It happened twice in the last few weeks.
The first time, it was a guest column in The balloon and the mail entitled “I fought Ticketmaster and Ticketmaster won.” For the next 869 words, the writer lamented the difficulties she had getting tickets to popular shows by Taylor Swift, Bad Bunny and Beyoncé.
All the concerts were sold out. In other words, there were more homeless people than seats for these shows. With demand through the roof, the price of tickets on the secondary market followed the law of supply and demand. We deal with that foundation of capitalism every day.
The author also detailed a litany of complaints against Ticketmaster: bait-and-switch dynamic pricing; allegations (not yet proven in court) that the company colluded with resellers; alleged pressure on small venues to use Ticketmaster to sell tickets or face retaliation; the “scam” of “official platinum seats”. He then described his method of tracking ticket prices on a spreadsheet in hopes of cracking some kind of code when it came to finding the best price on the resale market.
After all this work, she is disappointed and angry because concert tickets are, yes, expensive. She concludes: “Ticketmaster is making money hand over fist while fans’ hearts are breaking and most musicians are struggling. “As live music becomes increasingly unaffordable, we are losing something priceless.” Ticketmaster is the villain of his story.
The second story involved the sale of tickets for a Lana Del Rey tour of the United Kingdom. When pre-sales began, fans complained that tickets were incredibly expensive, with some general admission tickets costing over £400. Hundreds of people took to social media to blame Ticketmaster. The company was responsible for defrauding the public. Someone had to be blamed, so it had to be the ticket seller, right?
Hold on. Looks like we need a refresher course on the economics and protocols of the concert ticketing industry. We can do this in a few simple lessons. You might want to print it out and pin it to your refrigerator door for the next time a concert ticket is out of reach.
Lesson 1: Fewer and fewer artists can sustain a career simply by selling music. Most of the income now comes from touring and playing live.
Lesson 2: Because everyone goes on tour, the cost of touring has risen beyond the rate of inflation. There is more demand for staging, lights, video screens, sound equipment, roadies, buses, trucks, special effects, hotel rooms and all the materials necessary to equip a modern tour.
More demand means higher costs for the artist and the promoter. All these costs must be recovered with the face value price of the ticket. Tours are carefully designed with profit and loss predictions, cost contingencies, insurance and other fail-safe financial instruments. With margins this tight, even a single canceled or undersold concert can send a tour into the red.
Lesson 3: Now people expect a show when they go to a concert. There better be all kinds of special effects, pyrotechnics, dancers, costume changes, perfect sound, dazzling lights. The show should be an overwhelming experience for all the senses and last at least two hours, preferably longer. And there better be one or two excellent opening acts. All of that costs money.
Lesson 4: The price of a concert ticket must cover the costs of the show and provide at least a small profit to the artist and those organizing the concert.
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Lesson 5: Ticketmaster does not have anything to do with setting the face value of a concert ticket. In fact, none of that nominal price goes to Ticketmaster. The only way the company makes money is through the Ticketmaster service fee. This is also how the company covers all the costs of its computerized ticketing system, which is a complex, expensive and constantly evolving R&D mission.
Here’s the truth: the final face value of a concert ticket is determined by the artist and their management. They put all the costs of the tour into a spreadsheet and, together with a promoter, determine how many shows need to be played and how many tickets need to be sold to cover all expenses and make a small profit at the end. another extreme. However, many are reluctant to charge the real market value for a ticket so as not to be seen as a scam to their fans.
It’s funny how a sports team or a theater production can charge any going rate and there is relatively little outrage. “It costs what it costs,” people say. However, for some reason, concert tickets are sacred and fans believe they deserve to see a top-notch show from the front row for $50. What universe do they live in?
“But… but… but I AM HIS BIGGEST FAN! I HAVE TO GO TO THE SHOW! I DESERVE IT FOR ALL THE EMOTION I HAVE INVESTED IN [insert name of artist here.]!”
