Adam Smith Would've Hated Ticketmaster
Live Nation-Ticketmaster is one of the most famous monopolies in the country right now, following a 2022 debacle wherein the sale of Taylor Swift's The Eras Tour tickets was stopped after just an hour due to site crashes and millions of tickets sold to resellers. However, public frustration with Ticketmaster dates back decades. After cornering an already small market by acquiring their main competitor Ticketron in 1991, they continued to grow, merging with Live Nation in 2010. Throughout this time, Ticketmaster became an unstoppable, yet majorly disliked, force in the ticketing world (Gastelum, 2024). Pearl Jam filed an unfair business practice complaint with the company in 1994, Stubhub sued Ticketmaster and the Golden State Warriors in 2015, and Bruce Springsteen fans flew into an uproar in 2022 when the dynamic pricing model set his ticket prices at up to $5,000 during periods of high demand (AP News, 2024). They face constant criticism because their monopoly allows their business to flourish even with their lack of preparedness to handle high demand and extortionate fees and pricing. So, why do artists continue to use the platform, given its blemished history and public disdainwith major acts?
The short answer is that they have no other option. Ticketmaster has an estimated market share of 60% and exclusive contracts with 70% of music venues (American Antitrust Institute, 2023). This means that even if an artist employs an independent ticketing service, like Taylor Swift’s manager AEG, they are still forced to work through Ticketmaster or lose access to staple venues like Atlanta’s own Mercedes Benz Stadium—which has one of such exclusive contracts with the company (Rial, 2022).
Since the United States aims to support free-market policies, the Justice Department has begun their attempt to deconstruct the monopoly. The Office of Public Affairs has released a statement on their civil antitrust lawsuit against Live Nation Entertainment Inc (Ticketmaster’s parent company), stating that the company “unlawfully exercises its monopoly power in violation of Section 2 of the Sherman Act,” which prohibits the anti-competitive business practices that Ticketmaster relies on (Office of Public Affairs, 2024). While it may appear antithetical to a free market system to stop a company from taking advantage of its position as a major provider, the forefather of capitalist thinking would argue such regulation is the only thing keeping the market free.
Adam Smith is often hailed as the father of classical liberalism and is largely associated with the idea of a minimal government role in the economy. His seminal work, An Inquiry into the Nature and Causes of the Wealth of Nations, established the fundamental theory of the “invisible hand of the market” which self-corrects, automatically endows order, and drives prices and wages to their natural values. A superficial, surface-level awareness of Adam Smith’s work tends to lend itself to advocates of a completely free-market economy. In reality, a closer examination of his works reveals a nuanced view that acknowledges the necessity of governmental intervention in certain aspects of society and economy. One of these areas is that of monopolies.
Adam Smith was adamantly (pun not intended) anti-monopoly, calling monopolies “a great enemy to good management.” This is because monopolies are anti-competitive in nature, and competition is the backbone of a capitalist market. Competition encourages greatness and forces companies to excel in order to gain customers. A monopoly, however, has no incentive to innovate or improve because they have cornered the market and consumers have no alternative choices. Monopolies can raise prices while offering subpar services as long as consumers have no other option for that service, defeating the productivity of a capitalist system. In this light, the Live Nation-Ticketmaster monopoly embodies everything that Adam Smith detested—the notion that musical acts are required to deal through Ticketmaster to gain access to the most popular venues aligns with his analysis that anti-competitiveness “forces everybody to have recourse to [the monopoly] for the sake of self-defence” (Smith, 1996).
This bind created by Ticketmaster’s exclusive contracts actively degrades free-market competition, because even in the face of site crashes, botched ticket rollouts, and predatory fines, there is no demand-based incentive for the company to improve when artists are all but forced to use their services. Thus, when considering the validity of the Department of Justice’s lawsuit against Live Nation-Ticketmaster, keep the following in mind: Adam Smith would’ve hated Ticketmaster.
Edited by Jeffrey Wu
References
American Antitrust Institute. (2023). Busting the Live Nation-Ticketmaster Monopoly: What Would a Break-Up Remedy Look Like? https://www.antitrustinstitute.org/work-product/busting-the-live-nation-ticketmaster-monopoly-what-would-a-break-up-remedy-look-like/.
AP News. (2024). 30 years of clashes between Ticketmaster, artists and fans. https://apnews.com/article/justice-live-nation-ticketmaster-swift-cca2b9881881fb016d0862b945ccddee.
Gastelum, S. (2024). The Ticketmaster and Live Nation Merger: Why They Should Have Never Ever Been Together. Boston College Law Review, 65(1), 205-239. https://bclawreview.bc.edu/articles/3106.
Rial, B. (2022). Ticketmaster renews Mercedes-Benz Stadium deal. The Stadium Business. https://www.thestadiumbusiness.com/2022/06/07/ticketmaster-renews-mercedes-benz-stadium-deal/.
Smith, A. (1996). Adam Smith on monopoly: the mean rapacity, the monopolizing spirit. Antitrust Law & Economics Review, 27(4),
The Office of Public Affairs. (2024). Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets Across the Live Concert Industry. U.S. Department of Justice. https://www.justice.gov/opa/pr/justice-department-sues-live-nation-ticketmaster-monopolizing-markets-across-live-concert.
Osenar, T. (n.d.). Smith [Illustration]. https://firstamendment.mtsu.edu/article/adam-smith/
