Somehow, the ticket broker service has lumbered on over time, immune to the radical upheaval of business other business models in the internet age, passing none of the technology savings onto the consumer, and becoming a near monopoly that charges ridiculous fees of up to $500 per ticket. Who doesn’t want to pay $5,000 a seat to see the Boss?
Ticketmaster has always been something of a scam, but before the internet there was at least some argument that they provided a valuable service for fans to secure tickets without having to visit a venue’s box office, and that this service required the maintenance of proprietary infrastructure at thousands of locations nationwide. The venues themselves likely had no interest in providing this service directly, leaving it up to a broker, and so once upon a time, people would wait outside their nearest Ticketmaster location, often embedded in a video or electronics store, sometimes camping overnight to get the best possible seats. It was reasonable to charge a fee for this convenience and access, especially when ticket prices themselves were much more affordable overall. The rise of the internet and the resulting decrease in price for almost all electronic services, however, should’ve changed all that, calling into question the entire business model. After all, Ticketmaster no longer needed to operate locations or even deliver actual tickets. Instead, they became essentially another ecommerce website, nothing more and nothing less. This is something far easier for each individual venue to set up should they so choose, or for some enterprising online directory entrepreneur to create. Consider how radically the travel industry has changed over the past twenty years. Dozens of sites have sprung up enabling users to search thousands of hotels, airline flights, and car rentals, ultimately booking an entire vacation without paying a single penny for the service. Trivago, Travelocity, Expedia, and others do not operate any hotels, airlines, or car rental services themselves. Instead, they facilitate access and convenience at no cost to you.
Somehow, Ticketmaster has managed to lumber on, immune to the trends upending almost every other industry, while passing none of the savings onto customers and steadily growing their monopoly power. They remain purely a gateway to the actual provider. They do not operate any venues or sell any tickets of their own. They do not book artists or events, provide any representation or consulting service. They don’t do anything except list tickets available from somewhere else and provide the ecommerce services for you to purchase them. It’s no different than booking a hotel on a travel site, but rather than do it for free, they continue to charge upwards of $20 per ticket, sometimes almost as much as the face value of the ticket for less expensive shows, simply to enable a credit card transaction and have the customer print it out themselves. Of course, credit card transactions aren’t free, averaging about 1.5% for a company the size of Ticketmaster. There is overhead required to support an ecommerce platform at scale, and a reasonable fee for the service would be understandable. Online brokers generally charge $7 to $10 per stock trade, for what amounts to a similar business model. The broker themselves doesn’t own any stock. They are completing the transaction on your behalf and transferring the appropriate money, the same as Ticketmaster, and yet for reasons completely unexplained Ticketmaster doesn’t charge a flat fee. They charge an exorbitant average of 27% of the face value of the ticket, almost what a lawyer would charge to represent you in a personal injury case, rising above $50 for expensive seats to in demand shows. This fee is applied to the cost of almost every event ticket sold in the entire United States. Ticketmaster even gets a cut of most direct box office sales.
Nice work if you can get it as they say, but Ticketmaster wasn’t content with this near monopoly and baked in slice of the pie, even after they acquired Live Nation to control even more of the market. No, they have been frustrated in recent years by their inability to take advantage of the resale action, where ticket holders sell on sites like Stubhub at a premium for in-demand shows or great seats, sometimes at very lucrative prices. They saw an opportunity to incorporate similar thinking and capture some of that revenue into their own pricing, recently introducing what they claim is a “dynamic” model that takes into account demand from fans. Previously, ticket prices were set by the venue based on the act and the desirability of the seat. For obvious reasons, the front row cost more than the back, but across each section the price was the same. Dynamic pricing upends that model by designating certain seats as “Official Platinum,” for reasons that are entirely unclear given they are no different than the seats on either side. These “Official Platinum” seats are then priced upward based on what Ticketmaster believes customers are willing to pay, which is apparently quite a lot if the recent rush for Bruce Springsteen tickets is any indication, where some seats were going for upwards of $4,500 per ticket plus fees. Ticketmaster itself describes this as picking up on cues from the travel industry, claiming “Ticketmaster’s Official Platinum seat program enables market-based pricing (adjusting prices according to supply and demand) for live event tickets, similar to how airline tickets and hotel rooms are sold.”
