Tune in tomorrow, Saturday January 28th, to Faction Talk, channel 103, at 4 PM East, 1 PM West.

If you miss the episode, you can hear it on demand on the SiriusXM app. Search: Lefsetz

Let’s start with the fees. Everybody wants them baked in, except for the acts. Ironically, even those acts complaining about the fees!

Everybody on the inside knows the real price of the ticket is the face price plus the fees, otherwise the whole concert promotion paradigm doesn’t work. The promoter needs those fees to make a profit.

But here’s where Ticketmaster takes the blame once again. The hate is focused on the ticketing company when it’s really the fault of the act! The act can ask for an all-in price, Ticketmaster has no problem with this, but so many acts don’t want this.

Let’s use an example. A club show. $25 face value plus $25 in fees. The act can side with the fan, you’re getting ripped-off! But the truth is the ticket really costs $50. It’s just by making half of it fees, the act looks like it’s not overcharging, that it’s on the fans’ side, when this is not the truth.

Of course there are acts that would go to all-in pricing, but unless there’s uniformity, there is no solution, no happiness.

Never mind all the other industries, like hospitality, that survive on fees.

So let’s move on to the bots.

Do you still get spam e-mail? Even worse, do you get spam texts? OF COURSE YOU DO! We’ve been doing this internet thing for decades but spam hasn’t been eradicated yet. Talk about money… Google provides Gmail, the number one e-mail service, the company has tons of money, but even Google can’t solve the problem!

So if you think you can legislate bots away…

And even if you have a law, without manpower, without enforcement, the law is toothless. Think about the IRS… The Republicans want funding removed, saying that the IRS targets small businesses. Don’t you  see there’s going to be the same argument when it comes to anti-bot enforcement? Even if there’s a law, if it’s enforced, the blowback will be loud.

As for the scalpers utilizing these bots… The truth is both promoters and fans like scalpers. On risky shows, promoters sell directly to scalpers, to take some of the risk off the table. Especially in sports. And the public likes to know that a ticket is always available if they’re willing to pay. And, the public wants to be able to resell/scalp its own tickets. So tying the ticket to the individual and disallowing resale, the fans are not happy with this.

Okay, how do we address the evil Ticketmaster?

Forget the merger with Live Nation, that ship has sailed. How can Ticketmaster be hobbled?

The only way is by declaring it a monopoly. On the surface, this appears to be the case, with even Ticketmaster saying it has 60% of the market, others saying as much as 80%.

Easy to throw the m-word around, but proving a monopoly? Much harder. Now under previous administrations antitrust laws have not been strictly enforced. This has changed under Lina Khan, who is experienced and knows the landscape. This is important, unlike previous heads of the Federal Trade Commission, Khan has worked in the field and understands it. Whereas the public and congresspeople don’t understand ticketing.

So, one way of proving a monopoly is harm to the consumer. Just raw market share is not enough to take action.

But let’s say Khan takes action.

Now let’s just focus on ticketing, not the consent decree, whether Live Nation uses Ticketmaster as a pawn for concerts.

So, jumping to the end here, let’s just say the FTC says Ticketmaster is a monopoly. Now if this happens, the FTC must come up with a solution, THAT OBVIATES THE MONOPOLY! In other words, when the decision is dealt, the resulting company or companies must not have a monopoly.

Well everybody inside knows that as much as it’s a national punching bag, Ticketmaster is the best ticketing company. Sure, use someone else for a club, but if you want scale, Ticketmaster is the only choice. As for someone rising up and competing? Why invest all that money if Ticketmaster has exclusive deals.

But let’s say we get rid of exclusive deals. Let’s use the English model.

In the English model, the arena controls 60% of the ticket inventory, and the promoter 40%. So the building still gets fees, and the remaining pool of tickets is open to other companies. Yes, the promoter picks. So there is competition. Maybe it’s price, maybe it’s efficiency. But at scale, no one is close to Ticketmaster’s efficiency. Is a company going to invest to compete with Ticketmaster? That’s a big ask. All that money with no guarantee. But it could happen. Or it could turn out that Ticketmaster does all of the ticketing anyway, and you end up with a monopoly.

