Ticketmaster gets grilled: 6 takeaways from hearing over Taylor Swift concert fiasco
(CNN) -- Lawmakers grilled a top executive of Ticketmaster's parent company, Live Nation Entertainment, on Tuesday after the service's inability to process orders for Taylor Swift's upcoming tour left millions of people unable to buy tickets late last year.
During the three-hour hearing, senators pressed Live Nation president and CFO Joe Berchtold and some other witnesses on whether his company was too dominant in the industry, thereby harming rivals, musicians and fans.
"I want to congratulate and thank you for an absolutely stunning achievement," Sen. Richard Blumenthal said to Berthtold. "You have brought together Republicans and Democrats in an absolutely unified cause."
Here's a look at the big takeaways from the hearing:
Blaming it on the bots
When tickets for Swift's new five-month Eras Tour went on sale on Ticketmaster in mid November, heavy demand snarled the ticketing site, infuriating fans who couldn't snag tickets. Unable to resolve the problems, Ticketmaster subsequently canceled Swift's concert ticket sales to the general public, citing "extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand."
In his testimony Tuesday, Berchtold partly blamed the Swift ticketing incident on the bots.
Ticketmaster, he said, was "hit with three times the amount of bot traffic than we had ever experienced" amid the "unprecedented demand for Taylor Swift tickets." The bot activity "required us to slow down and even pause our sales. This is what led to a terrible consumer experience that we deeply regret."
Berchtold also went on defense more broadly about his company. He emphasized that Ticketmaster does not set ticket prices, does not determine the number of tickets put up for sale and that "in most cases, venues set service and ticketing fees," not Ticketmaster.
He also rejected suggestions that its dominance has allowed for soaring fees, citing data from the market intelligence firm Pollstar showing that Live Nation controls about 200 out of approximately 4,000 venues in the United States, or about 5%.
The venues controlled by Live Nation set fees that are "consistent with the other venues in the marketplace," he said.
Entertainment industry pushes back at Ticketmaster's dominance
Members of the entertainment industry and one rival spoke out against Ticketmaster's dominance in the industry.
Jack Groetzinger, CEO of SeatGeek, alleged that many venue owners "fear losing Live Nation concerts if they don't use Ticketmaster" and its services, and argued the company must be broken up.
"Live Nation controls the most popular entertainers in the world, routes most of the large tours, operates the ticketing systems and even owns many of the venues," he told lawmakers. "This power over the entire live entertainment industry allows Live Nation to maintain its monopolistic influence over the primary ticketing market."
He continued: "As long as Live Nation remains both the dominant concert promoter and ticketer of major venues in the US, the industry will continue to lack competition and struggle," he said.
Clyde Lawrence, a singer-songwriter on the witness panel, explained how the company acts as a promoter, a venue and the ticketing company, which eats into performing artists' revenues. Artists, he said, have no leverage over Live Nation.
"Since both our pay and theirs is a share of the show's profits, we should be true partners aligned in our incentives — keep costs low while ensuring the best fan experience," he said. "But with Live Nation not only acting as the promoter but also the owner and operator of the venue, it seriously complicates these incentives."
Lawrence also said with Ticketmaster, "we'll see a 40%-ish or closer to 50% fee added on top" of the base ticket price.
The fallout from the ticketing fiasco once again cast a harsh spotlight on Ticketmaster and its power in the industry, more than a decade after it completed its merger with Live Nation despite concerns the deal would create a near monopoly in the ticketing sector.
"To have a strong capitalist system, you have to have competition," Sen. Amy Klobuchar, a Democrat from Minnesota, said during her opening remarks. "You can't have too much consolidation — something that, unfortunately for this country, as an ode to Taylor Swift, I will say, we know 'all too well.'"
Consumers may pay the price, too
Kathleen Bradish, vice president for legal advocacy at the American Antitrust Institute, called Ticketmaster "a very traditional monopoly" and told lawmakers the lack of competition in the live entertainment industry results in consumers having to pay higher prices.
"Its dominance in markets up and down the live entertainment supply chain creates the incentive and the ability to limit competition and protect its market position," she explained. "Customers pay the price for these monopolistic acts with higher ticket prices and fees, lower quality, less choice and less innovation."
On the concert side, the company excludes "smaller or independent concert promoters and venues. In digital ticketing, it includes excluding ticket resellers and brokers who provide important competition via the secondary ticketing market," she said.
Lawmaker says Ticketmaster merger should 'be on the table'
Lawmakers repeatedly questioned the US government's past handling of the Live Nation merger with Ticketmaster. It involved a legally binding consent agreement that allowed the company to merge with Ticketmaster so long as the combined company abided by a number of behavioral conditions.
A 2019 Justice Department review found that Live Nation was not meeting its commitments under the order, but instead of suing, the Department modified the agreement and extended it for another five years, according to Bradish at the American Antitrust Institute.
"DOJ should pursue new enforcement action to obtain effective structural relief," said Bradish, calling for a breakup of Live Nation under either Section 7 of the Clayton Act or Section 2 of the Sherman Act.
Sen. Mike Lee said the way that history has unfolded since the Live Nation merger raises "very serious doubts" about the usefulness of consent agreements imposed by the federal government.
If the current Justice Department concludes that the consent decree has been violated, "unwinding the merger ought to be on the table," Blumenthal said.
Concerns over security, and pressure for accountability
In response to Berchtold's explanation about the bot problem, some lawmakers questioned the company's security practices, noting many small businesses can determine when bad actors are infiltrating their systems.
Republican Senator Marsha Blackburn suggested Berchtold strengthen its cyber protections, get better advice and hire new IT workers to better protect its systems. (Berchtold said the company has poured billions of dollars into security to protect its systems over the years.)
Another Republican, Sen. John Kennedy, went further in criticizing the company over the Swift ticketing issue. He said whoever at Live Nation was in charge of the incident "ought to be fired."
No easy answers
In the back half of the hearing, some of the focus shifted to possible solutions -- but there were no easy answers.
Some lawmakers focused on the ability to resell tickets. While this option can be useful for customers who need to change plans, it can also help prop up the scalping market.
When senators discussed whether restricting the ability to transfer tickets would help, Live Nation's exec was in favor of it. But the SeatGeek CEO said this might only entrench Live Nation's dominance, as it holds the kind of market share that would force consumers to solely transact there in the absence of other resale market options.
-- CNN's Brian Fung and Aditi Sangal contributed to this report
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