Washington, D.C., that claimed fans had waited in an “uncomfortably hot” arena and that she had lip-synched portions of the show. A third case, filed last month, echoed those claims but also alleged that Madonna’s show in Los Angeles had been unexpectedly “pornographic.”
All three cases have been filed as class actions, seeking to represent potentially thousands of other fans who also endured the alleged delays. By starting the concerts later than expected, the cases claim Madonna and Live Nation breached their contracts with fans and violated state consumer protection laws.
Madonna’s attorneys have strongly rejected those accusations. In a request to dismiss the New York case earlier this year, her lawyers argued that simply needing to wake up early was not the kind of “cognizable injury” that can form the basis for a lawsuit. And they say that anyone buying a concert ticket is well aware that a show likely won’t start at the exact time printed on the ticket.
“No reasonable concertgoer — and certainly no Madonna fan — would expect the headline act at a major arena concert to take the stage at the ticketed event time,” her legal team wrote in April.
While Wednesday’s dismissal means that the New York case is now closed, the D.C. and Los Angeles lawsuits remain pending.
Barclays has suspended its sponsorship of Live Nation’s U.K. festivals following protests from artists over the bank’s links to defense companies supplying arms to Israel as well as fossil fuel firms.
Country singer CMAT, folk group Lankum and rock bands Pest Control, Zulu, Scowl, Speed and Ithaca are among the acts who have either pulled out of or threatened to boycott Live Nation-promoted summer events, including July’s Latitude festival and the three-day Download festival, which starts Friday (June 14) in Donington Park, Leicestershire.
In a statement on Friday, a spokesperson for Live Nation U.K. said, “Following discussion with artists, we have agreed with Barclays that they will step back from sponsorship of our festivals.”
Confirming the news, a spokesperson for Barclays told Billboard that the London-headquartered bank “was asked and has agreed to suspend participation in the remaining Live Nation festivals in 2024.”
“Barclays customers who hold tickets to these festivals are not affected and their tickets remain valid,” the spokesperson continued. “The protestors’ agenda is to have Barclays debank defence companies which is a sector we remain committed to as an essential part of keeping this country and our allies safe.”
Referencing recent outbreaks of vandalism at a number of U.K. Barclays bank branches, where protestors threw paint and smashed windows, the spokesperson said the “only thing that this small group of activists will achieve is to weaken essential support for cultural events enjoyed by millions. It is time that leaders across politics, business, academia and the arts stand united against this.”
Barclays is one of the biggest sponsors of music festivals in the United Kingdom and signed a five-year sponsorship deal with Live Nation last year. Over the past two decades, the company says it has invested £112 million ($142 million) in supporting British music and the country’s arts sector.
Pressure from pro-Palestinian groups on music festivals and arts organizations to cut ties with sponsors with perceived links to Israel has been building since the start of the conflict in Gaza. Last month, more than 150 artists withdrew from Brighton’s Great Escape Festival over the independent event’s ties to Barclays.
Defending its position, Barclays has previously stated that it provides “vital financial services to U.S., U.K. and European public companies that supply defence products to NATO and its allies” but does not directly invest in these companies.
The news that the international bank, which has also drawn heavy criticism from environmental campaigners for bankrolling fossil fuel firms, was pulling out of sponsoring Live Nation’s U.K. festivals was welcomed by campaign group Bands Boycott Barclays.
“As musicians, we were horrified that our music festivals were partnered with Barclays, who are complicit in the genocide in Gaza through investment, loans and underwriting of arms companies supplying the Israeli military,” posted the campaign group on Instagram.
“Hundreds of artists have taken action this summer to make it clear that this is morally reprehensible, and we are glad we have been heard,” the group added.
Posting on X, Rage Against The Machine’s Tom Morello, who is due to play Download this weekend, said that “the fact that the festival has listened to its musicians and cut ties with Barclays Bank is a testament to the power of artists taking collective action for human rights.”
“I’ve been pushing hard for this behind the scenes,” added Morello, “and I salute all the artists like Zulu, Scowl and Speed who have taken a stand to help make this historic withdrawal happen.”
Equity analysts aren’t convinced the U.S. Department of Justice will accomplish its larger goal of separating Live Nation’s concert promotion and ticketing businesses, thereby undoing the controversial merger it allowed in 2010. But if Live Nation and Ticketmaster were to become separate companies, analysts estimate the combined companies would be worth from $85 to $96 per share, based on a handful of reports Billboard has seen.
