Ticketmaster is the dominant primary ticket outlet for large-scale live entertainment events in the United States. Over the past few decades, it has established itself as a near-monopoly in the ticket sales industry. But how exactly did Ticketmaster get to this position of market dominance? There are a few key factors that enabled Ticketmaster’s rise to becoming a monopoly:
Exclusive deals with venues and promoters
One of Ticketmaster’s main strategies has been to sign exclusive long-term contracts with major venues and event promoters to sell tickets for their events. This means that for the most popular concerts, sports games, etc., Ticketmaster is the only authorized place you can purchase tickets. They have exclusive ticketing arrangements with most major stadiums, arenas, theaters, clubs and promoters across the US. This gives them a huge advantage over any competitors when it comes to supplying tickets to high-demand events.
Acquisitions of competitors
Over the years, Ticketmaster has systematically acquired or merged with rival ticketing companies like Ticketron, TicketWeb, Paciolan, and more recently Live Nation. This strategy eliminated competitors and made Ticketmaster the dominant player in different segments of the industry including concert promotions, artist management and online ticket sales. After their 2010 merger with Live Nation, Ticketmaster controlled over 70% of the primary event ticketing market according to the Department of Justice.
Anti-competitive practices
Ticketmaster has been accused of engaging in anti-competitive practices that make it difficult for rival ticketing companies to compete. These include:
– Exclusive deals with venues that prohibit them from selling tickets through other outlets.
– Locking up the best seats for its own ticket brokers, denying access to competitors.
– Predatory pricing in certain markets to undercut rivals.
– Refusing to list competitor’s ticket inventory on resale sites owned by Ticketmaster like GetMeIn and TicketsNow.
High service fees
Ticketmaster charges very high service fees on every ticket sold – often 25% or more of the base ticket price. This generates massive revenues for Ticketmaster while keeping ticket prices artificially high. The lack of competition allows them to continue charging exorbitant fees. Their service fees generated over $2 billion in revenues in 2018.
Leveraging data and technology
Ticketmaster has built proprietary technology and data analytics tools for ticket sales that maintain its competitive edge. This includes data to price tickets based on projected demand and tools that allow it to quickly list and sell large volumes of tickets online. Competitors struggle to match Ticketmaster’s tech capabilities.
Strong branding and consumer inertia
Many consumers are simply accustomed to buying from Ticketmaster for major events. Its brand has become synonymous with ticket sales. The convenience of its large event inventory and brand recognition maintain Ticketmaster’s dominance. Consumers continue using it out of habit even when its fees and services draw complaints.
The Early Years
Ticketmaster was founded in 1976 in Phoenix, Arizona by two computer programmers, Gordon Gunn and Peter Gadwa. They wanted to create a centralized ticketing service that venues could use instead of having to run their own box offices in-house. The ticketing systems at the time were very manual involving paper tickets and cash registers.
Gunn and Gadwa saw an opportunity to build and sell computerized ticketing services to venues and promoters. They launched Ticketmaster’s first system at a local venue in Phoenix. The new technology allowed customers to purchase tickets at remote box office locations instead of just at the venue itself. It also automated the tracking of ticket inventory and sales.
This centralized ticketing model proved very appealing to venues and promoters. It allowed them to run leaner operations while Ticketmaster handled the technology and staffing for ticket sales. Within a couple years, Ticketmaster was signing deals with venues and promoters across the country.
Some key milestones in Ticketmaster’s early growth include:
- 1978 – Expanded to first markets outside Arizona by signing deals with venues in Seattle and Charlotte.
- 1982 – Handled ticketing for first NFL client, the Seattle Seahawks. Also signed contracts for several NBA and NHL teams.
- 1984 – Partnered with Ticketron, the largest ticketing company at the time, to handle ticketing for some events.
- 1989 – Merged with Ticketron under the Ticketmaster name. This gave them dominant market share in major cities.
By the late 1980s, Ticketmaster had established itself as a major player in the primary ticketing market. It had also begun expanding into secondary ticketing by purchasing resale ticket companies like Ticket Exchange.
Consolidating Market Power in the 1990s
In the 1990s, Ticketmaster continued aggressively pursuing exclusive deals with venues and acquiring competitors to lock in their dominant position in the industry. Some key events in this decade include:
- 1991 -Signed 5-year exclusive deal with Los Angeles’ Forum arena after outbidding competitor Ticketron.
