Ticketmaster is one of the largest ticket sales and distribution companies in the world. Founded in 1976, Ticketmaster provides ticketing services for many of the major entertainment events in the United States and abroad. Over the years, Ticketmaster has faced scrutiny and criticism for its business practices, especially related to service fees and its position in the ticket sales market. This has led some to question whether Ticketmaster functions more as a marketplace or as a traditional ticket distributor. There are arguments on both sides of this issue.
What is a marketplace?
A marketplace is a platform that connects buyers and sellers. Marketplaces allow sellers to list products or services, while enabling buyers to search for, compare, and purchase those offerings. Some key characteristics of marketplaces include:
- Bringing together many buyers and sellers
- Facilitating transactions between buyers and sellers
- Providing infrastructure, tools, and services to enable transactions
- Enabling price discovery – buyers and sellers negotiate prices
- Generating revenue by charging fees or commissions on transactions
Well-known examples of online marketplaces include sites like eBay, Etsy, Airbnb, and Amazon Marketplace. These platforms allow many different sellers to list their products in one centralized location to connect with buyers. The marketplace provider earns money by charging listing fees, transaction fees, or commissions on sales.
In contrast, a traditional retail model involves a distributor purchasing inventory to resell to customers. In this case, the business buys products wholesale and sells them at a markup. The business takes on more inventory risk and upfront costs, but also receives the full profit on each sale.
Ticketmaster’s Business Model
Ticketmaster’s core business is ticket distribution and sales. Here are some key elements of Ticketmaster’s business model:
- Contracts with venues, sports teams, musicians, theaters, etc. to serve as the exclusive or primary ticket seller for events
- Provides the technology to power ticketing systems and process sales for these clients
- Sells tickets directly to consumers through Ticketmaster.com and other channels
- Charges service fees on each ticket sold as its primary revenue
- Owns or has acquired multiple event venues and promoters to own more of the live event business
In exchange for providing ticketing services, Ticketmaster typically gets an upfront fee from the event organizer as well as a percentage of the ticket price as a service charge paid by the ticket buyer. Unlike a marketplace, Ticketmaster does not allow third parties to list tickets for sale on its platform. It primarily sells first-party ticket inventory provided by sports teams and event venues.
Arguments for Ticketmaster as a Marketplace
There are a few aspects of Ticketmaster’s business that resemble a marketplace model:
Connects buyers and sellers
At a high level, Ticketmaster connects event organizers who want to sell tickets with consumers who want to buy tickets. The company facilitates these transactions between the two parties.
Provides value-added services
In addition to just selling tickets, Ticketmaster also provides technology and services to event organizers to help them manage ticketing, market events, collect data, and conduct dynamic pricing. These are value-adds beyond just sales.
Enables some price discovery
Ticketmaster utilizes demand-based pricing algorithms to adjust ticket prices in real time based on market demand. This provides some degree of price discovery based on supply and demand dynamics.
Third-party resellers
Ticketmaster does facilitate some secondary ticket sales through its TicketExchange platform where fans can resell tickets to others at market-driven prices. This is arguably a partial marketplace feature.
Arguments Against Ticketmaster as a Marketplace
However, there are also several aspects of Ticketmaster’s model that are different from a typical marketplace:
Not open to third-party sellers
Unlike eBay or Etsy which are open to any seller, Ticketmaster only sells tickets directly on behalf of the sports teams, venues, and event organizers. It does not enable third parties to list inventory.
Owns event venues and promoters
By acquiring event organizers and venues like Live Nation, Ticketmaster now owns more of the initial ticket inventory. This makes it less of an open marketplace.
Fixed fees
The fees Ticketmaster charges to facilitate transactions are generally fixed service fees, not bid/ask spread commissions that vary based on market dynamics.
No buyer-seller negotiation
Buyers cannot negotiate prices directly with sellers the way they could on eBay. Prices are fixed by Ticketmaster based on its own algorithms.
First-party ticket sales
The majority of Ticketmaster’s business is first-party ticket sales on behalf of partners, not facilitating third-party transactions. This is more of a traditional retail or distribution model.
Conclusion
Evaluating Ticketmaster’s business model, it does not appear to function primarily as an open marketplace like eBay or Airbnb. While it connects buyers and sellers and provides value-added services, it lacks key marketplace features like:
- Allowing broad third-party seller participation
- Variable transaction fees driven by supply and demand
- Buyer-seller price negotiation
The core of Ticketmaster’s business remains first-party ticket sales and distributions, leveraging exclusive deals with major event providers. It charges fixed fees for facilitating those transactions. With limited price discovery or negotiation and an inventory limited to partners, Ticketmaster acts more like a traditional distribution and retail channel than an open marketplace. The company faces ongoing criticism for antitrust and anti-competitive behavior due to its dominance in ticketing.
While Ticketmaster enables some secondary ticket sales through TicketExchange, that appears to be a smaller part of its current business model. The bulk of its profits still come from fixed fees earned selling primary tickets to premier events. Based on these realities, Ticketmaster functions predominantly as a ticketdistributor and sales channel, not an open marketplace. However, as the ticketing landscape continues to evolve, marketplace dynamics may play a bigger role in the company’s future business practices.