Shoot first, aim later. The United States Senate attacks event ticketing

Senators Amy Klobuchar and Mike Lee were heard yesterday. It was supposed to be about live event tickets, but it really wasn’t. It was about calling Live Nation a television monopoly. We know this because Senator Klobuchar made his feelings clear, as did others on the panel. It’s strange for someone known to be sane, but at the start of the hearing, when introducing witness Clyde Lawrence, founder of Lawrence’s eponymous group, Klobuchar dismissed his catchphrase by wishing that he would “one day be big enough to to break up a ticketing company,” quoting him before beginning his testimony. This hearing was not a fact-finding trip, it was a very modern iteration of our current politics where people are not looking for facts, they are looking for confirmation of what they already believe.

Senator Klobuchar began the hearing by wistfully recalling the days in high school when it was affordable for students like her to buy tickets to concerts by Led Zeppelin and The Cars. She was concerned that young people today could not afford $500 to go to a show and whether action should be taken to make concerts affordable. Klobuchar said he wants tickets to be cheaper.

One thing, though: the world has changed since the senator’s school days. It’s been a long time. So much so that Ric Ocasek, lead singer of The Cars, died in 2019 at the age of 75. Led Zeppelin played their last show in London at the O2 Arena on 10 December 2007. The band held a raffle to access tickets. The O2 holds 20,000 people. Twenty million people applied for tickets.

Big search for certain events in nothing new. Taylor Swift’s tour is just this year’s model. What’s different is the fans. Zeppelin fans who didn’t get tickets accepted their reality. Taylor Swift fans didn’t.

The facts are simple and undeniable. Taylor Swift performed 52 concerts in venues with approximately 2.5 million seats available. Since these shows are already held in football stadiums, the only way to secure more seats is for Swift to add more shows, something Garth Brooks routinely does. Garth will play two shows a day for as many days as it takes to absorb all the demand in a given city before moving on to the next venue. Each added stadium show opens up another 50,000+ tickets for sale.

The math is both simple and brutal. There are only 2.5 million seats available for Swift’s North American tour. That’s 125 times more seats than Led Zeppelin’s last show. However, once they’re sold, they’re sold. Complaining doesn’t get you more seats, organizing a protest doesn’t get you more seats, writing emails and sending Power Point presentations to Congress doesn’t get you more seats. Only one thing brings more seats: the addition of performances. Only one person can decide to add more shows: Taylor Swift.

There is another important thing that has changed since Senator Klobuchar’s school days. The gigs were previously thought to be publicity stunts aimed at drumming up interest in the band and getting more songs on the radio in the days leading up to the show. All of this was meant to get fans into stores to make purchases of recorded music. Musicians make their money by selling records, tapes and CDs. First Napster and then streaming services like Spotify killed that revenue stream. People now pay $4.99 or $9.99 a month to access almost all songs on their devices. Very little of that money goes back to the artist. The money from the sale of recorded music is gone forever.

The way musicians make money now is by selling tickets to live events. As a result, ticket prices have increased. Curiously, no one seems too upset that Taylor Swift is on track to make nearly $600 million from this current tour. Likewise, there weren’t many complaints when Adele went on sale in Las Vegas with ticket prices over $750, or when World Series tickets cost $900 and Super Bowl 2023 tickets are currently over $5,000 each.

The issue at hand is the suffering that Taylor Swift fans experienced when they were denied tickets either because of problems during the ticketing process or because literally the music stopped and they didn’t have a seat. The answers were strange on both sides of the table. The senators seemed confident that Live Nation could fix the problem. This is half true. Live Nation could have done a better job managing the sale process and avoided some of the delays and pain points of this particular sale. However, Live Nation has no control over how many seats have been sold. Demand, it turns out, far outstrips available seats. This is not a problem of monopoly practice, but of insufficient supply.

There was no talk during the three-hour hearing about how to respond to excess demand by providing additional supply. Instead, the main focus seemed to be around the misunderstanding about bots. Bots are computer programs that are deployed, sometimes illegally, in an attempt to collect inventory for the purpose of reselling tickets.

