Ticketmaster fees have become increasingly expensive in recent years, often making up a large percentage of the total cost of a ticket. There are several reasons why Ticketmaster charges such high fees, which this article will explore in detail.
High Demand for Tickets
One of the main reasons Ticketmaster can charge expensive fees is that there is very high demand for tickets to many live events. Concerts by major pop stars or beloved heritage rock bands routinely sell out in minutes. Sports events like NBA, NHL, and NFL games also have limited seating and intense demand. Fans are often desperately trying to get tickets before they sell out, which means they are willing to pay very high fees.
Ticketmaster typically has exclusive contracts to sell tickets for the most popular live events. This lack of competition means fans have no alternative but to pay Ticketmaster’s fees if they want to attend an event. The high demand and lack of alternatives gives Ticketmaster leverage to charge higher and higher fees.
Dynamic Pricing Model
Ticketmaster utilizes a dynamic pricing model, where the ticket price fluctuates over time based on demand. As an event draws near and remaining tickets become more scarce, prices are increased. Ticketmaster’s fees follow the same model, increasing as demand increases closer to the event date.
For extremely popular events, fees can be exceptionally high on the secondary resale market. Ticketmaster owns several resale sites, like Vivid Seats and GetMeIn. Here, resellers can charge market-based prices, which are often many times higher than face value. Ticketmaster takes a percentage of these inflated resale prices as a fee.
Processing Fees
Ticketmaster defends its fees by noting that there are costs associated with selling and processing millions of tickets. These include technology expenses for operating its sales platform, payroll for several thousand employees, and sponsorships with venues, sports teams, and promoters.
Ticketmaster must also combat millions of attempts by scalpers trying to acquire tickets unfairly through bots and bulk buying schemes. The company spends over $350 million per year on anti-bot technology to maintain a fair ticketing marketplace.
Venue Fees
In addition to its own fees, Ticketmaster also collects facility fees, service fees, and other venue-related fees on behalf of the concert halls and stadiums that host events. These fees are passed on to the venue to help cover their operating expenses.
Venues claim these fees are necessary to maintain and improve the concert-going experience through things like ushers, security, cleaning staff, upgraded sound systems, etc. Ticketmaster acts as an intermediary collecting the venue fees, which allows them to be lumped in with their own fees.
Lack of Competition
As the dominant primary ticket seller, Ticketmaster faces very little competition, especially for major concerts and sporting events. According to TicketNews, Ticketmaster sells over 200 million tickets per year, while other primary sites like AXS, eTix, or Eventbrite each sell around 20 million. This vast market share means venues and promoters have little choice but to use Ticketmaster.
The lack of competition gives Ticketmaster little incentive to lower fees. They are able to operate a virtual monopoly on supply of high-demand tickets. Without a viable rival, fans are left paying Ticketmaster’s high fees if they want to attend must-see events.
Captive Audience
Ticketmaster also benefits from having a captive audience of superfans who feel compelled to pay high prices and fees to see their favorite team or artist. Sports fans are devoted to their local team. Music fans feel an emotional connection to bands they have followed for years.
Fans want to experience live events with other passionate fans. This shared social experience creates a willingness to pay premium prices that sports teams, concert promoters, and Ticketmaster are able to capitalize on.
Lack of Price Controls
There are currently no regulations or price controls imposed by the government or industry associations on how much Ticketmaster can charge in fees. The company has discretion to set fees at optimal levels to increase their profits, limited only by consumer tolerance.
Some countries do have limits – in Spain, ticket fees are capped at 15% of face value. But in the majority of its operating markets, including the United States, Ticketmaster does not have any fee restrictions and can charge as much as the market will bear.
High Profit Margins
Ticketmaster is estimated to have profit margins between 10-20% on its ticketing services. They bring in billions in revenue annually, with very high margins especially on fees compared to the cost of providing their ticketing platform.
As a public company, Ticketmaster is beholden to shareholders demanding steadily rising stock prices and profits. This constant pressure to deliver profits likely motivates Ticketmaster’s continual efforts to find new ways to maximize fees paid by consumers.
Bundling Fees into Tickets
In some cases, Ticketmaster bundles fees directly into the ticket price rather than showing them separately. This practice makes the base ticket price appear higher and hides the true amount of fees being charged.
By rolling fees into the ticket price, it makes it appear that Ticketmaster is charging less in fees and allows them to avoid public perception issues surrounding excessive fees. In reality, it does not change the total amount of fees collected by Ticketmaster.
Conclusion
In summary, Ticketmaster is able to charge expensive fees through a combination of high demand, lack of competition, a captive audience base, and no regulations preventing them from setting fees at profitable levels. As long as fans keep attending events in high numbers, Ticketmaster will likely continue to find ways of maximizing the various fees and service charges associated with live event tickets.
