Taylor Swift’s loyal army of fans, known as Swifties, may just take down the biggest monopoly in the United States music industry, putting Australia’s market on notice. The online disaster that unfolded in November when Swift’s upcoming Eras Tour went on sale has become a global social media frenzy that’s burned Ticketmaster and its parent company Live Nation. Millions swamped the US giant’s sites, crashing them as tickets sold out only to then pop up on Live Nation’s own resale platforms at up to 10 times the original asking price.
Ticketmaster/Live Nation merged in 2010 to create an entity with unprecedented power in the US music industry and beyond, including Australia. But that monopoly may now be under threat.
Prior to the epic Swift tour ticketing fail, pressure had been building on US regulators and lawmakers from a group of industry associations that had banded together under the Break Up Ticketmaster banner. It has since been revealed that a Department of Justice investigation into Live Nation Entertainment is under way and the company will testify before a US senate inquiry into the concentration of market power in the music industry.
The outcome could have implications for the $3 billion Australian live music sector, which has two dominant ticketing players – Ticketek in addition to Live Nation/Ticketmaster – with a combined market share of 85 per cent. Ticketek is part of TEG, which was bought in 2020 by US private equity group Silver Lake – domiciled in the tax haven of the Cayman Islands – and was recently reported to be on the market again.
Ticketmaster’s rise to dominate the US ticketing industry and become a global behemoth was made possible by turning the traditional ticketing model on its head. In the past, venues paid ticketing companies for a service. Under the Ticketmaster model, venues are paid – often very large fees – in exchange for exclusive contracts. Ticketmaster and its imitators often advance venues the total projected ticket sales ahead of concert performances, to nullify the venue’s risk. Promoters got in on the act and now also get a slice of the ticket profits.
Ticketmaster expanded its business beyond tickets to become a major promoter that also offers marketing services, and it also moved into venue ownership, capturing value all the way up the food chain. At the end of 2021 Live Nation had 259 venues around the world and has already built two in Australia: Brisbane’s Fortitude Music Hall and Adelaide’s Hindley Street Music Hall.
Ticketek has been a fast learner. It’s also developed a vertically integrated model, albeit not, as yet, expanding into venue ownership. The two companies have spent billions over the past decade building formidable businesses in Australia, including Live Nation’s 2019 purchase of Moshtix, the pair’s biggest local rival. Ticketmaster and Ticketek control ticketing in all Australia’s major venues, and the fees each company charges consumers are now indistinguishable. So, for music-lovers, the ever-rising fees are inescapable and artists are watching their cut of the ticket fee shrink.
It is increasingly hard to operate in the Australian music industry without encountering the ticketing duopoly, which now banks a combined total of about $500 million in revenues each year – an estimate based on pre-Covid revenues in 2018 and 2019.
“The powerful ticketing duopoly controlling tickets in our arenas is a government-sanctioned, legal racket that extorts Australian ticket buyers,” says Paul Sloan, chief executive of Perth-based booking agency Billions.
Just how valuable exclusive ticketing contracts are is illustrated in the accounts of Amplify Bidco Pty Ltd, TEG’s holding company in Australia, where it was valued at $261 million (at cost) for the year ending June 30, 2021. Like so many multinationals, it pays barely a skerrick of tax, if any, in Australia.
For the year to June 30, 2020, TEG (Amplify Bidco) had revenues of $166 million, made a loss of $262 million and banked tax losses of $29.2 million. These losses can be offset against any future profits. In calendar year 2019, the last year before the pandemic when the sector was in full swing, Live Nation Australasia Holdings Pty Ltd, whose holding company is Live Nation Europe and is ultimately owned by New York Stock Exchange-listed Live Nation Inc, had a profit of $4.5 million, revenues of $257 million and paid just $2.6 million tax.
Despite paying little or no tax, both companies were major beneficiaries of the Morrison government’s Covid-related arts funding known as Restart Investment to Sustain and Expand (RISE) Fund. It is estimated that Live Nation received about $7 million; TEG received at least $1.35 million for a Guns N’ Roses tour. None of these subsidies appear to have flowed through to lower ticket prices for concertgoers.
Exclusive ticketing rights and the fees that go with them are at the heart of growing dissatisfaction among independent promoters, venue owners and local artists, who are left with a smaller share of the ticket price and are increasingly responsible for all their expenses. Most are afraid to speak up, fearing retribution from the two key players.
Evelyn Richardson, chief executive of Live Performance Australia, declined to comment on the fees taken by the ticketing majors. “We are happy to let our members set prices,” she said. Critics point to the fact that Ticketmaster’s Australia boss, Maria O’Connor, is the deputy chair of Live Performance Australia, and Live Nation Australia chief executive Michael Coppel is also on the executive council.
