Live Nation is destroying concerts. Ticketmaste...
When you're a true mom and pop indie small venue, you're like one person and you're doing like six jobs. You guys here with the water department? You guys need drink tickets? You want me to do it? Here's a list for a backup. I could be up on the roof later working on the air conditioning for all as we know. Let's do our little security meeting then. How you doing, you all right? Are you sweating? How the heck did that happen? If you haven't grabbed the plunger, then you're not an indie venue owner. This is Tom. He owns a small rock club in Tampa, Florida that fits about 400 people. Venue owners like Tom are the secret artists responsible for orchestrating all of your favorite concert moments. Very soon, about 400 people will make their way in here for this concert. We're almost there. And Tom is getting squeezed. We used to operate about 25, 30% margins in 2019, and now it's literally like 3% margins. And the same people that are squeezing Tom are the ones gouging you for concert tickets priced at thousands of dollars. So if you can't afford to see your favorite artists and the people putting on the shows aren't making any profits, who is making money? A giant corporate monopoly, of course. The two-headed beast of Live Nation and Ticketmaster. We're gonna dig into just how they not only ruin the concert-going experience, but set the template for making everything in the American economy, from food to airline travel and healthcare, shittier and more expensive for all of us. I can go through a day where 100 people say to me, we love you, we gotta figure out how to keep you here. And how can you not be making money? Every time I turn around, you're having a sold-out concert. I'm like, listen, here's the thing. The big dogs are literally just gonna swallow me. There's a hierarchy in live music, both in the sizes of the venues and the popularity of the artists. At the base are the small, independent venues like Tom's. That's where traditionally most artists cut their teeth. Then in the middle tier, you have venues like the Pabst Theater in Milwaukee, Wisconsin, owned by Gary Witt. And at the very top, you have the big dogs Tom mentioned, the arenas, mostly owned by giant corporations like Live Nation and the artists that can fill them, your Drake's, Taylor Swift's, and Beyonce's. Today, only that top tier that charges you thousands of dollars for tickets is able to sustain itself. But it didn't used to be this way. At one point, this top tier didn't even exist. The venues used to be a lot smaller, even for the biggest artists in the world. And the tickets were cheaper, too. It's 1956. Teenagers in Miami are lining up outside the Olympus Theater all day to see Elvis Presley, the king of rock and roll. It's the hottest ticket in town, and it costs $1.50. And before you say, well, that's just inflation, we did the math, and in today's economy, that would be like seeing the biggest pop star in the world for under $20. That's because back in the 50s and 60s, musicians kind of expected to lose money on live shows because the tour was just marketing for their album. That's where the real money was. Shows were short, usually less than 30 minutes, and they were small, often too small. Tens of thousands of people came out that weekend in Miami to see the king of rock and roll, but the theater only fit about 2,000, so he ended up playing seven shows over the course of three days. The Beatles figured out a way around that. In 1965, the boys from Liverpool changed live music forever with a record-breaking show at New York's Shea Stadium. 55,000 fans at a single show, screaming so loud the Beatles couldn't hear themselves play. The show grows 300,000, or about $3 million today, and the band pocketed most of that. Stadium rock was officially born, and in the years to come, it would only become more successful, all thanks to basketball. In the 60s, the NBA and NHL were massively expanding their league sizes, which led to a new crop of huge indoor stadiums, most notably Madison Square Garden in New York and the Forum in LA. It could fit up to 20,000 people, rain or shine, had better acoustics than the bigger outdoor stadiums, and were in need of more events to fill the nights when there were no games. Up to that point, a big artist might make up to 100K after playing a week's worth of shows in a mid-sized theater, but with these stadium and arena shows, they could make that much in just one night without raising the ticket price. Case in point, the most expensive ticket for that iconic Beatles show was $5.75, or $56 today, and it stayed like this for decades. We looked up more ticket stubs from the biggest acts of the 70s and 80s, and when we adjusted the prices for inflation, we were surprised to find that every single show we looked up between 1970 and 1989 cost almost exactly the same, around $45, a price that would have also gotten you into the Beatles' iconic Shea Stadium show back in 65. But in the 1990s, everything in live music changed because of three groups, Ticketmaster, Live Nation, and Pearl Jam. First, there's Ticketmaster. Today, concert ticketing is mostly digital, but before the 90s, tickets used to be sold through call centers, at stores, or at box offices. Me and my loser friends, you know, we gotta go get Aerosmith tickets. Top priority of the summer. There were a number of different ticketing agencies, and they made their money by charging venues a fee for handling all the technology and logistics of selling tickets. But Ticketmaster inverted that, and instead of charging venues, they started making money by charging fans, the infamous service fee. This incentivized venues to sign exclusive contracts with Ticketmaster over other