Ticketmaster is the largest primary ticket outlet for large-scale events in the United States and worldwide. They have exclusive deals with many major venues, artists, promoters, leagues, and teams to be the exclusive seller of the initial release of event tickets. This gives Ticketmaster enormous power in the live event ticket market.
In recent years, Ticketmaster has started to impose more restrictions on ticket resale through their Ticketmaster Verified Resale platform. Some of the key restrictions include:
Restricting tickets to the Ticketmaster exchange
Ticketmaster requires season ticket holders for sports teams and other clients to exclusively resell their tickets on Ticketmaster’s resale exchange. This means that Ticketmaster controls both the primary and secondary ticket market.
No transferring of tickets off of Ticketmaster’s system
Many tickets now come with the restriction that they cannot be transferred or sold outside of Ticketmaster’s exchange. This aims to cut down on scalping.
Caps on resale prices
Ticketmaster now places caps on how much tickets can be resold for on their exchange. This limits how much profit resellers can make.
These restrictions have proven controversial, raising questions around Ticketmaster’s monopoly power and business incentives. This article will dive deeper into the key issues.
Ticketmaster’s dominance of primary ticket sales
Ticketmaster sells around 70% of the primary tickets for major concerts and events in the United States. They sell over 485 million tickets per year globally.
Some key sources of Ticketmaster’s dominance:
– Exclusive contracts – They have exclusive deals with many major venues, sports teams, and promoters to be the only primary ticket seller. This instantly gives them a monopoly on the best events.
– Large upfront payments – Ticketmaster makes large upfront payments to lock in exclusive deals. Venues and teams depend on this income.
– Vertical integration – Ticketmaster’s parent company Live Nation is the world’s largest concert promoter, venue operator, and event producer. This vertical integration strengthens Ticketmaster’s position.
– Established software/tech – Ticketmaster has spent heavily on technology and software for ticketing systems. Venues rely on these systems.
– Consumer reach – Through decades of operation, Ticketmaster has become a trusted household name with 60 million monthly users of its website. Its brand strength means consumers default to using it for tickets.
This immense market power in primary ticket sales is the foundation of Ticketmaster’s ability to now control and restrict resale as well.
The rise of the ticket resale market
In recent decades, a large secondary ticket market has emerged where tickets are resold, often at significant markups above face value. Key facts about the ticket resale market:
– Estimated at $10 billion globally per year
– Between 30-45% of tickets for major concerts are now resold
– Major sites include StubHub, VividSeats, and SeatGeek
– Resale prices frequently more than double face value for hot events
Forces driving the resale market
Several forces have contributed to the rapid growth of the secondary ticket market:
– Price caps on primary sales – Primary ticket prices are often capped based on negotiations with venues, teams, and artists. This leaves room for markups on secondary markets.
– Underpricing of primary tickets – Many experts argue events deliberately underprice tickets initially to generate hype and sell out quickly. This allows large markups later.
– Increasing scarcity – For finite venues, demand growth for live entertainment has outpaced supply, creating more scarcity and resale value. Between 2011 and 2018, North American ticket sales grew 55% while venue capacity only grew by 6%.
Criticisms of the resale market
While a liquid resale market provides value, large resale markups have also drawn criticism:
– Pricing regular fans out – Many feel that resale sites price regular attendees out of the market for top events. The best tickets end up going to corporate buyers, brokers, and the wealthy.
– Lack of price transparency – Having separate primary and secondary markets makes it harder for consumers to understand what a “fair” price for a ticket is. This allows for exploitative pricing.
– Questions around scarcity – Industry observers argue primary sellers deliberately underprice and undersupply to fuel the perception of false scarcity and drive up secondary prices.
– Double-dipping – When the same entity controls primary and secondary sales they can strategically double-dip for profit. This applies to Ticketmaster’s move into controlling resale.
Ticketmaster’s move to take over ticket resale
Recognizing the size of the secondary market, Ticketmaster determined they wanted control over resale as well. They have enacted a two-pronged strategy:
Developing their own resale exchange
In 2008, Ticketmaster acquired their own resale platform which they branded Ticketmaster Resale in 2016 and Ticketmaster Verified Resale in 2018.