Live Nation shares were trading around $101 to $102 the day before the lawsuit was announced on May 23. But shares have since traded in the $93 to $94 range, putting the current price at the upper end of analysts’ “sum of the parts” (SOTP) valuations. In the wake of the lawsuit, some analysts have lowered their price targets for Live Nation, and S&P Global downgraded its rating on Live Nation’s debt.
Any good merger creates value greater than the sum of the parts. Live Nation’s business model is a “flywheel” in which one segment (such as concerts) generates value for other segments (ticketing or sponsorship and advertisements). To the company, the flywheel is the result of hard-won competitive advantages built over the past 14 years. To the DOJ, the flywheel represents Live Nation’s ability to use its dominant market position to its advantage in anti-competitive ways.
Trending on Billboard
Breaking up Live Nation would eliminate the synergies that create value for the combined company. What is currently one stock would become two stocks of two separate companies with different management teams. Live Nation shareholders would likely get ownership in the new, standalone Ticketmaster. Analysts have calculated the value of Live Nation and Ticketmaster using a SOTP approach that combines the value of the business segments as if they were standalone companies.
But analysts have serious doubts the DOJ will succeed in breaking up the company. “Federal Judges…are generally pro-business and we doubt — at least based on [the DOJ’s 128-page] summary — the case is strong enough to either break up Live Nation or for the DOJ to win the lawsuit,” wrote Huber Research analyst Doug Arthur in a Thursday (June 6) note to investors. Similarly, J.P. Morgan sees “a real possibility that [Live Nation] comes out of this a winner” and fends off the DOJ’s ultimate goal of breaking up the company, analysts wrote in a May 29 note to investors.
“The government’s burden is going to be pretty high,” Bill Morrison, partner at Haynes & Boone, tells Billboard. “It’s long been the case in antitrust jurisprudence that it’s not illegal to have a monopoly. What’s illegal is to use that monopoly power in an anti-competitive way. And so that would be the burden that the DOJ would have to prove, which is to show that Live Nation abused its monopoly power and it acted unreasonably to restrain trade to maintain its monopoly.”
There could be outcomes other than a forced divestiture, however. Wolfe Research analysts note the “DOJ does not lose if it reached for the stars and landed on the moon,” they wrote in a May 23 note. “From that perspective, it is entirely possible the DOJ wants to get Live Nation/Ticketmaster to agree to remedies, such as eliminating exclusive ticketing deals, and is using the threat of a breakup to achieve those goals.”
The very existence of the DOJ’s lawsuit has changed how investors will approach Live Nation. The health of the concert business and Live Nation’s strengths will be overshadowed by the pall cast by the DOJ. Northcoast Research downgraded Live Nation from “buy” to “neutral” because analysts believe the stock price will be based on legal news and the political environment rather than fundamentals and business performance. J.P. Morgan also noted a “sentiment overhang” related to the DOJ’s lawsuit and lowered its price target to $116 from $126, although it kept its recommendation at “overweight.”
One variable that has largely gone unmentioned is the possible change in the administration at the White House. President Biden has taken an aggressive stance on protecting competition — the DOJ sank proposed mergers by Spirit-JetBlue and Penguin Random House-Simon & Schuster — reducing the fees consumers face everywhere from airlines to concert tickets, and criminally prosecuting companies over no-poaching rules and wage-fixing. A second Trump administration would bring an entirely new slate of appointments to head influential antitrust positions. “It depends on who is in those key [regulatory] spots, and then what the priorities are of those offices and the philosophy,” Morrison says. “We’ve seen big pivots in the past.”
Live Nation did not immediately respond to a request for comment on this story.
On Friday (May 31), AEG chairman/CEO Jay Marciano became the first major live music executive to voice support for the Department of Justice’s effort to break up Live Nation and Ticketmaster, foreshadowing the role AEG will likely play as a key witness in the DOJ’s antitrust case against Ticketmaster.
