The Eras Tour's potential impact could be the potential dissolution of Ticketmaster's partnerships or entity.
Perhaps one of its long-term consequences could be the intense legal turmoil it triggered against one of the globally hated corporations, Ticketmaster, and its primary shareholder, Live Nation. Should the Department of Justice succeed, Live Nation might be forced to disintegrate.
FOR YOUR INFORMATION: Taylor Swift's Eras ticket sales commenced in autumn 2022. Her devoted fans had been eagerly waiting for over six years, enduring a pandemic and reliving the intense feelings evoked by specific parts of the "Exile" track from "Folklore" album, such as when Swift and Bon Iver's voices blended in harmony.
However, Ticketmaster was woefully unprepared for the overwhelming demand. The site crashed within the first hour of sales, leaving fans in lengthy queues that eventually froze or booted them out of their accounts. Scalpers and bots swooped in to snatch up tickets and resell them for inflated prices. Austerity and fury echoed across the web and the halls of Congress. Live Nation's president and CFO were called before the Senate for a stern reprimand. At one point, Democratic Senator Richard Blumenthal of Connecticut commended the executive for their success in uniting both Democrat and Republican factions in response to the situation.
In May, the Justice Department filed a lawsuit against Live Nation, claiming the company used its influence as the country's biggest concert organizer to stifle competition, inflate costs for the public, and intimidate artists and venues into employing its services. Live Nation rejected these accusations as baseless.
"It is also absurd to assert that Live Nation and Ticketmaster possess monopolistic power," the company stated on its website. "The defining characteristic of a monopolist is monopolistic revenues derived from monopolistic pricing. Live Nation does not meet this profile."
Live Nation's stock (LVY) has skyrocketed by almost 50% this year, largely due to persistent demand for concerts and music festivals. Nevertheless, musicians and their fans do not appreciate Ticketmaster's offerings; they simply lack alternative options. Consequently, investors feel they are gambling on a sure thing.
As my companion Paul R. La Monica explained in Barron's last month when the company reported exceptional earnings: "Investors adore Live Nation nearly as much as Taylor Swift and Oasis detest it."
Live Nation exerts substantial control over virtually every aspect of live music, according to the Justice Department lawsuit. It allegedly controls 80% of primary ticketing sales for concerts at venues and directly owns 265 venues, including 60 of the 100 top-rated amphitheaters.
Once you've gained entry, Live Nation doesn't stop asking for your money. Sherwood Media's Amrita Khalid reported last week:
"At Walnut Creek Amphitheatre, located in Raleigh, North Carolina, you can buy an enormous margarita for over $30 at a stand called Bamboo Piranha. It seems like a local business, but in reality, it's a trademark owned by Live Nation. Live Nation is an investor in several food and beverage brands offered at its venues, such as CVT Soft Serve, plant-based burger company Everything Legendary, and Owen's Craft Mixers."
The future of the Department of Justice's lawsuit remains uncertain.
Some experts predict that the Biden administration's rigid antitrust scrutiny will weaken, which can partly explain why Live Nation's stock has soared by 14% since Election Day.
Clearly, Live Nation is pinning its hopes on this occurrence.
"We are hopeful that we'll witness a return to the more traditional antitrust strategy, where the agencies have typically aimed to address issues by implementing targeted corrective measures that minimize government intervention in the marketplace," said Live Nation President and CFO Joe Berchtold during an earnings call last month. "We'll be ready to engage as soon as they're ready."
However, dismissing the lawsuit would also provide an easy public relations victory for the incoming President Trump. Over the summer, around 40 state attorneys general – both Democrats and Republicans – signed onto the Justice Department's case, revealing widespread political support. Additionally, the populist wing of the Republican Party, embodied by Vice President-elect JD Vance, has evidently distanced itself from the traditional right-wing reverence for Big Corporations (they even adopted the nickname "Khan-servatives," in acknowledgement of Biden's top antitrust enforcer, Lina Khan).
Adam Wolfson, an antitrust lawyer with the firm Quinn Emanuel, believes that while it's feasible that the Department of Justice under Trump could abandon the lawsuit, "it is unlikely."
Last week, Trump appointed Gail Slater, an economic advisor for Vance, as head of the Department of Justice's antitrust division.
"She is well-known for her aggressive enforcement," said Wolfson. "It's highly unlikely that the Trump administration will be less aggressive."
Wolfson, who is also leading a class-action lawsuit against Live Nation, added, "There is significant bipartisanship regarding frustration with Live Nation-Ticketmaster."
In response to the Justice Department's allegations, Live Nation's business operations have come under scrutiny. The company is accused of controlling a large portion of the concert ticketing market, affecting both artists and fans alike.
If the lawsuit against Live Nation by the Justice Department succeeds, it could potentially lead to significant changes in the concert industry, potentially impacting Live Nation's business model.
