YIGC – Ticketmaster: It’s me! Hi! I’m the problem, it’s me

Maddy: [00:00:14] Hello and welcome to your In Good Company, a podcast that makes investing accessible for everyone. I am Maddy Guest and today I am not joined by my co-host, Sophie Dicker. I am going to level with you. It has been one of those weeks. We had a great episode lined up for you off the back of the story that the Disney CEO is back in his role after his successor lasted just two short years. If you've read the book Ride of a Lifetime about how he rose from the ranks of a genius to become the CEO of Disney for 15 years. Well, you're going to love this episode. And if you haven't, that's okay, too, because we talk about the importance of leadership in companies you're investing in and some strategies for ensuring you're putting your money into companies that have good leaders. But unfortunately, when we recorded this one, I forgot to turn my mike on. So you're just going to have to take my word for it that it's a great app and wait one more week. But we didn't want to leave you high and dry way, as I'm sure you know by now, are both huge fans of the dive, which produces Sash creates on another one of our equity media channels. So we wanted to share with you one of our favourite episodes from the past few weeks. It's all about Ticketmaster and the story of what happened with Taylor Swift. Apologies from myself, and Soph we hope that you understand what these weeks are like as we push to the end of the year. We are sending love to everyone listening. We hope that you are doing well and that you are looking forward to a well-deserved break to start 2023. We've got a massive year planned and we cannot wait. We'll be back in your ears next week. But in the meantime, please enjoy The Dive. 

Sascha: [00:01:58] From Equity Mates media. This is the dive. I'm your host, Sascha Kelly. Taylor Swift has been forced to cancel her ears tour ticket sale to the general public after historic demand for tickets caused Ticketmaster's site to be completely overwhelmed. It's Swift's first tour in five years, and Ticketmaster had verified 1.5 million fans for pre-sale, but they were inundated with 14 million visits to the site. With such demand, resale markets went crazy, with some screenshots showing Taylor Swift tickets with tens of thousands of dollars. Swifties weren't happy. But this certainly isn't the first time Ticketmaster has had issues arise with their system. And it's not the first time that they've faced intense criticism. 

Audio Clip: [00:02:45] You know. You're hot when you can sell out Madison Square Garden, 20,000 seats, 30 seconds. That's what Justin Bieber did, talking about two shows at the Garden, which seats around 20,000 people selling out in less time than it takes me to apply my lip gloss. That's great. 

Sascha: [00:02:59] It's Friday, the 18th of November. And today I want to understand the Ticketmaster monopoly and how it pushes up prices for consumers and reduces the bargaining power of artists. To do this, I'm joined by my colleague here at Equity Mates is Darcy Cordell. Darcy, welcome to the dive. 

Darcy: [00:03:15] Thanks, Sascha. 

Sascha: [00:03:16] I'm so excited. This is the second what? The second Taylor Swift episode in a matter of months. So I'm just all geared up for this conversation. 

Darcy: [00:03:25] Yeah, this story really blew up today, so we thought we had to do a story on it.

Sascha: [00:03:29] Got a jump on it. So let's start.

Audio Clip: [00:03:30] Ticketmaster is telling Taylor Swift fans today it's seeing a historically unprecedented demand for tickets to Swift's new tour eras. 

Sascha: [00:03:38] I saw the headlines are that Taylor Swift's general public presale for tickets has been cancelled after this just off the charts demand. Just how crazy did the Swifties go? Darcy tell me.

Darcy: [00:03:51] Well, demand for tickets for Swift's tour was twice the top five tours in 2022 and the Super Bowl combined. That's a lot of tickets. 

Sascha: [00:04:00] And a lot of tickets. 

Darcy: [00:04:01] There's a chart that actually displays this which will publish on Instagram later at the dive businesses. And included in the show notes that more than 2 million tickets for the tour were sold on Tuesday. And that's the most ticket sold for an artist in one day in history, Ticketmaster said. It also said it had 14 million hits on the page for tickets to see SWIFT. That's enough demand to fill about 900 stadiums. 

Sascha: [00:04:24] That's so Big.

Darcy: [00:04:25] And now, as you've said, they've announced they've had to stop public ticket sales of the Eras tour due to this extraordinarily high demand and the fact that there weren't enough tickets left to sell. Pre-Sale tickets went on sale on Tuesday and you need an invite code to access them. But even still, the site crashed on the demand for presale alone and for fans who did get their hands on tickets. They've been reselling for as much as 28,000 USD a pop. 

Audio Clip: [00:04:50] Word to the wise. But if today's Taylor Swift Ticketmaster debacle pissed you off, do yourself a favour and don't go on StubHub. Just. To see how many people purchased them today just to resell them. 

Sascha: [00:05:03] I love Taylor Swift, but there is no way I would part with basically a house deposit to see her. And I'm going to admit I do get served a lot of Taylor Swift fan accounts on socials and the public outcry is massive. A lot of really disappointed U.S. base fans out there. And the evidence of this scalping and reselling has only added to the public anger towards Ticketmaster, which was already considerable. It's one of the least popular businesses out there. But the problem really is there just aren't that many other options for people who want to sell or buy tickets. You really just need to use Ticketmaster. 

