Lawmakers grill ticketing industry after Taylor Swift concert fiasco

Today's Senate Judiciary Committee hearing on the live entertainment ticketing industry, where senators heard from industry officials, antitrust experts and even one musician, just wrapped up.

The hearing came about two months after Ticketmaster's mishandling of the sale of Taylor Swift concert tickets in November.

While Swift herself wasn't there, her lyrics certainly were. Senators and witnesses alike peppered in references to the artist's catalogue throughout the hearing.

Here are some of the highlights:

At the Senate Judiciary Committee, lawmakers and experts are discussing the issue of ticket transferability and whether that is hurting or benefitting consumers in the ticketing market.

Sen. John Kennedy of Louisiana asked witnesses on the hearing panel if making tickets non-transferable would help in capping the price of the ticket and weeding out the issue of bots, which would in turn benefit customers.

While Live Nation President Joe Berchtold supported the suggestion, antitrust expert Kathleen Bradish said such a solution wouldn't get to the heart of the matter because it doesn't solve the competition issue.

"If there were competition, if we solve the competition issue here, then customers will get what they want," she told lawmakers.

SeatGeek CEO Jack Groetzinger echoed Bradish, and said that in an industry that already lacks competition, "reducing transferability just exacerbates the problem."

"A related issue is if the incumbent were to allow transferability but only on its own platform," he added. "It's a way to force all consumer data and all transaction fees onto that platform."

Another expert on the panel, Sal Nuzzo, also disagreed with Kennedy's proposed solution, saying that if a customer buys a ticket, they should be able to "transfer that ticket at the market rate."

The secondary market, Nuzzo argued, also allows smaller or growing artists "the ability to fill those venues" especially when it comes to people who purchased the ticket but are unable to show up for individual reasons.

When Sen. Josh Hawley asked Live Nation's Berchtold why the executive thinks restricting the ability to transfer tickets would help the customer, he pointed to bots.

"Tickets are often underpriced by the artists because they want to deliver value to the fans. That creates a $5 billion opportunity a year in the United States for the industrial scalping of tickets using bots ... and resell them on the secondary (market,)" he said, arguing that this illegal activity is aided by the ease of ticket transfer option.

The Senate Judiciary Committee's hearing on the live entertainment ticketing industry is ongoing, and so far, senators and witnesses alike have name-dropped some big acts in their questions and testimony.

Here's who has been mentioned so far:

Singer-songwriter Clyde Lawrence offered a wish list to lawmakers on the changes he would like to see in the ticket industry:

Fred Rosen, the longtime former CEO of Ticketmaster, defended the company he helped build and described it as the “fall guy” in an interview with CNN on Tuesday, amid a hearing into the company's Taylor Swift ticketing fiasco.

“Ticketmaster has to do what the acts and the promoters want, and Ticketmaster becomes the fall guy for all of this,” Rosen said in an interview on "At This Hour" with Kate Bolduan.

He went on to defend Ticketmaster’s size, saying that being bigger “creates issues when people think you’re taking advantage.” He added: “The fact of the matter is, we created it to take the heat for everybody, and so you become what I call, you know, the ‘scheduled whipping boy.’”

“Anybody who's not sitting in Ticketmasters’ position is, of course, they're going to complain,” he said. “But my view is make a better system and compete, and if you're better, you'll beat the company, and if you're worse, you'll complain.”

Rosen said if he were still at the company, he would recommend there be some kind of “circuit breaker” in place to shut down sales when demand is as unprecedented as it was for the Swift tickets.

“The system has to shut off so that you can have an orderly distribution of tickets," he said, "and I think part of the problem is that because of the emotion that's connected in a concert sale, no one wants to deal with the logic of this.” 

He also said he doesn’t think all of the tickets should have been put on sale at the same time, “but it's my understanding that's what the act wanted.”

Republican Sen. John Kennedy blasted Live Nation for the Taylor Swift ticketing meltdown and called on executives to be held accountable.

“I am not against big, per say. I am against dumb,” Kennedy of Louisiana said to a top Live Nation exec. “The way your company handled ticket sales for Ms. Swift was a debacle.”

Kennedy added that whoever at Live Nation was in charge of the incident “ought to be fired.”

Democratic Sen. Richard Blumenthal said Live Nation has managed to do the unthinkable: bridge partisan divides in Washington.

“I want to congratulate and thank you for an absolutely stunning achievement: You have brought together Republicans and Democrats in an absolutely unified cause,” Blumenthal said to Joe Berchtold, the president and CFO of Ticketmaster parent Live Nation.

“May I suggest, respectfully, that unfortunately your approach today in this hearing is going to solidify that cooperation,” Blumenthal said. 

The Connecticut Democrat argued Live Nation is essentially arguing “it’s not us, it’s everyone but us” despite the fact that the company is “the 800-pound gorilla here.”

He added: “Look in the mirror and say, ‘I’m the problem. It’s me.’”

Kathleen Bradish, vice president for legal advocacy at the American Antitrust Institute, told lawmakers at a Senate hearing that the lack of competition in the live entertainment industry results in consumers having the pay higher prices.

Live Nation-Ticketmaster is an example of "a very traditional monopoly" and also "a 21st century digital player" like other online platforms, she said Tuesday.

"Its dominance in markets up and down the live entertainment supply chain creates the incentive and the ability to limit competition and protect its market position," she explained.

On the concert side, it excludes "smaller or independent concert promoters and venues. In digital ticketing, it includes excluding ticket resellers and brokers who provide important competition via the secondary ticketing market," she said.

A top Live Nation executive sparred with lawmakers and other witnesses Tuesday over the extent of the company's ability to control the service fees that consumers pay on top of base ticket prices.

Live Nation CFO Joe Berchtold defended the company from suggestions that its dominance has allowed for soaring fees, citing data from the market intelligence firm Pollstar showing that Live Nation controls about 200 out of approximately 4,000 venues in the United States, or about 5%.

"Are they the biggest [venues]?" asked Sen. Dick Durbin.

"No sir, they are generally not the biggest," Berchtold responded. "The biggest tend to be the sports venues, the arenas, the stadiums controlled by the sports teams or the owners of the sports teams."

The venues controlled by Live Nation set fees that are "consistent with the other venues in the marketplace," Berchtold added, reiterating that service fees are set by individual venue operators, not Ticketmaster.

Singer-songwriter Clyde Lawrence testified that despite Berchtold's claim, venues typically profess not to know what the service fees on tickets will be.

"We definitely ask venues before [a show] what the fees are going to be," Lawrence testified. "We ask that question to the venues and they say, 'Not only do we not choose what it is, we don't even know what it is. We can't even tell you what it's going to be.' So I don't know where the answer lies, but no one's taking responsibility."

"Typically with Ticketmaster, we'll see a 40%-ish or closer to 50% fee added on top" of the base ticket price, Lawrence added.