By Praise Bartholomew
BC Law EIC Student
April 2023
A Media Outcry
On February 1, 2023, screams were heard across the nation. Something extraordinary was on the horizon, threatening to leave people hungry, rent unpaid, and friendships on shaky ground. Beyoncé announced that she would be going on tour. It seemed like nothing could diminish fans’ excitement. That was, of course, before they realized that they would have to once again deal with the trauma that is Ticketmaster.
In 2010, Live Nation and Ticketmaster merged, creating Live Nation Entertainment, a one-stop shop for ticketing, marketing, and venue management. The merger resulted in an expansion that gave Live Nation Entertainment approximately 80% of the ticketing and live events market. Consumers’ concerns regarding Ticketmaster’s monopolized power were now coupled with higher service fees, bots that hinder ticket acquisition, and a dynamic pricing model that makes ticket prices exponentially more than consumers and artists think they should be.
Dynamic Pricing
Dynamic pricing occurs when the cost of a concert ticket fluctuates based on demand. This means that a ticket initially priced at $200 can be sold for $700 or more, depending on fan interest. Ticketmaster champions this model as a way to keep tickets off the secondary market and provide more profit to artists and their teams. However, experts suggest that the dynamic pricing model harms consumers and artists. Ron Knox [1], a senior researcher at the advocacy group Institute for Local Self Reliance, called on the Department of Justice to examine whether the Ticketmaster merger has resulted in a system that helps artists or bullies concertgoers and artists. As an alternative, he argues that a more competitive landscape would aid concertgoers and implores Congress and regulatory agencies to apply pressure in this market to protect consumers.
As unfair pricing continues to be a problem, what is the law doing to protect consumers?
Better Online Tickets and Sales Act
The Better Online Tickets and Sales Act “BOTS” [2] was introduced in 2016 to prohibit ticket purchasing in mass by automated technology, resulting in ticket scalping. The act made it illegal to purchase tickets acquired through automated technology and set a fine of $16,000 for any violations. The legislation has two major parts.
1. First, it outlaws security measure avoidance, a protective standard that enforces ticket limits for events with attendance capacities of over 200 people.
2. Second, it prohibits the sale of event tickets that are knowingly acquired by violating the act [3]. The FTC brought their first cases under the BOTS act in 2021 for three ticket brokers for more than $31 million in civil penalties for purchasing thousands of tickets for the purpose of overcharging consumers.
While enforcement of the act could help consumers by allowing them to purchase tickets without unfair competition and dynamic pricing spikes due to artificial intelligence, the act does not address the concerns of dynamic pricing as a whole.
Anti-Competitive Behavior
Widespread panic regarding Beyoncé tickets was not the first time that consumers questioned whether Ticketmaster treated them fairly. The Department of Justice recently opened an investigation to investigate whether Ticketmaster has a monopoly over the industry after Taylor Swift fans filed suit against the company. Most stadium-level and mid-level venues in the United States have an exclusive agreement with Ticketmaster, making interaction with Ticketmaster necessary for many events. These exclusive agreements leave consumers at the hands and whims of Ticketmaster, whether they like it or not. Senator Klobuchar., chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights and a hearing leader, stated that “[her committee is] working on bipartisan legislation.” Additional legislation has been introduced, such as the Better Oversight of Secondary Sales and Accountability in Concert Ticketing Act “BOSS Act [4],” which focuses on transparency in ticketing transactions by requiring all-in pricing, disclosure of fees in advance by primary and secondary ticket sellers, and requiring primary ticket sellers to reveal the total number of tickets for sale to the general public after industry holdbacks [5].
Additional proposed solutions sought to emulate the United Kingdom’s model, where most venues do not have an exclusive contract with Ticketmaster. The absence of an exclusive contract makes for a more competitive market with ticket price points that are advantageous to consumers. The United States government is weary of interfering with the freedom to contract and thus seeks alternative solutions. The outcry for change has placed the government under pressure to address unfair ticketing practices. Startups have a prime window of opportunity to enter the industry.
How Are Startups Combating This Issue
Startups are looking to combat Ticketmaster by challenging practices that consumers find problematic. The Ticket Fairy [6] is a startup ticketing platform that handles sales and marketing. In 2019, the company sold over 850,000 tickets on its platform and has seen substantial growth and funding due to funders' interest in introducing new ticketing platforms to the market [7]. Ticket Fairy has unique functions, including an "earn your ticket" referral program, ticket after-pay, and technology which aims to curve ticket scapeling.
Just recently, baseball legend Alex Rodriguez raised over 20 million to fund a new ticketing platform to enhance the fan experience, starting with the sports industry [8]. Startups such as Eventbrite, Stubhub, and SeatGeek have gained significant market share in recent years. While Eventbrite has catered mainly to community-based events, SeatGeek has gained traction particularly because of its mobile-focused approach and user-friendly interface [9]. With both older and developing startups sparking the interest of the masses in the act of resistance, there is a substantial growth opportunity. Regulation that promotes competition and prevents anti-competitive behavior would improve the ticketing playing field and allow startups to compete effectively. While it will not be an easy task for startups, with outcry from legal administrators and Beyoncé fans, anything is possible [10].
[1] https://www.usatoday.com/story/entertainment/music/2022/08/17/springsteen-ticketmaster-dynamic-pricing-infuriat es-music-fans/10310415002/
[2] https://www.congress.gov/bill/114th-congress/senate-bill/3183
[3] https://queue-it.com/videos/bots-act-impacts-premium-onsale-ticketing-industry-ecosystem/
[4] https://www.congress.gov/bill/116th-congress/house-bill/3248/text
[5] https://variety.com/2023/music/news/taylor-swift-ticketmaster-senate-hearing-change-anything-1235509836/
[6] https://www.ticketfairy.com
[7] https://www.forbes.com/sites/maryjuetten/2021/06/08/a-better-event-experience-ticket-fairy/?sh=409779f35307
[8] https://fortune.com/2023/03/01/a-rod-alex-rodriguez-ticketing-startup-jump-raises-30-million-ticketmaster-taylor-sw ift-fiasco/
[9] https://techcrunch.com/2022/08/31/seatgeek-raises-238-million-privately-after-ditching-going-public-via-spac/
[10] https://fortune.com/2023/02/08/biden-junk-fee-legislation-ticketmaster-airline-prices/