The company has come to be loathed by concertgoers for adding an average of 25 percent to advertised prices through its steep service fees. But the dominant, some would say monopolistic force in ticketing is showing chinks in its armor at every level of its business here in Chicago.
The company has come to be loathed by concertgoers for adding an average of 25 percent to advertised prices through its steep service fees. But the dominant, some would say monopolistic force in ticketing is showing chinks in its armor at every level of its business here in Chicago.
In response to what club personnel called "customer requests and technological advances," Metro recently dropped its contract with Ticketmaster and began selling tickets online with fees half of those Ticketmaster charged. And last year, the box office at the House of Blues began selling no-fees tickets to all of the major outdoor shows promoted by its parent company, Live Nation, at the First Midwest Bank Amphitheatre, Alpine Valley and the Charter One Pavilion.
In response to what club personnel called "customer requests and technological advances," Metro recently dropped its contract with Ticketmaster and began selling tickets online with fees half of those Ticketmaster charged. And last year, the box office at the House of Blues began selling no-fees tickets to all of the major outdoor shows promoted by its parent company, Live Nation, at the First Midwest Bank Amphitheatre, Alpine Valley and the Charter One Pavilion.
When the policy was introduced, Live Nation denied that it was a pilot program for a new nationwide policy. But last fall, the company broke off talks with Ticketmaster and announced that it will directly sell tickets for all of its concerts once its contract expires at the end of this year.
It remains to be seen whether Live Nation will spare concertgoers the steep fees they've paid Ticketmaster, or if the new boss will be as bad as the old one. But one thing is certain: Ticketmaster will lose 17 percent of its $1 billion annual revenue.
Sitting down for a rare public interview with Wall Street Journal reporter Ethan Smith at the recent South by Southwest music conference in Austin, Texas, CEO Sean Moriarty made it clear that Ticketmaster's plan for survival is to move into the burgeoning market of secondary ticket sales -- some would say scalping -- by competing with sites such as eBay, Craigslist and Stub Hub through its own Ticketsnow.com.
Ticketmaster has been lobbying many states to change their laws so that only the original seller of a ticket -- in many cases Ticketmaster -- can conduct the auction for reselling that ticket. Moriarty hopes to dominate the $3 to $4 billion resale market and move toward a world where there are no set prices as ticket values fluctuate with demand. "You've got to let buyers and sellers trade freely in a way that's unencumbered in a way to really maximize the market," he said, "and I think that's where we're going."
Yet even as Moriarty claimed his company has entered a new era of transparency, the embattled executive dodged direct questions such as "Why do Ticketmaster service fees cost so much?" by hiding behind a cloud of Orwellian corporate doublespeak.
Based in Los Angeles and founded in 1978, Ticketmaster began its rise to prominence in 1982 after it was purchased by billionaire Chicago investor Jay Pritzker. Since then, it has become what its CEO called "one of the most misunderstood well-known companies out there."
"I think any service business that charges a fee for services faces challenges," Moriarty said. "If you look at service fees for cable companies, for example, or banks' ATM networks, people on one hand are pretty quick to criticize the price, but if you ask them if they'd like to live in a world without the access that they have to cable television or a world where they aren't able to walk up to any ATM and take money out, they'd probably say 'no.' Our service is actually much more complex than people know."
Fair enough: Ticketmaster does allow concertgoers to log on or phone in and purchase tickets anywhere in the world in a matter of minutes. That technological infrastructure needs to be maintained and upgraded. But Moriarty was disingenuous when comparing ticket fees to cable TV and ATM charges.
Cable companies charge the same every month whether you watch one hour or 100, and you have alternatives, thanks to satellite and broadcast TV. Similarly, ATMs charge the same fee whether you're withdrawing $20 or $200, and you can choose between hundreds of them, including many that don't charge any fees at all.
Ticketmaster, on the other hand, has a captive market. Concertgoers have no choice because the company ties venues up in longterm exclusivity agreements, and many no longer even have a box office. Service fees are levied per ticket instead of per transaction, even though it costs no more to sell four tickets than it does to sell one. And fees are arbitrary: Last year Ticketmaster added $7.25 to every $25 ticket for the Warped tour (a 29 percent increase) but $10.50 to every $59.50 ticket for Tool at the Sears Centre (an 18 percent jump).
The Justice Department investigated Ticketmaster in the mid-'90s, coinciding with Pearl Jam's famous feud with the company, which stemmed from a 1994 show at Chicago's Regal Theatre where the company added $3.50 to an $18 ticket. Since then, reporters repeatedly have asked for a breakdown of how service fees are divided. Ticketmaster claims a portion of the fee is rebated or kicked back to the promoter, but it refuses to specify how much.
"I don't think it's appropriate in a world where we've got 9,000 clients, Jim, to actually disclose the particulars of any individual client deal, and summarizing or making a sweeping statement is probably not something that's appropriate, either," Moriarty said when I asked for a breakdown during the audience Q&A portion of his SXSW panel.
"You choose to bring it up as fodder for the same conversation over and over, [but that] doesn't really get you very far. It's easy to be redundant and it's easy to talk constantly about rising prices, but it actually takes a little more work to understand the situation in full context."
Gee, and here I thought that's what I was trying to do. So much for transparency.