However, it appears that nearly 95% of Taylor Swift tickets went directly to fans intending to attend the show. The bots may have affected Ticketmaster’s sales by overwhelming their computing power. They did not reduce the number of tickets sold to fans.

A typical bot user has two expected outcomes: to purchase tickets faster than human buyers if possible, and to bind tickets repeatedly and efficiently remove them from inventory. This is probably the cause of much of the delay and error during the sale. But in the end, the Verified Fan system worked as intended, preventing bot traffic from getting tickets. During the hearing, there were many references to how financial institutions don’t have similar problems, but just last week Bank of America
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there was a day-long computer problem that affected Zelle transactions. This led to people’s accounts being overdrafted and being charged fees. It took the bank almost an entire day to sort out the mess.

There was no discussion about the fact that SeatGeek had its own issues with the five Taylor Swift shows they purchased. Yet their technology was as affected as Ticketmaster’s sales. The huge demand overwhelmed their systems as well. The real lesson from the Swift tour is that everyone needs to increase the ability of their ticketing system to handle the huge demand.

Zach Bryan is currently accepting pre-registrations for his “all my friends hate Ticketmaster” tour. Ticket sales are handled by AXS, owned by entertainment giant AEG, which owns the 02 (where Led Zeppelin played their last show) and Golden Voice, which produces the massive Coachella music festival. However, on January 19th when Zach Bryan’s sign-up window opened on AXS, sign-ups tanked and social media posts complained about the process.

There were other curious omissions in the hearing process. First, there appears to be no recognition that Live Nation is a publicly traded company with a legal duty to its shareholders. Their legal duty is to their many shareholders. Second, there was confusion about market share. Ticketmaster has 100% market share of the venues it sells tickets for. But this is a false statistic. There are theaters, arenas and stadiums in almost every city. Ticketmaster’s reach is significant, but it’s not the only ticketing option in the entire ecosystem. They may indeed own half of the current ticketing market, but more competition is coming.

The INTIX (International Ticketing Association) conference is taking place this week in Seattle. Here is a partial list of the ticketing companies in attendance, all of which have enough capital and market share to send a team: Vivenu, Paciolan, Tixly, Secutix, True Tickets, AXS, FEVO
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, Uptix, See Tickets, Red 61, eTix, Tix.com, TicTacTix, BAM Ticketing, KIS Technologies, Patron Technologies, Saffire, Spektrix, Tickets.com, Ticket Socket, TickX, Tix, Tix Track, Total Ticketing, VBO Tickets, and UpStage Technologies. These are just some of the companies that are present. Ticketing is an expanding market with many new investments being made to access the space.

During the hearing, there also seemed to be concern over the fact that Live Nation’s revenue has grown over the past decade. Part of that revenue growth is due to the work the company has done to get bigger. Another part of this growth was accidental as the prices of everything increased. Real estate agents got a similar boost in their commissions as home prices rose, and tipped employees saw similar gains. During periods of inflation, when prices rise, incomes rise.

New entrants into the market space have to compete with established players. That’s how it goes. They have done the pioneering work to build the business. Before Ticketmaster took off, to buy a ticket you had to stand in line at the box office or find a record store with a ticket machine. Now that tickets are sold online, there are more contestants to get seats, but the size of the seats remains the same.

The competition is fierce. That’s how the game goes. Computers are now built by companies all over the world except IBM
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is still significant. Tesla opened the doors to electric cars, but GM and Ford outsell them. Kleenex and Coca Cola are iconic grocery store brands, but now you can get them delivered by Amazon, too
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. Success in America takes time, energy and a willingness to innovate.

Taylor Swift is one of the most popular female artists on the planet. She should be congratulated for building such a strong fan community and creating a huge catalog of songs. She can probably sell out any theater in the world right now. Its massive success is not the measure of how any of the companies that support the live entertainment industry should operate.

Instead, let’s celebrate Swift’s music however we can. And in a perfect world, maybe Swift would invite Clyde Lawrence to her stage somewhere to help her sing a song. It’s rare to see someone come across on television as a modern-day Mr. Smith in Washington. If yesterday’s hearing had any meaningful result, it might have been to introduce the Lawrence band to a wider audience.

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