The Decibel - Swifties and Drake fans’ beef with Ticketmaster

Episode Date: March 28, 2023

The price of concert tickets has risen dramatically – with some tickets costing thousands of dollars. Ticketmaster, which controls a huge proportion of the market, has come under fire recently for some of its practices, like dynamic pricing and murky service fees. It’s now the subject of a proposed class action lawsuit in Quebec.The Globe’s Josh O’Kane has been covering concerns around Ticketmaster for years. He’s here to explain what’s going on with the company, how Ticketmaster got such a stranglehold on the market, and what it means for the music industry.Questions? Comments? Ideas? Email us at [e-mail]

Yeah, so I mean, when Blink-182 announced that the original guitarist was rejoining the band, I went looked and tickets were like more than $200 for the nosebleeds. And I was like, how can this possibly be? Like, maybe this is that mysterious dynamic pricing thing that everyone talks about that I've reported on for a long time. So I sat and I waited. And then after weeks and weeks and weeks, I looked and there's still the best available tickets in the nosebleed were $215. That's the Globe's Josh O'Kane. He reports on the business of arts and entertainment, including the music industry. You know, so $215 for a seat.

That includes a $7 like order processing fee, presumably to run the servers. Maybe the Scotiabank Arena had a $4 facility charge. And then there was a $27 service fee. And then the ticket itself was technically $180. If you've tried buying concert tickets lately, you know how expensive and stressful it can be. Now it's the subject of a proposed class action lawsuit in Quebec against Ticketmaster.

The company controls most of the concert ticket market, and it's faced criticisms for years of inflated ticket prices, murky service fees, and ticket reselling. Today, Josh is here to tell us about these problems, how Ticketmaster got such a stranglehold on the market, and what this means for the music industry. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Josh, thank you so much for joining me in studio today. Yeah, thanks for having me, Mainika. It's interesting. So we were just looking at the Beyonce concert in July that's happening

in Toronto. And this is a Ticketmaster's website. And the cheapest tickets are like just over kind of $250, way up in the nosebleeds. But then the most expensive ones right in the front are over $2,500. There was one I found for $2,600 for one ticket. Like that's a lot of money. It really is a lot of money. And it's kind of becoming this almost universal experience, particularly for big ticket shows like Beyonce, one of the biggest artists in the entire world. I mean, even Bruce Springsteen, who used to make it like a very important point to try to keep tickets at a reasonable price level, even for great seats, now is sort of using Ticketmaster. And some people have been complaining they've found tickets as much as $5,000. And so, you know, Bruce Springsteen, who used to be this sort of working class hero, is now kind of just has very little choice except to accept these $5,000 tickets.

So ticket pricing is part of this proposed class action lawsuit in Quebec now. Can you just start by telling us what's actually happening there? So Drake announced the tour earlier this month. And when a fan in Montreal bought some official platinum tickets to the show, they cost nearly $800. But then, you know, demand was so high, Drake added another date in Montreal. And the same seats were on sale for nearly half the price as the other date. And so this proposed class action lawsuit needs to be authorized by the court, you know, is exploring like the value for consumers and particularly within Quebec's consumer protection laws. these official platinum tickets that this person was looking for are actually nothing special,

that they kind of can be random seats in an arena or another venue. Yeah. Yeah. And I think when you see official platinum, I mean, that sounds special. Like, what is that supposed to mean? It is supposed to mean a seat is great. But I mean, like, I got official platinum tickets to see Blink-182 and they're in the nosebleeds. So like, I guess they're decent seats in the nosebleeds, but they're not that close. There's so much that's ill-defined now because Ticketmaster kind of has a significant amount of power over the industry that, you know, you kind of have to live with these sorts

of things. But this proposed class action, you know, should it go forward? You know, maybe it'll make the company think differently. It's really too early to tell. So let's get into some of the issues surrounding Ticketmaster these days. Part of this is something called dynamic pricing. So, Josh, what is dynamic pricing and how does this work? work. So like midway through last decade, Ticketmaster began exploring the idea of sort of algorithmically determining the price of a ticket through this like proprietary algorithm,

depending on the demand in that moment for a specific seat, people looking at those seats, people looking at tickets in general for a concert and how few are left. They can adjust the prices like a person sitting on a computer next to you may be getting an entirely different set of prices. It's hard to tell. And it's a sort of secret sauce that Ticketmaster has where they're trying to maximize revenue, both for themselves, but also for artists. Wow.