“AEG has long maintained that Ticketmaster has a monopoly in the U.S. ticketing marketplace and uses that monopoly power to subsidize Live Nation’s content businesses,” Marciano wrote in a memo to staff May 30. Beyond its longstanding criticism that Live Nation uses its scale to overpay for talent, AEG doubled down on its attacks on Ticketmaster’s use of exclusive ticketing contracts, with Marciano telling staff that AEG and its attorneys “strongly believe that DOJ’s lawsuit will succeed and ultimately bring sweeping changes” to the live music industry.
The government interviewed dozens of Live Nation’s competitors during its two-year anti-trust investigation, including AEG — executives at AEG have met with DOJ investigators on at least three separate occasions, including a 2023 meeting to discuss the crash of the ticket presale for Taylor Swift’s The Eras Tour, which AEG promoted through its joint venture with Louis Messina.
Trending on Billboard
That puts Marciano and AEG in a rare position to galvanize public opinion and build support for his call to staff and the larger music community to help “us lay the groundwork now for the future of the industry.”
But AEG’s claims aren’t as compelling as Marciano thinks, according to Live Nation executive vp of corporate and regulatory affairs Dan Wall, who responded to Marciano’s May 30 letter with a statement alleging AEG is trying to use Live Nation’s antitrust case “to advance their own interests.”
“AEG supports this case — indeed, begged DOJ to file it — because it doesn’t want to pay artists market rates or convince venues to adopt its second-rate ticketing system exclusively,” Wall said in a statement provided to Billboard after Marciano’s statement was released.
AEG declined to comment for this story.
The battle between Live Nation and AEG dates back to the federal government’s 2010 approval of Live Nation’s merger with Ticketmaster, which the government approved by imposing a number of conditions on Ticketmaster designed to increase competition. As part of those conditions, referred to as the consent decree, the DOJ required Ticketmaster to license its source code and technology to AEG to create a competing ticketing service. The government did not address some of Ticketmaster’s more controversial tactics at the time, like the use of exclusive contracts to lock venues into long-term deals, which lies at the heart of this current conflict.
AEG only licensed Ticketmaster’s technology for a year, and in 2011 announced it was instead building a new ticketing platform called AXS with the help of Montreal firm Outbox ticketing. It took two years to switch all of AEG’s venues globally to AXS Tickets, and then AEG struggled to sign on new clients, even after merging with Veritix in 2015, and in 2019 ended up losing a major client — Altitude Sports and Entertainment — to a startup called Rival launched by former Ticketmaster CEO Nathan Hubbard.
AXS’ struggles were due in part to its ownership structure following the 2015 merger with Veritix, which divided ownership among AEG, private-equity firm TPG and Cleveland Cavaliers owner Dan Gilbert, who previously owned Veritix. In 2019, AXS’ partners began exploring a sale of the company and looked at buying Rival or being bought by Rival, deals AEG blocked thanks to AXS’ ownership rules that required unanimous consent for all material decisions. AEG also blocked a merger between AXS and CTS Eventim, a powerful European ticketing provider that was looking for an entry point in the U.S. market to compete with Ticketmaster.
Gilbert and TPG eventually agreed to sell their stakes in AXS to AEG in 2019, which by then had started to explore a new business model for the ticketer, built around non-exclusive ticketing contracts. Instead of competing with Ticketmaster to sign venues to AXS, AEG would instead focus on expanding its use of AXS ticketing for AEG-promoted tours. Both Live Nation and AEG prefer to use their own ticketing platforms for the concerts they promote because it allows the promoters to directly control the customer data.
Hoping to encourage Ticketmaster to allow AEG to use AXS whenever it brought tours to buildings ticketed by Ticketmaster, AEG offered to allow Live Nation to use Ticketmaster at the venues AEG controls, including the Crypto.com Arena in Los Angeles.
AEG would extract a similar concession from Live Nation in 2021 that would earn a mention in the DOJ’s lawsuit against Ticketmaster. On June 15 of that year, leading venue operations company ASM Global, in which AEG owned a minority stake, announced it had renewed its agreement with Ticketmaster to provide ticketing services for a majority of the 300 venues ASM manages.
The government flagged the agreement as suspicious because AEG at the time owned 30% of ASM and had “advocated for AXS to serve as the exclusive primary ticketer for the ASM Global venues,” the complaint reads. “But ASM Global’s majority shareholder, Onex, worried that Live Nation would retaliate by withholding shows from ASM Global venues if ASM Global entirely switched away from using Ticketmaster.”