The dreaded monopoly… The only real solution is to break up Ticketmaster into smaller companies, a la the breakup of AT&T. This could be done in theory, but it wouldn’t be easy. Maybe everybody gets the underlying tech and…

Now with AT&T, we saw the smaller companies ended up merging and the result was there were few companies left. Right now, really only three, Verizon, T-Mobile and a company that uses the original AT&T moniker. T-Mobile merged with Sprint and it still offers deals, but not as good, but…

We’re talking about ticketing.

Yes, if Ticketmaster is a monopoly it must be broken up, otherwise it ends up with most of the market share anyway.

So, the resulting companies, along with theoretical newbies, all compete. Will ticketing be improved? Possibly. Ticketmaster is built on legacy spaghetti code, just like Windows. But it’s a big risk, investing all that money, will you end up being able to sell tickets?

But here’s the dirty little secret, even if you break up Ticketmaster, ticket prices will not go down, they could even go up, as a result of needing to compensate the ticketing companies for all that investment to compete! There’d still be the fee problem, and the bot problem and…

As for the Taylor Swift on-sale “debacle”… Remove all the bots and I bet you’d still have a problem, or a close facsimile thereto. Because you get in and you want to choose your ticket. Remember the old days, when you had to go to Sears or wherever to get tickets? There might be someone in front of you, not even buying a concert ticket, but a ticket for another event, spending ten minutes nailing down what they wanted. Ticketmaster delivered choice, choose your seat, unlike Ticketron, but this inherently adds friction. Oh, we could go to a model where you take what we give you, but how many people would end up complaining about that?

Here’s the bottom line. When people rail against Ticketmaster it’s because demand exceeds supply. People are inherently left out. And unhappy. And, inherently those tickets that are available will either be worth more than the face price or end up being very expensive.

And you know who is responsible for that? THE ACTS! They want you to blame Ticketmaster as opposed to themselves. Oh, they could price the tickets at what they’re worth, but you’d call them greedy, and they are uber-protective of their image. The Stones price their tickets at what they’re worth, but there’s not a lot of runway left in their concert career, and they are the STONES!

Which brings me back to the fact that the fans are delusional. They believe they are entitled to be in the building, in a good seat at a low price. And oftentimes that’s literally impossible!

And, of course, there are all those shows that aren’t instant sellouts, where the promoter is at risk… So it’s not hard to get a ticket and people don’t complain, except for the fees. And, once again, the fee problem was generated by the acts!

I’m not saying Ticketmaster has perfectly clean hands, but I will say both the acts and the fans are responsible for ticketing hiccups, but just like seemingly everyone else in America today they won’t accept responsibility, it must be somebody else’s fault.

That’s assuming you can get the FTC to declare Ticketmaster a monopoly to begin with. Which is a big lift in itself.

And, once again, if Ticketmaster is a monopoly, the solution must ensure that that monopoly is broken and won’t reappear. Which means you’ve got to take drastic action against Ticketmaster, a breakup, and not allow the resulting companies to ever merge to the point where the result is a monopoly. And with smaller companies will there be as much investment? Unclear. But one thing is clear, ticket prices will not go down, as I stated earlier, there’s a good chance they’ll go up! Maybe someone will invest enough that a national stadium tour can go on sale all at once… But why do we need that anyway? Breaking it up by gig solves so much of this problem.

So, if you want to fix ticketing…

You must sacrifice. And you still might not end up with the result you desired.

We test drove an electric Hyundai Ioniq after Felice’s car got totalled. A great automobile. But the only one you could buy had four wheel drive, which we didn’t want, and was ten grand over sticker. What did we do? Moved on and bought something else. Oh, Hyundai can sell every one they build, with a markup over list price, and you can buy it at that price, or not.

The law of supply and demand affects everything. Why should it not apply to ticketing? IT DOES!

