Why are Ticket Prices So High?

Ticket sales are based on several simple economic models; market-based pricing and supply and demand.

With market-based pricing a product’s worth is determined by the prices of similar products that are on the market, and by an agreement between a buyer and seller. In other words, if the price offered by the seller seems reasonable, the buyer will agree to the price.

In microeconomics, supply and demand is an economic model of price determination in a market. A decrease in supply leads to increase in costs, while increasing supplies generally leads to decreasing costs.

With ticket sales, more tickets means cheaper tickets, while less tickets means more expensive tickets.

This is a very simple economic concept that most folks, especially ticket brokers, venues and artists understand and incorporate into their business models. Billboard [ reported Adele’s last concert tour’s total ticket inventory was around 750,000, and only around 300,000 of those tickets were available to the general public. The rest were either held back for VIPs, or were sold on a primary ticket sellers Official Platinum Seats site for three or four times the value. Adele and her management knew how to lower ticket prices, all they simply had to do was to add concert dates. But why work twice as hard to earn the same money? And of course, the publicity around selling out, as well as high demand and priced tickets sets the stage for her next album and concert tours. That’s millions of dollars in free publicity.

Bruce “The Boss” Springsteen builds and sustains a reputation of being the “everyman” artist, down to earth and caring for his fans. He consistently rails against ticket resellers, yet, he is selling his own tickets at three times the normal value.

What do these artists and primary ticket sellers have in common? Answer: they jack up the prices for tickets, add exorbitant fees, and try to monopolize the market. All of which effectively locks out the regular guy or gal trying to go to a good show. Worse, it is infectious, they have set the market prices which now drives the rest of the market. What else do they have in common? Millions of dollars in the bank.

New York’s Attorney General and Governor, as well as the Department of Consumer protection have decided to try to address the problem of high priced ticketing this year. Both the NY AG (Ticket_Sales_Report – NYAG) and the NY Department of Consumer Protection (Ticket-Reseller-Report – cultural affairs) released reports, and in the very first sections of their reports they report that there is an extreme deficit of available tickets from the start, caused by the hold back of tickets. Less than half of the tickets to major entertainment events are available to the general public. The artists and venues instead make those available to VIPs. This causes all of the tickets to then become a function supply and demand pricing; less tickets=higher prices.

The artist and venues create the environment for the ticket prices to rise by taking the best tickets in the house and creating “packages” which often more than triple the costs of those tickets. Once those ticket prices hit the market, the stage is set for rising prices.

Learn more about the Insomniac web browser, designed for ticket resale professionals

We put in a call to Springsteen’s management to ask them how to lower ticket prices. Read what they have to say in our follow story.

Next Up: What should be done to lower prices?