LNE_Logo_300_(10-2011)The way that fans interact with music has changed drastically in the decade, moving them away from getting them to form long lines at venues to buy tickets to concerts to doing so now online, at home, alone, instantly, and with a click of a mouse.  This also has meant that live performances sell out in mere minutes, whether they are music festivals like Coachella or  Adele’s upcoming tour.  The frenzy of camping out for shows has become antiquated. But has this technology-based change also given undue competitive advantage to big promoters with major name recognition? That has been a gripe of smaller players in the market, and it has become a more pressing issue to many as live concerts have become an ever more lucrative, central part of a music industry riven by streaming, recorded, published and performed ways of product distribution.

The complaint chorus rose to a crescendo about Live Nation, one of the leading companies promoting, orchestrating, organizing, and booking artists for concerts.  A federal district judge had dismissed on summary judgment an anti-trust challenge to Live Nation; appellate judges recently affirmed that ruling. The courts have found that the company’s size was neither inherently good nor bad but that plaintiff It’s My Part Inc. (IMP) had provided insufficient proof that its anti-trust claim could succeed.

The appellate opinion noted that IMP set up the case akin to a “David-and-Goliath battle between an industry behemoth and its regional challenger.” That wasn’t an apt analogy, said U.S. District Judge Harvie Wilkinson III, who wrote on behalf of the U.S. Court of Appeals for the Fourth Circuit. Weighing in on a key issue — whether the corporate giant illegally coerced bands to perform at its select venues — he wrote that “[j]ust as big is not necessarily bad, small it not necessarily weak.” He and his colleagues sided with the music industry Goliath not David.

Background

IMP, which owns  Merriweather Post Pavilion, contended that Live Nation monopolized and restrained competition in the area around the nation’s capital. IMP’s anti-trust suit argued that Live Nation coerced and enticed artists to perform only at its locally owned and managed  amphitheaters and venues; the suit asserted that the affected artists included the Counting Crows, Ashley Simpson, Goo Goo Dolls, and Santana.

But in sworn statements to a federal district court, artists denied Live Nation’s improper sway, and said they simply preferred certain venues. Trent Razor, of Nine Inch Nails, said, for example, that he “personally enjoy[s] playing amphitheaters as opposed to arenas.” This preference “plays a small factor” in where the band chooses to perform. Music agents also testified that their artist-clients were not coerced to perform at specific venues. (It’s worth noting that, in Southern California, the issue of a promoter’s sway over artists and where and when they perform has cropped up about music-festival giant and promoter Goldenvoice.)

IMP unsuccessfully tried to argue that industry professionals were covering up for industry heavyweights like Live Nation and other large promoters. The court did not buy this argument, saying, ” if pure speculation by a competitor were enough to prove the opposite of what consumers describe is happening in the market, then antitrust defendants should surrender every time a rival files a complaint.” Further, the court held that the evidence suggested the opposite of what IMP was seeking to prove against Live Nation.

Market forces, technology 

Wilkinson said the appellate ruling will be better for the music industry because  it will help the market prosper, especially in an interconnected and tech-driven world. Market forces and high-tech alone would defeat a ruling favoring IMP: “By cutting ties among related products and related producers, IMP’s view of economic activity, if allowed to take hold, would box firms both into their own product markets and into their own geographic locales. That tendency toward isolationism has more in common with the market squares and horse-drawn buggies of the 19th Century than with the interconnected and technology-driven contemporary world.”

The court also rejected IMP’s assertion that Live Nation’s business practices illegally bound artists to the promoter, and noted that IMP failed to identify the exact market Live Nation monopolized. The judges also ruled that  Live Nation’s practice of tying concerts at multiple venues did not violate the Sherman Antitrust Law, as IMP argued. The court said that “[e]ven though national firms undoubtedly have an edge over smaller competitors, and David may not triumph over Goliath everywhere, he can certainly hone his home court advantage.”

This music industry outcome differs  substantially to a similar scenario involving movie theater chains.  Live Nation praised the appellate judges, saying in a statement: “We applaud the Fourth Circuit’s ruling and appreciate the panel’s judicious verdict which eradicates claims of anti-competitive conduct by asserting that the purpose of antitrust law is to penalize anti-competitive practices, not competitive success. We remain committed to our central business and cultural focus, which, as the court validates, is to provide ‘synergies among promotion, venues and ticket sales, all of which serve to bring live music to the public.’ “