Live Nation exec faces lawmakers about Taylor Swift concert tickets fiasco
(CNN) -- Lawmakers grilled a top executive from Ticketmaster's parent company after the service's inability to process orders for Taylor Swift's upcoming tour left millions of fans unable to buy tickets or without their ticket even after purchase.
Joe Berchtold, the president and CFO of Ticketmaster parent company Live Nation Entertainment, testified before a Senate committee on Tuesday, two months after the Swift ticketing fiasco reignited public scrutiny of the industry.
"As we said after the onsale, and I reiterate today: We apologize to the fans," Berchtold said. "We apologize to Ms. Swift. We need to do better and we will do better."
Ticketmaster, he said, was "hit with three times the amount of bot traffic than we had ever experienced" amid the "unprecedented demand for Taylor Swift tickets." The bot activity "required us to slow down and even pause our sales. This is what led to a terrible consumer experience that we deeply regret."
Tickets for Swift's new five-month Eras Tour -- which kicks off March 17 and will have 52 concerts in multiple stadiums across the United States -- went on sale on Ticketmaster in mid November. Heavy demand snarled the ticketing site, infuriating fans who couldn't snag tickets. Customers complained about Ticketmaster not loading, saying the platform didn't allow them to access tickets, even if they had a pre-sale code for verified fans.
Unable to resolve the problems, Ticketmaster subsequently canceled Swift's concert ticket sales to the general public, citing "extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand."
As fury grew among legions of hardcore Swifties, Swift herself weighed in on the fiasco. "It goes without saying that I'm extremely protective of my fans," Swift wrote on Instagram in November. "It's really difficult for me to trust an outside entity with these relationships and loyalties, and excruciating for me to just watch mistakes happen with no recourse."
As a result, the US Senate Judiciary Committee scheduled the hearing titled "That's The Ticket: Promoting Competition and Protecting Consumers in Live Entertainment" to examine the lack of competition in the ticketing industry.
During her opening remarks, Sen. Amy Klobuchar, a Democrat from Minnesota, emphasized the importance of competition to uphold a capitalist system in her opening remarks. While criticizing the amount of consolidation in the market, she used Taylor Swift's lyrics, saying it's a practice that the country knows "all too well."
"To have a strong capitalist system, you have to have competition,' she said. "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.'"
Berchtold suggested that venues enjoy significant leeway to run their operations. He testified that Ticketmaster does not set ticket prices, does not determine the number of tickets put up for sale and that "in most cases, venues set service and ticketing fees," not Ticketmaster.
In addition to the executives, the committee said witnesses at the hearing included Jack Groetzinger, CEO of ticketing platform SeatGeek; Jerry Mickelson, CEO of Jam Productions, one of the largest producers of live entertainment; and singer-songwriter Clyde Lawrence.
Groetzinger testified that as long as Live Nation remains both the dominant concert promoter and ticketer of major venues in the US, "the industry will continue to lack competition and struggle."
The merger
Criticism of Ticketmaster's dominance dates back decades, but the Swift ticketing incident has once again turned that issue into a dinner table discussion at many households.
Concert promoter Live Nation and ticketing company Ticketmaster, two of the largest companies in the concert business, announced their merger in 2009. The deal at the time raised concerns, including from the US Department of Justice, that it would create a near-monopoly in the industry.
The Justice Department allowed the Live Nation-Ticketmaster merger to proceed despite a 2010 court filing in the case that raised objections to the merger. In the filing, the Justice Department said that Ticketmaster's share among major concert venues exceeded 80%.
Ticketmaster disputes that market share estimate and says it holds at most just over 30% of the concert market, according to comments on NPR recently by Berchtold.
On Tuesday, the Senate Judiciary's leading Democrat and Republican weighed in on Ticketmaster's economic dominance.
"These issues are symptomatic, I think, of a larger problem," said committee chair Sen. Dick Durbin, arguing that live event ticketing has been "dominated by a single entity" that was created from the merger.
Durbin said he believes the legally binding consent agreement allowing Live Nation to complete the deal with conditions has not succeeded in preserving competition. If the current Justice Department concludes that the consent decree has been violated, "unwinding the merger ought to be on the table," said Sen. Richard Blumenthal.
Sen. Lindsey Graham, the panel's top Republican, agreed that "consolidation of power in the hands of a few can create problems for the many."
"Out of this hearing," he said, "I hope we can make a better experience of the consumer being able to buy tickets to things you want to see without such a debacle" as the Taylor Swift ticketing process.
'Customers are the ones that pay the price'
While irate fans were left scrambling to wade through the Swift ticket confusion, their collective anger caught lawmakers' attention.
Members of Congress used the debacle to criticize Ticketmaster's control of the live music industry, saying that because Ticketmaster dominates so heavily, it has no reason to make things better for the millions of customers who have no other choice.
"Ticketmaster's power in the primary ticket market insulates it from the competitive pressures that typically push companies to innovate and improve their services," Klobuchar, who chairs the antitrust subcommittee, wrote in an open letter to Ticketmaster's CEO in November. "That can result in the types of dramatic service failures we saw this week, where consumers are the ones that pay the price."
Blumenthal echoed Klobuchar's concerns. He tweeted at the time that the tour "is a perfect example of how the Live Nation/Ticketmaster merger harms consumers by creating a near-monopoly."
In December, lawmakers from the House Energy and Commerce Committee sent a letter to Live Nation CEO Michael Rapino, demanding a briefing on what went wrong and what steps the company is taking to fix the problems.
"The recent pre-sales ticketing process for Taylor Swift's upcoming Eras tour -- in which millions of fans endured delays, lockouts, and competition with aggressive scammers, scalpers and bots -- raises concerns over the potential unfair and deceptive practices that face consumers and eventgoers," the committee wrote in its letter.
The committee noted it had previously raised concerns about the industry's business practices and said it wanted to meet with Rapino to discuss how the company processes tickets for concerts and major tours. It also wants answers about how Ticketmaster plans to improve in the future.
Brian A. Marks, a senior lecturer in the department of economics and business analytics at University of New Haven's Pompea College of Business, said he would have liked Swift to make an appearance at the hearing.
"This hearing seems to be focused on Swift and what happened with the ticket sales. We also have to remember that Taylor Swift and her team negotiated a contract with Ticketmaster for sale of her concert ticket," said Marks.
"Will Congress want to look at that contract? To me, what happened with the Swift concert tickets was not necessarily the result of Ticketmaster being the dominant player in the industry," he said. Artists, and especially larger artists like Swift, "are free to elsewhere," he said. "This point may get missed in tomorrow's hearing."