Perhaps needless to say, Mr. Springsteen’s fans were not as enthused. The internet and the entertainment media was abuzz last week after this new dynamic pricing model wreaked havoc on ticket sales for the Boss’ upcoming tour with the E Street band, their first since 2016. Fans attempting to purchase tickets circulated screenshots along with color commentary on social media showcasing the ridiculous prices for these “Official Platinum” tickets. “I’m sure you won’t see this @springsteen but you or your management need to have a word with the abhorrent criminals running @Ticketmaster who are charging exorbitant amounts to see you in concert,” one person tweeted. “Please listen to your fans, nobody can afford these ridiculous ticket prices.” The writer, John Semley, parodies Springsteen himself, telling him to “write a song about a working man refinancing his car and home to purchase bruce springsteen tickets.” He supplied some sample lyrics, “i got a sixty-nine chevy /with a three-ninety-six fuelie heads /and a hurst on the floor /i had to sell it to go see the Boss at the Wells-Fargo Center.” John Eddie, a singer-songwriter from New Jersey with the same musical roots as Mr. Springsteen, mocked, “Elon Musk was going to buy Twitter but then he decided to buy a pair of Bruce tickets instead.” As Variety described it, these fans had been provided “an introduction…to Ticketmaster’s ‘dynamic pricing’ program, in which ‘platinum tickets’ — which may be placed anywhere in the arena, from the front section to the back rows — fluctuate in price, in what is said to be ongoing reaction to demand. The system lets ticket prices quickly rise to a level it’s believed resellers would get for them, keeping that extra money in-house for the artist and promoter. But as Wednesday’s ticket sales went on and went up, even some concert veterans who know and accept the idea of variable pricing wondered: Would even scalpers ask close to $5,000 for a good but not directly front-of-house seat?”
Other fans were rather confused, noting that “Section 300 can be $199 one minute and $699 the next,” with no idea whether the prices would go up or down. This was doubly shocking when you consider that the “sticker” price for seats, as in the price agreed to by Ticketmaster, the venue, and the artists’ management, was as low as $60. “The original base price for the tickets was reported to be a not-so-out-of-line $299-399 for floor seats and a reasonable $60 for the most distant sections; indeed, some satisfied fans who purchased upper-level seats early in the day reported being able to get out the door for less than $100, even including fees,” Variety reported. Ticketmaster, of course, increases their own fee as the ticket prices go up with some hitting a whopping $500 per ticket, which strikes me as a massive conflict of interest of the kind that can only occur in a monopoly market. Ticketmaster makes more money on every “Official Platinum” ticket they sell. This means they have a vested interest in increasing the price for every ticket as much as possible over retail. Unlike Trivago or Travelocity, they are not helping consumers find the best price. They’re “helping” consumers pay the highest possible price, and they control every aspect of the algorithm that sets these prices. They alone decide which seats are “Official Platinum” and they alone calculate the “demand” that figures into the final price. The algorithm is not public. No metrics about how they incorporate demand have been released of any kind. Even if we assume dynamic pricing is appropriate in the first place, we are just supposed to trust them that their model is a fair representation of demand and value, but why on Earth would anyone do that?
Unlike Stubhub, the actions of the model are hidden from view. Consumers cannot browse available tickets for a show to determine what is the going rate for great seats. Ticket prices on Stubhub are set by the market. I can post tickets there for $5,000 a piece, but if the same seats are available from another seller for $500, I am not going to make the sale and will have to lower my price. This transparency helps to accurately capture market demand and what people are willing to pay. Ticketmaster on the other hand provides no such visibility. You cannot easily browse other seats available, and they can artificially inflate demand by issuing a small number of “Official Platinum” seats at the start. Once someone purchases them at an increased rate, they can release more on their own schedule, and continually drive up the price throughout the sale, all with no one being aware what everyone else is paying and with no means to determine what is in fact a fair price, even if assuming they can afford to pay more. Putting this another way, everyone understands the nature of supply and demand, but that is not this. It’s the equivalent of a car dealer telling you they only have one Nissan Sentra on the lot and demanding fair market value for it, when they actually have thousands hidden in the back because “Official Platinum” seats are no different from any others except Ticketmaster has said so. The fox guarding the henhouse also comes to mind.
