You probably guessed this but: promoters often have deals whereby they get a cut of the ticketing agency fees, say in exchange for exclusivity. So really the distinction presented to the consumer between fees and the face price of the ticket is all a bit bogus.
And that's before you look into the sort of practices around tickets being released by the agency to a secondary ticket vendor (perhaps one which they own...) and sold on at great markup with a cut going back to the agency and perhaps even back to the promoter.
I suspect the problem is that while the author is happy to pay $60 all-inclusive with no questions asked, a lot of live music fans are young-ish and on the kind of budget where it isn't an easy decision to spend $60 on a night's entertainment. You might persuade them to pay, but harder if you put them off with a big upfront ticket price than if you spring it on them in hidden extras. I'm sure ticketmaster have done their research and wouldn't be doing it this way if it didn't increase their revenue, and that promoters wouldn't be using them if these tactics didn't improve theirs.
Also part of the problem is that there's this social pressure in the music industry around fans and ticket pricing and around artists 'selling out'. In the open market, tickets for big shows are usually worth a lot more than the face price, but promoters (or at least, artists) are reluctant to be seen to capture all that value because of the negative PR involved.
A lot of people have wanted to see Ticketmaster taken down a peg for a long time. It's probably easier to do if you limit yourself to small-to-mid-size gigs, independent artists etc, and there are already some great non-abusive ticketing agencies in this space for example http://www.wegottickets.com ...
Not sure why you're getting downvoted (unfortunately people seem to use this as a proxy for "I disagree with you" or, worse, "you contradict my position"; here have an upvote) but you are 100% correct. All those fees Ticketmaster charges, the artist (and venue?) gets a cut off. Ticketmaster is the lightning rod here but everyone is complicit.
Ticketmaster's business model is to take the reputation hit and allow venues and performers to increase fees. This specific move is probably driven by greedy venues. https://stubcrew.com/the-ugly-truth-about-ticketmaster-fees/ talks about it more.
EDIT: and the downvotes here is probably evidence that they succeeded
But the other side of the coin, is people don't really care that much about who the ticket vendor is for a big show, they just want to go to a big show.
The artists want as much as possible. Ticketmasters practices allow as much profit for themselves as possible and for the artist. A lot of the 'fees' that people hate, ticketmaster take the blame, but it's just a stealth way of increasing the ticket price and making the band not look like they are ripping off there fans.
Tickets are only $60, but then there are $30 worth of fees. Oh and dynamic pricing which means the ticket actually costs you $180 + fees, but the band can get away with it, rather than just outright putting them at $200, ticketmaster are the ones that look like they are ripping off the fans, not the acts, when they are in it together.
Here in the UK, the problem is, all the major venues are owned by Live nation who own ticketmaster, band wants to play there? have to use ticketmaster. They also bought up a lot of the festivals here, so the issue is they control everything.
It's because the promoter pays the band based on the face price of the ticket, not on the total price with fees.
At an incredibly high level, there are two historical economic forces at play:
1) The Irving Deal, which states that the goal of the band is to get 90% of all earnings of any event, including concessions, popcorn, tickets, etc. Obviously a very tough proposition in the event promotion business when some of your events make you money, but most break even and some you lose quite a bit on.
2) The Fred Deal, which is what transformed TicketMaster from being a company that cost promoters money (you pay us $.50 for every ticket we sell for you) to one that made them money (we'll charge the customer an extra $10 and give you $8 of it, but you need to sign a multiyear contract and we sell ALL your tickets).
If you're keenly interested in this, you should read the very excellent and recently published book Ticket Masters goes through all of the history and mechanics in great detail. Immediately upon finishing you should come work for me at Ticketfly in San Francisco where we're solving these sorts of problems on a daily basis. ;)
One important thing to know is that the venues/artists often get a kickback of part of the Ticketmaster fees. In other words, the artists, venues, producers, and Ticketmaster are in cahoots to fleece fans for as much money as possible, and Ticketmaster is willing to play the 'bad guy' and take the blame for high prices, and they get to keep a bigger slice of the overall pie than they would in a highly competitive market for ticketing services because they provide that "service".
Take away this dynamic, and the face price of tickets is going to go up, and the total price is unlikely to change substantially.
Personally, I think this would still be a net plus for society. In order for market forces to work well, you need pricing transparency.
Because the artists are all in favour of it. Ticketmaster et al are in the business of reputation laundering. If the artists sold tickets directly at market clearing prices then fans would be livid at the level of greed on display.
By using Ticketmaster as an intermediary, artists are able to put artificial below-market prices on the tickets but then sell them at inflated prices, while deflecting fans' anger to the middle man. Ticketmaster, in turn, pays the artists a kickback and everybody wins (except the fans).
>I get your point but how is Ticketmaster not a parasitic price-gouger?