companies. Ticketmaster also gobbled up the competition, acquiring seven other ticketing agencies between 1985 and 1991, including their main rival, Ticketron. Tickets are selling fast. Buy yours at Navy Pier, Carson Perry Scott, and Ticketron. So to sum up, that era of stable concert ticket prices we talked about ended at the same time that Ticketmaster became the only ticketing service in town. Because with their rivals out of the way, there was nothing to stop Ticketmaster from raising service fees, which they did. But an unlikely hero put them in the targets of government regulators. People have been screaming about the Ticketmaster monopoly since the early 90s, when Pearl Jam was testifying before Congress. At the same time that Ticketmaster was consolidating its corporate power in the 90s, there was a parallel story of anti-corporate rock bands like Nirvana and Pearl Jam, emerging from roots in local underground music scenes, playing tiny 400-person rock clubs like Tom's, and then blowing up to massive fame as part of the alternative rock boom. What exactly is your real name? Is it Beck? Were you christened Beck? All right. And once these artists got huge, they started questioning Ticketmaster's exploitation of their loyal fan bases. What do you think of artists who charge anywhere between $50 to $75 for tickets? Who charges that much money? Who does that? Madonna does? Yeah, but that's like a burlesque show. Pearl Jam was one of the most outspoken acts of the genre, and were even called upon at one point by the White House. And just as Elvis used his time with the president to talk about the most pressing issue on his mind, kicking the Beatles out of America, Pearl Jam used their time with Clinton to raise Ticketmaster's exploitation of their fans. In 1994, they filed a complaint with the Justice Department against Ticketmaster, after Ticketmaster refused to cap their service fee on Pearl Jam's upcoming tour. The complaint alleged Ticketmaster's monopoly, a legal battle ensued, and the whole incident resulted in guitarist Stone Gossard and bassist Jeff Ament testifying in front of Congress. All the members of Pearl Jam remember what it's like to be young and not have a lot of money. Many Pearl Jam fans are teenagers who do not have the money to pay $30 or more that it's often charged for tickets today. They were treated like a joke. Do you think Ticketmaster's entitled to a profit? I think our main concern is, are we entitled to use a different company other than Ticketmaster? These old congressmen and senators, their daughters wanted to get their autographs, and it was a rude, obnoxious moment. But it goes deeper than the usual political inaction you might expect. The American Prospect reports that Ticketmaster was leveraging its ties to key government officials to swing the case in their favor. Quote, there is evidence Ticketmaster tapped its one-time attorney, Mickey Cantor, a close Clinton confidant, then working as U.S. trade representative, to keep tabs on the case. It's confirmed that Cantor had made calls on Ticketmaster's behalf in 1992 while he was general counsel of Clinton's presidential campaign. Pearl Jam tried to do the tour without Ticketmaster, but they were just too powerful. The Department of Justice closed the investigation, and the band had to go back to using Ticketmaster a few years later. Lead singer Eddie Vedder later told Spin Magazine, it was really amazing to be right up close and get absolutely stomped on by a huge corporate entity. And what did the Ticketmaster CEO at the time have to say about all this? When you bring that up, it's irrelevant to me. No one thought that ticketing was a business. I thought it was a business. I'm not ashamed of that. So that's how Ticketmaster turned ticketing into a business by inventing the service fee and ushered in the era of rapidly rising concert prices. But where does Live Nation come into all of this? Just one year after this whole debacle, a radio mogul named Robert X. Sillerman founded a concert promotion company named SFX Entertainment. What is a concert promoter, you ask? Promoters do all of the work of arranging the logistics of the show. They book the artists, the venues, the vendors, they handle all of the payments, and they literally promote the show to the public. From SFX, Scott Milk presents Britney Spears Live. Promoters make their money by splitting the face value price of the ticket sales, so not the service fees, with the artist at a pre-agreed rate. Sillerman did to the promotion industry what Ticketmaster did to ticketing, aggressive consolidation of the competition. After gobbling up a bunch of smaller concert promoters and creating what the New York Times called the concert world's first truly national force, he sold it to the broadcast monopoly Clear Channel for $4.4 billion and used the money to buy a controlling share of Graceland, the estate of Elvis Presley, you know, the guy whose tickets used to be $1.50. It's good to be the king. Maybe we one-upped him, because maybe we own the king. I think it stinks. Clear Channel's funded off and Live Nation was born. But ticketing and concert promotion aren't the only businesses involved in putting on a live music tour, and Live Nation started slowly making their way into other business lines. It is also an artist management company, a venue operations company, and it runs sponsorship and advertisements for major concert tours across the country. So by the early 2000s, you basically just have two companies that have dominated all the various businesses in live music, but that wasn't enough for them. Live Nation wanted the whole industry to themselves. Live Nation was starting its own ticket-selling business to compete with Ticketmaster. Yeah, that's