Incredibly, Ticketmaster continues to defend the practice, claiming their only goal is to “give the most passionate fans fair and safe access to the most in-demand tickets while allowing the artists and everyone involved in staging live events to price tickets closer to their fair value.” The company released the following information about the sale of Springsteen tickets. 88.2% of tickets were sold at face value. The prices for arena shows ranged from $59.50 to $399 before service fees, and the average ticket price was $202. 11.8% of tickets were designated Platinum. 1.3% of total tickets across the shows sold for more than $1K. The average price of all tickets sold, both at face value and through Platinum pricing, is $262. 18% of all tickets sold were under $99; 27% between $100 and $150; and 11% between $150 and $200. 56% over $200. For some reason, Ticketmaster feels this data vindicates the dynamic pricing model, essentially saying it’s a good thing that they only overcharged 11.8% of their customers, pushing more than 1 out 10 seats well above face value. Of these, we only really, really abused 1.3%, and they can probably afford it. Trust us! We would never do anything unfair to overcharge people on purpose. They also continue to bizarrely insist that overcharging by orders of magnitude directly on the Ticketmaster website somehow prevents scalpers from doing the same, as if they were doing all of us a massive favor. It is true that the artist might benefit slightly, but that’s not the fans problem. They already had the chance to set the price and ensure they are selling tickets profitably. There’s no reason to believe that someone as wealthy as Mr. Springsteen or another act popular enough to benefit from this pricing model needs to squeeze consumers just a little more. What is even an additional $4,000 a ticket going to do compared to Mr. Springsteen’s net worth of around a billion dollars? It is also true that Ticketmaster should have a vested interest in ensuring real fans get tickets instead of bots and resale houses. This is something they should’ve aggressively pursued for at least a decade now. To their credit, they have introduced a verified fan registration system which provides some measure of security, but the suggestion that the only way to make this better is to charge more themselves is ludicrous. First, there are other models that don’t increase the price: The popular touring band Phish has sold their tickets through a lottery for years now. Second, even with both the dynamic pricing and the verified fan model, tickets were on Stubhub before they were even sold through Ticketmaster, as they always are and likely always will be.
Sadly, Mr. Springsteen himself has yet to comment, prompting some to claim that he no longer cares about his fans. Bobby Olivier, writing for NJ.com, believes, “Springsteen, the artist who has defined his career by singing about working-class and disenfranchised Americans, has forgotten his fans.” He continued, “It is exceedingly clear that Bruce Springsteen does not care how much a given fan spends to see him play. If he did care, the rock icon who recently sold the rights to his publishing catalog for a cool $500 million — and whose concert tours typically rake in around $200 million at the box office — would refuse to work with Ticketmaster, finance the shows himself, buy permits to use unoccupied fields across America and set a ticket price he alone could control. He’d call it Brucestock or something and pocket considerably less from the fans who’ve supported him for half a century.” Unfortunately, “he won’t do this, because no one does. As with all A-list acts, fans expect Springsteen to play their local arena or stadium, those venues usually have binding contracts with promotional juggernaut Live Nation to operate the performances, and Live Nation merged with Ticketmaster in 2009, creating a smothering entertainment conglomerate that essentially forces artists — who in many cases must also adhere to the desires of their record labels, which in turn have deep-seated relationships with Live Nation and Ticketmaster — to use Ticketmaster to fill their shows, turning a blind eye as fans are price-gouged over and over.”
Some lawmakers are threatening legislation in response. Representative Bill Pascrell, Jr., a Democrat from New Jersey, was livid. “When Yogi Berra said it’s ‘déjà vu all over again,’ he could have easily been talking about Ticketmaster and another unwelcome surprise for Springsteen fans,” he said in a statement last Thursday. “After the long hiatus, we are all excited that Bruce is going back on tour. But Americans have the right to enjoy some live entertainment without getting ripped off. Ticketmaster sees popular events as an opportunity to soak regular Americans.” He believes Ticketmaster and Live Nation should be broken up. He has also introduced the BOSS Act to increase transparency and regulation on the industry. “Even though it’s 2019, the $9 Billion live events ticket market resembles the Wild West: bereft of regulation and order, with bad actors around too many corners making a living by ripping people off,” explained Representative Pascrell. “The BOSS Act would finally impose hard regulation and transparency to the ticket market so that fans can find affordable tickets and enjoy some live entertainment in these uneasy times without fear of being taken to the cleaners. American have been gouged and gouged and then gouged some more. Ticket buyers don’t know how many tickets are going on sale or how many are being held back, can’t see what fees will be tacked on, and sometimes don’t even know if the tickets they are purchasing exist yet. For too long on these issues, our government has failed to hear the ghost of Tom Joad, the common man and woman. It’s high time government stands up for him and for them. My legislation is for the fans, not Ticketmaster.”
I’m not sure aggressive regulation is the answer, but clearly Ticketmaster is more than happy to leverage their monopoly position to gouge customers, coming up with even more creative ways to fleece the public even as they claim they are protecting us and the artists. Bruce Springsteen is powerful enough to make a statement and at least slow the tide. The question is: Will he at least say something?