Darcy: [00:05:43] That's right, Sascha. Ticketmaster is basically a monopoly in the ticketing industry. Every time a big artist goes on tour, fans complain about the service and its huge phase added onto the ticket price. I've experienced it myself countless times.

Audio Clip: [00:05:57] We found a ticket for Adele selling on sinking for $690, plus $538 in fees.

Darcy: [00:06:04] So pretty much any major event you go to, you're using Ticketmaster or another site that falls under their control. In 2010, Ticketmaster merged with Live Nation Entertainment, which is the biggest concert promoter in the US, and that's now Ticketmaster's parent company. And the merger has left them with immense power over the live music industry. Live Nation and Ticketmaster have contracts with major venues that give them exclusive rights to the ticket sales in those venues. If an artist wants to hold a concert at Madison Square Garden, for example, they need to sell tickets for Ticketmaster. But then included in the ticket costs are fees as well. And those fees can include the cost of the promoter, who is also General Live Nation, the same company as Ticketmaster.

Sascha: [00:06:47] Welcome to the last of five shows at Patterson Square Garden. 

Darcy: [00:06:55] It's this vertical integration that has been coming under fire. 

Sascha: [00:06:58] According to Ticketmaster's website, it says handling fees vary depending on the event and are agreed on between the relevant event partner and Ticketmaster. So if the relevant event partner is Live Nation, then they're just kind of paying themselves, aren't they?

Darcy: [00:07:12] Looks like that meeting is only between themselves. 

Sascha: [00:07:14] Yeah, exactly. So has anyone ever tried to reduce this monopoly or boycott ticket sales with them? Fought against the man, I guess. 

Darcy: [00:07:23] Pearl Jam tried and failed back in the nineties. 

Audio Clip: [00:07:26] Guitarist Stone Gossard and bassist Jeff Ament were at the House of Representatives to begin 3 hours of testimony about Ticketmaster. 

Darcy: [00:07:34] They laid down guidelines for their tours in the nineties to Ticketmaster. They spelled out a $1.80 service fee on their $18 tickets, but Ticketmaster usually charged three four times the service fee than that. So in response, Pearl Jam tried to take their concerts to different venues and then a court battle with Ticketmaster followed. 

Audio Clip: [00:07:52] It is well known in our industry that some portion of the service charges Ticketmaster collects on its sale of tickets is distributed back to the promoters and the venues. It is this incestuous relationship and the lack of any national competition for Ticketmaster that has created the situation we're dealing with today.

Darcy: [00:08:07] But unfortunately, Pearl Jam was unsuccessful. 

Sascha: [00:08:10] But there is growing attention now being drawn to this monopoly by lawmakers and politicians. 

Darcy: [00:08:17] I'm on the ball. There is. Amongst all these complaints during the swift two saga, Tennessee Attorney General Jonathan's committee said he's looking into consumer complaints from upset fans. The White House's chief of staff, Ron Klein, has also criticised Ticketmaster in recent days, pointing out that the application for student loan forgiveness processed 8 million applications in the first 30 hours of its launch without crashing. And Ticketmaster couldn't handle that. Alexandria Ocasio-Cortez She accused Ticketmaster of monopolising the ticket selling industry. She tweeted daily reminder that Ticketmaster is a monopoly. Its merger with Live Nation should never have been approved. And they need to be reined in. Break them up. 

Sascha: [00:08:59] Three very different swifties. I'm not sure if they were all reacting because they are fans of Taylor Swift. Now, Daisy, it does seem like there's two separate issues here. One is that there were just way too many people like me and there was too much demand for Taylor Swift tickets. But secondly, Ticketmaster is a monopoly and can essentially set its own fees. Those two things don't really seem to be related to each other. Ticketmaster could have all the competition in the world and the fact is that there would still be enough Taylor Swift fans who would crush whatever site she was selling tickets through. But there is a harm that comes from this ticket monopoly beyond higher fees. And so after the break, let's explore the harm that the consolidation of this industry has had on artists and tours a little closer to home. 

Audio Clip: [00:09:44] I have this dream. My daughter in law kills me for the money. There are Taylor Swift tickets on sale now that cost as much as a brand new car. Millions of fans went online this morning for pre-sale tickets to her Heiress tour, but either couldn't get on to the Ticketmaster website or couldn't afford the tickets that they were offered. And a lot are angry at the company and asking really, is Ticketmaster our only option?

Sascha: [00:10:18] Welcome back to the Dive. Today we're talking about the record breaking Taylor Swift concert that crashed Ticketmaster's website. Fans were rightfully outraged at Ticketmaster for their poor service and planning for what seemed like it was always going to be a blockbuster sale. But as a result, it's refocused this conversation on Ticketmaster's monopoly and the fact that there's just no competition that can offer lower fees. And that isn't the only harm that comes from ticket selling monopolies. And it's perhaps best demonstrated right here in Australia. 