A source close to the deal called the DOJ’s version of the story an “oversimplification,” noting that AEG and Onex didn’t have the right to require ASM Global clients to use one ticketing system over the other and that the majority of clients opted to stay with Live Nation. ASM did, however, convince Live Nation to grant a rare exception to its venue contracts, allowing ASM venues contracted to Ticketmaster to switch to AXS tickets for any tours AEG brought to the buildings.
In exchange, Ticketmaster paid a large advance for the multiyear contract and issued a press release, quoting ASM Global president/CEO Ron Bension saying, “Aligning with industry leaders like Ticketmaster is a critical component in providing millions of people with the most seamless and secure live experiences.”
Happy to have secured the largest carve-out in Ticketmaster’s exclusivity contract to date, AXS decided to push for more exceptions. In 2022, AEG began routing Swift’s The Eras Tour alongside its partner, Messina Touring Group. The majority of the venues on the tour were Ticketmaster-exclusive facilities, though ASM managed five of the stadiums, representing 12 shows on the 52-date trek. But two of those dates — a pair of concerts at State Farm Stadium in Glendale, Ariz. — would be ticketed by SeatGeek under its exclusive deal with the Arizona Cardinals. Making matters worse, two of ASM’s management clients decided to partner with Ticketmaster for the sale.
Down to just five shows at two stadiums, AEG dropped the matter, but not before reporting the issue to the DOJ, encouraging them to look at Live Nation and Ticketmaster’s use of exclusive contracts as anti-competitive.
After the fiasco, Live Nation chairman Greg Maffei appeared on CNBC to defend Ticketmaster and claim “AEG, who is the promoter for Taylor Swift, chose to use us because, in reality, we are the largest and most effective ticket seller in the world,” he said. “Even our competitors want to come on our platform.” AEG leadership was quick to respond. “Ticketmaster’s exclusive deals with the vast majority of venues on The Eras Tour required us to ticket through their system,” the leadership said in a statement, adding, “We didn’t have a choice.”
In the months following, AEG’s relationship with Live Nation only worsened. In January 2023, AEG announced it was backing a U.S. tour for chart-topping singer Zach Bryan who had just released a live album called All My Homies Hate Ticketmaster. The album title succinctly encapsulated decades of anti-Ticketmaster sentiment from music fans over Ticketmaster fees, pricing and indignities and AEG was eager to get in early. With AEG as his promoter, Bryan embarked on an expansive tour of non-Ticketmaster buildings, a gambit that hadn’t been attempted since Pearl Jam in the 1990s. AEG even deployed a sophisticated anti-scalping system to keep tickets out of the hands of scalpers.
Despite the tour’s success, Bryan had reached a surprising conclusion about the experience — some of his homies hated AXS tickets too.
“Everyone complained about AXS last year. Using all ticketing sites this year,” he said of his 2023 Quittin’ Time Tour, which was still being promoted by AEG but would no longer route around Ticketmaster buildings and would play all venues, regardless of which company was the ticketer.
“All my homies still do hate Ticketmaster, but hard to realize one guy can’t change the whole system,” Bryan wrote on X, formerly Twitter. “It is intentionally broken and I’ll continue to feel absolutely horrible about the cost of tickets.”
In his written response to Marciano’s letter, Wall, a former litigator for Live Nation who helped architect the 2010 consent decree, says AEG is now trying to use the legal system to compete against Ticketmaster instead of focusing on improving AXS.
Marciano contends that there are many things that the DOJ can do to level the playing field and ended his letter by encouraging his employees not to “get distracted by Live Nation spin” and instead to “prepare for a world with more competition, more innovation, artist and consumer choice, lower ticketing fees, and more music.”
Live music experts are anticipating the antitrust lawsuit brought by the U.S. Department of Justice against Live Nation to take years to resolve, given the wide scope of the claims against the concert giant and the various stakeholders in the live music ecosystem.
“It is going to take a couple of years, at least,” Lee Hepner, senior counsel of anti-monopoly group the American Economic Liberties Project, said at the NIVA 2024 conference in New Orleans on Tuesday (June 4). The conference is put on by the National Independent Venue Association, which formed in 2020 to secure federal funding from the government during the pandemic. The upside, for Hepner and other speakers on the panel called Ticket Tyranny: The Unseen Grip of Market Dominance, is the “massive potential in restructuring the industry.”