- 1993 – Handled exclusive ticketing for inaugural MLS soccer season including 1994 World Cup held in USA.
- 1993 – Acquired Ticketron’s remaining assets which were mainly old mainframe computers and software.
- 1996 – Signed exclusive 10-year contract with Chicago’s United Center.
- 1997 – Purchased TicketWeb and named it official secondary ticketing site.
- 1998 – Handled exclusive online sales for 1998 FIFA World Cup in France. This was their first major international event.
DOJ Anti-Trust Lawsuit
In the mid-90s, the U.S. Department of Justice began investigating Ticketmaster over anti-competitive practices. Many venues claimed they wanted to use other ticketing services but were stuck in exclusive deals with Ticketmaster.
In 1994, the DOJ filed an antitrust lawsuit against Ticketmaster. The government contended that Ticketmaster was engaging in illegal monopolistic behavior through their exclusive deals which froze out competitors.
However, after a 4-year legal battle, a federal judge ruled in Ticketmaster’s favor in 1998. The court determined there was insufficient evidence that Ticketmaster’s exclusive contracts substantially harmed competition in the ticketing industry. This court victory allowed Ticketmaster to continue its aggressive business tactics.
Growth in the 2000s
Going in the 2000s, Ticketmaster was the undisputed leader in event ticketing in North America. They continued to leverage their position by signing long-term venue deals and acquiring technologies to reinforce their dominance.
Some developments for Ticketmaster in the 2000s:
- 2000 – Signed exclusive 10-year deal with Chicago’s Sears Centre arena.
- 2001 – Launched Ticketmaster.com to handle all online sales. This quickly became one of the web’s highest grossing retail sites.
- 2008 – Acquired Paciolan, a major ticketing company focused on sporting events and colleges.
- 2008 – Purchased UK-based secondary ticketing firm Get Me In.
- 2009 – Merged with Live Nation, the world’s largest concert promoter, to form Live Nation Entertainment.
The merger with Live Nation in particular drew strong anti-trust scrutiny from regulators in the U.S. and Europe. The combined company controlled over 70% of the U.S. ticketing market. However, after agreeing to license some ticketing software to competitors, the deal was approved in 2010.
The Live Nation merger cemented Ticketmaster’s dominance of live event ticketing while also making it a global powerhouse in concert promotion and artist management.
Ticketmaster Today
Currently, Ticketmaster sells over 500 million tickets per year through its various divisions and subsidiaries. It has remained consistently profitable with over $11 billion in total revenues reported in 2021.
Some key facts about Ticketmaster’s business today:
- Has ticket sales agreements with over 1000 major venues and promoters in the U.S.
- Processes more than 11 million ticket orders per week during peak sales periods.
- Owns or partners with the largest concert promoter (Live Nation), artist management firm (Front Line) and national radio promoter (FEA).
- Owns major secondary resale sites like Vivid Seats and TicketsNow which it uses to resell its own primary ticket inventory.
- Charges convenience fees averaging 25% of ticket price generating over $2 billion annually.
- Has mobile apps with over 60 million downloads providing ticket sales and entry to events.
- Has a database tracking sales of over 1 billion tickets since 2013 which informs its ticket pricing models.
Despite frequent criticism of its high fees and anti-competitive practices, Ticketmaster maintains around 80% market share of primary ticket sales for event venues with over 5000 seats. Its dominance is largely unchallenged.
Smaller competitors like AXS and Eventbrite have managed to gain some traction in specific music niches and for smaller DIY events. But no competitor has come close to challenging Ticketmaster’s stronghold over ticketing for premiere venues and promoters.
The combination of exclusive long-term venue deals, acquisitions of competitors, high service fees, and investment in technology and analytics has made Ticketmaster a monopoly and the undisputed market leader in event ticketing for over 40 years and counting.
Forces That Maintain Ticketmaster’s Dominance
Ticketmaster has been so successful at maintaining its market dominance across decades because of both deliberate strategic choices and some inherent industry conditions that favor a single large ticketing company.
