The absolute genius of TicketMaster
Suppose you are an artist—and let’s say you’re also extremely popular. Now you’re doing a big show in a big city, and everyone wants come to watch your show. Without question, it’ll be sold out in seconds. People will be grumpy because they didn’t get into the show and all will be despair.
What’re your options here? Well, naïvely, you’d of course think: “hey, let’s just bump up the prices, and we’ll sell the tickets to whomever is ready to pay the price”; surely there’s enough people in this big city to pay $300 for your show, no? Then if you still haven’t sold out a few weeks before the show, you’ll just drop prices until that happens. All is good, and you have made a lot more money, and the people are happy.
This is the obvious supply-demand concept: there’s too much demand and not enough supply, so increase the price to reduce demand.
But then you do that, and you end up in a huge backlash, and people call you a price gouger and turns out the people weren’t happy and your fans stop liking you and then all is despair again.
Then along comes TicketMaster; and everyone hates TicketMaster already: with their glitchy website and astronomical service fees and charges for using your own printer to print the tickets—there are countless articles of pure hatred and loathing of the whole company. Maybe you wonder why they aren’t bankrupt yet, everyone must hate them? Surely there is someone who can do a way better website for half the price?
But you’re a big enough name in the artistry world that they’ll let you in on a big secret: it’s all designed this way.
You see: now you get to put out your tickets at whatever is seen as a fair price, and you’ll get off the hook and not be ousted for price gouging. No-one even questions you for using TicketMaster, because everyone does it, right? But the dirty little secret is that then TicketMaster comes along and tacks on a huge service fee, but they give most of that fee back to you. Now you aren’t the price gouger—you run away for free—and they’re just the hated, shitty service and take the blame for the whole game. See, most of that service fee doesn’t actually end up with TicketMaster. There’re some legalities with what they can call a service fee, so it goes into paying credit card transaction fees and anything else that can be squeezed into it: rebates for buildings, for artists, for promoters. But in practice, in the end-game, TicketMaster gets a minority portion of that fee, and you use the rest to pay an assortment of miscellaneous fees and expenses!
Here’s what Irving Azoff, TicketMaster CEO said in 2009:
“I will also say, I’d like to get on the record when people hear what TicketMaster’s service charge is, you know, TicketMaster was set up as a system where they took the heat for everybody. TicketMaster gets a minority percentage of that service charge. In that charge are the credit card fees, the rebates to the buildings, rebates sometimes to artists, sometimes rebates to promoters. So TicketMaster, we’re like the IRS and deliver bad news.”
Isn’t that genius? I’m not even mad honestly. I personally don’t think it’s that bad that the people who are prepared to pay get to go to shows and they aren’t sold in some kind of first-come-first-served manner—then again, I almost never actually go to live shows. With the current situation of sub-market-equilibrium ticket prices, we’ve ended up with this parasitic secondary market system where bots buy the tickets in milliseconds and humans then have to buy them at the adjusted market price on some secondary markets, which are subject to scamming and just outright fraud.