The Canadian government sued Ticketmaster this past month alleging misleading ticket price advertising. The government found in its investigation that Ticketmaster’s mandatory fees often inflate the advertised price by more than 20% and, in some cases, by over 65%. It’s a case worth taking a close look at because it is the subject of a longtime complaint by nearly everyone who has purchased tickets from Ticketmaster. The bigger point is this; the face value of a ticket is not representative of a ticket’s cost.
Yet, there are some who cling to it simply because it’s a price that is printed on a ticket, regardless of the price paid for the ticket. Indeed, there are laws being considered that would require the face value of a ticket to be disclosed on ticket resale sites (or set as a price cap for resale as a whole). When lawmakers consider this they really need to take a deeper look at what they are proposing. When they do, finally perhaps, some much-needed transparency might make its way to the primary market for tickets.
Instead of calling it “face value” it would be more accurate to refer to the price on a ticket as a “pre-fee starting point” because the actual price of a ticket is so far off from the printed price – often 25% – 50%. To its credit, Ticketmaster is aware of this and in the past tried to roll these costs into a higher ticket price in an attempt to mitigate consumers’ perception that they are being nickel-and-dimed. At the time, Forbes ran a column about this move. It read:
Ticketmaster began experimenting with so-called “all-in” tickets over the last year, in which the service fees were included in the advertised price of tickets. Though this saved fans the shock of paying 30% more than the advertised price when service fees were included, artists generally do not like the all-in model because it cuts down on their ability to blame someone else for the final price of the ticket.
That’s right. While Ticketmaster fees account for much of its multi-billion dollar profits, others have their hand in the pot. Revenue-sharing within the fees is standard practice. In 2010, then-CEO of Ticketmaster Nathan Hubbard said,
“Most of the parties in the live event value chain participate in these service fees either directly or indirectly — promoters, venues, teams, artists and, yes, ticketing companies.”
For PR purposes there is something about the optics of a lower price printed on the ticket; even if that price is a mirage. You can wind up paying $150 or more for a $100 ticket direct from the source and yet it’s this so-called face value that lawmakers and others gravitate toward when they consider requiring secondary resale sites to disclose the original price compared to the resale price, in the name of transparency. It makes no sense.
This is the hypocrisy of it all – it’s the original price, not the resale price, that is lacking transparency. On the secondary resale market, tickets are priced based on supply and demand. If demand is high and supply is low, just like any other commodity market, the price should be expected to be higher than the original price. Sometimes by a little, and sometimes by multiples. And sometimes the resale price is less than face value or less than the ticketholders’ cost, but that is how supply and demand works. But what does that have to do with the original price? Nothing.
This issue hides in plain sight. Industry professionals are well aware of the myth of face value and the game of fees. Just a few months ago Live Nation CEO Michael Rapino admitted in emails that some of the fees Ticketmaster charges for the sale of tickets are “not defendable.”
Mike, we agree. The question is, will anything really change in this ongoing face value debate?
There is another problem with listing original face values on secondary resale sites. In addition to all the fees already discussed, they don’t account for other acquisition costs. How about personal seat licenses (PSLs) that can amount to thousands of dollars? How about alumni association fees that colleges add on? These costs add up and drive the actual price of each ticket even higher, even though none of this is reflected within the face value printed on the ticket.
Here is something we can all agree on; let’s stop calling the price printed on a ticket something it is not. Let’s no longer diminish the value of that ticket and the experience it represents. Even after fees, fans continue to buy tickets resulting in sold-out events. The primary market is strong and growing. And the same goes for the secondary resale market. These may not always be inexpensive experiences, but they are valuable ones to the fans who experience them.
For nearly 25 years Gary Adler has served as Executive Director and Counsel of the National Association of Ticket Brokers (NATB). He is an attorney with Clark Hill PLC in its Washington, DC office. He can be reached at [email protected].