right. It was a battle of titans, like Batman v. Superman or Godzilla x Kong. But just like in those movies, the showdown was a bit anticlimactic and turned into more of a buddy movie. Did we just become best friends? Yep! They abandoned those plans and in early 2009 announced that they were going to merge these two very, very large, powerful companies in the entertainment industry. And the Obama administration basically let them get away with it. And that's really led to a very dominant monopoly power for Live Nation ever since. They control at least 60% of the top venues in the country, 80% of the primary ticket-selling market. We made a video with Cory Doctorow in 2022 that talked about this merger and the history of weakened antitrust policy that led to it. You can watch that here. But today we're gonna dig more into Live Nation's business model. How does this giant company actually make money? They might own all of these various business lines, but they're not all equal. At the core of this business model is its concert promotion business. It is a capital-intensive, hard-to-run business with ostensibly very low margins. And Live Nation will talk a lot about how they're only earning about a 1.3, 1.7% margin on their concert promotion business, which is pretty small. The way that they are able to do that is because their concert promotion business really drives the rest of the other business lines. So it drives their ticket-selling operation, where Live Nation actually gets something like a 37% margin. It runs their sponsorship and advertising business line, which elicits a 67% commission. Live Nation makes almost no money on concert promotion, and they make most of their money charging concert-goers like you massive service fees and getting sponsorship deals, both of which require very little upfront investment. They just use the concert promotion business to direct traffic into the parts that do make money. It's the ability to get market share, which allows you to be able to generate massive sponsorships to the Toyota or Nestle's Crunch, whatever it might be, will give you money. Market share is the key part there. They dominated all these businesses in the industry so that nobody had any choice but to work with them and get ripped off. Artists, for example, often don't have a choice but to use Ticketmaster for ticketing and Live Nation for promotion. Let's imagine we just played a sold-out show at a venue Live Nation owns and operates. When an artist plays these venues, they're required to use Live Nation as the promoter. We have practically no leverage in negotiating them. If they wanna take 10% of the revenues and call it a facility fee, they can and have. If they wanna charge $30,000 for the house nut, they can and have. And if they wanna charge us $250 for a stack of 10 clean towels, they can and have. And Live Nation's market dominance also means you don't have any choice but to pay their fees. Ticketing fees, service fees, convenience fees, platinum fees, Pricemaster fees, per-order fees, handling fees, and payment processing fees, among others. Yeah, that's definitely too many fees. It's also why the same tour is cheaper in other countries where Live Nation doesn't have dominance. And it means venue owners don't have freedom to choose either. If you don't choose Ticketmaster, there are consequences to that. Live Nation might refuse to run shows at your venue, so you are deprived of the hot concerts that people wanna go to. That hasn't stopped some venue owners from trying, though. Tom and Gary don't work with Live Nation. But Live Nation's reach still infiltrates their choices, even when they're made with the best intentions for the fan experience. Here's what happened when the Radioheadside project, The Smile, played at the Pabst Theater. That show, they were very specific about their pricing and what they wanted their pricing to be. We followed those guidelines. But the day that our tickets were announced, they were immediately available on the Ticketmaster website because Ticketmaster controls the secondary market also. So scalpers were able to buy up tickets at the original price and immediately resell them on Ticketmaster, where Ticketmaster takes a fee, of course, for exorbitant prices. So the people that went out and spent $350 for the tickets that were supposed to cost $55, they take that out on the artist, or they take it out on us and blame us. But in the meantime, we're all just a part of Live Nation and Ticketmaster turning the wheel of meat so they can keep increasing those margins on service fees and on secondary tickets that feed the rest of their business, because again, they use our business as a loss leader. And because concerts are a loss leader, fueling their other businesses, Live Nation doesn't even care if sold-out shows are mostly empty because half the tickets were lost to scalpers. This whole business model is notably different from the model that independent venues follow. We produce 800 shows a year. In order for us to survive, for our 300-plus employees to survive annually, every single show we do, we have to find ways to be able to generate revenue. It's quite the opposite with Live Nation. To recap, Live Nation, the premier live music business, doesn't really care about the actual business of putting on live music as much as it cares about the business of scalping tickets and selling Dunkin' Donuts sponsorships. And they've taken away the freedom to choose for everyone in the industry. Live Nation is really controlling the entire ecosystem of most of the concerts that people are going to in this country. Everything from the point-of-sale system to the staffing at the bar to what is being sold at the bar and for how much. They're dictating what tours get to come to your venue, how tickets are sold and at what price they're sold and what fees are attached. Listen to this artist put it a little more bluntly. And then it hit me, oh my gosh, they own all the venues. It's a monopoly. So then now they just want my body in this room so they can sell food and alcohol so then they're going to make tons of money. And then they got me like schlepping around the United States talking about, I want to be famous. Okay, so now let's revisit that pyramid of live music again. 