The Rising Prices of Concert Tickets and the Ticketmaster Antitrust Case
If you are as old as me, you probably remember a time when concert tickets were as little as $20. Now that’s all in the past.
Statistics show that tickets have gone up about 20% from pre-pandemic prices. Average tickets prices are $108.50, and if you are looking for top seats to see popular acts like Harry Styles, Red Hot Chili Peppers, and Kendrick Lamar, you could be paying more like $500 to $980.
Of course, inflation and the fact that artists lost so much money during the pandemic could be to blame. But there has also been some shifty behavior in the Live Nation Entertainment/Ticketmaster camp. Now that the companies have merged, they seem to be creating a monopoly raising ticket prices at will.
Read on to find out what’s behind it.
The Ticketmaster/Live Nation Merger: What’s It All About
Once upon a time, Live Nation and Ticketmaster were ticket seller companies that competed against each other. Then they decided to merge to form Live Nation Entertainment.
The Department of Justice allowed the merger but were aware of the potential for the new company to increase ticket prices to unreasonable amounts. Therefore, they entered a settlement that would prevent the company from requiring the use of Ticketmaster sales to host a Live Nation concert.
Big surprise, a mere 9 years later, the DOJ discovered that the company had violated those terms. Highlights from their demands to modify the settlement include the following:
“As a result of this conduct, venues through the United States have come to expect that refusing to contract with Ticketmaster will result in the venue receiving fewer Live Nation concerts or none at all. Given the paramount importance of live event revenues to a venue’s bottom line, this is a blow that most venues can ill-afford to risk.
“As a result, many venues are effectively required to contract with Ticketmaster to obtain Live Nation concerts on reasonable terms, limiting the ability of Ticketmaster’s competitors to compete in the primary ticketing market and harming venues that would benefit from increased competition.”
The company heeded warnings and revised its settlement understanding that they would be facing $1 million dollar fines per violation. If violations continue, the organization would also be facing the possibility of having to let Ticketmaster go.
The Taylor Swift Debacle
You might think that the threat of a violation and possible split would have made Live Nation Entertainment behave, but in late 2022 they were back to their old ways. This time, Taylor Swift and her fans were caught in the middle.
It all started at the presale for the Taylor Swift Eras tour, her first since 2018. Apparently, there was such a demand for tickets (2 million sold in one day- the most tickets ever sold in a day for any artist) that the site was overwhelmed. This led to glitches, long wait times and many fans not getting tickets.
However, Ticketmaster downplayed the incident claiming only 15% of fans experienced issues.
The company also claimed that it wasn’t only the immense demand causing problems. They also alleged that they were being overwhelmed by the bots scalpers use to buy as many tickets as they can.
However, there is also the question of whether Ticketmaster purposely shut out buyers. The company is known for not only selling tickets at astronomical fees, but also for profiting off its secondary market website which serves as a platform for price-gouging resellers.
Is the Artist Responsible?
It should be noted that Ticketmaster is not the only entity that may be to blame for inflated ticket prices. Artists can also do their part to keep it under control.
Eric Budish, an economics professor at the University of Chicago and expert on the ticketing industry explains how the artist can “set what you think is a fair price and turn off the resale market.” The way to do this would be to “put names on tickets,” similar to airplane ticketing.
This method of paperless ticketing would have prevented people from reselling their tickets as the ticket would only be good to the person who purchased it. Swift could have opted to do paperless ticketing, but why would she? It would reduce her profits considerably.
Therefore, she allowed the reselling, and in case you’re wondering, yes, she does make a profit off that.
Budish also stated that he doesn’t believe that Ticketmaster was not prepared for the excess traffic generated by the Swift ticket sales. “It’s like you’re in the Super Bowl and you fumble the first snap,” he stated.
While we can argue back and forth over who is responsible for the injustices Swifties had to face, its Live Nation that’s being targeted for compensation. And it’s Ticketmaster that’s filing the suit on behalf of the 26 plaintiffs who tried and failed to score tickets to her concert.
