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The Consolidation of Markets In Tickets Highlights a Consolidation Problem Across the Economy!

Gary Adler and the secondary market are in the spotlight:

Big Ideas:

  • Consolidation of power is having a huge impact on the ticket ecosystem.
  • Want to know what’s next in tickets, keep an eye on antitrust enforcement. 
  • Tickets are about people. So create and keep customers as your go-to routine. 

This week the NATB’s Executive Director, Gary Adler, had a chance to sit down and do the “True AF” podcast with Eric Fuller. 

Gary’s conversation with Eric comes down to competition and betting on the future.

Let me explain. 

Last week, I shared a number that I heard three times during the week about how much of the secondary market Vivid Seats controls. That number was pegged at “80%” by a couple of different brokers in different parts of the country. 

What ensued was a discussion on some of the Facebook boards about where the number came from, what other folks number was, and a whole lot of things that were not really the point. 

The point was that the 80% number didn’t matter, it was the fact that more power was consolidating into fewer hands. The same situation that is happening in the primary market. All that really matters is that the secondary market and the primary market are oligarchies, meaning that most of the power is collected in just a few hands. 

I have people constantly ask me about systemic issues and things that are really driving behaviors and changes in the market. I don’t usually talk about them because no one signed up for case studies on the history of antitrust law in the United States, the challenges that tax havens create for folks selling tickets, or any of the stuff that lie at the root of what is going on here. 

But the short answer is that as more power moves into fewer hands, historically it skews markets. 

I’ll offer up a homework assignment in the form of some reading materials on the history of monopoly power, oligarchy, and monopsony to help you go on a deep dive…in case you are curious:

  • A history of the term monopoly in America: the term was used a lot through the 1950-1960s, but really has only been used as the name of a board game for the last several decades. One thing I learned is that the better you are at using language, the better you are at solving problems. It allows you a richness in the context of your arguments. 
  • Goliath: My neighbor, Andy, stole my copy last summer, but this is a book that has a rich cast of only in America characters that talks about the 100 year history of monopoly power fighting democracy. While this book is about America, the challenges of the concentration of power are inherent in any society. 
  • The Curse of Bigness: This is by Professor Tim Wu. This matters because President Biden has hired him to work in the White House and advise him on antitrust matters. Combine Professor Wu with the appointment of Lina Khan as the Chair of the FTC and we could be entering a new era of antitrust policy. But this book talks about the need for stronger antitrust enforcement to fight companies that have become too big to fail and that are skewing our democracy and economy. 

The core here is that competition is good. It drives innovation, investment, and growth. 

This is as deep as I’m getting into antitrust and competition law. That’s my lady’s job. So if you ever hear about this stuff again, it will be because Kathryn has done something awesome. 

But the gist of the argument here is that as long as there is less competition in the market, things will become more difficult for people selling tickets because the power isn’t in the hands of the primary side or the secondary side, but the side of the platforms and technologies. 

And, the more consolidation, the less innovation, the more expensive things become, and the more customers suffer. 

As far as bets on the future goes, it seems that Gary is making a bet that without some sort of government intervention that consolidation of power will continue. 

That’s a safe bet to make, but one thing to keep an eye on is the appointment of Lina Khan as Chair of the FTC. She became well-known for writing a paper on the power that Amazon wields over the economy, the unintended and negative impacts on the country, and how antitrust enforcement could help introduce competition into the market. 

There are no guarantees that anything will happen. I’ve lived in DC long enough to know that the status quo cuts both ways and there are tons of people in DC that like things just the way they are because it works for them. But her appointment could mean that antitrust enforcement becomes a much more exciting topic over the next few years and that companies that have monopoly power in their industries could get a fresh set of eyes on their businesses. 

Again, no guarantees that anything will change, but we haven’t seen someone like Lina Khan or Tim Wu appointed to significant posts in a long time. 

As for me, bets on the future of the world of tickets?! 

My bet is that there is a sugar rush of demand as things open up and that quickly that flames out as the old sales practices, old tricks, and old habits that weren’t working particularly well before the pandemic begin to lose even more steam. 

Another bet I’ll make is that you are going to end up seeing a lot of deadwood on the secondary market. I think Eric quotes a number of around 40% of tickets being sold on the secondary market below face value and I think the number that Gary had used previously was more than 50%. Either way, that is a lot of tickets being sold under face value. 

But with the glut of events, you are going to see more deadwood. 

Full stop. 

People won’t be able to consume everything and they may not have enough money to consume everything. 

The final prediction I’ll make today is that eventually there will be a big reset and that will provide a lot of opportunities for folks to create value. 

Unfortunately, the pain will come before the pleasure. 

But times of instability are times of opportunity. And, if you are paying attention to me, the way to capture that opportunity is to do three things:

  • Focus on the value you can create for your customers, your business, and the community around you.
  • Be agile: test and move.
  • Understand that a successful business does three things: creates customers, keeps customers, and make a profit. But if you aren’t doing the first two, the third one is going to be hard to keep up for long. 

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