Ticketmaster is the largest ticket sales and distribution company in the United States, with a dominant market share in the live entertainment industry. There has been considerable speculation and debate over whether Ticketmaster engages in dynamic pricing, raising prices for events that are in high demand. While Ticketmaster denies that it sets or changes prices, there are concerns that it facilitates dynamic pricing on behalf of its clients. This article will examine the evidence and arguments on both sides of this issue.
How Ticketmaster Works
Ticketmaster provides ticket sales services to concert promoters, sport leagues, theaters, and other large event organizers. It sells tickets through its website, mobile apps, and retail outlets. Ticketmaster charges fees on top of the base ticket price, keeping a share of the fees as revenue. Its fees include order processing charges, convenience fees, and delivery fees.
For many major concerts, sport events, and other high-profile tickets, Ticketmaster has exclusivity deals with the venues and promoters. This means it is the only authorized ticketing service, giving it a monopoly on initial sales. Ticketmaster states that prices are set by its clients – the venues and event organizers. It acts as an agent selling on their behalf.
What is Dynamic Pricing?
Dynamic pricing, also known as surge pricing or demand-based pricing, is the practice of adjusting prices in real time based on current market demand. Airlines and rideshare services like Uber use dynamic pricing algorithms to raise prices when demand spikes, aiming to balance supply and demand. The goal is to increase profitability by charging higher prices when consumers are willing to pay more.
For event tickets, dynamic pricing would mean increasing prices for hot-selling tickets in high demand. Event organizers using dynamic pricing can adjust ticket prices up or down based on factors like:
- Current sales and event selling pace
- Seat location – front row or VIP tickets may see bigger price surges
- The artist’s recent popularity and chart success
- Incoming requests and traffic for the event
- Comparable pricing data from the secondary ticket market
As an event sells out quickly, prices would rise automatically based on algorithms calculating optimum prices. Similarly, prices may fall for slow-selling events to help increase sales.
Arguments That Ticketmaster Uses Dynamic Pricing
There are a few key arguments suggesting Ticketmaster may be enabling or directly profiting from dynamic pricing:
1. Consumer Reports of Price Fluctuations
There are many consumer complaints about Ticketmaster ticket prices drastically rising for high-demand shows and sporting events.
For example, some Taylor Swift fans reported ticket prices doubling from the initial presale cost to over $1,000 per ticket later as her tour sold out quickly. Fans trying to buy Harry Styles concert tickets also reported ticket prices rising while they were selecting seats.
These price spikes within the official Ticketmaster sales process fuel speculation of dynamic pricing.
2. Secondary Market Price Data
Ticketmaster owns secondary ticket exchange SeatGeek. In 2009, Ticketmaster and Live Nation also entered a long-term partnership with resale site StubHub. Critics say Ticketmaster uses sales data from the secondary market to adjust its primary ticket prices.
For example, if third-party resellers are getting 20% higher prices for an event, Ticketmaster may raise its own prices to capture more of that profit potential.
3. Company Statements and Patent Filings
Ticketmaster’s CEO Nathan Hubbard has discussed dynamic pricing in multiple interviews, generally defending the practice.
In a 2009 Wired interview, he stated: “we’re not hiding the fact that we dynamically price tickets … Artists and managers now understand better that pricing tickets below true market value benefits scalpers, not fans.”
Ticketmaster has also filed multiple patents relating to dynamic pricing over the years. This includes a 2016 patent for software to adjust event ticket pricing based on secondary market sales data.
4. Event Organizer Interest
The event organizers and venues working with Ticketmaster appear very interested in dynamic pricing.
Concert trade publication Pollstar holds an annual Ticketing Summit where industry insiders discuss ticketing issues. At the 2020 summit, a Ticketmaster executive presented a session on dynamic pricing strategies to a packed room.
The interest suggests the promoters Ticketmaster works with want to use dynamic pricing and may be pressuring the company to implement it.
