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Taking aim at Ticketmaster

Marketplace Staff Mar 14, 2008

Taking aim at Ticketmaster

Marketplace Staff Mar 14, 2008


Tess Vigeland: The summer concert season is upon us — or at least the ticket-buying stage of it is. I see The Police will be here at the Hollywood Bowl in May. Perhaps it’s time to get online…

If you’ve bought a ticket to a concert or sporting event lately, you might have experienced a bit of sticker shock. There are the service fees, shipping charges, facility fees… Sometimes they’ll even charge you to print out the ticket on your own computer with your own paper.

But at least one entrepreneur in Seattle is trying to bring down ticket costs while bands bring down the house.

From the Emerald City, Ann Dornfeld reports.

Ann Dornfeld: The Aesop Rock show is about to begin at the Showbox theater in downtown Seattle. Fans of the underground rapper say they were happy to pay 20 bucks to see him play.

Miles: Yeah, I went down on my lunch break just to get tickets for this show.

That’s Miles. He went across town to buy tickets at the box office. He didn’t have to. He could have bought online through Ticketmaster, but he was determined to not give any money to the industry leader.

Miles: They overcharge! I mean, it’s ridiculous. Like, you’re gonna spend, like, $8 extra.

That’s $8 in service fees for each $20 ticket. The fees go even higher, too.

Take a Sonics basketball game. A cheap seat at Key Arena is $10. If you buy it on the Ticketmaster Web site, you’ll pay a “convenience charge” of $3. To print out the ticket at home is another $2.50. Then there’s an “order processing charge” of $4. Add tax and the final cost is $19.77. The ticket price has doubled.

Stan Soocher is a professor of Music and Entertainment Industry Studies at the University of Colorado. He says Ticketmaster cornered the market in the 1970’s when it created a computerized, national ticketing system. Customers could now go to the grocery store to pick up tickets for a concert or ball game.

Stan Soocher: Really, Ticketmaster was also very successful in striking up licensing deals where they realized that they would charge a service fee of the consumer and then to get a licensing deal with a venue, Ticketmaster would offer a rebate where some of that service charge would go back to the venue.

As a result, Ticketmaster has contracts with most of the nation’s large concert venues and stadiums. Over the years, that’s led to charges of monopolistic practices from bands like Pearl Jam, R.E.M. and String Cheese Incident. They demanded more freedom to sell their own tickets with lower service fees. Pearl Jam’s complaint was tossed out. String Cheese settled out of court.

Even sports teams have gotten involved. The Cleveland Cavaliers basketball team has a federal anti-trust lawsuit pending against Ticketmaster.

But Soocher says Ticketmaster’s greatest threat is probably the loss of its contract with concert promoter Live Nation at the end of this year.

Soocher: Ticketmaster, they’re losing 10 percent of their business when they lose Live Nation, so what’ll be interesting to see is as Live Nation moves out on their own in terms of selling tickets and can become a competitor to Ticketmaster, will there be more of a flexibility in the service fees? Will they go down in a more competitive atmosphere?

Ticketmaster officials declined to speak on tape for this story, but they say a lot of those service fees pay for the company’s technology costs.

Steve Butcher says that doesn’t make sense. He’s cofounder and CEO of one Ticketmaster competitor, the Seattle company Brown Paper Tickets.

Steve Butcher: With technology, the cost of delivering the same services over the years has gone way down but the fees have gone up.

Butcher says his company’s anti-fraud technology is similar to what Ticketmaster uses, but on a $10 ticket, Brown Paper charges just $1.24 service fee.

Butcher says he keeps costs down by rejecting the standard ticketing business model. That means no three- to ten-year exclusive contracts with venues like Ticketmaster has. And Brown Paper doesn’t negotiate service fees. At first, that was a hard concept to explain to venues:

Butcher: One of the first things they’d ask before they signed up was “how much of the service fee can we get back?” We said, “Well, actually, no, you just increase your price to get what you need and we keep our service fee.” What people wanted was for us to charge $5 in service fees and they’d get $3 back, because that’s what they were used to.

Butcher has built up his company by focusing on the smaller venues that the ticket industry usually ignores, providing tickets for film festivals, burlesque shows and lectures. He estimates the company will handle about 30,000 events in the next year — still about a third of the number Ticketmaster handles.

In order to win over major venues, the company will have to convince promoters to charge more for tickets and not demand a cut of the service fees.

Meanwhile, consumers like Miles are pretty much resigned to shelling out for those fees.

Miles: I’ve never really not gone to a show based on the price, because if I want to go see a show, I will, and just find the best way to do it. If it’s through Ticketmaster, fine, I’ll do it, but it’s, like, that’s the least desirable way to do it.

The best way to avoid a convenience fee is still to inconvenience yourself and buy in person at the box office.

For Marketplace Money, I’m Ann Dornfeld in Seattle.

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