So if there's a huge number of people waiting in the queue, like right when tickets go on sale, they realize that the demand is there and there's a limited supply. So why not raise the prices? How much or how well that works? That's not really necessarily known, but if something is in high demand, it is in, you know, the artist's best interest as well as the shareholders of Ticketmaster's best interest and its parent Live Nation to maximize the value of that. The best metaphor for that you could, is the airline industry and that

if there's a very high demand flight, it's going to cost a lot of fuel. Why not charge more for that? This also makes me think of Uber, right? You have surge pricing sometimes. It sounds like kind of a similar thing. Exactly. But philosophically, what's most interesting about this is that Ticketmaster was kind of inspired by scalpers themselves. If you can watch someone sell tickets to your concert that were originally $100 and someone is standing outside the stadium and selling them for $400, why would you not charge $400 in the first place? And then more money goes back to you and to the artist. But if you're not sure, why not adjust the prices? Whereas you had to kind of guess before, you know, if you're selling an arena's worth of tickets and you're trying to get a certain profit

margin, you could kind of say, oh, I want to do, you know, this price range for these seats. Now you can actually kind of test that in real time. Okay. Okay. So the prices are adjusting in real time with dynamic pricing. How much more could a ticket go for with this? It's impossible to tell. I imagine that within Ticketmaster, they're probably trying to test the limits of that with certain seats. You know, with a really high demand stadium tour, you're going to have people who happen to have $2,500 in disposable income because they really want to be front row for Beyonce.

I just want to say one more thing about when I was looking at this Beyonce thing. I'm looking at a section right up by the stage. I'm looking at two seats right next to each other. One is $873. The seat right next to that is $1,872, like a $1,000 difference. You're literally sitting right next to each other. How is that possible? It's entirely possible that those seats, one of them might be a resale ticket.

Like someone bought a ticket and thought they could probably make more money off of it. And it just immediately relisted it on Ticketmaster's resale marketplace. And now when you're buying tickets, Ticketmaster just puts regular tickets and resale tickets together. That is part of the anti-scalping measures in that you don't need to necessarily worry about fake tickets because Ticketmaster can recognize its own tickets and make sure that fans are not spending thousands of dollars on fakes. But it does mean that there's very little control over the pricing. Yeah. This was fascinating because I have to say just before this interview, my producer Rachel and I were looking at tickets for this Beyonce concert.

We're on different computers right next to each other in the same building. I'm looking at a ticket that's actually $30 cheaper than she's looking at for the exact same seat. Like, how is that legal, Josh? Part of this is, you know, Ticketmaster has a significant amount of the marketplace. It's not a monopoly. You know, there are some estimations that between 66 and 80 percent of the concert ticket market is Ticketmasters. And you could argue that basically they're the only game in town for a lot of large stadiums based on like the contracts that they have.

And as a result, I mean, if their job is to maximize the interest for shareholders and for their artists who are their clients, it does make sense. It's not great from a consumer perspective, but that's just sort of the reality of the Ticketmaster has been sort of working under since it was established in the 1970s. And right after it got established in the 1970s, this was the era of like Ronald Reagan and the first president, George Bush, where there's that sort of kind of level of conservatism in the United States where Ticketmaster was born. And part of that sort of philosophy under those administrations was actually taking a different view of like antitrust and that bigger companies and companies having a greater market share sometimes could actually create better interest for consumers.