Sources of Ticketmaster’s Ongoing Market Power
| Factor | Description |
|---|---|
| Exclusive contracts | Long-term exclusive deals (10-20 years) with major venues lock out competitors. |
| High switching costs | Venues incur high costs to change ticketing platforms so tend to renew Ticketmaster contracts. |
| Mergers & acquisitions | Buying competitors helps eliminate threats to market share. |
| Brand recognition | Wide customer familiarity with Ticketmaster makes it default choice. |
| Investment in technology | Ticketmaster spends heavily on analytics tools and sales systems making it hard for smaller players to keep pace. |
| Vertical integration | Owning promoters and venues gives Ticketmaster control over entire industry stack. |
| Consumer inertia | Many consumers stick with Ticketmaster out of habit despite frustrations over fees. |
These sustained competitive advantages have allowed Ticketmaster to survive and thrive despite:
– Numerous consumer class action lawsuits over fees
– Investigations and fines from regulatory agencies
– Public relations backlashes over unfair pricing gouging fans
Industry Conditions Favoring Consolidation
Beyond Ticketmaster’s own business practices, there are some inherent industry conditions that make the ticketing market susceptible to monopolization:
- High fixed costs – Major capital investments needed for ticketing software, analytics, sales platforms favors a single large player.
- No differentiation – Commodity-like nature of basic ticket sales makes competition mostly about price and volume.
- Fragmented buyers – Millions of consumers each buy a small number of tickets making collective bargaining impossible.
- Lack of regulation – U.S. largely has free market approach allowing dominance like Ticketmaster’s to flourish.
Criticisms of Ticketmaster’s Monopoly
Despite its business success, Ticketmaster’s monopoly position has long drawn criticism from consumers, watchdogs, and industry players alike:
Complaints About Ticketmaster
| Issue | Description |
|---|---|
| High Fees | Service fees often add 25-30% to ticket prices, generating huge profits for Ticketmaster at the expense of fans. |
| Misleading Pricing | Fees are only revealed late in transaction giving illusion tickets are cheaper at the start. |
| Predatory Pricing | Underprices tickets initially to price out competitors then jacks up prices later closer to the event once sales are locked in. |
| Arbitrary Restrictions | Imposes ticket purchase limits and opaque rules that stymie consumers. |
| Poorer Service | Monopoly position leads to worse customer service compared to a competitive market. |
| Lack of Innovation | No incentive to improve ticketing experience for consumers when already dominate the industry. |
While Ticketmaster is clearly very profitable and efficient for venues and promoters, critics argue its monopolistic power is abused at the expense of ordinary consumers.
Past Legal and Regulatory Actions
Ticketmaster’s dominance and aggressive tactics have made it a target for legal and regulatory action over the years:
- 1994 – Sued by DOJ on antitrust charges for anti-competitive exclusive venue deals (lawsuit failed).
- 1995 – Sued by Pearl Jam band over imposing fees fans didn’t want (band lost suit).
- 2009 – Merger with Live Nation was reviewed for 2 years by DOJ for anti-trust concerns before being approved.
- 2019 – Fined $4.5M by FTC for misleading advertisements about ticket costs.
- 2022 – Sued by DOJ to potentially split Ticketmaster and Live Nation for unfair competition.
However, most of these actions did little to curb Ticketmaster’s market power or change its business practices.
Calls to Break Up Ticketmaster’s Monopoly
There have been frequent calls by activists and lawmakers to break up Ticketmaster’s ticketing monopoly:
- Legislation like BOSS Act introduced to promote ticketing competition and transparency.
- Calls to separate Ticketmaster’s primary and resale ticket businesses.
- Ending all exclusive venue contracts so competitors can get inventory.
- Banning Ticketmaster / Live Nation merger and requiring divestitures.
- Enforcing caps on maximum ticket service fees.
Despite this pressure, Ticketmaster has successfully maintained its monopoly position in the ticketing industry for over 45 years. Their exclusive deals, high fees, and acquisitions of competitors continue relatively unimpeded to this day. It remains extremely difficult for any rival to challenge Ticketmaster’s dominant status as the leading ticket seller.
Conclusion
Ticketmaster has established an extremely profitable and nearly unassailable monopoly in event ticketing. This dominance was built over decades through shrewd exclusive venue deals, mergers and acquisitions, anti-competitive behavior, and exploiting inertia of consumers.
Its monopoly power now looks very secure with no signs of meaningful competition emerging. Calls to break up Ticketmaster have gone unheeded for years. Barring an unexpected regulatory intervention, Ticketmaster appears poised to continue dominating primary ticket sales and soaking consumers with high fees for the foreseeable future.