Ant Taylor, founder and CEO of ticketing competitor Lyte, agreed on Tuesday saying, “Given how big the scope [of the DOJ lawsuit] is, it is going to be challenging to see it through… What excites me about this moment is the opportunity we have as an ecosystem to look — not just at Live Nation — but to look at the way we do business together and the conditions in which Live Nation has thrived.”
Trending on Billboard
Specifically, Taylor added, “What’s the business model of ticketing and why, for 40 years, has there been so little innovation around it?”
Ticketmaster has been a dominate force in the ticketing business for decades — its 2010 merger with Live Nation only strengthened its position in the U.S. market. The DOJ lawsuit claims that Live Nation-Ticketmaster has “unlawfully maintained monopolies in several concert promotions and primary ticketing markets and engaged in other exclusionary conduct affecting live concert venues, including arenas and amphitheaters.” A major concern for the DOJ and the group of 30 states that jointly filed the suit on May 23 is Live Nation’s “flywheel model,” which the DOJ describes as a “self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals, and then uses its powerful cache of live content to sign venues into long term exclusive ticketing deals, thereby starting the cycle all over again.”
Unlike the consent decree that Live Nation has been under since the merger, which was designed to prevent the company from abusing its position, Kevin Erickson, director of Washington D.C.-based nonprofit organization Future of Music Coalition, told the audience that he believes the DOJ lawsuit is focusing on the correct parties impacted by the alleged monopoly: the artists, venues and fans.
“Even with the best intentions, a consent decree is inadequate to address the potential for harm,” Erickson said. “It shifts the enforcement burden onto the people who have the least amount of power. It forces artists and artist representatives and venue folks to monitor for violations of antitrust law.”
Hepner explained that Future of Music Coalition has been collecting such complaints against Live Nation for years and encouraged those in the room to reach out on how to connect with the DOJ with additional complaints as the lawsuit works its way through the justice system.
If the DOJ’s lawsuit is successful and Live Nation is forced to divest Ticketmaster, the panelists expressed hope that without the promoter’s financial backing, competition in ticketing will flourish, allow for innovation and end exclusive ticketing contracts often used by Ticketmaster and other major ticketers.
Panelist Gary Witt, president and CEO of Pabst Theater Group, stressed the importance of eliminating Ticketmaster’s dominance due to growing customer dissatisfaction. “It is not about your experience when the customer comes through the door. It is not about the artist’s experience when they come backstage. It’s about the initial experience of buying a ticket,” Witt said to the audience.
The primary ticketing market has become “a closed market and allows for zero innovation,” Witt said, adding, “We have an industry to save here.”
Artists at country singer-songwriter Ashley McBryde’s level of popularity can sell $16,000 to $20,000 worth of T-shirts and hoodies when they play 1,500-capacity venues. Layne Weber, director of merchandising and fan engagement for McBryde’s management company, Q Prime, says some venues took a 20% to 25% cut of her merchandise sales during her spring tour — which is standard in the industry but, he says, exorbitant for services rendered at many clubs. “I went to a show the other night and the merch table was next to the bar,” Weber says. “The merch seller was having to compete with the bartender who’s trying to sell the drinks. That was a venue taking 20% of the sales.”
Weber’s complaints, which many artists and their representatives share, are at the center of a long-running live-industry debate over merch percentages. For decades, artists, venues and promoters have haggled behind the scenes over percentages as part of every show contract, but they contend the stakes are now much higher. “Ever since we’ve come back from COVID, the merch numbers have gone through the roof for all genres of music,” says Crom Tidwell, owner of Crom Tidwell Merchandising in Nashville. And with so much money at stake, artists want a larger percentage of their own profits.
Trending on Billboard
“Bands are getting ripped off,” says Barry Drinkwater, executive chairman of Global Merchandising Services, which handles merch for top metal acts such as Iron Maiden and Guns N’ Roses. He adds that the venue’s cut particularly hurts small acts, which tour on slimmer margins and often operate their own merch tables. “They need the money that gets them food, gets them to the next show,” he says. “Then the promoter wants to charge them 20% of the gross.”
