Ticketmaster is one of the largest ticket sales and distribution companies in the world. The company sells tickets for concerts, sports events, theater shows, and other live entertainment events. Ticketmaster generates revenue through service fees and other charges that are added onto the base ticket price that venues set.
How does Ticketmaster make money?
Ticketmaster makes money in a few key ways:
- Service fees – This is the biggest source of revenue for Ticketmaster. The company charges service fees on top of the base ticket price for items like order processing, customer service, and ticket delivery. These fees can range from 10-25% of the base ticket price.
- Convenience fees – These are extra fees Ticketmaster charges for the convenience of secure online or phone-based ticket purchases. Convenience fees are typically around $5-15 per ticket.
- Order processing fees – Ticketmaster charges an order processing fee, usually around $5-10 per order, for each ticket order.
- Late delivery fees – If customers purchase “will call” tickets that are picked up at the venue box office, Ticketmaster may charge a late delivery fee around $5-10 for not delivering the tickets early.
- Premium ticket services – Ticketmaster owns and operates secondary ticket exchanges like TicketsNow where resellers can charge markups on highly desired tickets. Ticketmaster makes money by taking a percentage of these resale revenues.
- Data and advertising – As one of the largest ticketing platforms, Ticketmaster collects valuable user data and event data that it monetizes through targeted advertising and promotions.
The bulk of Ticketmaster’s revenues come from the various fees it tacks onto initial ticket purchases. By some estimates, fees comprise around 20-30% of every ticket bought through Ticketmaster. The company generated over $10 billion in revenue in 2021, the bulk of which was from fees.
Who ultimately gets the money?
Ticketmaster is a subsidiary of Live Nation Entertainment, the world’s largest entertainment and ticketing conglomerate formed in a 2010 merger between Live Nation and Ticketmaster. So the major beneficiaries of Ticketmaster’s profits are:
- Live Nation Entertainment – As the parent company, Live Nation gets a cut of all Ticketmaster’s profits, which accounted for about 27% of Live Nation’s total revenue in 2021.
- Ticketmaster Executives – Top executives like Ticketmaster’s president and other high-level managers are compensated from Ticketmaster’s earnings.
- Live Nation Shareholders – Any profits made by Live Nation and its subsidiaries enrich the company’s shareholders through stock price growth and dividends.
- Venues/Event Providers – Venues and event promoters share some of the fees Ticketmaster generates, as they get a cut of Ticketmaster’s service fee on each ticket sold.
Though fees may seem high to consumers, Ticketmaster argues they enable affordable ticket prices. With fees, the company invests in technology to enhance security, expand distribution, and support clients. Critics counter that fees mostly benefit executives and shareholders.
Where does the base ticket sale revenue go?
The base ticket price itself, before any fees added, goes directly to whoever is hosting the event. For example:
- Concerts – Revenue from the base ticket price goes to the musical act’s management and the concert promoters putting on the show.
- Sporting Events – Ticket sale revenue goes to the teams/leagues hosting the event.
- Theater – Base price revenue goes to the theater company or producers hosting the performance.
Ticketmaster acts as an intermediary and platform for ticket sales. But the company does not directly get the revenue from the initial ticket’s face value, only additional fees stacked on top.
Does Ticketmaster have monopolistic power?
Ticketmaster controls around 70% of the primary ticket market and sells 500 million tickets per year. The company has no true competitors anywhere near its size in the ticketing industry. This lack of competition gives Ticketmaster tremendous influence over the live event market.
Many observers have accused Ticketmaster of monopolistic practices that hurt consumers, such as:
- Charging exorbitant fees with no alternative ticketing options for big concerts and shows
- Prohibitive contracts that force venues to sell tickets exclusively through Ticketmaster
- Merging with Live Nation in 2010 to become a vertically integrated entertainment giant
- Owning secondary resellers like TicketsNow, which critics allege allows Ticketmaster to double-dip revenue
Ticketmaster maintains their size and market dominance is not a monopoly but simply a reflection of their superior technology and service capabilities. They also note consumers can avoid fees by buying directly at venue box offices.
Nonetheless, the lack of competing ticketing platforms and frequent allegations of abusive practices have led many to question Ticketmaster’s hold on the ticket sales industry.
Attempts at ticket sale reform
There have been some attempts in recent years to reform the live event ticketing industry and provide more alternatives to Ticketmaster:
- AGT – In the late 1990s/early 2000s, venues including the Rockettes and Seattle Seahawks left Ticketmaster to form their own ticketing company, Audience Group Ticketing (AGT). But AGT failed to gain traction and was bought out by Ticketmaster in 2008.
- Bands reforming ticketing – Some major music acts like Pearl Jam have tried bypassing Ticketmaster to handle their own ticketing. But these efforts proved complicated and were limited in scope.
- New ticketing platforms – Some new players like AXS and SeatGeek have emerged to compete with Ticketmaster in recent years. But their market share is still vastly outmatched by Ticketmaster’s scale and dominance.
- Legal challenges – Various lawsuits and regulatory bodies like the DOJ and FTC have challenged Ticketmaster over anti-competitive practices, but no meaningful changes have yet occurred.
Despite frequent backlash, Ticketmaster still largely maintains exclusive agreements with major venues and charges fees with impunity. Their entrenched position continues to net them billions in revenue annually.
Key financial figures
Here are some key financial figures for Ticketmaster and parent company Live Nation Entertainment:
2021 Revenue | $10.3 billion (Ticketmaster) $6.26 billion (Live Nation total) |
2021 Operating Income | $334 million (Ticketmaster) $117 million (Live Nation total) |
Fees as % of Revenue | Estimated at 25-30% |
Market Share | ~70% of primary ticket market |
Stock Price (LYV) | $80.96 (as of Oct. 2022) |
These impressive revenue figures show why Ticketmaster is so profitable and dominant. With high fees captured from virtually every major live entertainment event, the company brings in billions yearly.
Conclusion
In summary, Ticketmaster earns money primarily through service fees added onto ticket sales. Live Nation Entertainment, parent company executives, venues, and shareholders ultimately gain from Ticketmaster’s profits. Attempts by consumers and artists to bypass or compete with Ticketmaster have largely failed. With exclusive venue contracts and world-leading ticket volumes, the company retains a hugely lucrative stronghold on live event ticketing.