Ticketmaster
 | This article possibly contains original research. (October 2007) |
 | This article needs additional citations for verification. (June 2008) |
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| Company type | Public (Nasdaq: TKTM) |
|---|---|
| Industry | Live Entertainment |
| Founded | 1976 in Arizona by Albert Leffler, Peter Gadwa, Gordon Gunn & Charles H Hamby Jr. |
| Headquarters | 8800 Sunset Blvd, West Hollywood, California, USA |
Key people | Sean Moriarty CEO, Terry Barnes Chairman, Susan Bracey EVP and CFO, Ed Weiss General Counsel, Brian Pike Chief Technology Officer |
| Products | Ticketing technology, Ticket Sales, Ticket Resales, Marketing, Distribution of event tickets and information, support of venue renovation |
| Revenue | In 2007, Ticketmaster sold more than 142 million tickets valued at $8 billion. |
| Owner | Public |
Number of employees | 6,678 |
| Website | www.ticketmaster.com |
Ticketmaster is a ticket sales and distribution company based in West Hollywood, California, USA, with operations in many countries around the world. Typically, Ticketmaster's clients (arenas, stadiums, and theatres) control their events, and Ticketmaster simply acts as an agent, selling the tickets that the clients make available to them.
One of the first ticketing companies to sell tickets on the Internet[citation needed], Ticketmaster now sells a large percentage of its tickets online, some via phone, and a percentage through its many ticket outlets.
Ticketmaster has recently devoted significant resources to counter fraud. Other technology includes barcoded tickets, which offers the ability for counterfeit tickets to be refused at the point of entrance.
Ticketmaster's market share remains over 50% of total sales for tickets in the United States. Despite the ready availability of web-based ticketing software, Ticketmaster continued to see revenue growth in 2006 & 2007.
Ticketmaster recently acquired a UK ticket exchange site, Getmein.com. Getmein is a ticket exchange site that allows sellers to list the tickets at whatever price they choose. It claims to have over 500,000 tickets listed at any one time and independent research has shown the majority of these to be priced at least 100% above the original face value.
In early 2008 Ticketmaster completed the acquisition of Paciolan Inc.. Paciolan is a developer of ticketing system applications and hosted ticketing systems.
Service fees
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Ticketmaster collects no part of advertised ticket prices. Instead it adds services fees to recoup its costs. Consumers often find these markups excessive, especially because there are many instances where no alternative purchase method is offered (allowing the purchase of tickets without incurring fees). This seemingly unfair business practice, along with a dearth of competitors, has led many to view Ticketmaster as monopolistic. However, alternative ticketing companies have entered the marketplace, alleviating Ticketmaster's perceived "monopoly" brand status for most consumers. But because most of their competitors use much the same pricing structure, ticket buyers often find little comfort in the presence of Ticketmaster's competition. Not all events generate the same consternation. Many ticket buyers have the option of purchasing tickets directly from venue box offices, thereby avoiding service fees from any ticketing agent though many box offices will also charge a service fee, particularly if the venue is owned by a ticket agency. The typical fees in addition to a ticket's face value include:
- Ticketmaster Service Charge
This is Ticketmaster's charge for the general service they provide and maintain. You will pay this charge no matter which way you buy the tickets through Ticketmaster (Phone, online or in person at a ticket center), although the amount of the charge may be different for different channels and different payment methods.
- Building Facility Charge
This is determined by the venue, and not Ticketmaster.
- Processing Charge
This is Ticketmaster's charge for processing your order and making the tickets available to you (mail, etc.) This is usually not a per ticket charge, but rather a per order charge.