Live Nation has expressed sympathy for this point of view. Last fall, trumpeting an endorsement from Willie Nelson, the world’s biggest concert promoter unveiled its On the Road Again program, which eliminates merch-selling fees for artists at its clubs and provides a per diem of $1,500 in gas and travel cash for artists, among other benefits. Earlier this year, Live Nation president/CEO Michael Rapino told Billboard that the program had “already helped support 3,000 developing artists,” and a statement that Live Nation issued on May 22 said, “We’re incredibly proud of how On the Road Again is supporting thousands of artists and their crews, with 100% merch profits, $1,500 cash nightly for gas and travel costs and more. Developing artists are the future of live music, and we’re proud to keep this program rolling strong.”
Complaints over merch fees are not limited to clubs, however. At arenas, stadiums and other large venues, in-house concessions staff take over merch sales, and the 20% to 25% cut goes largely to these services. And at least one venue takes an even bigger chunk. Drinkwater says New York’s Madison Square Garden (MSG) charges artists 30% of their merch sales, plus credit card fees. He also notes that percentages can be higher in the United Kingdom. (A representative for the Garden declined to comment.)
Whether artists are handling their own merch tables or relying on in-house staffers, managers say they’re often unsatisfied with the services they get, given the cost.
“I don’t feel they’re worth 25% of the revenue,” says Rick Sales, who manages Slayer, Ghost, Mastodon and others. “It’s not good value for the money spent.”
Venue reps counter that long before fans step into their buildings, they negotiate deals with artists, including merch percentages. Not surprisingly, those with leverage receive favorable terms. “Every live performance is a negotiation,” a concert-business source says. “The band doesn’t like the merch percentage, find somewhere else to play.” Venue consultant Brock Jones, the former GM of Nashville’s Bridgestone Arena, adds: “At the end of the day, venues have got to make money, too — electricity isn’t free, all that space isn’t free. Venues have to recoup those expenses. An 80/20 merch deal is absolutely fair when the venue is selling.”
Tidwell agrees that it’s a different story at arenas, which often are required to staff union employees at fixed salaries. “You’ve got to have a crew to facilitate the sales,” he says. “Somebody has to pay for the help.” But he also contends that artists complaining about high venue percentages in small venues have a point: “What are you doing for your 20%? You’re just providing a lobby and a table.”
Some small venues, still reeling from the pandemic, have expressed concern that Live Nation’s On the Road Again program might pressure them into following suit and giving up a crucial revenue source. “Temporary measures may appear to help artists in the short run but actually can squeeze out independent venues, which provide the lifeblood of many artists on thin margins,” the National Independent Venue Association said in a statement in September.
Arenas and stadiums are where the big merch money is. On her The Eras Tour last year, Taylor Swift made a reported $200 million on T-shirts and other goods sold at shows. In its 2023 financial report, Live Nation claimed “double-digit growth” in merch and concessions at the arenas it owns or operates, such as the Moody Center in Austin. Notably, the On the Road Again program does not apply to large venues. Drinkwater says the standard 20% to 25% cut applies and, like MSG, sometimes venues pass on credit card fees (usually 5%) to the artist. “We try with our artists to beat this down,” he says. “Sometimes we get a reduction if we can do big sales.”
Earlier this week, hackers on a “dark web” site claimed to have stolen data from hundreds of millions of Ticketmaster user accounts — but a source with knowledge of the investigation into the attack says there is no evidence that Ticketmaster fan accounts were compromised or that private user data was stolen.
Officials at Ticketmaster’s parent company, Live Nation, acknowledged a breach Friday (May 31) in a Securities and Exchange Commission (SEC) filing, noting it had identified “unauthorized activity within a third-party cloud database environment containing Company data (primarily from its Ticketmaster L.L.C. subsidiary) and launched an investigation with industry-leading forensic investigators to understand what happened.”
The statement noted that the company was “cooperating with law enforcement” and that “as of the date of this filing, the incident has not had, and we do not believe it is reasonably likely to have, a material impact on our overall business operations or on our financial condition or results of operations.”
Trending on Billboard
According to the source, federal authorities are currently working to understand how a “dark web” site seized by the federal government was recaptured on Monday (May 27) by hackers with the group ShinyHunters and used to ransom 1.3 terabytes of private data allegedly stolen from Ticketmaster for $500,000. Investigators aren’t sure what, if any, Ticketmaster files are being held in the 1.3 terabyte file, the source adds.
