It happened twice in the last couple of weeks.
The first time, it was a guest column in The Globe and Mail entitled “I fought Ticketmaster, and Ticketmaster won.” Over the next 869 words, the writer bemoaned the difficulties she had getting tickets to hot shows by Taylor Swift, Bad Bunny, and Beyonce.
All the gigs were sold out. In other words, there were more bums than seats for these shows. With demand sky-high, the price of tickets on the secondary market followed suit following the laws of supply and demand. We deal with that basic of capitalism every single day.
The author also spelled out a litany of grievances against Ticketmaster: The bait-and-switch of dynamic prices; allegations (still not tested in court) of the company colluding with scalpers; alleged pressure on small venues to use Ticketmaster to sell tickets or face retaliation; the “scam” of “official platinum seats.” She then outlined her 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’s disappointed and angry that concert tickets are, yes, expensive. She concludes, “Ticketmaster is making money hand over fist while fans’ hearts break and the majority of musicians struggle. As live music grows increasingly unaffordable, we’re losing something priceless.” Ticketmaster is the villain of her tale.
The second story involved ticket sales for a Lana Del Rey tour of the U.K. When presales began, fans complained that tickets were insanely expensive with some general admission tickets going for more than £400. Hundreds took to social media to blame Ticketmaster. The company was responsible for gouging the public. Someone needed to be blamed, so it had to be the ticket seller, right?
Hang on. It seems that we need a refresher course in the economics and protocols of the concert ticketing industry. We can do this in a few easy lessons. You might want to print this out and pin it to the refrigerator door for the next time a concert ticket is out of reach.
Lesson 1: Fewer and fewer artists can sustain a career just by selling music. The majority of revenue now comes from hitting the road and playing live.
Lesson 2: Because everyone is hitting the road, the cost of touring has gone up beyond the rate of inflation. There’s more demand for staging, lights, video screens, sound gear, roadies, buses, trucks, special effects, hotel rooms, and all the materials involved in equipping a modern tour.
More demand means higher costs to the artist and the promoter. All those costs have to be recouped in the price of the face value of a ticket. Tours are carefully laid out with P/L predictions, cost contingencies, insurance, and other fail-safe financial instruments. With margins so tight, even a single canceled or undersold concert can tip a tour into the red.
Lesson 3: People now expect a spectacle when they go to a concert. There’d better be all kinds of special effects, pyro, dancers, costume changes, perfect sound, dazzling lights. The show needs to be an overwhelming experience for all the senses and extend through at least two hours, preferably more. And there had better be an excellent opening act or two. All that costs money.
Lesson 4: The price of a concert ticket has to cover the costs of a show and provide at least a bit of a profit for the artist and those staging the concert.
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Lesson 5: Ticketmaster doesn’t have anything to do with setting the face value of a concert ticket. In fact, nothing from that face value 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 its costs for its computerized ticketing system, which is a complex, expensive, and ever-evolving R&D mission.
Here’s the truth: The ultimate face value price of a concert ticket is determined by the artist and their management. They put all the touring costs into a spreadsheet and, in conjunction with a promoter, determine how many shows must be played and how many tickets must be sold in order for all the expenses to be covered and for their to be a little profit at the other end. Yet many are loath to charge the actual market value for a ticket lest they be seen as gouging their fans.
Funny how a sports team or a theatre production can charge whatever the going rate is and there’s relatively little outrage. “It costs what it costs,” people say. For some reason, though, concert tickets are sacred and fans believe they deserve to see a top-tier show from the front row for $50. What universe are they living in?
“But…but…but I’M THEIR BIGGEST FAN! I HAVE TO GO TO THE SHOW! I DESERVE TO FOR ALL THE EMOTION I’VE INVESTED IN [insert name of artist here.]!”
Uh, no, you don’t. Sorry to break it to you, but no one deserves to go to a concert. Tickets are purchased with discretionary after-tax income. Artists are on the road to make a living just like a civilian goes to their job every day. A show costs what it costs. This ain’t charity work. It’s not even non-profit.
Before you call me an apologist for Ticketmaster, 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 to account for some of its practices. For example, it costs Ticketmaster just as much to sell a $25 ticket as it does a $250 ticket. So why is the service charge higher on the more expensive ticket? Are there practices that look a little weird from the outside? Maybe and they should be investigated. But Ticketmaster cannot be blamed for the starting price of a concert ticket.
Same thing with dynamic pricing, the practice of real-time algorithmic adjustments to the price of a ticket depending on demand. The bigger the artist, the higher the demand, the greater the potential the ticket prices will go up right 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’s nearly sold out, or Uber’s surge pricing when it starts to rain.
And the only person who can okay Ticketmaster to engage dynamic pricing is — you guessed it — the artist. Ticketmaster does NOT fire up that algorithm arbitrarily. It needs permission from the artist.
What about the “facility fee” or “venue surcharge?” That’s at the discretion of the venue, a charge to help cover its costs from hosting a show. Ticketmaster only passes it along as per any negotiations and arrangements.
Ticketmaster has a second job in addition to selling tickets. It’s there to take all the heat for the artist. This voluntary punching-bag role is there by design. Michael Rapino, the Canadian-born CEO of Live Nation, parent company of Ticketmaster, had this to say during a recent investor presentation.
“We’re a B2B [business-to-business] business. We have two B2B clients, venues for Ticketmaster, and artists for the concert division. We don’t have a lot of control on the consumer product. I can’t tell you what the price is going to be. I can’t tell you how to put it on sale. We work for the artist. We take the punch for the artist. We protect the artist.”
In other words, in addition to selling tickets, Ticketmaster is there to absorb all the music fan hate on behalf of the artist. He continued: “You don’t have artists complaining. You have fans that want cheaper ticket prices, but you don’t have our core customers saying we’re not doing a fabulous job. So I’m not overly concerned on the consumer side.”
What about the cost of tickets on the secondary market? Unless it has to do with Ticketmaster Verified Reseller program, the company has nothing to do with that. And no, contrary to what a lot of people think, Ticketmaster doesn’t own resellers like StubHub, Vivid Seats, SeatGeek, TickPick, or any of the other professional scalpers. (The scalping concert tickets would go away tomorrow if artists just charged the proper market value for a ticket from the outset. That, however, is a discussion for another time.)
Back to the Globe and Mail piece. It concludes with a whine about having to pay $67 to see the great Neko Case at the lovely and intimate Danforth Music Hall in Toronto, saying “But she’s one of my favourites and was worth it.”
Wait. She’s saying that $67 to spend an entire evening with a brilliant artist whose career extends back decades was too much. How does she think Ms. Case is going to make a living if she charged less? Damn, that sounded like a bargain to me.
Concert tickets are exponentially more expensive than they used to be, but today, tours are not subsidized by the sale of CDs. In the past, acts lose money by touring but make up for that by subsequent sale of CDs and records. That’s why back in the ’90s you could see a very decent band for $35 or so. It was a different world back then.
The costs of touring have gone up tremendously. Expenses need to be passed along to the consumer. That’s how it works in all businesses, including when it comes to putting on a rock show.
But let’s be very, very clear: The ultimate reason for those higher prices are market forces and decisions made by the artist. Blame Ticketmaster all you want, but they’re just the messenger. And if the US DOJ manages to break up the Live Nation-Ticketmaster nexus and other ticket sellers enter the market, nothing is going to change.
The price for a show is the price for a show. Either pay it or don’t. And if you have an issue, take it up with the artist.