But then as it did kind of hurt small businesses from being able to necessarily compete with these sorts of concerts. Right. Antitrust, meaning that the governments are trying to essentially just make sure there's competition in industry. So there isn't a monopoly. Yeah, but Ticketmaster was able to grow and establish its relationships with a bunch of venues and promoters in that so that by 95, I think it was, I believe Yale has reported that by 1995, Ticketmaster had control of 80% of like most major tours, at least in North America. I want to ask about another charge that you mentioned when you talked about your Blink-182 tickets. And I think this is something we often see when we're buying a ticket, and this is a cost for a service fee. And this came up, people were tweeting screenshots of tickets they were buying for the Cure concerts coming up.

The tickets themselves were just 20 bucks, but someone was buying two tickets and that cost them over $75. So what are these service fees that we're paying for? It's not 100% clear. And obviously, a ticketing company is going to want to make sure that its costs are covered from processing things on servers, its own contracts, its own staff. But how much of that is pure profit is never 100% clear. Now, Robert Smith from The Cure was, you know, he really wanted to, you know, keep tickets as low as possible. But in certain cases, all of the different fees that added up actually amounted to more than the original ticket itself. And he complained very

loudly. And Ticketmaster agreed to issue refunds between five and ten dollars to a number of people who bought tickets for those tours under those pretenses, basically because Robert Smith stood his ground. Ticketmaster has gotten into trouble for fees like this before. Back in 2014, they settled a class action lawsuit for nearly $400 million over, quote, order processing fees, end quote. So how is this still going on? It's still something that people are getting frustrated by. Part of this comes down to Ticketmaster, you know, dominance begets dominance. And because they continue to invest in, you know, technology that verifies you're not getting fake tickets,

artists who don't want their fans to spend a bunch of money and then find out that the tickets were fake will still go with Ticketmaster, even if they have some reservations. Now, that said, Ticketmaster did manage to incur the wrath of Swifties last year. Taylor Swift fans, yes. I'll just say, by the way, this is back in November, right,. Taylor Swift fans, yes. I'll just say this is, by the way, this is back in November, right? When Taylor Swift's tickets went on sale for her new ERAs tour

and everyone tried to buy the pre-sale tickets at once and everything crashed essentially. Correct, yeah. And Taylor Swift has enormous influence over the music industry and her fan base is one of the most powerful in the world, influential. this enormous promoter that bought Ticketmaster about a decade and a half ago to look and see if it was in fact beneficial to consumers, if there are other antitrust considerations that may have

perhaps been missed back then. And so the argument has been that if they were to be broken up, then the relationship between the promoter side and the ticketing side would be less tied up together and there might be a greater opportunity for commercial choice. Because there is commercial choice, I will say. There's more choice available for smaller venues and smaller tours. Like I went to five concerts last week and none of them were Ticketmaster concerts, but they were like 200 to 1,000 person rooms. You went to five concerts in a week?

Yeah, I write a bit of music professionally. That's incredible. I'm very tired though. We'll be right back after this message. I think the idea that even the most powerful artists, though, have to go through Ticketmasters is still something that kind of maybe surprises people. Like we're talking about, yes, smaller artists may have to kind of go with whoever is, you know, booking the venue or anything there. But like Taylor Swift, Beyonce, even these artists have to go through Ticketmaster, Josh. Like, how are we at the stage where nobody really has a choice here but to work with Ticketmaster?

Part of it was that is exactly based on Ticketmaster's relationships and how they've grown since the 70s and 80s. If you sign a bunch of contracts with a bunch of venues and you become the biggest ticketer in the world, roughly, since 1995, then you just have the infrastructure. You have the server processing power for today's digital transactions. You have investments in sort of anti, in sort of anti scalping stuff. And then you kind of combine all that with just the fact that they already have relationships with a bunch of venues and major promoters, it's it's owned by one of the biggest promoters in the world, then, you know, dominance can be entrenched in that way. And that is what people are sort of now second guessing.

