Lawmakers grill ticketing industry after Taylor Swift concert fiasco

Ticketmaster's mishandling of Taylor Swift's concert ticket sale in November earned its parent company a spot in the hot seat at the Senate Judiciary Committee's Tuesday hearing.

Lawmakers grilled Live Nation president and CFO Joe Berchtold on the company's market practices, with some claiming that it is monopolizing the market and hurting customers.

Here are the highlights from the hearing, not counting the lawmakers' random references to Taylor Swift's lyrics:

Live Nation blames it largely on bots: From his opening statement to responses to senators' questions, Berchtold stressed the problem of bots and industrial scalping of tickets, which he claims also caused the Swift tickets fiasco.

Republicans, Democrats, artists and others all appeared to agree Live Nation is the anti-hero: Clyde Lawrence, an artist on the witness panel, explained how the company acts as a promoter, a venue and the ticketing company, which can eat into performing artists' revenues while also escalating ticket price for consumers. Bipartisan agreement on any issue is hard to come by, but as Democratic Sen. Richard Blumenthal noted, Live Nation managed to bring them all together.

No easy answers: The ability to resell tickets can be a useful for customers who need to change plans. But it can also help prop up the scalping industry. With that in mind, lawmakers discussed whether restricting the ability to transfer tickets would help. Live Nation was in favor of this, but the CEO of a rival platform, SeatGeek, said this might only entrench Live Nation's dominance, as it holds the kind of market share that would force consumers to solely transact there in the absence of any other resale market option.

A losing ticket for consumers: When there is less competition in a market, there is lesser incentive for businesses to innovate, experts say Customers pay the price for alleged monopolistic acts with higher ticket prices and fees, lower quality and less choice and less innovation, antitrust expert Kathleen Bradish told lawmakers.

Today's Senate Judiciary Committee hearing on the live entertainment ticketing industry, where senators heard from industry officials, antitrust experts and even one musician, just wrapped up.

The hearing came about two months after Ticketmaster's mishandling of the sale of Taylor Swift concert tickets in November.

While Swift herself wasn't there, her lyrics certainly were. Senators and witnesses alike peppered in references to the artist's catalogue throughout the hearing.

Here are some of the highlights:

• In her opening statement, Sen. Amy Klobuchar talked about the need to have competition in capitalism: "To have a strong capitalist system, you have to have competition. You can't have too much consolidation — something that, unfortunately for this country, as an ode to Taylor Swift, I will say, we know 'all too well.'"
• Sen. Richard Blumenthal told Live Nation's CFO, "Ticketmaster ought to look in the mirror, and say, 'I’m the problem, it's me'"
• Sal Nuzzo, with the James Madison Institute, described how the leading player in the market would argue that their growth benefits consumers. "A few million Taylor Swift fans would respond, 'This is why we can’t have nice things,'" he added.
• Sen. Mike Lee called restricting the ability of consumers to resell their tickets "a nightmare dressed like a daydream."
• Lee made a second Swift reference when he described how he had hoped to become the chair of the Subcommittee on Competition Policy, Antitrust, and Consumer Rights over Klobuchar. "I was hoping to get the gavel back, but once again, Senator Klobuchar is cheer captain and I'm on the bleachers."

At the Senate Judiciary Committee, lawmakers and experts are discussing the issue of ticket transferability and whether that is hurting or benefitting consumers in the ticketing market.

Sen. John Kennedy of Louisiana asked witnesses on the hearing panel if making tickets non-transferable would help in capping the price of the ticket and weeding out the issue of bots, which would in turn benefit customers.

While Live Nation President Joe Berchtold supported the suggestion, antitrust expert Kathleen Bradish said such a solution wouldn't get to the heart of the matter because it doesn't solve the competition issue.

"If there were competition, if we solve the competition issue here, then customers will get what they want," she told lawmakers.

SeatGeek CEO Jack Groetzinger echoed Bradish, and said that in an industry that already lacks competition, "reducing transferability just exacerbates the problem."

"A related issue is if the incumbent were to allow transferability but only on its own platform," he added. "It's a way to force all consumer data and all transaction fees onto that platform."

Another expert on the panel, Sal Nuzzo, also disagreed with Kennedy's proposed solution, saying that if a customer buys a ticket, they should be able to "transfer that ticket at the market rate."

The secondary market, Nuzzo argued, also allows smaller or growing artists "the ability to fill those venues" especially when it comes to people who purchased the ticket but are unable to show up for individual reasons.

