Senators are looking into Ticketmasters dominance in the ticketing market following several high-profile fiascos. As a pricing professional, I support free markets, and (of course) dynamic pricing, but only within reason, ethical standards, and the law.
However, the current market conditions are clearly detrimental to the consumer, as evident by predatory pricing practices, the breakdown of the market and platforms, and ensuing chaos. I am sure Taylor Swift would agree.
The ticket market is not operating freely
In many cases, over 90% of tickets are not released to the public, ending up with credit card companies and secondary market sellers, some of which are owned by Ticketmaster/Live Nation. Those that are released are quickly snapped up by bots of ticket brokers. The platforms are also sometimes blocking tickets purchased from other secondary markets from working at their venues. LN owns some of the secondary ticket sellers and has a major financial incentive to control the secondary market as they collect their fees twice at an inflated price.
On Dec. 9, Bad Bunny played a concert in Mexico City, where thousands of fans with valid Live Nation (LN) tickets were denied access. I personally went through something similar. Last year, we bought secondary tickets from Stubhub for the sold-out LCD Soundsystem concert at the Fox Theatre. When we arrived, we were not admitted as the LN scanners would not read them. At the Outlaws Festival at Shoreline, another 2022 LN event, I was excited to see the Black Pumas, as were many in the crowd. The Black Pumas never played. This was not announced, and no recourse or refunds were offered. This indifference to customers is a hallmark of monopolies.
LN has a 70% share of live event ticketing. To preserve it, they attempt to control the distribution of tickets through tight artist management relationships, retaliating against venues that dont use their platform, buying control over festivals and venues, and exerting control over the secondary markets through ticket releases, pricing, and admissions. Many of us remember Pearl Jams famous losing battle versus LN, where they lost an antitrust lawsuit and attempted to use non-LN venues but exposed some of their anticompetitive practices. Its no wonder that legislators likeAOC call LN a monopoly.
The Department of Justice (DOJ) shares this view. In fact, the Live Nation/Ticketmaster merger was allowed only under provisions designed to curtail their monopolistic powerand they have operated under an antitrust consent decree since their merger in 2010. This decree requires them to license their ticketing platform and prohibits retaliation against venues that do not use the ticketing platform for 10 years. In an update to this agreement in 2019, the DOJ said, Despite the prohibitions in the Final Judgment, LN repeatedlyengaged in conduct thatviolated the Final Judgment. To address this, LN agreed to a number of provisions such as not threatening to withhold concerts from a venue, appointing an antitrust compliance officer, and paying a $1 million penalty per violation.
Unchecked price increases
Another hallmark of monopolies is unchecked price increases. In fact,live event ticket prices have increased by over 400% for the top 100 tours over the last 20 years, outpacing inflation by 334%.
The price inflation was partially caused by the shift in the monetization model in the music businessbut it has gotten worse post-COVID due to the pent-up demand for live events. Moreover, the average service fee is between 27 and 31% of the ticket value, and in some cases, over 75% of the ticket value, which is far beyond the value added for the service provided.
Some people are willing to pay more for tickets than the primary price. One-time events is an area where pricing based on willingness to pay can conflict with ethical pricing standards by pricing certain segments of consumers out completely. However, since the primary ticket price is below market, secondary ticket resellers fill the vacuum.
What artists and legislators can do
So, what can be done? Dynamic ticket pricing of primary ticket sales could help the market operate more efficiently, reduce and shady practices on the secondary market, and stop bots from crashing the primary ticket sales events. This has a cost of pricing out segments of the market, which many artists dont want to do.
Artists could make the tickets to their events non-transferable, which would eliminate the secondary market, or band together to push back against some of the worst practices from Ticketmaster/LN.
Our legislators must step in to ensure the primary and secondary markets operate freely. The Sherman Antitrust and Robinson-Pattman acts provide a general frameworkbut they need to be updated with modern e-commerce in mind.
Ticket sellers and venues should not be combined, nor should primary and secondary ticket sellers, as it gives too much control over live events. Venues should have a choice of ticket platforms. The secondary market needs more regulation and oversight. Consumers would welcome any ideas that bring some fairness back to the industry.
Gabriel Smith is the chief evangelist and head of solutions strategy at Pricefx.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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