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Live Nation CFO Joe Berchtold Faces Congressional Grilling

Live Nation CFO Joe Berchtold Faces Congressional Grilling

Photograph Credit score: Reside Nation

Lawmakers at the moment grilled Joe Berchtold, president and CFO of Ticketmaster father or mother Reside Nation, over the much-publicized debacle that unfolded after Swifties had been unable to buy Eras Tour tickets final 12 months.

The Reside Nation exec (together with SeatGeek CEO Jack Groetzinger and others) testified earlier than the Senate Judiciary Committee this (Tuesday) morning. The listening to arrived after would-be attendees filed a number of lawsuits towards Reside Nation over the aforesaid Taylor Swift Eras Tour ticketing fiasco, which has arguably prompted extra congressional outrage and requires regulation than the Astroworld tragedy.

Furthermore, the listening to additionally passed off amid a Justice Division antitrust investigation into the 2010 Reside Nation-Ticketmaster merger, following smaller-scale controversies involving “dynamic pricing,” billing practices, and different areas in 2022. In the meantime, Reside Nation is remaining extremely energetic within the lobbying enviornment.

“I’d now like to show to the topic of at the moment’s hearings, which give attention to competitors within the ticketing and stay leisure business,” Senator Dick Durbin (who chairs the Judiciary Committee) mentioned when kicking off the hours-long listening to. “Reside occasion ticketing garnered a whole lot of consideration towards the top of 2022, most notably in November, when Ticketmaster’s techniques failed throughout the pre-sale for Taylor Swift’s new tour, leaving tens of millions of followers caught in digital queues for hours ready to purchase tickets.

“Whereas Ticketmaster and its father or mother firm, Reside Nation Leisure, have provided explanations for these points – these points are symptomatic, I believe, of a bigger downside. The ticketing and stay leisure markets lack competitors, and they’re dominated by a single entity, Reside Nation,” he continued.

Then, after recapping the above-noted Reside Nation-Ticketmaster merger, the related consent decree, and the market results thereof, the senator allowed his fellow committee members to talk. These lawmakers (together with some longtime Reside Nation critics) took the chance to clarify the significance of competitors, Reside Nation’s perceived unfavorable influence on shoppers, and alleged consent-decree violations.

Subsequently, Berchtold devoted a verbose opening assertion (learn on for the whole thing of the 900-word-long speech) to highlighting the purportedly stiff competitors that Ticketmaster faces and blaming the Eras Tour debacle on bots and scalpers. (Groetzinger’s personal remarks focused the alleged “monopolistic affect” of Ticketmaster and referred to as for its break up from Reside Nation.)

From there, Berchtold defended towards questions on Ticketmaster’s function in establishing costs and repair charges (“the band units the ticket value, the service-fee stage is about by the venue”), cited Pollstar information to downplay Reside Nation’s venue possession, and denied that his firm had abused its market place to attain a Barclays Middle deal.

Different exchanges involving Berchtold touched upon the extension of the Reside Nation-Ticketmaster consent decree, the size of unique venue agreements, the data collected by Ticketmaster (Senator Marsha Blackburn demanded written solutions to those and associated questions), and the BOSS Act.

Maybe essentially the most attention-grabbing remarks of the marathon listening to got here from Senator John Kennedy, who proposed face-value transferability or an outright non-transferability on all first-party tickets (Berchtold mentioned he’d again the measure, although different individuals weren’t as supportive) and directed firmly worded feedback at Ticketmaster/Reside Nation.

“I’m not towards large per se,” the lawmaker advised Berchtold. “I’m towards dumb, and the way in which your organization dealt with the ticket gross sales for Ms. Swift was a debacle. And whoever in your organization was in control of that must be fired.”

Right here’s a whole transcript of the opening remarks that Reside Nation CFO Joe Berchtold delivered earlier than the Senate Judiciary Committee.

“Chair Durbin, Rating Member Graham, Senators Klobuchar and Lee, and different members of the committee, I’m Joe Berchtold, president and chief monetary officer of Reside Nation Leisure. I thanks for the invitation to seem at the moment to deal with these essential points within the stay leisure business so we are able to collectively work to make issues higher.