When Sen. Josh Hawley asked Live Nation's Berchtold why the executive thinks restricting the ability to transfer tickets would help the customer, he pointed to bots.

"Tickets are often underpriced by the artists because they want to deliver value to the fans. That creates a $5 billion opportunity a year in the United States for the industrial scalping of tickets using bots ... and resell them on the secondary (market,)" he said, arguing that this illegal activity is aided by the ease of ticket transfer option.

The Senate Judiciary Committee's hearing on the live entertainment ticketing industry is ongoing, and so far, senators and witnesses alike have name-dropped some big acts in their questions and testimony.

Here's who has been mentioned so far:

• Taylor Swift
• Bruce Springsteen
• Bruno Mars
• Shania Twain
• Prince
• Bad Bunny
• Madonna
• Garth Brooks

Singer-songwriter Clyde Lawrence offered a wish list to lawmakers on the changes he would like to see in the ticket industry:

1. A bigger share of merchandise sales: Live Nation and other promoters typically take 20% or more from the gross merchandise sales in a night for "providing the real estate," Lawrence says. "But we're providing all of the customers ... how come we don't get any of the bar sales?"
2. Expansion of off-platform ticketing and ticketing choice
3. Caps on fees
4. Greater transparency on settlement sheets at the end of a show

Fred Rosen, the longtime former CEO of Ticketmaster, defended the company he helped build and described it as the “fall guy” in an interview with CNN on Tuesday, amid a hearing into the company's Taylor Swift ticketing fiasco.

“Ticketmaster has to do what the acts and the promoters want, and Ticketmaster becomes the fall guy for all of this,” Rosen said in an interview on "At This Hour" with Kate Bolduan.

He went on to defend Ticketmaster’s size, saying that being bigger “creates issues when people think you’re taking advantage.” He added: “The fact of the matter is, we created it to take the heat for everybody, and so you become what I call, you know, the ‘scheduled whipping boy.’”

“Anybody who's not sitting in Ticketmasters’ position is, of course, they're going to complain,” he said. “But my view is make a better system and compete, and if you're better, you'll beat the company, and if you're worse, you'll complain.”

Rosen said if he were still at the company, he would recommend there be some kind of “circuit breaker” in place to shut down sales when demand is as unprecedented as it was for the Swift tickets.

“The system has to shut off so that you can have an orderly distribution of tickets," he said, "and I think part of the problem is that because of the emotion that's connected in a concert sale, no one wants to deal with the logic of this.” 

He also said he doesn’t think all of the tickets should have been put on sale at the same time, “but it's my understanding that's what the act wanted.”

Republican Sen. John Kennedy blasted Live Nation for the Taylor Swift ticketing meltdown and called on executives to be held accountable.

“I am not against big, per say. I am against dumb,” Kennedy of Louisiana said to a top Live Nation exec. “The way your company handled ticket sales for Ms. Swift was a debacle.”

Kennedy added that whoever at Live Nation was in charge of the incident “ought to be fired.”

Democratic Sen. Richard Blumenthal said Live Nation has managed to do the unthinkable: bridge partisan divides in Washington.

“I want to congratulate and thank you for an absolutely stunning achievement: You have brought together Republicans and Democrats in an absolutely unified cause,” Blumenthal said to Joe Berchtold, the president and CFO of Ticketmaster parent Live Nation.

“May I suggest, respectfully, that unfortunately your approach today in this hearing is going to solidify that cooperation,” Blumenthal said. 

The Connecticut Democrat argued Live Nation is essentially arguing “it’s not us, it’s everyone but us” despite the fact that the company is “the 800-pound gorilla here.”

He added: “Look in the mirror and say, ‘I’m the problem. It’s me.’”

Kathleen Bradish, vice president for legal advocacy at the American Antitrust Institute, told lawmakers at a Senate hearing that the lack of competition in the live entertainment industry results in consumers having the pay higher prices.

Live Nation-Ticketmaster is an example of "a very traditional monopoly" and also "a 21st century digital player" like other online platforms, she said Tuesday.

"Its dominance in markets up and down the live entertainment supply chain creates the incentive and the ability to limit competition and protect its market position," she explained.

On the concert side, it excludes "smaller or independent concert promoters and venues. In digital ticketing, it includes excluding ticket resellers and brokers who provide important competition via the secondary ticketing market," she said.