This is odd. Apparently, before the announced merger of Ticketmaster and LiveNation, there was an attempt by the current Ticketmaster CEO, who was with a different company at the time, to drive LiveNation out of business. The idea was to get the major scalpers to partner together and pit themselves against LiveNation. The proceeds from the ticket sales would be split among the parties, including the artists.

This is the economics example of trying to form a cartel. The idea behind a cartel is to control prices and divvy up the profits among the players. If you  don’t want to participate in the cartel, then you don’t get a piece of the profits. Unfortunately, cartels are illegal in the U.S. It violates the Sherman Act. Secondly, cartels circumvent the free market mechanisms to regulate themselves. And these efforts always create less value for the consumer.

The one thing I like about this situation is it’s a classic prisoner’s dilemma. Altough illegal, all the parties would have been better off if they had worked together. But, just like the classic prisoner, no one trusts the other one and everyone ends up in a worse position.

Links:

WSJ: Big Ticket Seller Tried Deal With Scalpers

Hypebot: Project Showtime: Secret Deal Between Irving Azoff, Ticketmaster & Ticket Scalpers Revealed

Ticketnews.com: Azoff tried and failed to make a major move into the secondary ticket market