Darcy: [00:10:48] Yes, that's just a few weeks ago, the Sydney Morning Herald wrote about this issue and they said that artists, managers and agents have been raising serious concerns with them about the international influence and market consolidation that the big ticketing and event companies are having. So the Sydney Morning Herald and The Age reported that three companies control 85% of Australia's live music market and that THG, which is owned by US private equity firm Silverlake, IAG, also from the United States and Live Nation, the company that owns Ticketmaster. 

Sascha: [00:11:20] Let's look a bit deeper into Live Nation because they're the company that's really been at the focus today. They've been slowly accumulating Australian music companies since 2012. 

Darcy: [00:11:30] It all started when they acquired promoter Michael Coppel. Present couple himself became CEO and president of Live Nation Australia after the merger. And then he secured Adele's debut Australian tour in 2017. She performed to 600,000 people in just eight shows, which means about two and a half per cent of the Australian population attended. 

Sascha: [00:11:50] I was one of those two and a half percent starts. [00:11:52][2.0]

Darcy: [00:11:53] I was jealous. 

Sascha: [00:11:54] Well. 

Audio Clip: [00:11:55] Hello it is me. 

Darcy: [00:12:00] But Live Nation kept buying after this. There's a long list of Australian companies that now own it including Splendour in the Grass and Foals Festival. Six different artist agencies, the Fortitude Music Hall and Henley Street Music Hall. And it also has control of the Palais Theatre and Marvel Stadium, which is a major venue in Melbourne's CBD.

Sascha: [00:12:19] It also bought Australian ticketing company mosh tix in 2019 and the market power of these three big live music companies has reduced the power of artists. The Sydney Morning Herald quotes an artist manager, Paul Sloan, who said quote, The scale of the large companies means they have been able to aggressively reduce the capacity of third parties to negotiate reasonable terms. And I think the clearest example of this is the debacle witnessed at Splendour in the Grass this year. With the dawn came a new light on the carnage left behind by 50,000 music festival goers. 

Darcy: [00:12:55] Yeah, if you didn't see it across your Instagram, Splendour was supposed to kick off Australia's grand reopening of the festival circuit early this year after two years of not appearing. 50,000 punters descended on the northern New South Wales coast. Secret Sounds, which is the company that runs Splendour and is owned by Live Nation, increased the capacity on site by 20% and implemented these tough new contracts that put the burden of risk on local artists, even if the event didn't go ahead in the event of weather conditions. The Sydney Morning Herald reported that after the first day of the festival was cancelled, artists who were due to play on the flooded out day were only offered a portion of their original fee, leaving a lot of them out of pocket once you take into consideration travel and accommodation. 

Sascha: [00:13:39] Then, of course, we saw hundreds of attendees who were left stranded despite paying hundreds of dollars for tickets and onsite accommodation. I mean, my Instagram was full of videos. It really looked like Fire Festival 2.0. To me. 

Darcy: [00:13:54] It was a disaster. But of course, no one expects an organiser to control the weather. No one can do that. But a lot of local artists and music industry figures were left with a pretty bitter taste in their mouth after struggling to survive in their industry during the pandemic, which shot the music scene off for years. They were being left in the red as a result of their partnership with sacred sounds, although they present themselves as a plucky local Australian operator. They're actually owned by the massive US based Live Nation and the Sydney Morning Herald said the booking agents and managers they spoke to felt that artists needed to sign these unfavourable contracts at Splendour. As a result of the power wielded by Live Nation. I'll quote its near-monopoly on Australia's biggest festivals means that artists have very little capacity to negotiate and set terms more favourable to themselves.

Sascha: [00:14:42] And Darcy I think the part that hit home for me in researching this story was during the pandemic the former federal government established an emergency arts fund which they called Rise, which stood for restart investment to sustain and expand. All in all, the pot for this was 200 million to support struggling arts organisations. Now that was barely touching the sides as it was. 7 million of that public money went to Live Nation and its numerous subsidiaries. Then you have these music managers telling their artists that they're only going to be receiving part of their fee for splendour while this massive amount of public money is designed to help these very artists. Was going into the company instead. 

Darcy: [00:15:22] Yeah. It's not ideal for the little players, Sascha and I guess hopefully scenarios like this one with Taylor Swift give more airtime to Ticketmaster's monopoly and we might see some more regulation coming or potentially Ticketmaster and Live Nation breaking up at some stage. 

Sascha: [00:15:38] That's the thing, isn't it? Taylor Swift probably doesn't need these dollars in her pocket. She's pretty wealthy as it is, but it's definitely shining a light. Got the spotlight on this company that's benefiting from it. We might leave it there for today. If you enjoyed this episode, do tell a friend about it. It's the best way for our podcast to go. If you've just joined us for the first time, welcome. Go check out our back catalogue. Remember, you can follow us on Instagram where at the dive business news or one word, you can contact us by email thedive@equitymates.com And you can subscribe wherever you are listening right now so you never miss an episode. Darcy, thank you so much for joining me today and indulging the fact that I just always click on a Taylor Swift headline. 

Darcy: [00:16:18] Pleasure, Sascha. Any time. 

Sascha: [00:16:20] Until next time.