Not sure there’s a more cut and dry everyday example of a consumer-abusing monopoly than Live Nation/Ticketmaster. I remember when I was a kid Ticketmaster’s fees were usually flat and maybe like $2.50 per. I don’t go to too many events these days, but when I do it appears seem like 30% is the typical fee, and that’s on tickets that run over $100 apiece to begin with. DoJ keeps talking about reviving antitrust. Can’t think of a better place to start.
The naïve Supply & Demand analysis would say that prices are too low. Why are tickets described as expensive? Surely not simply because customers would prefer to pay lower prices, that's true of everything. Are there many empty seats at most shows? That would suggest that prices might be too high. I think a lot of the anger is due to the service fees being so large compared to the face value, so it feels like a bait and switch, as well as the fair market price (i.e. what customers demonstrate willingness to pay in the resale market) being higher than the advertised price. Not arguing that Live Nation/Ticketmaster have optimized the customer experience, but the explanation I've heard is that there is a natural incentive to get as much money per ticket as possible (as with any product), artists don't want to have their reputation stained with "outrageous" prices, so Ticketmaster adds the fees, supplies the secondary market, and takes the hate. The venue, the promoter, the ticketing agency and often the artist camp (artist, management and agent) take tickets from the pool of available seats and feed them directly to the re-seller (which from this point on will be referred to by their true name: SCALPER). I am not saying every one of the above entities all do this, nor am I saying they do it for all shows but this is a very common practice that happens more often than not. There is money to be made and they feel they should participate in it. There are a number of scams they employ to pull this off which is beyond the scope of this note.Tickets on the primary market are often limited and sell out in minutes.
Economists have for some time been trying to figure out why concerts are priced below market clearing. Surely the artist does better by having fans allocate scarce supply by willingness to pay rather than by willingness to queue. The scalper profits by the arrangement rather than the artist, venue or promoter: why not reallocate the surplus back up the chain by charging market-clearing prices?
Trent Reznor, the genius behind Nine Inch Nails, provides some insight. In short, scalping could be stopped immediately, without price changes, if concert promoters or venues wanted to stop it: simply print names on tickets and check against photo ID at the door. Why don't they do it? Let's turn it over to Trent.
The ticketing marketplace for rock concerts shows a real lack of sophistication, meaning this: the true market value of some tickets for some concerts is much higher than what the act wants to be perceived as charging. For example, there are some people who would be willing to pay $1,000 and up to be in the best seats for various shows, but MOST acts in the rock / pop world don't want to come off as greedy pricks asking that much, even though the market says its value is that high. The acts know this, the venue knows this, the promoters know this, the ticketing company knows this and the scalpers really know this. So...
Twice in the past month I have declined to purchase tickets to a show, not because I can’t afford it but because I refuse to pay the fee. I am more than happy to give the artist their money, but it is absolutely insane to pay such exorbitant rates for facilitating a transaction. As a matter of principal I couldn’t purchase. The most recent was a Jim Gaffigan standup show. The total fee (not ticket price) was $180. Wtf??! I find it hard to believe that a free market environment got us here. With the exception of realtors, there is no space more primed for disruption. As for antitrust laws, imo the space that needs it most is our two party political system. More competition, please!
I'd say you have better grounds for complaining about fees when you refuse to pay them compared to when you do. As long as people are willing to pay there's little incentive for sellers to change. More competition could help, but it would just be more firms trying to collect the market price. The market distortion seems to start with artists being unwilling to ask as much for tickets as fans are willing to pay. John Oliver did a bit that repeated the notion that Ticketmaster provides a moral shield for artists by collecting fees that bring the price up to market level then rebating money back to venues, promoters and "sometimes even the artists themselves," showing 2009 Congressional testimony from CEO Irving Azoff: "When people hear what Ticketmaster’s service charge is, you know, Ticketmaster was set up as a system where they took the heat for everybody. … In that service charge are the credit card fees, the rebates to the buildings, rebates sometimes to artists, sometimes rebates to promoters." Artists also take advantage of the opacity. “Here’s the thing,” Oliver continued, “Selling 20,000 tickets in 30 seconds would be crazy if that’s what Bieber did, but he didn’t, because a report from the New York [Attorney General] later revealed that ‘fewer than 2,000 tickets to each show’ were actually put on sale that day, and that’s by no means a one-off. For many top shows, less than 25% of tickets are initially released to the general public.” Bieber’s MSG run was no different. Reporters eventually looked into re-sale inventory for the “sold-out” shows and found that many of the tickets being sold on the secondary market for inflated rates were tickets that had been put on hold for the artist—meaning they were essentially being scalped by Bieber directly. You may remember when it was possible to resell airline tickets; they were listed in newspaper classified ads. Now most airlines require the passenger's name at time of purchase, with no recourse if the traveler gets sick or has a change of plans. Many people would see this as a cynical ploy to make more money by overbooking flights based on expected no-shows, but it's also one of the techniques used by Pearl Jam and Nine Inch Nails to protect the customer from overpriced resale. It's also interesting that tickets for sporting events tend to have very high prices for the most desirable seats. I think musical artists depend on forming an emotional connection with their fans, and they're willing to give up a lot to preserve that loyalty. In politics, there is plenty of competition, with dozens of political parties. The difference in a market is that, even if most people like Coke or Pepsi, you can go to the store and "vote" for RC Cola and you actually get to enjoy your preference, without forcing anyone else to make the same choice.I assure you nobody in the NIN camp supplies or supports the practice of supplying tickets to these re-sellers because it's not something we morally feel is the right thing to do. We are leaving money on the table here but it's not always about money. Being completely honest, it IS something I've had to consider. If people are willing to pay a lot of money to sit up front AND ARE GOING TO ANYWAY thanks to the rigged system, why let that money go into the hands of the scalpers? I'm the one busting my ass up there every night. The conclusion really came down to it not feeling like the right thing to do - simple as that.
Oliver used a 2012 Justin Bieber run at Madison Square Garden as a case study on the shrouded inner workings of on-sales for major concerts. When tickets for the two MSG concerts went on sale to the general public, all available inventory was snatched up in a matter of seconds. News of the quick sellout was subsequently picked up by outlets like CNN which cited the impressive feat of moving what reportedly amounted to nearly 20,000 tickets per night.