The company is currently looking at possible fines of $2500 for each violation. With 11.6 million people unable to score tickets and another 2.4 million overpaying, damages could easily add up to $29 billion.
The Taylor Swift incident was far from the only one Live Nation, was involved in. A 2019 report by Billboard magazine showed that artists had been using Live Nation to put their tickets directly on resale websites like StubHub so they could increase sales without being directly associated with the steep cost of scalping.
Surprisingly enough, Metallica, who is known for being ‘all about the fans’, was found to be involved in this type of behavior. A 2017 incident revealed that the band sold tickets directly to resale sites where they were listed at a higher price before they went on sale to the public. They were far from the only band to be involved in such a scheme.
However, since that time, this type of activity has declined considerably as artists are now provided with methods to gain better control over how they make money off ticket sales. For example, many of them offer VIP packages and platinum seating options to increase touring income.
It should also be noted that, back when this happened, Ticketmaster claimed to not be involved in the issue. They pointed a finger at their parent company Live Nation.
However, even back then, Ticketmaster had blood on their hands. In 2018, they were found to be using software called Trade Desk which allows resellers to buy tickets from Ticketmaster and post them instantly to resale websites. This allowed the company to make two profits, once when the tickets are initially bought, and a second time when they are resold.
And while Metallica may stand out for their innovations in the metal industry, they were hardly innovating in their efforts to make money through reseller sites. In 2012, at the height of his fame, Justin Bieber was found to make only 7% of his tickets available to the public for his show at Nashville’s Bridgestone Arena.
While some were reserved for American Express customers and other set aside for fan club members, the Platinum Exchange program and VIP packages, entire blocks were reserved for resale sites. Other artists guilty of similar activity include Keith Urban and, surprise surprise, Taylor Swift.
Pearl Jam vs. Ticketmaster
While there have been many artists willing to play into the Ticketmaster scam and gain from the profits, there is one band that stood its ground fighting the organization to keep prices low- Pearl Jam.
To learn more about the story, let’s step back in time to 1994, an era when fans would have to buy concert tickets either by phone or by purchasing them directly from the venue. I’m sure it comes as no surprise that most purchases happened via telephone.
During that time, Ticketmaster had one major competitor, Ticketron. However, they acquired the company taking them out of the picture.
Once Ticketmaster took over, ticket prices rose astronomically tacking on 30% fees for some concert sales.
That’s when Pearl Jam, along with the Department of Justice, stepped forward stating that Ticketmaster had “virtually absolute monopoly on the distribution of tickets to concerts, and that the company had been indulging in “anti-competitive practices.”
Pearl Jam followed up with a lawsuit, but it never made it off the ground.
Ever since the Pearl Jam incident, Ticketmaster has been paying small fees to venues to secure exclusive contracts for the company as well as payouts to promoters for marketing concerts. Ticketmaster foots the bill for promotion so the concerts hit their guarantees before they happen minimizing the risk that the concert will be cancelled due to a lack of sales.
Ticketmaster could argue that these practices were not anti-competitive but instead a service to the fans. For example, the high ticket fees were tough, but the company was also saving fans the expense and hassle of driving to the venues to buy tickets. The firm also made concerts more likely to happen so fans aren’t left with a worthless ticket.
However, now that everything is internet based, the company’s argument of offering convenience to fans does not hold up as well.
Is Scalping illegal?
It is at this point in the article (or maybe it was earlier- who knows) when you might be asking, wait a minute, isn’t scalping illegal? It all depends on where you are located.
Most states have some type of law in place that prevents people from charging inflated prices for tickets. For example, in Rhode Island, you can’t resell tickets for more than 10% or $3 more than you paid for it. In Florida, you can’t sell a ticket for over a dollar more than you originally paid for it.
In California, you are allowed to scalp tickets as long as you have written permission from the venue.