Ticketmaster isn't the true price-gouger. It's actually the artist + promotor + venue that collectively set the high prices. Ticketmaster is just the administrative computer system to implement the high prices that the artist/promoter/venue want to charge.
For example, top artists can negotiate to get 105% of ticket's face value from the concert promoter. Indeed, people have speculated that Taylor Swift had so much leverage in negotiating the terms of the Eras tour that she got 110% of the ticket's face price.[1]
If Taylor gets 110% of the ticket money, how does that leave anything left for the promoter and the venue?!? With those artists' financial demands, you now have a math problem: where to get the extra +5% or +10% and also pay the promoter+venue without taking a loss? By charging extra fees.
It's a very clever bit of financial sleight-of-hand. The artist/promoter/venue can all charge more money but hide the blame by embedding it in Ticketmaster's "convenience fees", "service fees", "order processing fees", etc, etc. In this way, Ticketmaster is perceived as the parasite.
Your question where Ticketmaster is already assumed to be the "bad guy" means Ticketmaster's deliberate manipulation of public perception is working exactly as designed.
I've read that the artists and promoters prefer that Ticketmaster takes the heat. The top artists get almost all of the ticket face value and the promoter cut comes out of a kickback on the convenience fee. Ticketmaster also does a better job now of reducing the gap between face value and resale value. Bruce Springsteen ran real dynamic pricing for his tickets and the fans are mad at him -- better to do what Taylor Swift did and blame Ticketmaster for the high prices.
Part of Ticketmaster's purpose is to allow the artist, promoter and venue to charge extra but in a way that shifts blame to Ticketmaster. They are wildly successful in that, as evidenced by the number of people that bring up this exact point.
If you look at the fees, often there's a "venue fee" and other ones. They are different per event, but often are similar per tour and per venue... which means it's being set by artists, promoters and venues. It's trivial to show all-in pricing (some events have it turned on, so it's what you actually see on the main page). They don't do so on purpose.
You can't disrupt Ticketmaster's service fees because it's the venues and the peformers that are also profiting from those service fees.
Apparently, Ticketmaster's business model is based on taking the negative public relations hit for charging higher prices on behalf of their customers.
If you create a startup called CheaperTickets.com with the noble intention of not charging those hated service fees, you won't get any customers. (Keep in mind it's the venues & the artists that are the real customers of Ticketmaster and not the ticket buyers). The venues want the lucrative cut of the service fees while Ticketmaster gladly takes the heat.
Thanks for the great insight guys! Are the promoters/venues adding these fees because their Ticketmaster contract forces them to do it? Or are they doing it because the industry allows them to do so. What's their opinion towards it?
A significant amount of Ticketmaster's fees go to the artist. It lets the artist make more money while fans get mad at Ticketmaster instead of the artist.
Ticketmaster pay a substantial share of their "service fee" to venues and promoters. By signing an exclusivity deal with TM, venues can guarantee themselves a greater share of the effective ticket price. Artists are powerless to negotiate because of TM's dominant position in the ticketing market. It's a grubby little money-go-round scheme that exploits artists and fans alike.
This is of course interesting and will lead to inevitable comments about disruption being needed in event ticketing.
Let me save you the trouble as this has been rehashed many times already: the problem here is Ticketmaster's exclusives on venues and the entertainment's willingness to let Ticketmaster be the "sacrificial anode" and focus of ire from both audiences and performers.
There was a deal done some years ago--I forget the name--whereby performers would get 90% of ticket sales.
The way around that is not to increase ticket prices but to add "fees". Online transaction fees, mail fees, processing fees, booking fees, you name it. The fees in some cases are approaching the ticket price. Ticketmaster does this, splitting the proceeds with promoters and venues while the artists get a 90% cut of an ever smaller part of the pie.
Ticketmaster has multi-year exclusive deals with venues such that none can really afford the attractive cuts they get to "go it alone".
IMHO this situation has reached the point of requiring government action as this is now an antritrust issue (the ticketing market basically cannot function now).
Until that happens any ticketing disruption is doomed.
There's almost as big a racket around venues and concert promoters as there was with RIAA and it's ilk (it's basically a Ticketmaster/LiveNation monopoly in the U.S.), but artists do get a larger cut (harder to scam them when they see the full stadium I guess).
I've seen quotes about 60% of gross for artists with the rest being split between the ticket processor, promoter, taxes, etc. That 60% has to cover the artists' costs (not the venue but roadies, sound engineers, lighting crew, catering, tour manager, backing singers, extra musicians, dancers and so on
I run a ticket startup (SeatGeek) and thus have some familiarity with the industry. In response to to the proposed solutions:
"Someone Needs To Create A New Ticketing Platform"
Creating it is one thing. Getting venues to agree to use it is much, much harder. Venues usually sign long-term (5-10 year) contracts with Ticketmaster to make them their exclusive ticket platform. These contracts usually include a large upfront payment from Ticktmaster to the venue. Given that LiveNation is the by far the biggest promoter in the US, it would be an enormous risk for a venue to forsake Ticketmaster and go with an alternative.