The hack, the source tells Billboard, did not involve a breach of the core Ticketmaster system. Rather, company officials are looking at cloud hosting service Snowflake as a possible site of the hack. A hacker claiming to be involved in the attack told the website Bleeping Computer that they had breached Santander Bank and Ticketmaster after hacking into an employee’s account at Snowflake, which provides cloud hosting services for major companies. According to that report, Snowflake is disputing the claim. Billboard independently confirmed that Ticketmaster uses Snowflake’s cloud hosting service.
When reached for comment, Live Nation directed Billboard back to the SEC filing. Snowflake did not respond to a request for comment by press time.
Australian ticketing firm Ticketek also reported Friday that it had fallen victim to hackers, notifying customers that the names of some of its users, as well as their dates of birth and email addresses, may have been accessed in a data breach. In a statement on its site, Ticketet said the user information had been stored in a cloud-based platform hosted by a “reputable, global third-party supplier”.
“Ticketek has secure encryption methods in place for all passwords and no Ticketek customer account has been compromised,” company officials said in a statement. “Additionally, Ticketek utilises secure encryption methods for online payments and uses a separate system to process online payments, which has not been impacted. Ticketek does not hold identity documents for its customers.”
Live Nation’s share price has proven to be resilient following the U.S. Department of Justice’s lawsuit and effort to break up the company’s concert promotion and ticketing operations. Eight days into what is likely to be a multi-year journey through the court system, shares of Live Nation dropped 2.3% to $93.74 and have held steady after an initial drop the day of the DOJ’s announcement.
Live Nation shares closed at $101.40 on May 22, the day before the DOJ announced its lawsuit, and dropped 7.8% to $93.48 when the news broke the following day. Since the announcement, however, Live Nation shares are up 0.3%. Still, amidst the uncertainty surrounding the outcome of the lawsuit, Live Nation’s year-to-date gain has been pared to just 0.1%, while its 52-week gain has been reduced to 13.2%.
Regardless of the outcome, the mere existence of a protracted legal battle is enough to exert a drag on the stock. In lowering their price target for Live Nation to $116 from $126 this week, J.P. Morgan analysts said in a Wednesday (May 29) note to investors they doubt the DOJ will succeed in breaking up the company and its Ticketmaster ticketing arm, but noted the effect of a “sentiment overhang.” J.P. Morgan maintains its “overweight” rating on Live Nation and analysts “believe that continued execution on [adjusted operating income] growth should drive shares higher, with significant valuation upside should developments in the lawsuit break positive.”
Trending on Billboard
Music stocks were broadly down this week as the biggest companies in the Billboard Global Music Index lost ground. The index fell 2.3% to 1,799.07 as Spotify fell 3.8% to $296.53, Universal Music Group dropped 0.9% to 28.58 euros ($31.03), Warner Music Group sank 2.2% to $29.78 and HYBE dipped 0.2% to 200,000 won ($144.60). Ten of the 20 companies in the index were losers this week, nine gained ground and one was unchanged.
The index has gained 17.9% year-to-date on the strength of music streaming companies. Tencent Music Entertainment and Spotify lead all stocks with gains of 60.4% and 57.8%, respectively, through the end of May. Elsewhere, Hipgnosis Songs Fund has gained 39.7% due to the company’s pending sale to Blackstone, German concert promoter CTS Eventim is up 26.8% and Chinese music streamer Cloud Music has gained 22.7%.
Radio company iHeartMedia has the distinction of being the top-performing music stock of the week while carrying the worst year-to-date performance. Shares of the radio giant rose 6.4% to $0.926, marking a respite from a month-long free fall during which the stock has traded below $1.00 per share over the last seven trading days. Even after this week’s gain, iHeartMedia finished the month of May down 56% and has lost 65.3% year to date.
Reservoir Media shares gained 2.4% to $8.04 this week following the company’s fiscal fourth-quarter earnings release on Thursday (May 30). The company beat guidance for both revenue and adjusted EBITDA and its share price rose as much as 15.5% in the wake of the news. Following the earnings results, B Riley raised its price target for Reservoir to $11.50.
