Why Concert Tickets Are So Expensive — And Who's To Blame | So Expensive | Business Insider

Summary

The live concert industry is grappling with soaring ticket prices, driven by monopolistic practices, high service fees, and the secondary resale market. Companies like Live Nation Entertainment, which owns Ticketmaster, control ticket sales, promotion, and venues, leading to frustration among fans and artists alike. Dynamic pricing and inflated resale costs contribute to making tickets inaccessible for many. Despite efforts to reform the system, including lawsuits and legislative action, fans continue to face a broken ticketing system that prioritizes profit over accessibility, threatening the future of live music for the average concert-goer.

Takeaways

• 😀 Concert ticket prices have increased dramatically, with prices for major artists like Taylor Swift reaching as high as $8,000, while the average resale price was $3,800.
• 😀 The cost of concert tickets has grown at a rate four times faster than inflation over the past 30 years, leading to significant frustration among fans.
• 😀 In the 1960s, concert tickets were inexpensive, with prices for major events like The Beatles' concert at Chase Stadium costing only $5 ($58 today).
• 😀 The shift in the music industry's revenue model occurred with the rise of the internet and digital music sharing, particularly platforms like Napster, which drastically reduced revenue from recorded music sales.
• 😀 As record sales plummeted in the 2000s, live performances became the primary revenue source for artists, with top performers like David Bowie predicting this shift as early as 2002.
• 😀 The split between primary ticket sales and fees is significant. While the face value of a $140 ticket goes to the artist and promoter, additional service and processing fees add up to 30% or more, with a large portion of the fees going to the venue and ticketing companies.
• 😀 Live Nation Entertainment played a significant role in driving up ticket prices after acquiring Ticketmaster in 2009, leading to a dominant position in both concert promotion and ticketing services.
• 😀 The merger of Live Nation and Ticketmaster raised concerns about monopolistic practices, with critics arguing that the company has stifled competition and driven up prices for fans and artists alike.
• 😀 The secondary resale market, particularly platforms like StubHub, plays a significant role in ticket price inflation, with resale tickets often costing up to twice the original price, leading to criticism from fans and artists alike.
• 😀 Artists and fans have increasingly spoken out against dynamic pricing, where ticket prices increase in real time based on demand, making tickets unaffordable for many while benefiting resale platforms and bots.
• 😀 The ticketing industry's increasing consolidation has created a system where normal fans struggle to access affordable tickets, with concerns about the growing influence of large companies like Live Nation and resale platforms limiting access for the general public.

Q & A

Why have concert ticket prices increased significantly over the years?

Concert ticket prices have risen due to a combination of factors, including inflation, the shift in revenue sources for artists from album sales to live performances, and the increasing dominance of companies like Live Nation, which control ticketing, promotion, and venues. Additionally, the rise of resale markets and dynamic pricing has further inflated ticket costs.

What role has Live Nation Entertainment played in the rising cost of concert tickets?

Live Nation Entertainment has been a key player in driving up ticket prices due to its control over multiple aspects of the live music industry. It owns Ticketmaster, manages artists, promotes tours, and controls many venues. Its business practices, such as exclusive contracts with venues and the collection of service fees, have contributed to higher ticket prices.

How does dynamic pricing impact concert ticket costs?

Dynamic pricing allows ticket prices to fluctuate based on demand. While it helps artists capture higher revenue when demand is high, it also leads to significant price increases, sometimes pushing tickets into the hundreds of dollars, which frustrates fans who can no longer afford the tickets at face value.

What is the 'flywheel' business model employed by Live Nation Entertainment?

The 'flywheel' business model used by Live Nation Entertainment involves creating a self-reinforcing loop where the company profits from multiple streams, including ticketing, concessions, sponsorships, and resale services. This model strengthens Live Nation's dominance in the market and allows them to extract revenue from fans at every stage of the ticketing and concert experience.

Why is the resale market seen as problematic for concert-goers?

The resale market is problematic because it drives up ticket prices beyond face value, often by a significant margin. Resale platforms like StubHub charge high service fees and allow scalpers or bots to profit at the expense of fans. This market often makes it harder for average fans to afford tickets and diminishes the artists' profits from ticket sales.

How has the merger of Live Nation and Ticketmaster affected the ticketing industry?

The 2010 merger of Live Nation and Ticketmaster consolidated power in the live music industry, leading to higher prices, more service fees, and less competition. The merger has allowed Live Nation to dominate ticketing, promotion, and venue operations, further controlling pricing and the overall concert experience.

What are 'junk fees' in the context of ticket sales?

Junk fees refer to hidden or inflated charges added to the base ticket price, such as service fees and processing fees, which often appear at the end of the checkout process. These fees can account for a significant portion of the total ticket price and contribute to the frustration of concert-goers.

What is the Department of Justice's stance on Live Nation Entertainment?

The Department of Justice (DOJ) has filed an antitrust lawsuit against Live Nation Entertainment, accusing the company of using its dominant position to stifle competition and inflate prices. The DOJ's investigation focuses on Live Nation's 'flywheel' model, which allegedly engages in anti-competitive practices by locking venues into exclusive contracts and restricting artists' access unless they agree to use Live Nation's services.

What impact has the Taylor Swift ticketing debacle had on the industry?

The chaos surrounding Taylor Swift's Era's Tour ticket sales, where millions of fans were unable to secure tickets and the Ticketmaster site crashed, led to significant backlash. It also prompted a lawsuit against Live Nation Entertainment, increased scrutiny from lawmakers, and raised broader questions about the fairness and transparency of the ticketing system.

Why do some musicians criticize Live Nation despite benefiting from its services?

Some musicians criticize Live Nation for its role in high ticket fees and the overall pricing structure. While they may rely on Live Nation for promotion and ticketing services, they feel that the company's control over the market and its inflated fees undermine their connection with fans. However, they also acknowledge the challenges of working within an industry dominated by major players like Live Nation.