Of the Modern Lovers. Of the Talking Heads. We cover it all!

https://podcasts.apple.com/us/podcast/jerry-harrison/id1316200737?i=1000596717368

https://music.amazon.com/podcasts/9ff4fb19-54d4-41ae-ae7a-8a6f8d3dafa8/episodes/20202d29-8fa4-4729-ab68-2be128af3666/the-bob-lefsetz-podcast-jerry-harrison

https://www.stitcher.com/show/the-bob-lefsetz-podcast/episode/jerry-harrison-211221950

This is so spot on. Most ppl know nothing abt ticketing but they tried to get tickets one time for Taylor and now they are all experts….For all those that rail against TM what is the better alternative? The answer is one doesn’t exist. While I think verified fan is generally a waste they have implemented some very good programs over the last several years for both customers and artists (seat map, platinum tickets, aisle seats etc). Consumers generally want more choices so if you are willing to pay more to sit in aisle seat or sit up close you now have those choices….seat geek for instance is a good secondary site but for a high traffic concert onsale It’s not the platform I would want to use from artist POV. Aside from most ticketing companies not having the ability to handle high volume onsales you will never have a significant amount of players in primary ticketing business bc most can’t afford the advances the venues require for exclusivity anyway. I also don’t see why when companies like LN and AEG build or buy venues they shouldn’t be able to implement their own ticketing system In those venues. Just my perspective as everyone piles on TM.

Best,
Jarred Arfa

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This is word for word (almost) what I have been telling my friends who are not in the biz for weeks. No one gets it.

Alan Stewart

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Former SVP Marketing for Ticketmaster when Jared was President.  A few bullets:

1. For every Taylor Swift tour there are hundreds if not thousands of events with “distressed inventory” meaning sales are soft with plenty of seats available.  It’s the entitlement for the hot shows that gets fans nuts.  2M people trying to get 200K tickets.  That’s a lot of disappointed people.  You don’t see Nike under the microscope for limited edition Jordans and StockX and GOAT are billion dollar resale businesses where Nike gets nil.  Supply and demand.  Basic economics.

2. Every market research study I ever sat in said the same thing… why didn’t you get tickets for the show you would have gone to see by the artist or team or whatever you love?  I DIDN’T KNOW ABOUT IT.  As you note, discovery is key and Ticketmaster’s marketing is a differentiator.  Taylor awareness is high.  Most everything else not so much.  There are hundreds of events going on tonight in whatever city you live in.  Huge artists are touring without this hulabaloo right now and you can still get tickets.

3. Does Ticketmaster have issues?  Most definitely.  But the coat of armor they wear to protect the industry has long been explained by you and others yet falls on deaf ears.  I often suggested the one “most transparent” thing we could do was show how many seats in the venue were actually available for purchase at the on-sale.  You can imagine how (not) excited others were to do that.

Stagger the on-sales for big events, one venue at a time.  I seem to remember Garth doing this.  But then you don’t get the PR about how you broke the internet.

Mitch Rotter

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I too was listening to the news today.  It was ridicules. I had a similar argument that you make with my old partner, who was managing Pearl Jam at the time.  The fight was not with TM, it was with the band, agent, and promoter.  TM is just getting paid to take the fall.  Every manager wants 55-70 percent of the gross to the artist.  The higher the income, the higher the commission.  That has never been an equation that has never worked for any promoter, so Amphitheaters were born.  The business for the promoter became to be an “All about the popcorn” model.  Every agent, manager, and artist believes, that because the promoter has their fingers in so many pies, they deserve all of the ticket revenue.  At one point there was an artist asking for 105% of the door.  So when I model financials for any concert, festival, tour, I look at all factors for the client or artist.  It could be argued that with major promoters that there is somewhere in the range of $22+/ticket off settlement.

They also did not talk about the ticket company cost of acquisition.  The up front fees from ticketing companies to venues/promoters can range from hundreds of thousands to millions.  For the last decade I have guest lectured at several universities, mainly in festival and venue management.  When I talk about what is the most important factor in shows today my first 4 slides say, Beer, Beer, Beer & more Beer!  As a promoter it is inconceivable to promote without having a piece of all the ancillary profit centers, just ask any of the few public run buildings left for a settlement.  They share everything. Food & Beverage, Ticket Fees, Merch, Parking, VIP, Suites are all open for discussion, depending on what artist you can bring them.

I wish these lawmakers would spend more time on deciphering defense spending, rather than showboating for parents of children crying because of a botched on sale.  I agree, the need to brag about how big you are is sad.  I have not heard of any problems with Garth/Stones/Maca on sales. And yes, it is expensive to buy a ticket.  It’s expensive to tour.  Where is the outrage for Basketball or Football tickets?  Nowhere. Because there is a market out there for it.

