A Blog by Jonathan Low


Jun 28, 2019

The Reason Ticket Fees Got So Bad And Wont Get Better

The question is why anyone is surprised. This is what monopolies do. JL

Kaitlyn Tiffany reports in Vox:

The average ticket fee is now 27% of the ticket’s face value.Ticketmaster is regularly referred to as one of the most-hated companies in America — it’s the largest online ticket seller by far and has been under monopoly scrutiny since its 2010 merger with Live Nation, the country’s largest promotion and venue company.Fees of this size are a common source of confusion and ire. Close to 7,000 people wrote to the Federal Trade Commission (FTC) during an open-comment period about online ticket sales
For the August 2016 issue of Consumer Reports, the magazine’s staff drew attention to what they called the “ticket fee frenzy” by dissecting the price of a floor-level seat at a Guns N’ Roses concert taking place that summer in Kansas City, Missouri.
The ticket, which supposedly cost $250, would actually be $300.75 after fees — in other words, 20 percent of the ticket’s face value was tacked on in the form of itemized fees with confusing names.
There was a $19.50 delivery fee to cover expenses of mailing a ticket; a $4 facility charge set by the venue; a $4.25 order processing fee shared between the ticket seller, Ticketmaster, and the client, Live Nation, which happens to be Ticketmaster’s parent company; and a service fee, which was the largest, at $23. That money would go entirely to Ticketmaster.

While these particular numbers may be new to you if you do not live in the Midwest and attend canonical classic rock concerts, the gist is likely familiar. According to a study published by the Government Accountability Office in April 2018, the average ticket fee is now 27 percent of the ticket’s face value, with some fees as high as 37 percent. And Ticketmaster is regularly referred to as one of the most-hated companies in America — it’s the largest online ticket seller by far and has been under monopoly scrutiny since its 2010 merger with Live Nation, the country’s largest promotion and venue company.
Fees of this size are a common source of confusion and ire. Close to 7,000 people wrote to the Federal Trade Commission (FTC) during an open-comment period about online ticket sales at the end of last year. If the several dozen I read are any indication, they are mostly one-note: “Stop the fees please,” wrote Pat McCullough, from Ohio. “The fees are a gouge. Plain and simple,” wrote TJ Platt from Arizona. Donald Bosseau, a man from California who had been organizing an outing with his church group of 27 people, said he was shocked by a 17 percent fee added to the cost of each ticket, and had to waste his time going around to everyone and asking if they were okay with the higher price. “As one member said after canceling their seats — this sucks!”
While everyone seems to understand that the fees are both 1) very high and 2) seemingly nonsensical, it is less clear why they’ve been allowed to get this way — and whether there’s any chance at all that they might change.

On Tuesday, the FTC hosted a day-long workshop about the ticketing industry, with a one-hour panel about “The Adequacy of Ticket Price and Fee Disclosures.” This may not sound like particularly thrilling content to you, but that’s because you didn’t watch it.
The panel was a mix of industry representatives — Ticketmaster, its smaller competitor Eventbrite, as well as secondary market retailers SeatGeek and StubHub — and consumer protection advocates from the Better Business Bureau and Consumer Reports. It also included MIT economist Sara Fisher Ellison.
It was moderated by Michael Ostheimer, an attorney for the FTC’s advertising practices division. He was quite clearly underprepared for just how much the American people hate online ticket retailers, and how dedicated they would be to slipping their vitriol into the proceedings.
“Why are there all these different fees, Patti-Anne?” he read off of one question card (directed at Ticketmaster’s Patti-Anne Tarlton, an executive vice president present on the panel).
Minutes later, he started to read another — “Please explain how a 15-dollar convenience fee is fair” — and trailed off. “I think we’ve already covered that.”
Someone in the audience stood up and yelled that they had been listening all day and would like to say something. Ostheimer said no, sorry, he would be using the preselected question cards. The next question was about unfair fees, and how the food available for purchase near the auditorium was marked up to “three times its market value,” and Ostheimer did not finish reading it. “I thought someone was filtering these questions, I’m sorry,” he said, slightly glaring off-stage.
StubHub, represented by its in-house compliance counsel John Lawrence, quickly came under fire for the way it presents its fees. The additional costs don’t show up on StubHub’s website until after you’ve input personal information (name, email, phone number), and then appear in small print at the bottom of the window asking for your payment information. If you hit “Continue” without scrolling to the bottom of that window, you won’t see them until the order confirmation page.
(I tested this out by pretending to buy a ticket to the National’s Wednesday concert in Brooklyn, New York, which was advertised at $66.50, but came out to $83.88 after a $14.88 “service fee” and a $2.50 “fulfillment fee.”)