We touched on this a little bit earlier, but I wonder about what role artists have here. Like how much say do artists themselves have and what Ticketmaster charges or what fees are actually put onto their tickets? It depends on the size and the strength of an artist and their fan base. When someone like The Cure comes out and they say, we want to keep costs lower.

And then like, even that was like a very major public step. Like before all the controversy emerged, Robert Smith was saying, we are going to keep ticket prices low. And even then the service fees went up and it only took people complaining about that for Ticketmaster to offer refunds on that situation. So even people who are saying, I want to fight for my fans, they're still working in this system. And part of that just has to do with the fact that for the last 30 odd years, Ticketmaster just has relationships with promoters and venues. And you're sometimes stuck on that if you want to tour the most important touring markets in the world and sustain your reality as an artist. It's a really tough position

for artists, no matter how they try to put their foot down. It's been really hard. What can be done to actually prevent this stuff? Like sometimes we talk about government regulation. Is this a place where that might need to happen? Governments have tried in many ways to regulate the ticket market. Like as an example, the last Ontario Liberal government was trying to put forward legislation to cap the amount that like a Ticketmaster resale or like a StubHub or whatever secondary ticket market might be capped the amount of what a resale ticket could go for as a percentage of the original ticket price. And then as soon as the progressive conservative government came in, they got rid of that consumer protection. And their argument was sort of more towards a free market for secondary ticket pricing. And besides government, like any other way to improve the situation here? It's hard to tell because you'd have to introduce a player that could compete with Ticketmaster

that has the same sophisticated technology and experience of its employees that also would have a better relationship with promoters around some of the biggest concert markets in the world. It's not an easy problem to solve. What does all this mean, though, for artists, Josh? I mean, I think it's kind of common knowledge now that it's difficult to be a music artist. You're not making as much money as you were because of streaming. Now you can't sell CDs the way that you could, right, before. So how important are these live events for artists in terms of especially how much money they actually are making?

Live music, you know, it used to be conventional knowledge that like a tour was like an advertisement for your record or your CD. Then the Napster era of music kind of destroyed that streaming brought revenue back to the music industry on the recorded side but not really in a way that sort of the money flowed to artists in the same way and so yeah live music is crucial for artists but i think we're going to see, uh, concerts become less accessible. Um, you know, it's going to have people with a certain amount of disposable income who are going to be able to get to these concerts. I, you know, those people exist, they are going to pay for the tickets. Um, but it is going to be harder for the average person to justify going to see

live music for artists. You know, they, the biggest artists in the world are making more money off of these tours. Um, their costs are going up, um, which is a part of the natural reason why ticket prices are going up, but you know, for midsize artists, it's going to be a lot harder to justify higher ticket prices. Um, and that is where you know there could be pretty a pretty concerning future for the touring market where if you have to justify having super high tickets ticket prices or service fees are completely out of your control then you might have to cancel a tour you cancel a tour that's your your livelihood that's your income and that is where i think we're going to see in the next few years like you're seeing you know bands, bands like Animal Collective, you know, make, you know, reliable

art rock and sell like, you know, 1000 2000 3000 person venues, if they're having to cancel a tour, as they did last year, how are people supposed to be out there making art, you know, and so the biggest artists in the world are going to be fine. And they're continuing to cement their legacies, no matter how much they charge for tickets. But for other artists who are a little bit worried about like actually making sure they can sell enough tickets to justify a tour, it can be really, really hard. Yeah. It sounds like it's kind of a sad state of affairs, honestly, there, like for someone out there trying to make money doing music, it's pretty difficult. It's really hard to be an artist right now.

Josh, thank you so much for taking the time to talk to me today. Thanks for having me. That's it for today. I'm Maina Karaman-Wellms. Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show. Adrian Chung is our senior producer, and I'll talk to you tomorrow.