Senators are wanting into Ticketmaster’s dominance within the ticketing market following a number of high-profile fiascos. As a pricing skilled, I help free markets, and (in fact) dynamic pricing, however solely inside motive, moral requirements, and the regulation.
Nevertheless, the present market situations are clearly detrimental to the buyer, as evident by predatory pricing practices, the breakdown of the market and platforms, and ensuing chaos. I’m positive Taylor Swift would agree.
The ticket market is just not working freely
In lots of instances, over 90% of tickets usually are not launched to the general public, ending up with bank card corporations and secondary market sellers, a few of that are owned by Ticketmaster/Live Nation. These which are launched are rapidly snapped up by bots of ticket brokers. The platforms are additionally typically blocking tickets bought from different secondary markets from working at their venues. LN owns a number of the secondary ticket sellers and has a serious monetary incentive to regulate the secondary market as they accumulate their charges twice at an inflated worth.
On Dec. 9, Dangerous Bunny performed a live performance in Mexico Metropolis, the place thousands of fans with legitimate Stay Nation (LN) tickets had been denied entry. I personally went by means of one thing related. Final 12 months, we purchased secondary tickets from Stubhub for the sold-out LCD Soundsystem live performance on the Fox Theatre. After we arrived, we weren’t admitted because the LN scanners wouldn’t learn them. On the Outlaws Competition at Shoreline, one other 2022 LN occasion, I used to be excited to see the Black Pumas, as had been many within the crowd. The Black Pumas by no means performed. This was not introduced, and no recourse or refunds had been supplied. This indifference to prospects is a trademark of monopolies.
LN has a 70% share of dwell occasion ticketing. To protect it, they try to regulate the distribution of tickets by means of tight artist administration relationships, retaliating in opposition to venues that don’t use their platform, shopping for management over festivals and venues, and exerting management over the secondary markets by means of ticket releases, pricing, and admissions. Many people keep in mind Pearl Jam’s well-known dropping battle versus LN, the place they misplaced an antitrust lawsuit and tried to make use of non-LN venues however uncovered a few of their anticompetitive practices. It’s no marvel that legislators like AOC name LN a monopoly.
The Division of Justice (DOJ) shares this view. The truth is, the Stay Nation/Ticketmaster merger was allowed solely beneath provisions designed to curtail their monopolistic energy–they usually have operated beneath an antitrust consent decree since their merger in 2010. This decree requires them to license their ticketing platform and prohibits retaliation in opposition to venues that don’t use the ticketing platform for 10 years. In an update to this agreement in 2019, the DOJ stated, “Regardless of the prohibitions within the Closing Judgment, LN repeatedly…engaged in conduct that…violated the Closing Judgment.” To handle this, LN agreed to various provisions akin to not threatening to withhold live shows from a venue, appointing an antitrust compliance officer, and paying a $1 million penalty per violation.
Unchecked worth will increase
One other hallmark of monopolies is unchecked worth will increase. The truth is, live event ticket prices have increased by over 400% for the highest 100 excursions over the past 20 years, outpacing inflation by 334%.
The value inflation was partially brought on by the shift within the monetization mannequin within the music enterprise–but it surely has gotten worse post-COVID as a result of pent-up demand for dwell occasions. Furthermore, the typical service payment is between 27 and 31% of the ticket worth, and in some instances, over 75% of the ticket worth, which is way past the worth added for the service offered.
Some individuals are keen to pay extra for tickets than the first worth. One-time occasions is an space the place pricing based mostly on willingness to pay can battle with moral pricing requirements by pricing sure segments of customers out fully. Nevertheless, for the reason that main ticket worth is beneath market, secondary ticket resellers fill the vacuum.
What artists and legislators can do
So, what could be carried out? Dynamic ticket pricing of main ticket gross sales might assist the market function extra effectively, cut back and shady practices on the secondary market, and cease bots from crashing the first ticket gross sales occasions. This has a value of pricing out segments of the market, which many artists don’t need to do.
Artists might make the tickets to their occasions non-transferable, which might get rid of the secondary market, or band collectively to push again in opposition to a number of the worst practices from Ticketmaster/LN.
Our legislators must step in to make sure the first and secondary markets function freely. The Sherman Antitrust and Robinson-Pattman acts present a normal framework–however they must be up to date with trendy e-commerce in thoughts.
Ticket sellers and venues shouldn’t be mixed, nor ought to main and secondary ticket sellers, because it offers an excessive amount of management over dwell occasions. Venues ought to have a selection of ticket platforms. The secondary market wants extra regulation and oversight. Shoppers would welcome any concepts that carry some equity again to the trade.
Gabriel Smith is the chief evangelist and head of options technique at Pricefx.
The opinions expressed in Fortune.com commentary items are solely the views of their authors and don’t essentially replicate the opinions and beliefs of Fortune.
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