Music streaming company LiveOne fell 6.3% to $1.65 this week after fiscal year results on Thursday showed the company’s revenue grew 19% to $118.4 million. LiveOne shares are up 17.9% year to date.
Overall stocks were broadly down this week but performed better than the Billboard Global Music Index. In the United States, the S&P 500 dropped 0.5% to 5,277.51 and the Nasdaq composite fell 1.1% to 16,735.02. In the United Kingdom, the FTSE 100 fell 0.5% to 8,275.38. South Korea’s KOSPI composite index sank 1.9% to 2,636.52. China’s Shanghai Composite Index declined just 0.1% to 3,086.81.
AEG CEO Jay Marciano says Live Nation acts like a monopoly and agrees with the U.S. Department of Justice’s effort to break the concert giant and Ticketmaster up, according to an email Marciano sent out to employees on Friday (May 31). In the memo, the executive accuses the company of “preventing other businesses from competing” and “leaving consumers to suffer the consequences.”
In the two-page email, Marciano said the lawsuit was an important milestone for addressing alleged monopolistic behavior in the concert business, noting “the entire ecosystem of our industry” is at stake as the case winds its way through the U.S. legal system.
“Notwithstanding its claims about its profit margins or its market share, it is a monopoly, and it uses its monopoly power to impose its will on the live entertainment business,” wrote Marciano of Live Nation, later writing, “We strongly believe that DOJ’s lawsuit will succeed and ultimately bring sweeping changes.”
Trending on Billboard
Billboard obtained a copy of the email, which can be read in full below. An AEG spokesman did not respond to a request for comment regarding the letter. Live Nation had not responded to a request for comment at press time.
From: Office of Jay Marciano
No doubt all of you are closely following the ongoing media coverage in the wake of the Department of Justice lawsuit against Live Nation and Ticketmaster. As I mentioned in my note from last week, we spent the last few days carefully reviewing the DOJ filing, as well as Live Nation’s subsequent response to the complaint.
AEG has long maintained that Ticketmaster has a monopoly in the U.S. ticketing marketplace and uses that monopoly power to subsidize Live Nation’s content businesses, preventing other businesses from competing in those areas and leaving consumers to suffer the consequences. This lawsuit is not simply DOJ suing to break up a monopoly; at stake is the entire ecosystem of our industry, one that has long suffered from a badly broken ticketing model. As you know, the cornerstone of Live Nation’s monopoly is Ticketmaster’s exclusive ticketing contracts with the vast majority of major concert venues in the United States. These agreements block competition and innovation and result in higher ticketing fees, denying artists the ability to choose who will ticket their shows and how much their fans should pay.
Following the DOJ filing, Live Nation issued several public comments in service of its ongoing strategy to maintain its dominance – unfairly blaming others for industry problems they have created, making false and misleading statements, and dismissing the significance of the case. Artists, venues, and brokers are not responsible for the broken live entertainment business model in this country – that responsibility lies with Live Nation. Notwithstanding its claims about its profit margins or its market share, it is a monopoly, and it uses its monopoly power to impose its will on the live entertainment business. Live Nation may claim that its margins on promotion are low, but that’s only because it deploys the excessive profits of its ticketing monopoly to outspend what the concert market can profitably sustain. Live Nation does this with the goal of removing competitors from the business and in turn using its continued control of content to preserve a stranglehold on ticketing through venue exclusives.
The DOJ’s case is serious and reflects widespread sentiment among 30 attorneys general from across the country, numerous media outlets, industry commentators, consumer groups, and antitrust experts that Live Nation’s conduct violates the law and harms competition and consumers. While it may take some time, we strongly believe that DOJ’s lawsuit will succeed and ultimately bring sweeping changes resulting in increased competition and more innovation and choice that benefits fans, artists, and ourentire industry. DOJ’s lawsuit means that artists will have a choice in who tickets their concerts, that the ticketing fees consumers pay will be lower, and ultimately that artists and fans will have access to what we all want: more and higher quality live entertainment experiences at a price that fans can afford. We look forward to each and every one of you helping us lay the groundwork now for the future of the industry.
Let’s not get distracted by Live Nation spin. Instead, let’s stay focused on continuing to execute at the highest level, and preparing for a future state of the industry: a world with more competition, more innovation, artist and consumer choice, lower ticketing fees, and more music.Jay