10 years after the Live Nation Ticketmaster merger, the COVID pandemic shook the foundations of this hierarchy to its core. No matter where you were in the country, rooms like this were the first to close and the last to reopen. Large corporations were able to position themselves much better coming out of the pandemic than we were as indie establishments. We have never gotten back to where we were in 2019. The bottom has fallen out of live music. So independent venue owners and artists at the small and mid-sized levels are struggling. While Live Nation and the upper echelon of artists that Live Nation works with continue to make massive profits. But there is hope. Regulators are finally doing something serious about this. That video we made back in 2022 was part of a larger campaign from the Breakup Ticketmaster Coalition. In October of 2022, American Economic Liberties Project, where I work, and a bunch of allies started the Breakup Ticketmaster Coalition, which has sent over 100,000 letters to the Justice Department with narratives from artists and fans and venues and independent promoters talking about the Live Nation monopoly and encouraging the Justice Department to do something about it. And it turns out, unlike in 1994, when it was just Pearl Jam testifying, the Department of Justice decided they couldn't ignore the mass outcry of anger at these corporations anymore. And they filed a lawsuit. The lawsuit calls for a breakup of Live Nation and Ticketmaster at a minimum. And it talks about how all of these different business lines reinforce each other. And structurally, something needs to happen here to allow competition to occur. This lawsuit is historic and it has broad implications, not just for live music. Today, the entire American economy resembles the Ticketmaster model. Whether we're talking about the airline industry where three or four airlines control the entire industry, whether you're talking about grocery stores where really two companies control so much in all of your communities that, by the way, are now trying to merge, that's Kroger and Albertsons. The more concentrated the economy gets, the more it stifles creative expression. The ability for artists to make art and to get it to the public, the ability for the public to be able to consume it. Concerts have always been a third place, outside of work and home, for people to gather and share in a special experience that only exists at that time between the people in that room. There's this beautiful creation that came out of this empty room. You can capture images of that moment, but the true sensation, that feeling you get in the room, it's like lightning in a bottle. And when corporate greed destroys that magic, it drives all of us further apart from each other. There's a tremendous interest in the technology economy to be able to get you to spend as much time as possible scrolling on your screen, getting more and more angry with other people, and that's the battle that we fight in our business. Our goal is to get people away from that. It's more important than ever, I think, to have these spaces where people actually interact on an extremely vulnerable human level. Tom's lease is up in two years, and he isn't planning on renewing. It's not just Live Nation that is pushing him out of the business, it's corporations that have driven up prices in general and giant landlords that are destroying his community. I've been doing this work in these rooms since I was 20 years old. I'm 50 right now, four to five nights a week. I've always been very hands-on. Four to five nights a week, I've been in these rooms creating that magic. And at some point, you just have to look at it and go, you know, I've done this a long time. It's more important to me at this point to give this establishment the proper send-off that it rightfully deserves. It's more important for me to protect these entities as a whole than to try to hold onto my own brick and mortar any longer than I need to. Meanwhile, while Tom and Gary are fighting for the future, the CEO of Live Nation, Michael Rapinoe, is fighting against the government's lawsuit. And he has a vested interest in keeping things status quo. In 2022, Rapinoe was paid a whopping $139 million. He's the perfect example of who benefits in a country filled with rampant monopolization. Listen to what he said last year when talking about artist and fan complaints about the price of tickets. This is a great, great product that people will buy as they're gonna buy the Gucci bag. They're gonna buy moments in life where they will step up and spoil themselves, the big screen TV and whatever it may be. This is what corporate America has done to our lives. What used to be one of the most populous forms of entertainment is now a luxury good. And that's why this Department of Justice lawsuit is so important. It's been a corporate America since the Reagan administration, since the 1980s. And people have suffered because of that. It's a point in time now where hopefully with the current administration taking seriously antitrust in America, that this isn't just about Ticketmaster as a monopoly, it's about so much more than that.
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