Billions’ Paul Sloan, whose live music booking business includes Nick Cave, is one of the few outspoken operators.
“In my view, Australians are paying at the very least 10 per cent more than is reasonable for every major event ticket purchase they make, due to the lack of regulation of this sector. The major ticketing companies’ charges represent 15–25 per cent of the cost on most tickets, far steeper than the 5–10 per cent charged by the much smaller alternatives,” he tells The Saturday Paper.
The ticketing majors hide a bewildering series of fees in the so-called all-in fee, including a booking charge, infrastructure charge, venue charge – a payment to the venue – and so-called promoter inside charge, which is payment to the promoter. As was the case with Taylor Swift’s tour, the vendors may also double-dip on their own ticket release sites, taking a further clip. The only regular additional fee that the consumer sees on top of the apparent ticket price is a transaction fee, although in recent years a “basket fee” of up to 2.2 per cent of the ticket price has shown up. This lack of itemisation leaves artists, their managers, promoters and booking agents concerned that customers may blame the artists themselves for rising ticket prices.
In Live Nation’s US Securities and Exchange Commission filings, the company tells investors that they believe they can extend booking fees and charges even further, as a key area to increase their global revenue. This prospect includes Australia.
Neither Live Nation/Ticketmaster nor TEG/Ticketek would comment on the fees embedded in the tickets.
“On most big projects I deliver for my clients, the company making the most operating profit is the ticket business, which takes the least risk and does the least to deliver the project,” Sloan says. “I would avoid using them if I could, so I can deliver cheaper tickets to the fans of my clients, but the exclusive contracts they buy with venues prevent me from doing this.
“Because of exclusive ticketing contracts – particularly in arenas which usually do not have competition in their capacity range – a lack of regulation and control of the various ticketing charges means customers have no choice but to absorb the fees if they want to see their favourite acts. It places promoters wanting to present shows of that scale in the position where they can’t avoid paying whatever the exclusive ticket company and/or single venue option decides to charge.”
Sloan’s comments echo those of multiple promoters, booking agents, venue owners and artist managers that The Saturday Paper spoke to for this story.
The ticketing industry in Australia is self-regulated, a practice generally regarded as perilous and self-serving. But, so far, Australian regulators and government have been loath to go near the sector. The Australian Competition and Consumer Commission (ACCC) told The Saturday Paper that it could not comment on the industry or sector at present. A spokesperson noted only that “competition in markets generally leads to better outcomes for consumers. Competition can create incentives for businesses to offer terms favourable to consumers, invest in processes to enhance customer service, respond to changed market conditions through innovation. Highly concentrated markets may not experience the same innovation incentives as other, more competitive, markets.”
Brian “Smash” Chladil, founder and chief executive of local ticketing company Oztix, is unequivocal that concentration is driving prices higher. “It’s all about competition. A lack of competition is why consumers are paying through the nose.”
Oztix and other smaller players such as Humanitix charge about 5 per cent of the ticket fee – some 25–50 per cent less than the majors – for the same job.
“The fact is that these large venues are doing exclusive deals with the ticket company because they get paid a lot of money for the ticketing. Instead of just charging the promoter a fair and reasonable amount for rent, they discount their rent and then hit up all their suppliers for a rebate,” says Chladil.
“Ticketing companies advance money to promoters to underwrite the show, removing the risk for the promoters, and this keeps smaller companies like mine out of the contest for those venues.”
It is ticketing and its high margins that underpin the vertically integrated business of the ticketing giants’ parent companies TEG and Live Nation. According to Live Nation’s most recent net quarterly filing in the US, it is throwing off margins of 40 per cent, compared to about 3.5 per cent for live performances.
These figures beg the question: How can independent promoters survive? They don’t own ticket businesses with exclusive contracts or enjoy unregulated ticketing income, while massive promoters with efficiencies of scale are staging concerts on an unsustainable 3.5 per cent net operating income.
“These companies have been given exclusive and unregulated control of all the ticket stock in venues built with public funds,” Paul Sloan says. “This means the Australian public are even paying to build the venues that enable this duopoly to extort them with exorbitant charges on acts they love and cannot see anywhere else.”
The Albanese government is developing a new national cultural policy following a consultation period in July and August this year. There has been no indication whether it will look at market power in the live music industry or the dominance of the ticketing companies, but the government could look to the US for cues.
Both Arts Minister Tony Burke and Prime Minister Anthony Albanese have been enthusiastic in their promotion of Australian music, burnishing their hip credentials with appearances at popular gigs. Those cameos have got the attention of the industry, convincing the smaller players that now might be the best opportunity to bring about change, by appealing to these two long-time music fans.
This article was first published in the print edition of The Saturday Paper on December 17, 2022 as "Big ticket items".
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