FTX, Ticketmaster, and the Good People Hurt by Greed
ROBERT REICH for robertreich.substack.com
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| Taylor Swift performs onstage during the Z100's iHeartRadio Jingle Ball 2019 at Madison Square Garden in New York on December 13, 2019. (Photo: Angela Weiss/AFP via Getty Images) |
Friends,
I’m
not going to talk about Twitter today. I want to focus on two other outrages.
Over
the past week, both Ticketmaster and FTX crashed.
This
is what unregulated monopolies do, eventually – taking lots of angry consumers
with them.
Which
is why we need to either regulate or to bust up corporations that corner
markets. But to do so, we need to stop big money.
Taylor
Swift is the most popular artist in America; she hadn’t done live shows for
four years. Ticketmaster was her ticketing agent. But because Ticketmaster had
under-invested in its platform, its site and app couldn’t handle the demand
(not before scalpers managed to get plenty of tickets and put them on sale for
multiples of the original list price).
As Matt Stoller tells us, Ticketmaster’s monopoly started in 1991 when it acquired its main rival in computerized ticketing, Ticketron – putting 90 percent of the ticketing business in the hands of one firm, and giving it the power to tack on an ever-rising assortment of fees (now as much a part of concert experience as sticky floors and shoving).
A few years later, Ticketmaster merged with Live Nation, the world’s largest concert promotion company, so the combined entity could keep all the fees - and more - to itself.
The combined firm was chaired by Irving Azoff (who in a New
York Times profile - confessed himself a serial liar and talked about how he
put pictures of himself giving the middle
finger on his own stationary).
Monopolies
exert power in several ways – and not just in high prices. They also exert
power through failing to invest in their products and services. Either way,
they make extra money by shafting consumers.
They
also exert political power that shafts everyone. Why in hell did the Obama
administration ultimately approve the Ticketmaster Live Nation merger? Perhaps
because both firms were major political players?
Immediately
after the Justice Department consented to the merger, the combo began violating the consent agreement—-
charging outrageous fees, allowing the sale of tickets to bots, and suppressing
competitors who had developed ways of blocking scalpers, like Songkick. It acted so badly even the Trump
Administration had to rework the merger agreement. But not by much.
And
since then, Swifties and other consumers of live entertainment have been paying
through the nose.
Now,
the Justice Department’s antitrust division has launched an investigation. Talk
about closing barn doors after the cattle have been rustled away.
Meanwhile,
FTX and more than 100 affiliated crypto companies are filing for bankruptcy.
Reportedly, a million or more creditors could line
up. The situation is so dire that FTX has already said it doesn’t know who its
top creditors are or where many assets can be found.
Ex-billionaire
Sam Bankman-Fried turns out to be another Bernie Madoff -- a big-time Ponzi
schemer. His FTX exchange also depended on monopoly power. Giant Ponzi schemes don’t
thrive in competitive markets; they need to be the only big game in town.
Here
again, it’s when monopoly power (which FTX exercised) is combined with
political clout that the public gets taken for a ride.
Bankman-Fried
contributed around $37 million to Democratic candidates in the last election
cycle. His co-chief executive, Ryan Salame, gave more than $20 million to Republicans. In
all, FTX executives contributed nearly $72 million to both parties, and the
company was strategically bipartisan in its lobbying and government affairs
hiring.
Where
were the federal regulators? Nowhere to be seen.
It's
the same vicious cycle: Corporations achieve monopolies that shaft consumers
while pulling in big money, a portion of which is used to bribe politicians to
look the other way.
This
is not solely a Republican problem. The Ticketmaster Live Nation merger was
approved by the Obama administration. FTX and Bankman-Fried were major
contributors to Democrats. Republicans are more dependent than Democrats on big
money, but far too often both parties are drinking from the same trough.
©
2021 robertreich.substack.com
Robert Reich, is
the Chancellor’s Professor of Public Policy at the University of California,
Berkeley, and a senior fellow at the Blum Center for Developing Economies. He
served as secretary of labor in the Clinton administration, for which Time
magazine named him one of the 10 most effective cabinet secretaries of the
twentieth century. His book include: "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a
founding editor of The American Prospect magazine, former chairman of Common
Cause, a member of the American Academy of Arts and Sciences, and co-creator of
the award-winning documentary, "Inequality For All." Reich's newest
book is "The Common Good" (2019). He's co-creator
of the Netflix original documentary "Saving Capitalism," which is
streaming now.