- Shipping, E-Ticket Convenience, or Will Call Charge
Ticketmaster charges a fee for ticket delivery, even if the ticket is in the form of an automatically generated virtual "e-ticket", which buyers must then print out themselves, at their own expense. Buyers may also be charged an extra fee to collect the ticket(s) from the venue. E-ticket convenience charges have been known to be issued even when purchasing a ticket directly from Ticketmaster box offices.[citation needed]
As an example of a fairly typical markup, a ticket to see Motörhead at Brixton Academy, London 2006, cost £25, plus £3.75 per ticket service charge, plus £4.95 postage and packing per order. In this example, the fees are approximately an additional 35% of the cost of the ticket. Tickets to see Feist in Vancouver in 2008 are $49.50, plus a $10 "convenience fee", plus a $2.50 "Building Facility Charge", plus a $4.35 "Order Processing Charge", plus optional express postage. More expensive tickets would have higher charges, but generally proportionately less relative to the total: tickets to see Pavarotti at Chatsworth House were selling for £85 for the ticket, £8 service charge per ticket, and £2.50 per order for either postal delivery or box office collection.
While 35% is typical, it can be considerably more. Take for example, a $25.00 ticket to see Symphony X at the Pearl Room, just outside Chicago, has a $7.25 service charge, no option for will call or printable ticket, and $14.50 as the least expensive method of delivery. With the final processing charge of $2.40, this makes the total $49.15. With not even a "building facility charge" at the Pearl Room, this is a 97% increase in the cost of the ticket.
Another charging practice is Parking Fees and excessive shipping. Although Ticketmaster reports this as being charged by the vendor, this is rarely the case. One example of this being a $25.00 ticket to a 2007 Dream Theater concert at the Fillmore in Detroit, MI including an $8.60 service charge, a $9.65 shipping fee (the ticket coming in an envelope with a 23.5 cent bulk stamp), and a $5 parking fee at a venue that doesn't have parking.
Ticket sales market
Ticketmaster frequently obtains agreements to become the sole provider of tickets for large venues, in keeping with a business strategy it has used since the 1980s when it consolidated regional ticketing services into a single entity. In many cases, acquiring this exclusivity requires Ticketmaster to pay substantial "signing bonuses" to venues, sometimes millions of dollars. Although this practice can significantly reduce the profitability to Ticketmaster of these exclusive relationships, to date using these bonuses has enabled them to maintain venue exclusivity as a competitive strategy, though the future viability of this strategy is unclear as the Internet as the primary sales channel for tickets makes exclusivity a less attractive option for venues.
Ticketmaster is the subject of frequent complaints in the blogosphere and print media due to high ticket service charges.[citation needed] Notably, in the 1990s, Pearl Jam brought a lawsuit alleging that Ticketmaster is a monopoly, whose anticompetitive practices allow markup prices of more than 30%. The case was acquitted because ticket purchasers were not deemed to be the actual customers of Ticketmaster.[1][2]
Recently, there appears to have been questionable dealings between Ticketmaster and TicketsNow.com (which was acquired by Ticketmaster in January 2008). An anonymous source alleges that a TicketsNow executive assisted with the sale of more than $1 million worth of Radiohead tickets on the TicketsNow website[1] There appears to be a conflict of interest when a company operates in both the primary and secondary sales markets, and furthers claims about the negative implications of Ticketmaster's Monopoly on ordinary consumers.
Competitors include Tickets.com, StubHub, TicketLiquidator.com and others. TicketWeb, a Ticketmaster subsidiary also offers lower fees. These companies are typically excluded from primary ticket sales for major-league sports events in the U.S. (with the exception of Major League Baseball, which, as noted below, is now the owner of number 2 competitor Tickets.com).
A new brand of competition has emerged in the form of companies selling ticket futures contracts. Web-based companies such as Yoonew and TicketReserve offer ticket futures which guarantee customers tickets to big games such as the Super Bowl and World Series if the team for which they have futures contracts makes it. Though the price of ticket futures are often substantially lower than the price of actual tickets to the big event, customers risk losing their investment if their team does not make it. Yoonew, in addition, provides an exchange where ticket futures can be traded between users.
Ticketmaster is the primary ticket seller for 27 of the 30 NHL teams and 28 of 30 NBA teams, but in 2005, Major League Baseball acquired Ticketmaster rival Tickets.com. Some analysts[who?] expect MLB to stop using Ticketmaster for the sale of its approximately 100,000,000 baseball tickets per year once current contracts with Ticketmaster have expired. Other event promoters are expected to follow suit, such as Live Nation which will sell tickets directly through its site when their Ticketmaster contract expires[citation needed]. Thus, when the Ticketmaster contract ends finding sources for primary or "box office" tickets online may become a difficult task and vertical ticket search engines may become indispensable for finding primary ticket outlets.
