Saturday, June 20, 2009

Another thought about the IMP lawsuit

One thing that I did not consider in my last post about the Merriweather monopoly lawsuit, is that perhaps it is not Live Nation that is acting like a monopoly, but rather the musical artists themselves.

According to the reports I have read, the complaint that IMP has about Live Nation is that Live Nation is able to lock up the most popular acts with exclusive contracts. It occurred to me that this is likely to be the exercise of monopoly power by the musical artists themselves, not Live Nation.

Think about it this way: the Jonas Brothers, for example, are a wildly popular act. Their popularity gives them extreme market power. It would make a whole lot of sense for the Jo Bros to try to get large concert venue owners to pay them a large payment up front in return for an agreement to play those venues at a reduced price so that the Jo Bros can capture all the consumer surplus from the deal. This is similar to the business model of various buyers clubs that charge annual membership fees but offer goods at a reduced price.

Perhaps IMP could try that, too. IMP could offer a program in which concert goers are charged an annual fee, but allow those who pay the fee to purchase concert tickets all season long at a reduced price. After all, Merriweather has a monopoly in LOCAL live entertainment venues that are capable of attracting larger performers.