"Venues/Artists Need To Ditch The Big Guys"
See the above. Pearl Jam rather famously tried this in the mid-1990's, with disastrous results (http://goo.gl/xJItB). Not playing in Ticketmaster venues forced them into the netherlands of American live music venues.
"All-Inclusive Pricing Model"
To Ticketmaster's credit, they're getting a lot better at this, but they still have a way to go. It's worth noting that the majority of the fees that the author complains about are not kept by Ticketmaster; they are kicked back to the event promoter. The promoter does this so that they can advertise low face values (appearing fan-friendly) while maintaining margins.
"Offer More Music/Merchandise + Ticket Packages"
This is a bit of a non-sequitur. The author writes the entire article from the perspective of making ticket buying better, and then throws this in "for the content creators." It will indeed make more money for artists, assuming it doesn't hurt conversion rate (which it does) but strong-arming consumers into buying more stuff when they purchase tickets doesn't seem fan-friendly to me.
"Forget Everything I Just Wrote, We Should All Learn From Louis C.K."
Totally impractical. Louis C.K. could pull this off because he performs at comedy clubs. If you're Coldplay...not an option (see above).
There's no question that ticketing needs reformation. But this is an industry (like payment processing) where considering change from a detached, naive perspective is fruitless. It's important to understand the intricacies before avenues for upheaval can be found.
Ticketmaster provides a valuable service for the associated acts:
Reputation shield
If artists started charging fair market prices for their tickets the fans would go ballistic and the artists' reputations would be severely damaged. By ostensibly selling the tickets below, even if normal people never get to buy them at face value, they outsource the reputation damage to Ticketmaster. Since Ticketmaster already has a detestable reputation, they are well-equipped to provide this service with minimal damage to their brand. In exchange, Ticketmaster pays a portion of their revenues to the promoters and their associated acts. It's a win win: artists get more money without damaging their credibility with their fans.
Bands are in a fluid negotiation with both Ticketmaster and the venue for how much of the proceeds of their shows they get. It's different for different bands; you can't look at any breakdown of Ticketmaster's fees or the ticket price and know what it is. Moreover, to whatever extent the bands themselves aren't getting fee income, the venue sure does; the venues might have more market power than Ticketmaster does. The split between the venue and the artist is one of the oldest business negotiations in entertainment. Why are we alarmed about it now?
I sometimes wonder why venues choose Ticketmaster; large as Ticketmaster is it's not the only option, and how did they come to be the main player? My only conclusion is that the venues (and bands) are benefiting.
Here's my theory:
Venues and bands know that for PR reasons they can't jack up the price of tickets, but they don't want to miss out on the revenue from people willing to pay scalper prices. So they set tickets at a nominal price but reserve huge blocks of tickets for the band and venues. Nominally these are "family and friends" tickets, but in practice the band and venue put them immediately for resale. This way the bands and venues can get that gigantic revenue. Meanwhile a small number of tickets are sold at face value and immediately sell out. Ticketmaster profits from fees on the ticket sales and resales.
A "known evil" company like ticketmaster is now a benefit, as "obviously" the jacked up costs are ticketmaster's fault. Meanwhile ticketmaster is really just a service to take the heat off of bands and venues for what would otherwise be seen as price gauging.
And that's before you look into the sort of practices around tickets being released by the agency to a secondary ticket vendor (perhaps one which they own...) and sold on at great markup with a cut going back to the agency and perhaps even back to the promoter.
I suspect the problem is that while the author is happy to pay $60 all-inclusive with no questions asked, a lot of live music fans are young-ish and on the kind of budget where it isn't an easy decision to spend $60 on a night's entertainment. You might persuade them to pay, but harder if you put them off with a big upfront ticket price than if you spring it on them in hidden extras. I'm sure ticketmaster have done their research and wouldn't be doing it this way if it didn't increase their revenue, and that promoters wouldn't be using them if these tactics didn't improve theirs.
Also part of the problem is that there's this social pressure in the music industry around fans and ticket pricing and around artists 'selling out'. In the open market, tickets for big shows are usually worth a lot more than the face price, but promoters (or at least, artists) are reluctant to be seen to capture all that value because of the negative PR involved.
A lot of people have wanted to see Ticketmaster taken down a peg for a long time. It's probably easier to do if you limit yourself to small-to-mid-size gigs, independent artists etc, and there are already some great non-abusive ticketing agencies in this space for example http://www.wegottickets.com ...
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