By Robert Reich
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.