Following a recent post titled "Ticketmaster Must Be Stopped," several commenters defended Ticketmaster's right to operate its monopolistic, anti-competitive, anti-consumer business model free from government regulation, and I concede that's a valid position. As one person wrote:
"Are the purchasers of tickets not free to do business or not with Ticketmaster? Won't the free market eventually take care of such poor business practices?"
Another valid point - we can let market competition eventually take care of Ticketmaster's unsustainable practice of "legalized ticket scalping," which I illustrate above. I was planning to buy three $25 tickets online, available online only through Ticketmaster, for an upcoming concert in D.C. But then I was faced with an $8.20 "convenience charge" per ticket (32.8% of the ticket price) and an "order processing fee" of $4 to place the order, for a total cost of $103.60, of which only $75 is for the actual tickets, and $28.60 in exorbitant FEES (38% of the ticket cost)! Ouch! Note that the same $4 "order processing fee" applies even for one ticket, which would add $12.20 in total fees to a $25 ticket, for a total "scalped" cost of $37.20, with Ticketmaster charging fees of almost 50% of the ticket price!
And the fans (some), artists (most), promoters (all) and venues (all) are upset about some tickets reselling above face value on the secondary market (see photo below)? Tickets are already selling for WAY above face value in the primary ticket market, with Ticketmaster's practice of legalized scalping fees on all of the tickets sold!
Now I'm not arguing for government regulation of Ticketmaster's exorbitant fees, I was only making a property rights case against Ticketmaster's new "restrictive paperless tickets" in my previous post.
Two points/questions:
1. Ticketmaster's business model seems clearly unsustainable, especially when the cost of selling and processing online ticket purchases is almost zero. Why aren't competitors challenging Ticketmaster's monopoly? There don't appear to be any significant barriers to entry, are there? There is an active competitive secondary market with lots of competition (Seat Geek, Stub Hub, Tickets Now, eTix, eBay, Craigslist, etc.), so why hasn't anybody challenged Ticketmaster's monopoly in the primary market?
2. Why isn't there more fan and artist outrage over Ticketmaster's fees? Over the years, concert fans and musicians have directed a lot of outrage towards "ticket scalpers" (see photo below), but seem somewhat complacent about "legalized ticket scalping" when Ticketmaster sells tickets at 38% above face value?
Personally, I'll be expressing my outrage over Ticketmaster fees by going to the venue tomorrow and purchasing the tickets there for $25. Thankfully, that's an option in this case, but only because it's convenient for me to actually buy tickets directly, and would frequently not be an option for most buyers.
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