The Daily Caller

The Daily Caller
Robin Thicke (R) performs "Blurred Lines" with Verdine White of Earth, Wind & Fire at The Grammy Nominations Concert Live - Countdown to Music Robin Thicke (R) performs "Blurred Lines" with Verdine White of Earth, Wind & Fire at The Grammy Nominations Concert Live - Countdown to Music's Biggest Night event at Nokia theatre in Los Angeles December 6, 2013. REUTERS/Mario Anzuoni  

Mugged by the ticket cartel gatekeepers

Photo of Alan Daley
Alan Daley
Writer, American Consumer Institute

Entertainers and ticket sellers have a right to earn an honest living, but we’re tired of being mugged at the ticket booth. Shameless greed has become standard practice and it’s neither entertaining nor sportsman-like conduct. Ticket vendors have perfected the art of trolling. They slap high fees on ticket sales and for the event tickets that are returned and resold, total fees sometimes 75 percent above or even higher than the ticket’s face value.

For many live events, the near-monopoly ticket agent victimizes the public. Sometimes you have little choice but to buy from TicketMaster-Live Nation. Those who are better off might qualify for help from a concierge service like Amex Platinum or TheVIPconcierge.com who have access to blocks of good seats. Sometimes the artists themselves will hold large blocks of tickets and either sell them or give them to friends. Usually, the leftovers go to the regular public who must purchase them through an exclusive vendor which adds exorbitant fees justified by some imaginary “convenience.”

Commonly, ticket purchases are credit card transactions. For some events, you must buy by credit card and then present the credit card as your “paperless ticket” at the event’s gate. If you bought “paperless tickets” and can no longer attend, you do not have an option of selling the ticket to another consumer or giving the ticket to a friend. This means that some consumers are paying a high price for tickets they can never use. Return transaction must be handled by a vendor allied with the original seller. If you bought from Ticketmaster or Live Nation, that would be Ticketexchange – their subsidiary. TicketExchange will charge you another hefty fee for the “convenience” of returning a ticket. And that same ticket will earn yet another “convenience” fee when it’s sold to the next buyer. How convenient.

The merged TicketMaster-Live Nation-TicketExchange leviathan has a strong grip on live performances – sometimes exclusive, sometimes just dominant. Live Nation reported $1.68 billion in revenues for 2012, with pricing models that set their “convenience” fee of up to 25 percent above the seat price. In its 2010 antitrust complaint, the Department of Justice estimated Live Nation’s market share at a massive 83 percent.

Prices of tickets and fees can be astonishing. For example, when we checked on March 31, 2014 for the upcoming Jimmy Buffet in Tampa and found tickets on sale between $90 to $1,429 plus fees. Reseller StubHub had tickets as low as $94 with a good selection of available, and these tickets were available as an “instant download,” some as UPS, and some as “electronic.” Another vendor, Official Online Tickets offered “resold” tickets between $89 and $1,254 each, lower than the range offered by the primary ticket seller. Clearly, the venue was not locked into “paperless tickets” and that allowed for competition, which gave consumers some competitive choices and more flexibility than a paperless option.

The fact is that when there is an exclusive vendor for an event, the lack of competition will push ticket prices higher. That also applies to resold tickets. In the Jimmy Buffet Tampa case, competition from at least two resellers seems to constrain both the original ticket sale prices and the resale prices. In fact, resellers often sell tickets at prices lower than the primary seller’s prices.

The bottom line is that having a healthy secondary market appears to be essential to keeping prices more competitive. In fact, one recent study shows that having a competitive secondary market saves consumers about $2 billion per year on resold tickets. While consumers determined to see Jimmy Buffet in Tampa could still pay a hefty price, the price will not be dictated by a ticket seller monopoly. Competition is needed.

Alan Daley writes for The American Consumer Institute Center for Citizen Research.  For more information about the Institute, visit www.theamericanconsumer.org