For nearly 20 years, Reside Nation has operated in the US and all over the world with an artist-first enterprise mannequin that’s centered on serving to put artists on stage and connecting them with their followers. We imagine that the artist-fan connection is the inspiration of the stay leisure business, the supply of almost all business worth, and the number-one factor that public coverage ought to defend.

Over this era, we have now helped the business develop quickly. In 2022, stay music was a $12 billion business in the US – 4 occasions what it was in 2005. To gasoline this progress, Reside Nation has invested billions of {dollars} funding artists globally – $9 billion in 2022 alone.

Given our stage of funding in artists, it’s also crucial for Reside Nation to have the best platform potential for promoting tickets. Since our 2010 merger with Ticketmaster, we have now invested over $1 billion in capital to enhance the Ticketmaster system. A lot of this was [spent] on applied sciences to get rid of fraud and to get tickets to followers as an alternative of ticket scalpers utilizing bots, a main instance of which is our Verified Fan service.

As we speak’s Ticketmaster is greatest at school in conducting massive on-sales, advertising and marketing live shows, stopping frauds, and getting tickets into the palms of actual followers. I do wish to take a second to deal with some confusion about what Ticketmaster and different main ticketing platforms do and don’t do.

Main ticketing corporations together with Ticketmaster don’t set ticket costs. We don’t resolve what number of tickets go on sale and when, and we don’t set service charges. Pricing and distribution methods are decided by the artists and their groups. Service charges, even when they’re referred to as ticketing charges, are retained primarily by the venues. And their portion of the service payment that Ticketmaster retains has been falling steadily over time.

This results in the subject of at the moment’s listening to, competitors in ticketing markets. We hear folks say that the ticketing markets are much less aggressive at the moment than they had been on the time of the Reside Nation-Ticketmaster merger. That’s merely not true.

In 2009, the Division of Justice alleged that Ticketmaster’s market share was over 80 %. It’s a distinct story at the moment. The obvious change is the emergence of the big secondary ticketing market, wherein Ticketmaster has a modest market share and lots of sturdy rivals.

But additionally in main ticketing, the Ticketmaster of 2010 didn’t face the extent of competitors that we face at the moment, with new rivals, extremely capitalized, together with SeatGeek, AEG’s AXS and Eventbrite, together with established rivals together with and Paciolan.

Ticketmaster has misplaced, not gained, market share because the merger. And as I discussed, at the moment’s aggressive bidding course of, with quite a few credible various ticketing corporations, [is] ensuing [in] getting much less of the financial worth in a ticketing contract yearly.

There are issues within the ticketing business, issues we imagine can and must be addressed via laws. Many are the direct results of [the] industrial-scale ticket scalping that goes on at the moment. A $5 billion business in live shows alone in the US, fueled by practices that run counter to the pursuits of artists and their followers.

The latest on-sale expertise with Taylor Swift, one of many world’s hottest artists, has highlighted the necessity to handle these points urgently. We knew bots would assault that on-sale and deliberate accordingly. We had been then hit with thrice the quantity of bot site visitors that we’d ever skilled, and for the primary time in 400 Verified Fan on-sales, they got here after our Verified Fan password servers as nicely.

Whereas the bots didn’t penetrate our techniques or purchase any tickets, the assault required us to decelerate and even pause our gross sales. That is what led to a horrible client expertise, which we deeply remorse. We apologize to the followers, we apologize to Ms. Swift, we have to do higher, and we’ll do higher.

Ticketmaster realized worthwhile classes from this on-sale. In hindsight, there are a number of issues we may have performed higher. And let me be clear that Ticketmaster accepts its accountability as being the primary line of protection towards bots in our business. It’s an ever-escalating arms race.

However on this discussion board, the place we’re right here to debate public coverage, we additionally want to acknowledge how industrial scalpers utilizing bots and cyberattacks to unfairly achieve tickets has contributed to this terrible expertise. There are lots of issues we are able to and may accomplish collectively.

We must always enlarge the scope of the BOTS Act and enhance enforcement. We must always enact categorical prohibitions on fraudulent ticket practices together with misleading URLs and providing on the market tickets earlier than they’re on sale within the main. We must always mandate all-in pricing in order that followers see the complete price of their tickets from the beginning.

We share your objective of constructing [the] stay leisure business higher for artists, groups, and followers alike, and it’s in that spirit that I sit earlier than you at the moment. To work with you to make the fan expertise higher. I stay up for answering your questions.”