Also of concern to the company is declining sales in the highly profitable concert business. Off by double-digit percentages in 2005 from 2004, the summer concert season is a major profit center for the company with its high per-ticket prices and accompanying high service fees.
Ticketmaster has had only limited success in the secondary ticketing market. In September 2003, Ticketmaster announced plans to sell tickets in Internet auctions, which would bring the price of tickets closer to market prices, but its market share compared to that of eBay or Stubhub remains small, and Internet auctions are still a relatively minor part of its business. Indeed, since around the time of the 2003 announcement, Ticketmaster has lost the lead in the secondary ticketing market to new entrants like Stubhub, who have developed a popular and effective person-to-person market for tickets. Recently, Ticketmaster President Sean Moriarty appeared on a story about the ticketing business on NPR and pleaded for legislation that would make the selling of tickets from person to person illegal except through Ticketmaster's own product for this purpose. Ticketmaster established the Ticketmaster Ticketexchange to try to compete with Stubhub, their main tagline being that tickets are 100% guaranteed to be authentic, since they are sold through the season ticket holder's account. (Some NFL teams require people to be on the waiting list in order to use the service. The New England Patriots, New York Giants and New York Jets require waiting list memberships.)
Privacy
The company's use of personal information is more aggressive than most: a term that users wishing to purchase from their website must agree to is to receive Ticketmaster marketing:
"By completing this registration form you indicate that you consent to Ticketmaster sharing your email address and other information with those who provide the event, and that you consent to those who provide the event using your information to contact you by email or other means to send you marketing or other messages or using or disclosing your information in other ways. By completing this registration form, you also indicate that you consent to Ticketmaster contacting you by email or other means to send you marketing or other messages and using and disclosing the information you submit, as described in the Ticketmaster Privacy
This term is actually somewhat less aggressive than previously, following criticism [3] [4] [5] [6], and accusations of spamming. However, users of the site automatically receive a regular "My Account" email, which comes with the notice "By signing up to Ticketmaster you agreed to receive this email. If you do not want to receive it, you can edit your preferences on the site". In other words, Ticketmaster deliberately does not allow users to opt-out at signup from unwanted email in order to increase the audience for its marketing, and the unsubscribe procedure requires the user to login to a web page: there is no simple unsubscribe link or email address.
Prominent Lawsuits
In 1994, the rock band Pearl Jam appealed to the Antitrust Division of the United States Department of Justice, complaining that Ticketmaster adopted monopolistic practices and refused to lower service fees for the band's tickets. At the time, Pearl Jam wanted to keep ticket prices under $20 for their fans, with service charges no greater than $1.80. The company had exclusive contracts with many of the large venues in the United States and threatened to take legal action if those contracts were broken. The Justice Department ruled in favor of Ticketmaster, which culminated in the cancellation of the 1994 Pearl Jam tour. Four years later, Pearl Jam resumed their relationship with Ticketmaster. [7] [8] [9]
The ruling did not dispute Ticketmaster's monopoly, but claimed that venues (not bands) were the proper plaintiffs in an antitrust case[10]:
- It is the Plaintiffs['] own allegations in the Complaint which show that they are not best suited to bring this claim against Ticketmaster. If a violation has occurred, the appropriate party is a venue or class of venues and promoters who are the ones who "consume" Ticketmaster's product; they are the ones who would suffer any direct loss if there is [s]upracompetitive pricing in the fee contracts due to Ticketmaster's alleged monopoly power.
On April 28, 1997, Ticketmaster sued Microsoft over its Sidewalk service for allegedly deep linking into Ticketmaster's site. The suit was settled after a two-year legal battle in which Ticketmaster claimed that linking to specific pages on an Internet site without permission was an unfair practice.