The Live Nation settlement has industry insiders baffled | The Verge

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The Live Nation settlement has industry insiders baffled

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Instead of moving forward with a jury trial against Live Nation-Ticketmaster as expected, the Justice Department announced a settlement Monday that omitted what used to be on the top of its wish list: a breakup.

What the DOJ did get was a series of concessions that some industry stakeholders found unsatisfying and even baffling. There are a few bright spots, those who spoke to The Verge said: a 15 percent cap on Ticketmaster service fees at Live Nation-owned or operated amphitheaters, for instance, and a pledge to give artists more transparency on their own ticket sales. But they remained unconvinced the deal would usher in the large-scale change proponents of the lawsuit wanted. Many are hoping state attorneys general continue their case in pursuit of broader remedies, even if there’s no guarantee a jury will find in their favor or that Judge Arun Subramanian will grant more dramatic requests.

“The theme today in the discussions I’ve had with partner organizations and members has been this: Who asked for this?” said Stephen Parker, executive director of the National Independent Venue Association (NIVA). “Most of us are just puzzled. One, why now? Two, why this? And three, where it came from.” Parker said that several provisions in the settlement either propose solutions his members likely won’t care to take advantage of — like using multiple ticketing systems for an event — or are so scaled down that they’re hardly meaningful.

Kevin Erickson, director of the artist advocacy group Future of Music Coalition, echoed this, pointing to a provision about Ticketmaster pledging to open its backend to competitors. At trial, witnesses (including the CEO of competitor Seat Geek) described Ticketmaster software as “something out of the 1980s” or like “code flying across the screen” in The Matrix, and the DOJ noted issues Ticketmaster had selling tickets to Taylor Swift’s Eras tour (the company blamed a cyberattack). “I don’t see who’s asking for this. They just argued that Ticketmaster’s tech stack is held together with duct tape, and so why is giving people access to Ticketmaster’s tech stack a remedy?”

“They just argued that Ticketmaster’s tech stack is held together with duct tape, and so why is giving people access to Ticketmaster’s tech stack a remedy?”

Parker and Erickson both said that the company’s agreement to divest exclusive booking agreements for 13 amphitheaters in the US covers a relatively small portion of the venues it controls. The DOJ alleged Live Nation “owns, operates, or exclusively books at least 40 of the top 50 and 60 of the top 100 amphitheaters in the United States.” The company says it’s not actually selling any amps as part of the settlement, but rather letting other promoters book into those 13 venues. Erickson noted some seem to be in areas where an outdoor venue could face weather constraints that shorten its season or create an uncomfortable viewing environment in the summer. “Is this a concession or is it moving towards lines of business that you’re actually going to make the company’s margins look better?”

Leaving the decision up to the jury and judge is riskier than taking a known deal. Even if the proceeding states get a jury to agree that Live Nation is an illegal monopolist, the judge may not grant all the remedies they’d like. The Google search case could serve as an example of such a Pyrrhic victory, where the government mostly won its claims in the liability stage, but the judge granted remedies far below what the DOJ asked for to resolve its concerns. Live Nation CEO Michael Rapino, for his part, said in a statement that the settlement “marks a major step in improving the concert experience for artists and fans throughout the United States.”

But with the trial cut short — at least for now — the public won’t get as clear a view into what the government accused Live Nation of doing in the first place. “By leapfrogging past the airing of the evidence to the remedies, it makes it especially difficult to judge whether the sentence matches the crime,” said Erickson. “That was a part of the testimony that I was looking forward to, hearing more directly from some of the folks on the witness list about the barriers that they’ve experienced in getting access to amphitheaters and setting up amphitheater tours.” Subramanian said that if the case resumes Monday, the jury would continue hearing from Jay Marciano, COO of AEG, a rival to Live Nation-Ticketmaster in both concert promotion and ticketing. There are also more venues, Live Nation executives, and artists including Kid Rock on the plaintiffs’ witness list who have yet to testify.

The settlement includes an anti-retaliation provision, but that was something already central to the consent decree between Live Nation and the DOJ first entered in 2010, and the DOJ’s suit claims this didn’t end the practice.

“It is just going to be same old, same old with the way this settlement works”

Critics of the deal say without structurally separating the company and altering its incentives, not enough will change. “Today’s settlement does little to lower costs or preserve the independent venues and protect fans. They should be broken up,” Sen. Amy Klobuchar (D-MN) told The Verge. “It is just going to be same old, same old with the way this settlement works.”

Klobuchar plans to introduce a new bill to strengthen courts’ review of antitrust settlements, including by empowering states to have a greater role and making sure courts can’t approve agreements that fail to resolve antitrust issues. Reviews under the Tunney Act are already meant to ensure that antitrust settlements are in the public interest, though Syracuse law professor Shubha Ghosh says it’s rare for a judge to throw out a deal altogether. Under the Tunney Act review, the court will evaluate whether the parties are likely to return over the same issues, and if the proposal creates new problems, he said.

What about the outcome many music fans hope for: lower ticket prices? Fee caps on tickets could help, but Bill Werde, director of the Bandier music industry program at Syracuse University, said that issue is even larger and more complex than this case alone could solve. “For the typical music fan, they just want to know they can get tickets to the shows they want to go to and they want those tickets to be affordable,” Werde said. “I don’t think this settlement, and I don’t think almost any likely outcome, even from the case that the states are continuing to pursue, is going to move the needle on that issue.” That’s because another part of the problem with skyrocketing ticket pricing is about massive demand for tickets that outpaces supply, Werde said.

Plus, as long as Live Nation and Ticketmaster are linked, the company could theoretically shift around lost revenue from fee caps to other areas. It could either offer less to artists, or drive up ticket prices in the underlying costs before fees, Werde said. Similar dynamics may persist for the company’s power over concert venues, too. “As long as Live Nation still owns Ticketmaster, whether the Justice Department has proven anything or not, whether Live Nation is threatening people with this or not, the leverage is pretty clear and implied,” Werde said. “The thing about leverage is, if you really have it, you don’t usually need to throw it around.”

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