Ticketmaster is the largest primary ticket outlet in the United States. The company sells tickets for concerts, sporting events, theater shows, and other live events on behalf of event organizers. Ticketmaster has exclusive contracts with many major venues and artists to sell tickets to events. This gives them a lot of control over ticket prices. But how exactly does Ticketmaster determine what to charge for tickets? There are several factors that influence Ticketmaster’s pricing.
Dynamic Pricing Based on Demand
One of the biggest factors is demand. Ticketmaster uses dynamic pricing, meaning prices fluctuate based on market demand leading up to and on the day of an event. Events that have a lot of hype and buzz around them will understandably have more demand. Therefore, Ticketmaster will charge higher prices for high-demand events. Events that don’t generate as much demand will have lower prices.
Some specific indicators of demand that Ticketmaster looks at are:
– Pre-sales: How quickly an event sells out during pre-sales for groups like fan club members or credit card holders gives an indication of overall demand. Faster sell-outs mean higher prices.
– Secondary market: Ticketmaster looks at what tickets are reselling for on secondary markets like StubHub. Higher resale prices indicate fans are willing to pay more and Ticketmaster will raise prices.
– Social media engagement: The amount of buzz an event generates on social media also demonstrates demand. More mentions and engagement lead to higher prices.
– Tour history: Artists with a track record of selling out arenas and stadiums will have tickets priced higher from the start. New artists just starting will have lower initial pricing.
Venue Size and Location
The size and location of the venue also impacts pricing. Larger venues in big markets like New York and Los Angeles will have higher ticket prices. Smaller secondary markets will have lower prices for the same event. Higher-quality venues also command a ticket premium. An event at Madison Square Garden will be priced higher than a local club.
Artist’s Share of Ticket Revenue
The artist’s take of the ticket revenue also factors into prices. Top artists can command a larger percentage of ticket sales. If the artist gets 80% of the ticket price, Ticketmaster needs to charge higher prices to cover their fees and still make a profit. Less established acts will take a smaller cut, allowing Ticketmaster to charge less per ticket.
Overhead and Operating Costs
Ticketmaster has high overhead costs associated with running its platform and services. These include technology, staffing, sales commissions, and more. Ticket prices need to be high enough for the company to cover these costs and still turn a profit. As their operating costs go up, prices tend to follow.
Service and Convenience Fees
In addition to the base ticket price, Ticketmaster tacks on service and convenience fees. These extra charges are added revenue for the company. Service fees help pay for operating the platform. Convenience fees apply to online and phone sales since those methods are easier than buying at the box office. These fees often represent a large percentage of the final ticket price fans pay.
Comparison to Other Ticket Sellers
Ticketmaster also looks at pricing from competitors like AXS and SeatGeek. They try to keep their prices in line with competitors for similar events in the same markets. Drastically undercutting or going over competitors could lead to unsold inventory or consumer backlash.
At the end of the day, Ticketmaster is looking to maximize profits. An event will be priced high enough to cover all their costs and still make a healthy profit margin. With their position in the industry, they have free rein to set prices to drive high revenue.
Utilizing Data and Algorithms
In order to balance all these factors, Ticketmaster relies on data and algorithms. They constantly monitor prices on both the primary and secondary market. That data gets fed into pricing algorithms which calculate the optimal price to maximize selling out an event while squeezing out the most revenue possible. The algorithms take into account demand signals, venue data, and projected profit margins. It’s a highly data-driven approach.
Case Study: Average NFL Ticket Prices for 2022 Season
To illustrate Ticketmaster’s variable pricing in action, here are the average ticket prices for NFL games this season from highest to lowest:
|Average Ticket Price
|New England Patriots
|San Francisco 49ers
|New York Giants
|New York Jets
|Las Vegas Raiders
|Green Bay Packers
The Patriots and 49ers have two of the largest and most loyal fan bases in the NFL, leading to huge demand. As a result, their average ticket prices are over $500. The Jets and Giants play in the huge New York market which also drives up prices. Teams like the Raiders and Broncos have smaller fan bases but can charge a premium due to having smaller stadiums. All these factors get accounted for in variable pricing. The end result is each team has different average prices that maximize revenue based on their specific market dynamics.
Criticisms of Dynamic Pricing
Ticketmaster’s data-based dynamic pricing does receive its fair share of criticisms:
– It prices real fans out of the market – Regular fans can’t afford ballooning ticket prices for the biggest events. These tickets get sold to corporations and the super wealthy instead.
– Limits access for artists’ core fans – Top artists abandon their original fan bases in favor of chasing higher ticket revenues.
– Creates a monopoly – Third-party resellers can’t compete with Ticketmaster’s proprietary tickets and monopolistic position.
– Lacks transparency – It’s unclear how Ticketmaster arrives at specific ticket prices. Fans feel prices are arbitrary.
– Contributes to price gouging – For the highest demand events like the Super Bowl, fans think Ticketmaster engages in extreme price gouging.
In conclusion, Ticketmaster uses variable demand-based pricing for tickets. Factors like demand signals, venue, artist revenue split, costs, competitors’ prices, and profit goals all contribute to determining final event ticket prices. Advanced data analytics and algorithms help Ticketmaster optimize pricing. While this dynamic pricing does maximize revenue, it has also garnered criticism from consumers and observers for pricing regular fans out of the market. However, this data-driven approach appears to be the future of ticketing as teams and artists seek to squeeze out every dollar possible based on market conditions.