Why is Ticketmaster service fee so high?

Ticketmaster’s service fees have long been a source of frustration for many concertgoers and live event attendees. The fees, which can often add 25% or more to the base ticket price, are how Ticketmaster generates the bulk of its revenue. But why exactly are these fees so high, and what do they cover?

The components of Ticketmaster’s fees

Ticketmaster’s service charges are made up of a few different components:

• Convenience fees – These can be up to 25% of the base ticket price and are Ticketmaster’s main revenue generator.
• Order processing fees – These fees cover the costs of processing the ticket order.
• Facility charges – These are passed on to the venue to cover their operating expenses.
• Delivery fees – Charges for the delivery method chosen, such as standard mail, print-at-home, or UPS.
• Taxes – Local taxes on ticket sales, which Ticketmaster collects and remits.

Why are the fees so high?

There are a few key reasons why Ticketmaster’s fees tend to be so high compared to the base ticket price:

1. Monopoly power – As the dominant primary ticket seller, Ticketmaster faces little competitive pressure to lower fees.
2. High operating costs – Ticketmaster incurs significant technology, staffing, and marketing costs to operate its platform.
3. Venue contracts – Venues contractually require Ticketmaster to collect certain facility and service fees.
4. Guaranteed revenue – Service fees provide Ticketmaster with steady, reliable income separate from ticket sales.
5. Lack of regulation – There are no legal limits on how much Ticketmaster can charge in fees.

Essentially, Ticketmaster charges high fees because it can. It has negotiated contracts with venues that obligate it to collect certain fees, and it leverages its platform’s convenience and huge user base to tack on substantial convenience fees on top. With little competition in the primary ticket sales market, Ticketmaster has no external pressure to bring service fees down. As a result, the company chooses to maintain high fees as its primary revenue stream.

Where the money goes

While customers may see Ticketmaster’s fees as excessive, the company argues that its fees reflect the significant operating costs required to run its platform and provide services to clients. Here is a breakdown of where the money from Ticketmaster’s fees goes:

• Wages and salaries – Payroll for Ticketmaster’s over 8,000 employees makes up around 25% of its expenses.
• Product development – Developing and maintaining its website, apps, and ticket-selling infrastructure requires significant technology investment.
• Venue payouts – The facility fees and a portion of convenience fees go back to the venue and promoters.
• Credit card processing – Processing millions of ticket transactions comes with high payment processing fees.
• Customer service – Ticketmaster’s large customer service department handles over 400,000 fan inquiries per day.
• Other overhead costs – Headquarters, legal, marketing, and other general operating expenses.

While critics contend that Ticketmaster’s fees are out of line with its costs, the company claims its fees simply reflect the expensive overhead required to operate its “must-have” ticketing platform in a highly competitive live events market.

Does Ticketmaster make too much in fees?

Whether or not Ticketmaster’s famously high fees are reasonable is the subject of much debate among concertgoers. Here are some perspectives on both sides:

Yes, Ticketmaster’s fees are excessive

• Fees routinely add 25-30% to base ticket prices, disproportionate to costs.
• Fees keep rising while costs are steady and ticket prices remain competitive.
• High fees due to lack of competition allow Ticketmaster to reap outsized profits.
• Venues and performers could easily absorb more costs to lower fees.
• Fees penalize customers for convenience rather than reflecting fair costs.

No, the fees are justified

• Fees cover real costs of ticket sales, which venues would otherwise have to bear.
• Without the fees, ticket prices would have to rise substantially.
• Fees enable Ticketmaster to provide world-class platform, development, and service.
• Ticketmaster’s dominance is due to superior technology, not lack of competition.
• Consumers see value in the convenience and are willing to pay the fees.

Efforts to challenge Ticketmaster’s fees

Despite criticism, Ticketmaster’s high fees have persisted for years without significant disruption. However, there have been some recent challenges:

• Class action lawsuits – Customers have sued Ticketmaster for allegedly deceiving consumers about fees. But none have succeeded so far.
• Government scrutiny – The Department of Justice has looked into Ticketmaster’s practices but brought no major action.
• Artist pushback – Some big acts like Bruce Springsteen have fought back against high ticketing fees over the years to limited effect.
• Competing platforms – Rivals like AXS are trying to take share but have struggled to make major inroads.
• Direct-to-fan sales – Performers selling directly to fans cut out fees, but such efforts are niche so far.

Despite outcry over fees, Ticketmaster still dominates primary ticket sales with its unmatched venue relationships, technology, and fanbase. Alternatives have yet to demonstrate they can truly disrupt Ticketmaster’s hold on the industry.

What fans can do

While Ticketmaster’s dominance makes avoiding its high fees difficult, fans do have some options to reduce the sting:

• Buy directly from the box office – Box office sales often have lower or no fees.
• Choose cheaper delivery options – Print-at-home or mail versus expedited delivery.
• Buy fan club presales – Fan club presales through Ticketmaster often have lower fees.
• Watch for fee waivers – Occasionally fees are waived for special promos.
• Buy group tickets – Per ticket fees are sometimes lower for group orders.

Though inconvenient, avoiding Ticketmaster altogether remains the surest way to bypass their fees. Fans can try to buy from the box office, on secondary exchanges, or directly from artists or venues.

The future of Ticketmaster’s fees

Despite ongoing criticism that they overcharge consumers, Ticketmaster’s high service fees remain stubbornly persistent for now. However, there are some potential future developments that could lead to lower fees:

• More competition – If an alternative like AXS, SeatGeek or Amazon makes major market share gains, it could force Ticketmaster to reduce fees.
• Government intervention – Regulators could impose pricing restrictions or requirements to make fees more transparent.
• Consumer pressure – Continued public outrage and boycotts could make venues and artists demand lower Ticketmaster fees.
• Technology disruption – A radically new approach to primary ticketing could upend current model and fees.

But Ticketmaster’s entrenched position will make sustaining high fees possible as long as it delivers essential value to partners. Unless forced by competition, law, or consumer rejection, Ticketmaster will likely continue to leverage its platform’s advantages to charge some of the highest fees in entertainment.

Conclusion

Ticketmaster’s lofty service fees remain a major pain point for concertgoers, but are deeply embedded in the company’s business model. As an entrenched middleman between venues and fans, Ticketmaster can get away with fees that seem excessive to many customers. But with its vast technology, staffing and marketing costs, Ticketmaster contends it needs high fees to sustain its operations and continue providing a premier ticketing service. Despite outcry and lawsuits over the years, Ticketmaster has yet to face any truly disruptive threat. Unless meaningful competition emerges, government intervenes, or consumers unite and revolt, the company’s hefty fees seem likely to persist. While fans grumble, Ticketmaster still delivers enough value to venues, artists, and the majority of customers to make its fees a necessary, if frustrating, cost of live event ticket sales.