Key aspects of Ticketmaster’s resale exchange:
– Fully integrated into Ticketmaster’s primary ticketing site and apps. This makes it easy and seamless for consumers.
– Verified tickets ensure validity and restrict fraud, a key selling point.
– Lower buyer fees of around 10%, undercutting competitors.
– Gives Ticketmaster a cut of resale revenue in addition to initial fees.
Imposing restrictions on where and how tickets are resold
Ticketmaster simultaneously began imposing restrictions on ticket resale:
– Season ticket holders and other bulk clients must resell through Ticketmaster’s exchange.
– Many major event tickets now cannot be resold or transferred outside of Ticketmaster’s system.
– Ticketmaster now places price caps on the resale of tickets on their exchange.
This has allowed Ticketmaster to quickly gain control and extract fees from large portions of the multibillion ticket resale market.
Are Ticketmaster’s restrictions on resale legal and ethical?
As Ticketmaster seeks to control more of the ticketing lifecycle, major questions around the legality and ethics of its restrictions on resale have emerged.
Critics argue aspects of Ticketmaster’s restrictions constitute anti-competitive behavior:
– Exclusive dealing for primary sales could violate antitrust law if shown to substantially lessen competition. But difficulties in quantification make antitrust cases challenging.
– Requiring season ticket holders to resell only on Ticketmaster’s exchange may also raise antitrust issues by artificially inflating their market share.
– Restricting transfers off Ticketmaster’s systems also limits consumer choice and market competition. But case law is unclear on whether these constitute antitrust violations.
In 2018, Ticketmaster paid $10 million to settle a lawsuit alleging they conspired with brokers, but their restrictions remain in place. In general, the legality often comes down to detailed economic analysis on market definition, share quantification, and impacts. But it remains hotly debated.
Even if not outright illegal, many experts and consumer groups argue Ticketmaster’s moves are unethical:
– It represents Ticketmaster trying to artificially maintain an advantage and produce outcomes that benefit them over consumers and maximizing efficiency.
– By double dipping on primary and resale, Ticketmaster is trying to maximize fees over providing value.
– Restrictions reduce market information and price transparency for consumers.
– Ticketmaster may be complicit in underpricing primary tickets to fuel perception of false scarcity. This enables exploitation on secondary markets.
Ticketmaster defends their resale restrictions as legal, ethical, and beneficial:
– They argue their scale provides consumers choice, efficiency, and antimfraud protection most cannot match.
– Guaranteed verified resale tickets benefit consumers relative to riskier third-party exchanges.
– They say it reduces unfair arbitrage of underpriced tickets by megabrokers and bots.
– Caps on resale prices protect everyday fans from predatory markups.
– They say fan clubs, season ticket holders, and teams benefit from facilitated transfer mechanisms.
There are good-faith arguments on both sides, but restrictions undoubtedly primarily benefit Ticketmaster.
Impact of the restrictions
What has been the impact of Ticketmaster taking control over more of the ticketing lifecycle through restrictions?
Proponents argue Ticketmaster’s end-to-end control creates some benefits:
– Convenience of integrated primary and secondary ticketing.
– Reduced platform fees relative to third-party resellers.
– Stronger consumer protections against fraud.
– Metrics to identify abusers and bots attempting unfair arbitrage.
Criticisms and concerns
However, critics argue the restrictions have had many negative impacts:
– Ticketmaster’s fees now touch an even larger share of overall ticket revenue. Critics call this monopolistic fee gouging.
– It represents a move away from a free market toward one controlled by a single hegemonic entity.
– Less pricing transparency for consumers as Ticketmaster controls more of the supply chain.
– May enable Ticketmaster to gather protected usage data they can monetize.
– Actually helps Ticketmaster sustain allegations of artificial undersupply or underpricing of primary tickets.
The restrictions have significantly impacted the ticket resale industry:
– Ticketmaster now controls over 50% of the major event secondary market.