So, with all these restrictions in place, you may wonder, how does a platform like Stubhub get away with it? Well, while certain states do not allow or restrict scalping, it is not illegal on a federal level. Therefore, scalping online is A-okay, as long as sellers disclose that they are resellers and are selling tickets higher than face value.
Why are Ticket Prices So High?
Resellers are asking astronomical prices. But that doesn’t detract from the fact that tickets are expensive in the first place. So why are they so expensive? Here are a few reasons:
Demand: Most concerts are priced based on demand. For instance, with Taylor Swift being a popular artist who hadn’t toured in nearly 4 years, it’s no surprise that fans were willing to pay top dollar to see her. So if you want to see a well-known artist who hasn’t been around in a while, or is maybe doing a farewell tour, be prepared to empty your wallet.
Service Fees: Ever pay for a ticket and then find out that the total is way above what you expected? Thanks Service fees! Service fees may include:
- Order processing fees which are what the company charges for processing the online sale
- Delivery fees
- A facility charge which is a fee set by the venue where the event will be taking place.
- You may even be charged a printing fee
And yes, these fees are put in place by Ticketmaster. So that’s one way they are gouging fans.
Artist Loss of Revenue: Artists just aren’t bringing in the salaries they used to. They are making less off record sales thanks to the low payouts associated with digital platforms. And let’s not forget about all the money they lost during the pandemic.
Increased Production Costs: Ever consider all that goes into a tour? There are the lights, the crew, the costumes… and so much more. As a fan, you’re paying for it. And it’s gotten a lot more expensive due to inflation which ties back to the Ukraine War and supply and demand issues left over from the pandemic.
Inflation: Inflation is causing the price about just about everything to go up. This includes the price of gas, the price of producing merch, the price of stage props…you can bet artists are passing these costs on to the ticket buyers.
Venues Charging Artists to Sell Merch
Another issue to consider is that more and more of today’s venues are charging artists to sell merch. Most venues set up a 20/80 split meaning the artist must pay the venue 20 cents for every dollar of merch they sell.
Some see this as fair… after all the venue is technically renting their space to artists so they can sell merch. Shouldn’t they get a cut?
But on the other hand, artists don’t get a percentage of bar and food sales. If ticket sales and merch sales are split, shouldn’t food and drink sales be split as well?
The bottom line here is, the fact that artists have to give venues a cut of all the merch they sell is not only driving up ticket prices, but also driving up merch prices. I mean, today a tour t-shirt can cost you $50. Yikes!
Artists and venues are teaming up to keep this from happening. In January of 2022, the Featured Artists Coalition announced a new directory highlighting music venues that charge zero commission on merch sales. The idea is to address the “outdated and unfair” practice of charging artists for merch.
As of August of 2022, 400 venues had signed up. But many of the larger ones were conspicuously missing.
Many artists are supporting the cause and it’s hopeful that there are more signups in the coming months.
What About Live Nation Stock?
One would hope that the bad rap Live Nation and Ticketmaster are getting would cause a lack of enthusiasm from investors. Unfortunately, it’s just the opposite.
Wall Street considers Live Nation stock to be undervalued by 50%. However, they are predicting that the stock will make a comeback with a set price market of $105 to $110 by the end of the year.
Bullish analyst Morningstar’s Neil Macher wrote the following in his November 4 report, “Live Nation remains on track to return or even beat its pre-pandemic levels as the firm posted its highest attendance quarter ever. Festival attendance was very strong in the quarter, up 40% versus the same quarter in 2019.”
While inflation may keep some concert goers out of venues, the more passionate ones will be willing to pay top dollar to make up for the many cancelled tours of 2020 and 2021.
However, a new pandemic spike or a deteriorating economy could change these predictions.
Meanwhile, ticket prices remain high. As a fan, there’s not much you can do other than refuse to go see concerts which could mean cutting off your nose to spite your face. Or you could always go with the ‘if you can’t beat ‘em, join ‘em sensibility and invest in Live Nation stocks to (hopefully) get a return on what you pay.
How will you be handling the situation?