Asked why StubHub charges a “fulfillment fee” for tickets the customer prints out at home, Lawrence said that there’s a “flat fee for PDF-type tickets because … the seller has to upload it.” He also said that his company’s experiment with showing “all-in pricing” at the start of the purchase process — presenting the total cost of the ticket including fees up front — only confused people and lost his company business.
“This is a textbook place where a regulator could make a big difference,” MIT’s Sara Fisher Ellison chimed in, suggesting the FTC just mandate that all ticket sellers use the same up-front all-in pricing so that no one company would be taking the risk of seeming more expensive than the others in Google search results. Essentially every person on the panel agreed, appearing to politely beg the FTC to regulate them so that people would like them again.
Having all-in pricing on some platforms and not others is “too confusing; it needs to be consistent across the marketplace,” Consumer Reports’ Anna Laitin argued. “That’s the reason the StubHub experiment didn’t work. If it were consistent, people would get used to that really fast and like knowing the price they’re going to pay.” She too, suggested that the FTC could just make this a rule and save any one platform from having to go out on a limb.
This is where Tarlton elected to speak up, saying that Ticketmaster always makes disclosures about its fees and its “hundreds of competitors” don’t. “In Canada, there hasn’t been any enforcement,” she said, which doesn’t seem true considering Canada’s Competition Bureau is suing Ticketmaster right now for deceptive “drip pricing.” (That means the gradual adding on of additional costs throughout a purchasing process, which consumer protection bodies hate because it makes comparison shopping extremely difficult.)
The whole thing took an hour, and at the end, there was no consensus on how to make ticket fees more fair. Nothing was even on the table.

At no point during the panel did it come up that TicketMaster has been the subject of both state and federal government scrutiny — in more than one country — for years because of its fees. In 2016, for example, New York State Attorney General Eric T. Schneiderman led an investigation into the online ticketing industry and announced that superfluous fees are “impermissible under the law” and “constitute evidence of abuse of monopoly power.”
And since early 2018, the Department of Justice has been investigating TicketMaster’s parent company Live Nation for anticompetitive practices. Last April, the New York Times reported on complaints from venues that alleged Live Nation had threatened them for selling tickets through Ticketmaster’s largest competitor AEG. “[The venues] were told they would lose valuable shows if Ticketmaster was not used as a vendor, a possible violation of antitrust law.”

Obviously, we’re used to paying fees anytime we buy tickets online. But they typically feel reasonable: Movie tickets purchased through Fandango or through individual theater sites typically have an added convenience fee of $1.50 to $2.50, which appear legitimately used for upkeep of the system. AMC has its own ticketing app, and a Facebook integration, but it still has to pay to process those transactions. If you’re part of its Stubs A-List program — a MoviePass-type service which costs $19.95 a month for up to three movies a week — the fee is considered part of the subscription and you don’t pay it again.
Museums sometimes have fees of a dollar or two for buying tickets online, and this makes sense as well. Glitzier events — like Broadway shows and arena sports — have pretty high fees, but there’s an odd premium placed on pop stars. According to the GAO study, while sporting event ticket fees average 20 percent of face value, concerts are even worse, averaging 30.
This is somewhat baffling, but we can intuit that Ticketmaster knows just how dedicated fans are to seeing their favorite artists, and how much they can wring out of them in that moment of high-stakes desperation. Last year, discussing Ticketmaster’s Verified Fan program — which was criticized for asking fans to buy merch in order to qualify to buy concert tickets — David Marcus, an executive vice president and the head of music at Ticketmaster told me, “Live entertainment, music, is emotional, and it’s supposed to be. It’s art. It’s supposed to be challenging.” As if the way that art challenges us is by testing our abilities to make purchases on a monolith’s poorly designed website.

It hasn’t even been five years since Ticketmaster settled a class action lawsuit requiring it to pay out $400 million to more than 50 million ticket buyers who were charged unexplained “order processing fees” and “UPS delivery fees” that weren’t actually spent on anything in particular. In addition to the huge payout, the company was compelled to add disclosures on its website acknowledging that fees are a source of profit.
That lawsuit, originally filed in 2003 by angry Wilco and Bruce Springsteen fans, paid out anybody who had bought tickets on the Ticketmaster website between October 21, 1999 and February 27, 2013. But it’s worth nothing that this case was won because the fees weren’t disclosed. Not because they were considered predatorily high, or the product of an old-school monopoly getting away with whatever business practices it likes.
Now that the country’s largest promoter and venue owner and the country’s largest ticket seller are one company — permitted by the Obama administration’s justice department to merge in 2010 — there’s very little to hold these fees in check. As reporter David Dayen noted for the New Republic last year, nearly half of Live Nation’s revenue comes from fees that are handled by its own subsidiary. This is not a heartwarming success story. “This shafting of consumers fed one of the largest CEO pay packages recorded in 2017. Michael [Rapino], CEO of Live Nation, made $70.6 million last year, including $58.6 million in stock,” Dayen writes. (Meanwhile his employees make an average of around $24,000 a year).
At the FTC meeting on Tuesday, the online ticketing industry insisted that it can’t regulate itself, an insistence that has been backed up by its actions over the past 20 years. There’s not much cause to celebrate a row of executives saying “no, you go first” to each other because nobody wants to be the first to risk some profit in exchange for better business practices. If anything, we should be glad that guy in the audience managed to yell a little bit.


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