Arguments Against Ticketmaster Dynamic Pricing
Despite the circumstantial evidence, Ticketmaster insists it does not engage in dynamic pricing. The company and its defenders make a few counterarguments:
1. Contracts With Set Prices
Ticketmaster states all its ticket listings are sold per contracts with set ticket prices determined by the event organizers. As an agent, it cannot adjust prices without the organizer’s approval.
The company claims any price fluctuations result from event organizers releasing batches of tickets at different price levels – not from dynamic price changes.
2. Avoiding Consumer Backlash
Industry experts argue Ticketmaster is unlikely to risk the consumer outrage and backlash that more transparent dynamic pricing would trigger. The company already deals with enough anger over its fees.
Using hidden, stealth dynamic pricing to avoid public blowback would be seen as highly unethical. However, critics counter that Ticketmaster may be doing exactly that behind the scenes.
3. Diluting Primary Market Prices
Dynamic pricing could put Ticketmaster in conflict with event organizers’ interests. Higher primary market prices can drive more sales to secondary sites like Stubhub. This diverts revenues away from the organizers and Ticketmaster.
The organizers likely do not want official face-value prices inflated too much. Keeping primary prices lower allows them to criticize secondary resellers as scalpers.
Evidence of Direct Ticketmaster Dynamic Pricing Is Inconclusive
There is no smoking gun definitively proving Ticketmaster uses dynamic pricing on its own platform. The circumstantial evidence makes a compelling case but is not conclusive. Without access to Ticketmaster’s internal systems and pricing data, it is impossible to know for certain if they are dynamically adjusting prices.
Ticketmaster does appear to be closely analyzing secondary market ticket prices and sales data. The extent to which the company uses that data to inform their pricing recommendations to event organizers is unclear.
It is doubtful Ticketmaster would ever admit to dynamic pricing unless leaked internal documents revealed it. For now, consumers are left to speculate based on pricing patterns and changes they observe.
Venues and Event Organizers Likely Use Dynamic Pricing
Even if Ticketmaster itself does not alter prices, many experts believe the promoters and venues supplying the tickets likely engage in dynamic pricing. Ticketmaster would act as the platform enabling it.
Ticketmaster spokesperson Joel Maxcy told Wired “we don’t own the tickets and we don’t set ticket pricing. The venues set pricing.”
But the venues may be changing prices on their end based on demand signals rather than setting static prices.
There are clear financial incentives for venue operators and event promoters to utilize dynamic pricing systems. Optimal ticket pricing can maximize revenues from their high-demand events. This is especially crucial as the live event industry tries to recover from massive losses during the COVID-19 pandemic.
Platforms Like Ticketmaster Facilitate Dynamic Pricing
Whether Ticketmaster directly participates in demand-based pricing or not, many experts argue its sales platform and distribution infrastructure crucially enable the practice across the industry. Features like Platinum Tickets also demonstrate the company’s involvement in variable pricing based on demand.
Through exclusive ticketing deals, Ticketmaster has the consumer data and sales volume needed to implement successful dynamic pricing on behalf of clients. Its platform seamlessly allows price adjustments and tiered ticket releases.
Via distribution control and technical integration, Ticketmaster gives venues and promoters the mechanisms to adjust prices in response to market demand. This can occur even when Ticketmaster claims prices are wholly controlled by its clients.
Conclusion
In conclusion, Ticketmaster likely facilitates dynamic pricing even if it does not directly set prices and alter them itself. Through various tactics like:
- Analyzing secondary market price data
- Recommending pricing strategies to clients
- Offering Platinum Tickets and other demand-based inventory
- Providing the technical infrastructure for real-time pricing changes
Ticketmaster enables the broader live event industry to implement dynamic ticket pricing. This allows venues, promoters, and other event organizers to capture greater revenue. It remains an open secret whether Ticketmaster directly adjusts prices on its platform beyond the fees it charges. Without further evidence, fans are left to speculate if prices changes they see are Ticketmaster directly altering prices versus reflecting dynamic pricing adjustments made by event organizers.