Ticketmaster is a dominant player in the live event ticketing industry. As the largest primary ticket outlet in the US, Ticketmaster sells tickets for concerts, sports events, theater shows, and more. In 2019 alone, Ticketmaster sold 485 million tickets worth $33 billion. But how exactly does this ticketing behemoth make money?
Ticket Fees
The primary way Ticketmaster generates revenue is through service fees and order processing fees charged on each ticket sold. These fees can range from $5-$40 depending on the event. For a $100 concert ticket for example, there may be a $15 service fee per ticket along with a $5 order processing fee. So Ticketmaster makes $20 on the sale of that single ticket.
These fees are collected by Ticketmaster and split between them and their clients (the venue, sports team, promoter, etc). The exact revenue share depends on the contract, but typically Ticketmaster keeps 30-40% of the fees. These fees make up the bulk of Ticketmaster’s earnings.
Convenience Fees
In addition to standard service fees, Ticketmaster also charges convenience fees when customers purchase tickets online or through a mobile app. These fees can be $2-$5 per ticket and allow Ticketmaster to generate additional revenue from tech-savvy customers.
Delivery Fees
If customers choose to have tickets delivered by mail rather than print them at home, Ticketmaster tacks on a delivery fee. UPS overnight shipping for example costs $25 per order.
Late Fees
If a customer doesn’t pay for an order on time, Ticketmaster charges a late fee. This serves as both an incentive for customers to pay promptly and an added income stream.
Secondary Market Revenue
In addition to primary ticket sales, Ticketmaster also earns money through the secondary ticket market via their TicketExchange platform. TicketExchange allows fans to safely resell tickets they can no longer use. Ticketmaster takes a percentage cut of all resale transactions. They also earn revenue by charging a fee when tickets are posted for resale.
Dynamic Pricing
Through TicketExchange, Ticketmaster utilizes dynamic pricing technology to adjust prices in real-time based on supply and demand. As tickets get scarcer closer to an event, they raise prices to maximize yield. This allows them to earn even more revenue from high-demand secondary sales.
Advertising & Sponsorships
Ticketmaster brings in advertising revenue by selling ad space on their website and mobile app. Advertising partners include insurance companies, credit cards, and other brands looking to market to Ticketmaster’s large user base.
They also generate sponsorship revenue by partnering with brands on contests, giveaways and other experiential marketing campaigns. These sponsorships provide brands exposure to Ticketmaster’s audience while bringing in lucrative sponsorship dollars.
Merchandise & VIP Packages
In some cases, Ticketmaster allows customers to purchase merchandise, VIP packages, and other premium items during the checkout process. They take a cut of these ancillary sales.
For example, when buying concert tickets customers may have the option to add an artist t-shirt or backstage tour pass. These high-margin offerings represent an incremental revenue stream for Ticketmaster.
Data & Analytics
With their massive storehouse of customer data, Ticketmaster is able to generate revenue by providing data-based solutions to partners. These include detailed audience analytics, dynamic pricing algorithms, behavioral insights about high-lifetime-value customers, and more.
Partners like sports teams, venues, and concert promoters leverage these insights to improve sales, target marketing campaigns, price dynamically, and enhance the overall fan experience.
Business Services
Ticketmaster offers technology and business service offerings to other businesses in the live entertainment industry. These include white-label ticketing solutions, fan relationship management (FRM) tools, seat mapping software, access control systems, and marketing solutions.
Providing these services to other businesses allows Ticketmaster to diversify their revenue streams beyond just ticket sales.
Vertical Integration
Ticketmaster’s parent company Live Nation owns many of the venues, festivals, and concert promoters with whom Ticketmaster partners. This vertical integration benefits Ticketmaster in two ways:
- It gives them tremendous negotiating power over clients.
- It allows them to earn revenue across multiple arms of Live Nation’s consolidated business.
So even as Ticketmaster’s percentage fees may decrease, their overall revenue across the Live Nation ecosystem increases through consolidation.
Conclusion
In summary, here are the key ways Ticketmaster generates billions in annual revenue:
- Service and processing fees on every ticket sold
- Secondary market sales and reseller fees
- Advertising and sponsorships
- Merchandise and premium packages
- Data analytics and business services for partners
- Vertical integration across Live Nation’s consolidated business
So while fans may hate them, Ticketmaster’s lucrative business model has made them a dominant force in live event ticketing and a cash cow for their parent company Live Nation.