The merger between Ticketmaster and Live Nation was approved with stipulations by the Department of Justice back in January 2010. Reuters reported that Live Nation maintain 49.99% of the combined company; Ticketmaster, 50.01%. At the Ticketmaster website, the benefits of the merger was stated:
“We believe that the merger creates a diversified company with a great selling platform for artists and a stronger financial profile. The new company will provide a more direct relationship between fans and artists. More importantly, fans will benefit through more ticketing and seating options, reduced pressure on ticket prices and more direct access to their favorite artist.”
Over the years, the monopoly power of this merger grew and most recently, there was an outcry over the outrageous ticket price of upwards of $5,000 to attend Bruce Springsteen concert tour and of other celebrities concerts and performances as reported by RollingStone. Why are the tickets over-priced? The answer is “dynamic pricing” strategy adopted by the Ticketmaster company whereby ticket prices are determined in real time based on demand by ticket buyers as explained in a NPR segment this past Tue, August 31st, 2022. Alongside fans and music critics, New Jersey Democratic Representative Bill Pascrell Jr. has called out to the CEO of Live Nation Entertainment to provide transparency to the heavily marked-up ticket prices as reported by TheMusicUniverse.
Discussion Questions:
- Recall the characteristics of a Monopoly market, highlight and explain THREE features used by the Ticketmaster-Live Nation merger in further increasing the market share and earning supernormal profits.
- Given the recent overpriced-tickets outcry, the benefits of the merger as claimed by Ticketmaster above was not provided. Do you agree with New Jersey Democratic Representative Bill Pascrell Jr. that Live Nation Entertainment should explain their pricing strategy to their customers since private companies rarely do? Do explain.
- Read this blog submission: “Price Discrimination: Definitions, Degrees and Takeaways” and explain do you agree that “dynamic pricing” is an example of price discrimination? If so, which degree? If not, why not?
- Self-reflection: Dynamic Pricing is increasingly being used by retailers including grocery stores as reported by WSJ. Now that you know about this strategy from the producers/sellers’ side, how do you – the consumer/buyer – plan to take advantage of this OR do you plan to avoid it when you are buying concert tickets, flight tickets, hotel rooms, and/or groceries?
Sources| Reuters: Live Nation, Ticketmaster merge; agree to U.S. terms; Ticketmaster: Relationship between Live Nation and Ticketmaster; RollingStone: Springsteen fans raged over ticket prices. Experts say there’s no easy fix; NPR: Does Ticketmaster have a monopoly on live events?; TheMusicUniverse: Rep Bill Pascrell Jr. demands answers from Ticketmaster over Bruce Springsteen ticket prices; EnhanceTuition: Monopoly characteristics and diagram; Prisync: Price discrimination: definitions, degrees and takeaways; WSJ: Dynamic Pricing, explained: why prices are changing more often | Price Index |WSJ; Pixabay.com: audience bank celebration concert crowd festival