I agree with all you have said.  Thanks.

All the best,

Ken Deans

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Five points on ticketing:

1) There are tons of tech companies that are developing the “most innovative” new ticketing platforms. When I speak with their founders, the first question I ask is, “Who on your team has actual music business experience?” The answer is almost always, “No one.” While from the outside, concert ticketing looks ridiculously simple, what these techies fail to realize is that 90% of major venues in the US are under contract with Live Nation or AEG for years, sealed with (often hefty) up-front advances. If your startup is patting itself on the back for that $3 million Seed round raise, good luck on competing with the hundreds of millions these giant corporations are dishing out to secure these exclusive contracts.

2) You are 100% right that the artist (and their representatives) is where the buck stops with every deal. They approve the contracts – each of which delineates where every penny of income comes from and goes to for each show. They can accept or counter offers, and can negotiate individual terms, if they so choose. I’ve personally negotiated ticketing and service fees with Fred Rosen, when he ran Ticketmaster, so I know it can be done. I’ve also worked with artists that wanted to squeeze every possible bit of profit from a tour/show – which I don’t think is any different from how many deal with their taxes and the IRS (to keep as much as is legally possible).

3) Concert promoting is typically a risky business with tight margins. Promoters routinely take on millions of dollars in risk – no one ever knows for sure how a show will sell before it goes on sale. There are a number of factors that can shut-down a show or tour in a matter of minutes (pandemic, artist illness or injury, criminal arrest, civil unrest, etc., etc.). Promoters deserve to make a profit, and the fact that they’re forced to look to ticket and service fees for it, should be addressed in a more transparent manner. Artists need to acknowledge this, even though they are often across the negotiating table from them when these deals are structured.

4) Fans are just human. No one wants to overpay, and many seem to think that ticket inventory is unlimited. When artists and their reps are planning a tour, the astute are shooting for filling as many seats as possible, at the highest price, without leaving any empty. It’s an impossible task, that sometimes results in fans getting the short end of the stick. I’m not sure why we don’t see the same backlash with professional sporting events, as those prices are through the roof, with many of the same fees on each ticket, but nowhere near the same level of pushback from the public as we see with music.

5) There has always been a low-cost, low-tech means to end scalping – simply require a person show an ID and have a wristband secured on their wrist right there. This has worked at Will Call for decades, and with the proliferation of mobile devices and QR codes, attendees could be checked in and wrist-banded during the time it takes for them to wait in the metal detector line. Scalping is allowed/tolerated because the profits are huge and with cash, it’s impossible to follow the money. I’ve personally experienced major promoters selling tickets to “sold-out” shows (GA and lawn seating make this possible) – remember, even 100 tickets at $100 each is a $10,000 cash profit for a few minutes work in the parking lot.

In the end, market demand is what drives ticket prices. Artists that offer tickets at a face value lower than what the market will pay create the opportunity for scalpers to actually make more than they do for a show – I know that sounds incredible, but it’s not – imagine a band with 4 members that gets a $250K guarantee and sells out a 10K seat venue. If they can keep costs to 60% (which can be difficult) they’ll take $100K out to split. Each member (assuming they split evenly) will net $25,000 before taxes, and (assuming a 37% tax bracket – we’ll leave out the state) $15,750 after taxes. If a scalper can make $200 per ticket, they’d net more than the drummer if they sold just 79 tickets – without writing, practicing or playing a single note – or paying any tax.

The problem is not Ticketmaster – or any other ticketing platform. It’s the public’s recognition that the concert business is driven by market forces and is more “corporate” and “professional” than they can imagine, and that access to performances will come at a price, with profits for all involved – just as it is when you buy an iPhone.

Music has always been the least expensive/most accessible form of entertainment. Digital streaming has provided access to millions of songs for free, furthering the idea that music is floating out there for anyone to have.

Seeing your favorite artist in person has always carried a very unique value proposition – it’s time to recognize what that experience is really worth.

-Steve Stewart

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You are spot on.   Think of it like this. Ticketmaster just apologized to Taylor Swift for making her more than $300M for putting her concerts on sale in a way that any rational person/company would not have done and the world blames the company for a fiasco of a ticket sale in a manner her representatives insisted take place.

In no other industry could this happen. Insane

Fred Rosen