{"id":1204,"date":"2024-06-07T18:57:12","date_gmt":"2024-06-07T18:57:12","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/in-live-nation-doj-lawsuit-aegs-ticketing-claims-could-play-big-role\/"},"modified":"2024-06-10T17:44:06","modified_gmt":"2024-06-10T17:44:06","slug":"in-live-nation-doj-lawsuit-aegs-ticketing-claims-could-play-big-role","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/in-live-nation-doj-lawsuit-aegs-ticketing-claims-could-play-big-role\/","title":{"rendered":"In Live Nation DOJ Lawsuit, AEG\u2019s Ticketing Claims Could Play Big Role"},"content":{"rendered":"\n
\n

\n\tOn Friday (May 31), AEG chairman\/CEO Jay Marciano<\/strong> became the first major live music executive to voice support for the Department of Justice\u2019s effort to break up Live Nation and Ticketmaster, foreshadowing the role AEG will likely play as a key witness in the DOJ\u2019s antitrust case against Ticketmaster.<\/p>\n

\n\t\u201cAEG has long maintained that Ticketmaster has a monopoly in the U.S. ticketing marketplace and uses that monopoly power to subsidize Live Nation\u2019s content businesses,\u201d Marciano wrote in a memo to staff May 30. Beyond its longstanding criticism that Live Nation uses its scale to overpay for talent, AEG doubled down on its attacks on Ticketmaster\u2019s use of exclusive ticketing contracts, with Marciano telling staff that AEG and its attorneys \u201cstrongly believe that DOJ\u2019s lawsuit will succeed and ultimately bring sweeping changes\u201d to the live music industry.<\/p>\n

\n\tThe government interviewed dozens of Live Nation\u2019s competitors during its two-year anti-trust investigation, including AEG \u2014 executives at AEG have met with DOJ investigators on at least three separate occasions, including a 2023 meeting to discuss the crash of the ticket presale for Taylor Swift\u2019s The Eras Tour, which AEG promoted through its joint venture with Louis Messina<\/strong>.<\/p>\n

\n\tThat puts Marciano and AEG in a rare position to galvanize public opinion and build support for his call to staff and the larger music community to help \u201cus lay the groundwork now for the future of the industry.\u201d<\/p>\n

\n\tBut AEG\u2019s claims aren\u2019t as compelling as Marciano thinks, according to Live Nation executive vp of corporate and regulatory affairs Dan Wall<\/strong>, who responded to Marciano\u2019s May 30 letter with a statement alleging AEG is trying to use Live Nation\u2019s antitrust case \u201cto advance their own interests.\u201d<\/p>\n

\n\t\u201cAEG supports this case \u2014 indeed, begged DOJ to file it \u2014 because it doesn\u2019t want to pay artists market rates or convince venues to adopt its second-rate ticketing system exclusively,\u201d Wall said in a statement provided to Billboard<\/em> after Marciano\u2019s statement was released.<\/p>\n

\n\tAEG declined to comment for this story.<\/p>\n

\n\tThe battle between Live Nation and AEG dates back to the federal government\u2019s 2010 approval of Live Nation\u2019s merger with Ticketmaster, which the government approved by imposing a number of conditions on Ticketmaster designed to increase competition. As part of those conditions, referred to as the consent decree, the DOJ required Ticketmaster to license its source code and technology to AEG to create a competing ticketing service. The government did not address some of Ticketmaster\u2019s more controversial tactics at the time, like the use of exclusive contracts to lock venues into long-term deals, which lies at the heart of this current conflict.<\/p>\n

\n\tAEG only licensed Ticketmaster\u2019s technology for a year, and in 2011 announced it was instead building a new ticketing platform called AXS with the help of Montreal firm Outbox ticketing. It took two years to switch all of AEG\u2019s venues globally to AXS Tickets, and then AEG struggled to sign on new clients, even after merging with Veritix<\/a> in 2015, and in 2019 ended up losing a major client \u2014 Altitude Sports and Entertainment \u2014 to a startup called Rival launched by former Ticketmaster CEO Nathan Hubbard<\/strong>.<\/p>\n

\n\tAXS\u2019 struggles were due in part to its ownership structure following the 2015 merger with Veritix, which divided ownership among AEG, private-equity firm TPG and Cleveland Cavaliers owner Dan Gilbert<\/strong>, who previously owned Veritix. In 2019, AXS\u2019 partners began exploring a sale of the company and looked at buying Rival or being bought by Rival, deals AEG blocked thanks to AXS\u2019 ownership rules that required unanimous consent for all material decisions. AEG also blocked a merger between AXS and CTS Eventim, a powerful European ticketing provider that was looking for an entry point in the U.S. market to compete with Ticketmaster.<\/p>\n

\n\tGilbert and TPG eventually agreed to sell their stakes in AXS to AEG in 2019, which by then had started to explore a new business model for the ticketer, built around non-exclusive ticketing contracts. Instead of competing with Ticketmaster to sign venues to AXS, AEG would instead focus on expanding its use of AXS ticketing for AEG-promoted tours. Both Live Nation and AEG prefer to use their own ticketing platforms for the concerts they promote because it allows the promoters to directly control the customer data.<\/p>\n

