Complete 4 page APA formatted essay: The Music Industry: Competition Law in the Case of Live Nation Entertainment.Download file to see previous pages... The merger began after years of virtually utter

Complete 4 page APA formatted essay: The Music Industry: Competition Law in the Case of Live Nation Entertainment.

The merger began after years of virtually utter dominance of the concert ticket industry by Ticketmaster (US v. TicketMaster and Live Nation Inc, p.5). Ticketmaster's fee charges are added to the cost of the ticket for the consumer, though it does share some of the fee moneys with venues. This means that Ticketmaster's effect on the industry was generally slightly beneficial for venues but harmful to consumers because the cost of a Ticketmaster ticket is much higher than other tickets. Ticketmaster had 80% of the market venue share and an 85% contract renewal rate, meaning that for the foreseeable future at the time of the court ruling, it had monopoly power in the ticket industry. Its monopoly power was vertical: Ticketmaster had almost no sources of revenue or influence in any other market besides ticketing (US v. TicketMaster and Live Nation Inc, p.5).

Live Nation, by far the largest concert promoter in the nation, decided to enter the ticket industry directly (Collyer, 2010). LN was actually a potential challenger to Ticketmaster. They had the ability to make their promotion and organization services contingent on purchasing their ticketing services, or raise their normal promotion services and provide such a high discount for also using the ticketing services that no concert organizer would ever get the unvarnished promotion deal. If LN entered the marketplace, there was a substantial risk of severe competition with Ticketmaster or a new monopoly. The impacts of this would have been complex. LN's ticketing service would have been cheaper: Unlike Ticketmaster, they had an “ass in seats” incentive to get consumers to not only purchase a ticket but come to the show and thus build the reputation of a concert and a band. Concerts have ancillary sources of profit such as merchandise and food beyond the ticket, so LN had multiple reasons to charge consumers less. in contract, Ticketmaster's sole source of profit was ticket sales and the fees they charged, which meant that they could charge as high as the market would bear,in this case quite high due to their monopoly status. Initially, Ticketmaster would likely compete with LN by lowering prices, which would be good. however, if LN emerged dominant, it would have monopolized horizontally, taking control of a new industry which would give LN unprecedented control. Ticketmaster and LN decided to head off what would have been a grueling market fight and merge. This initially looked like the worst of both worlds: LNE, the new company created by the merger, would immediately have access to Ticketmaster's contracts and therefore its monopoly power, and now would draw a higher portion of revenue from tickets, meaning that they would have even more ability to raise ticket prices. “The merger... will create a goliath with hands in every pocket of the music business. The newly formed Live Nation Entertainment would have the ability to book concerts, sell tickets and merchandise, and manage artists all under one roof” (Fritz et al, 2010). The Justice Department, in the first major case under Obama, moved to intervene and created a bizarre version of Solomon's deal: LNE could have its monopoly in most other areas, but when it came to ticketing, it had to compete with itself (Fritz et al, 2010).