– Competing resale platforms like Stubhub have been weakened and shrunk.
– Small ticket brokers argue the restrictions hurt their ability to compete against Ticketmaster.
– However, some very large brokers have benefitted through preferential partnerships with Ticketmaster.
This consolidation of power concerns both consumers and competitors.
Ongoing controversies and legal challenges
Debates around Ticketmaster’s restrictions have continued as they now apply them more extensively. Some ongoing controversies and legal challenges:
Taylor Swift tour ticket fiasco
Ticketmaster’s sales for Taylor Swift’s upcoming tour in 2023 sparked outrage:
– Site outages and long waits plagued the primary sale.
– Swift’s team blamed it on massive demand and bots.
– But some argued it was driven by Ticketmaster releasing too few primary tickets to maximize resale revenue.
– High prices and lack of availability on resale platforms added to accusations.
New York investigation
After the Swift outrage, New York’s attorney general announced an antitrust investigation into Ticketmaster’s practices. Key issues:
– Whether Ticketmaster has abused its market power around pricing, fees, or restricting competition.
– If primary ticket releases are deliberately undersupplied to drive up secondary prices on their platforms.
Competing resale platform SeatGeek filed an antitrust lawsuit against Ticketmaster and Live Nation in 2022. Key allegations:
– Ticketmaster’s exclusive deals represent anti-competitive monopolistic behavior.
– Restrictions forcing season ticket holders to resell only through Ticketmaster Forever Tickets are anti-competitive.
– Ticketmaster has unlawfully leveraged its primary ticket dominance to take over secondary sales.
This lawsuit gets to the heart of the antitrust debate around Ticketmaster’s practices. The outcome could threaten their restrictions if deemed illegal monopolistic conduct.
Possibilities for changing or regulating the system
Given the ongoing controversies, many ask whether Ticketmaster’s restrictions should be stopped or the ticket ecosystem regulated to promote fairer competition. Some proposals that have been raised:
Break up Ticketmaster
The most aggressive option would be forcing the divestiture of Ticketmaster from Live Nation, arguing their vertical integration enables illegal monopolistic conduct. This could allow more primary ticket competition.
Ban restrictions and exclusivity clauses
Making Ticketmaster’s exclusive dealing and restrictions on resale explicitly illegal would restore more open secondary ticketing markets. However, Ticketmaster defends these restrictions as consumer friendly.
Regulate allowable fees
Legislation could regulate how much Ticketmaster and others can charge in fees to limit gouging and non-transparent costs. Caps at around 20% of ticket face values have been proposed. But opponents argue this would simply entrench Ticketmaster’s dominance.
More pricing transparency and oversight
Incremental proposals include mandating upfront fee disclosures, preventing artificial ticket shortages, or requiring Ticketmaster to license reselling software to competitors. But oversight and enforcement may prove challenging.
Support competing primary sellers
Bolstering other primary sellers like AXS could provide consumer alternatives and weaken Ticketmaster domination of the ecosystem. But competitor viability has proven difficult given Ticketmaster’s scale and exclusives.
Many argue the system should simply be left alone to maximize freedom, innovation, and efficiency. But critics counter that Ticketmaster has already limited freedom and competition through restrictions.
There are no easy or obvious solutions. But Ticketmaster’s restrictions remain highly controversial.
Ticketmaster has leveraged its dominant position selling primary event tickets to take increasing control over secondary ticket resale. They have imposed a range of restrictions that require tickets to be resold only through their own Ticketmaster Verified Resale exchange.
Ticketmaster argues this level of end-to-end control provides consumers significant benefits and protections. But their restrictions have also drawn widespread criticism for limiting competition, enabling monopolistic fees, and exploiting consumers.
Ongoing legal challenges and proposals for reform show that the debates are likely to continue. Ticketmaster maintains immense power, but still faces pressures from competitors, regulators, and the public. Their approach to balancing control and openness in the ticketing ecosystem remains a crucial issue shaping live entertainment.