\n\tHoping to encourage Ticketmaster to allow AEG to use AXS whenever it brought tours to buildings ticketed by Ticketmaster, AEG offered to allow Live Nation to use Ticketmaster at the venues AEG controls, including the Crypto.com Arena in Los Angeles.<\/p>\n

\n\tAEG would extract a similar concession from Live Nation in 2021 that would earn a mention in the DOJ\u2019s lawsuit against Ticketmaster. On June 15 of that year, leading venue operations company ASM Global, in which AEG owned a minority stake, announced it had renewed its agreement with Ticketmaster to provide ticketing services for a majority of the 300 venues ASM manages.<\/p>\n

\n\tThe government flagged the agreement as suspicious because AEG at the time owned 30% of ASM and had \u201cadvocated for AXS to serve as the exclusive primary ticketer for the ASM Global venues,\u201d the complaint reads. \u201cBut ASM Global\u2019s majority shareholder, Onex, worried that Live Nation would retaliate by withholding shows from ASM Global venues if ASM Global entirely switched away from using Ticketmaster.\u201d<\/p>\n

\n\tA source close to the deal called the DOJ\u2019s version of the story an \u201coversimplification,\u201d noting that AEG and Onex didn\u2019t have the right to require ASM Global clients to use one ticketing system over the other and that the majority of clients opted to stay with Live Nation. ASM did, however, convince Live Nation to grant a rare exception to its venue contracts, allowing ASM venues contracted to Ticketmaster to switch to AXS tickets for any tours AEG brought to the buildings.<\/p>\n

\n\tIn exchange, Ticketmaster paid a large advance for the multiyear contract and issued a press release, quoting ASM Global president\/CEO Ron Bension<\/strong> saying, \u201cAligning with industry leaders like Ticketmaster is a critical component in providing millions of people with the most seamless and secure live experiences.\u201d<\/p>\n

\n\tHappy to have secured the largest carve-out in Ticketmaster\u2019s exclusivity contract to date, AXS decided to push for more exceptions. In 2022, AEG began routing Swift\u2019s The Eras Tour alongside its partner, Messina Touring Group. The majority of the venues on the tour were Ticketmaster-exclusive facilities, though ASM managed five of the stadiums, representing 12 shows on the 52-date trek. But two of those dates \u2014 a pair of concerts at State Farm Stadium in Glendale, Ariz. \u2014 would be ticketed by SeatGeek under its exclusive deal with the Arizona Cardinals. Making matters worse, two of ASM\u2019s management clients decided to partner with Ticketmaster for the sale.<\/p>\n

\n\tDown to just five shows at two stadiums, AEG dropped the matter, but not before reporting the issue to the DOJ, encouraging them to look at Live Nation and Ticketmaster\u2019s use of exclusive contracts as anti-competitive.<\/p>\n

\n\tAfter the fiasco, Live Nation chairman Greg Maffei<\/strong> appeared on CNBC to defend Ticketmaster and claim \u201cAEG, who is the promoter for Taylor Swift, chose to use us because, in reality, we are the largest and most effective ticket seller in the world,\u201d he said. \u201cEven our competitors want to come on our platform.\u201d AEG leadership was quick to respond. \u201cTicketmaster\u2019s exclusive deals with the vast majority of venues on The Eras Tour required us to ticket through their system,\u201d the leadership said in a statement, adding, \u201cWe didn\u2019t have a choice.\u201d<\/p>\n

\n\tIn the months following, AEG\u2019s relationship with Live Nation only worsened. In January 2023, AEG announced it was backing a U.S. tour for chart-topping singer Zach Bryan<\/a> who had just released a live album called All My Homies Hate Ticketmaster<\/em>. The album title succinctly encapsulated decades of anti-Ticketmaster sentiment from music fans over Ticketmaster fees, pricing and indignities and AEG was eager to get in early. With AEG as his promoter, Bryan embarked on an expansive tour of non-Ticketmaster buildings, a gambit that hadn\u2019t been attempted since Pearl Jam in the 1990s. AEG even deployed a sophisticated anti-scalping system to keep tickets out of the hands of scalpers.<\/p>\n

\n\tDespite the tour\u2019s success, Bryan had reached a surprising conclusion about the experience \u2014 some of his homies hated AXS tickets too.<\/p>\n

\n\t\u201cEveryone complained about AXS last year. Using all ticketing sites this year,\u201d he said of his 2023 Quittin\u2019 Time Tour, which was still being promoted by AEG but would no longer route around Ticketmaster buildings and would play all venues, regardless of which company was the ticketer.<\/p>\n

\n\t\u201cAll my homies still do hate Ticketmaster, but hard to realize one guy can\u2019t change the whole system,\u201d Bryan wrote on X, formerly Twitter. \u201cIt is intentionally broken and I\u2019ll continue to feel absolutely horrible about the cost of tickets.\u201d<\/p>\n

\n\tIn his written response to Marciano\u2019s letter, Wall, a former litigator for Live Nation who helped architect the 2010 consent decree, says AEG is now trying to use the legal system to compete against Ticketmaster instead of focusing on improving AXS.<\/p>\n

\n\tMarciano contends that there are many things that the DOJ can do to level the playing field and ended his letter by encouraging his employees not to \u201cget distracted by Live Nation spin\u201d and instead to \u201cprepare for a world with more competition, more innovation, artist and consumer choice, lower ticketing fees, and more music.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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