Ticketmaster Plan to Salvage Reputation by Educating Customers, Lawmakers About Fees
Ticketmaster and Live Nation have faced their fair share of scrutiny over the past year both from consumers and the government, and they've revealed a plan to move forward with more transparency, especially when it comes to the ticketing fees that have often drawn the anger of consumers.
Billboard reports that after weeks of trying to determine how to salvage Ticketmaster's public perception, the company is lobbying to move forward with a plan to educate both the general public consumers and governmental policymakers about their ticketing practices and fees in order to foster a better understanding of what goes into the cost of the tickets.
Fees can often add over 30 percent to the final price of a concert ticket, something that has not sat well with consumers who have voiced their frustration with the ticketing fees with growing volume in recent years.
Live Nation president/CEO Michael Rapino addressed this with investors, explaining, “We’ve got to now go out and do a much better job so policymakers and consumers understand how the business operates. We’ve historically not had a big incentive to shout out loud that venues are charging high service fees or artist costs are expensive. But I think now [that] education is paramount.”
Breaking things down, Ticketmaster's primary source of revenue comes from the fees on the ticket transaction. The face value of the ticket goes to the artist, while Ticketmaster then shares the fees they collect with the venues providing the concert services.
As Billboard reports, Ticketmaster typically keeps $2 to $5 per ticket for processing costs and a small portion of the fees it collects to recoup any loans, advances or bonuses it may have paid the venue to win its ticketing contract. Contracts for large venues can be worth millions of dollars. The balance of the fees collected goes to the venue, which uses the money to cover the cost of the show.
Promoters are also involved, booking the venue for the artist and paying rent to use the space while also hiring the staff. Whatever money remains is often split with the act, receiving the the majority of the amount.
Rapino explained, “The artist takes most of that ticket fee base. So the way that the venue, the promoter or the ticketing company [earns its] revenue fees is through that extra fee.”
One of the reasons for the rising cost is the increasing production costs of shows, and while it has been profitable for Ticketmaster to cover more of a concert's costs through their fees, it's also led to a negative public perception as those fees have grown.
Ticketmaster Wants Total Cost of Ticket Shared at Start of Checkout Process
One move that Ticketmaster is hoping will alleviate some of the annoyance over fees is by shifting the point where consumers view the total cost of the ticket, which includes the face value plus fees. In New York, it has already been mandated that the total cost be shared at the beginning of the checkout process, and Ticketmaster would like that strategy to be adopted on a larger scale.
“We all want to know what is the true cost to see the show when we start shopping,” Rapino said. “We wish that would be mandated tomorrow across the board [because] that would relieve a lot of the stress [and] the consumer’s perception that there’s this magical extra fee added on."
For some time, Ticketmaster and other companies have used a "drip pricing" model which pulls from the idea that fans are more likely to make a purchase if the fees added on to a ticket don't appear until the end of the checkout process.
Ticketmaster Backing FAIR Ticketing Act
One of Ticketmaster's other big woes in recent months occurred during the Taylor Swift presale last fall where a cyberattack disrupted over 100,000 transactions. Taking a closer look at how outside influences affect the ticketing process, Ticketmaster is targeting scalpers through the FAIR Ticketing Act.
The act would outlaw the drip pricing model and also grant artists the option to ban scalping websites from reselling their tour tickets. They've already garnered support for the act through four major talent agencies, Universal Music Group and a number of management companies, Billboard reports. However, the bill does not have a congressional sponsor as of yet.
One of Live Nation's legal woes over their ticketing practices was recently cleared up. In January of 2022, Live Nation Entertainment were sued for allegedly violating antitrust laws and using what was described as predatory practices. But the suit didn't really get very far, as a lower court had ruled that the ticket buyers involved in the suit had actually waived their rights to sue as part of the the company's terms and conditions which agreed to settle disputes through arbitration.
An appeal eventually brought the suit back to the courts, but in February, a California court ruled that the visibility on the purchasing site "did enough" in terms of legal terms to spell out how disputes would be handled. As such, the case was dismissed.