Hey, no you don’t. I’m sorry to tell you, but no one deserve to go to a concert. Tickets are purchased with after-tax discretionary income. Artists are on the road to earn a living, just like a civilian goes to work every day. A show costs what it costs. This is not a charity work. It’s not even a non-profit organization.
Before you call me a Ticketmaster apologist, that’s the last thing I am. I’m not going to die on any hill for them. Yes, the ticketing business is one of the most opaque and frustrating of all consumer retail experiences. And yes, Ticketmaster needs to be held accountable for some of its practices. For example, it costs Ticketmaster as much to sell a $25 ticket as a $250 ticket. So why is the service charge higher on the more expensive ticket? Are there practices that seem a little strange from the outside? Maybe and they should be investigated. But you can’t blame Ticketmaster for the asking price of a concert ticket.
The same goes for dynamic pricing, the practice of real-time algorithmic adjustments to the price of a ticket based on demand. The bigger the artist, the greater the demand and the greater the potential for ticket prices to rise before your eyes. This is no different than hotel rooms costing more when there’s a big convention in town, seats on a flight that are almost sold out, or Uber increasing prices when it starts to rain.
And the only person who can authorize Ticketmaster to contract dynamic pricing is, you guessed it, the artist. Ticketmaster does NOT activate that algorithm arbitrarily. You need permission from the artist.
What about the “setup fee” or “venue surcharge”? That’s at the venue’s discretion, a charge to help cover the costs of hosting a show. Ticketmaster only transmits it in accordance with any negotiations and agreements.
Ticketmaster has a second job besides selling tickets. It is there to receive the artist’s full attention. This voluntary punching bag role exists by design. Canadian-born Michael Rapino, CEO of Live Nation, parent company of Ticketmaster, I had this to say during a recent investor presentation.
“We are a B2B [business-to-business] business. We have two B2B clients, venues for Ticketmaster and artists for the concert division. We don’t have much control over the consumer product. I can’t tell you what the price will be. I can’t tell you how to put it up for sale. We work for the artist. We take the hit for the artist. We protect the artist.”
In other words, in addition to selling tickets, Ticketmaster is there to absorb all the hate from music fans on behalf of the artist. He continued: “There are no artists complaining. You have fans who want cheaper ticket prices, but you don’t have our core customers saying we’re not doing a fabulous job. So I’m not too worried about the consumer side.”
What about the cost of tickets on the secondary market? Unless it has to do with the Ticketmaster Verified Reseller program, the company has nothing to do with it. And no, contrary to what many people think, Ticketmaster does not own resellers like StubHub, Vivid Seats, SeatGeek, TickPick or any of the other professional resellers. (Concert ticket reselling would disappear tomorrow if artists simply charged the appropriate market value for a ticket in the first place. That, however, is a discussion for another time.)
Return to the Globe and mail piece. He concludes with a complaint about having to pay $67 to see the great Neko Case at Toronto’s lovely, intimate Danforth Music Hall, saying, “But she’s one of my favorites and it was worth it.”
Wait. She says $67 to spend an entire night with a brilliant artist whose career goes back decades was too much. How do you think Mrs. Case would earn a living if she earned less? Damn, that seemed like a bargain to me.
Concert tickets are exponentially more expensive than they used to be, but these days tours are not subsidized by CD sales. In the past, artists lost money on tours, but made up for it with subsequent sales of CDs and records. That’s why in the ’90s you could see a very decent band for $35 or so. It was a different world back then.
Touring costs have increased enormously. Expenses must be passed on to the consumer. That’s how it works in every business, even when it comes to putting on a rock show.
But let’s be very, very clear: the fundamental reason for those higher prices is market forces and decisions made by the artist. Blame Ticketmaster all you want, but they are just the messenger. And if the US Department of Justice manages to break the link between Live Nation and Ticketmaster and other ticket sellers enter the market, nothing will change.
The price of a show is the price of a show. Either you pay it or you don’t. And if you have any problems, tell the artist.
