Wendy Gramm, former Office of Information and Regulatory Affairs administrator under President Reagan, once said “One anecdote and you get a regulation, two and you get a law.” In the case of the Taylor Swift Eras Tour ticket situation (some fans may prefer the words crisis or apocalypse), there may be enough anecdotes to motivate the overhaul of the entire United States Code several times over.
On November 15, Ticketmaster’s website crashed after millions of fans attempted to purchase tickets, leaving millions of fans wanting and creating enormous pressure for the Federal Government to intervene.
Representative Alexandria Ocasio-Cortez, Senator Amy Klobuchar and others have described Ticketmaster as a monopoly in the ticket sales and performance venue industry that must be reigned in. These accusations aren’t new. Earlier this year, a group of Democrat representatives sent a letter to the Department of Justice (DOJ) requesting the agency reevaluate the 2010 merger between Ticketmaster and Live Nation, which created Live Nation Entertainment (LNE).
Just before the merger, Bruce Springsteen, yes that Bruce Springsteen, wrote a letter in 2009 warning against it based on his experiences with the company’s venue and ticket practices, but the merger went forward anyway giving LNE control over 80% of the market.
The FTC has broad authority to take action to “[prohibit] unfair or deceptive acts or practices in or affecting commerce.” Following the merger, LTE was prohibited from threatening concert venues with losing access to acts if a venue decided to use a ticket vendor other than Ticketmaster until 2020. But, in 2019 the DOJ reported that “venues throughout the United States have come to expect that refusing to contract with Ticketmaster will result in the venue receiving fewer Live Nation concerts or none at all.” Basically, Ticketmaster stood accused of bullying venues to use their service, it was fined accordingly, and the ban on exclusive service with host venues was extended until 2025.
Because the Ticketmaster situation involves an internet-based company, other large tech firms should take note, as any regulation or law produced in an attempt to remedy the Ticketmaster problem could create new compliance costs for all internet-based companies.
Often, one bad situation, like the Ticketmaster website crashing, can result in a host of broad regulations that are only somewhat related to the particular causes of a situation. In his book, Fixing Food, economist Richard Williams describes many instances in which maligned incentives motivated employees at the Food and Drug Administration to hunt for authority to intervene and write new regulations. .
President Biden has also expressed concern about the added “processing fees” on online purchases, like concert tickets, that don’t often show up until check out. I experienced this recently with booking.com. I selected a hotel room in Chicago for $190 for one night (about market rate for a Friday). Only after checkout did I see that my total charge was almost $300. I’ve pretty much resolved now to only book through hotel websites, unless a booking service doesn’t add extra fees. It was an infuriating experience, but should it require additional regulation?
In the case of Ticketmaster, should any new regulation be limited to concert tickets? And should we trust the government to make prices more transparent? Federal regulation certainly hasn’t helped upfront price transparency in colleges or hospitals, perhaps the most regulated and credentialed institutions in America.
Yes, it’s inconvenient and annoying not to see the added fees until checkout, but it’s also inconvenient not to see sales tax until checkout. Does the federal government intend to mandate tax cost inclusion into the final sale prices as well?
There may be a genuine antitrust concern with Ticketmaster and LTE’s practices. It will be interesting to see whether the DOJ decides to revisit the merger and require the company to break up. But we should all be wary of lawmakers who seek to capitalize on the latest “crisis” to regulate large sectors of the economy.