Thursday, September 20, 2018

The Ticketmaster Nightmare | Lefsetz Letter

“‘A public relations nightmare’: Ticketmaster recruits pros for secret scalper program”

The pubic doesn’t understand ticketing. People believe they’re entitled to a front row seat for face price to all shows. Furthermore, they’ve been abused. They used to line up and now they’ve got to get up in the morning to find out they can’t buy tickets and all the seats are bought by bots. Those damn scalpers, they’re the problem!

Only they’re not. First, blame the acts. Second, blame Ticketmaster.

Music is opaque. The most immediate medium, only the song is for real. After that… Well, there’s studio trickery and lies. But this is an industry built on hype and image, and no one wants to mess with that. They say the show is sold out when it isn’t. They say the act has reached a milestone when it hasn’t. Meanwhile, you still want to go and experience your favorite act live.

Recorded music distribution has been worked out, with streaming. But acts HATE IT! Because it reveals truth. I.e. nobody is listening to your music. Used to be you could fake it, with radio play and artificial statistics. Now you’re not in the top fifty, not even in the top hundred, and people cherry-pick the hits and you’re not making what you used to and somehow it’s the streaming service’s fault.

But the streaming services are run by youngsters praying to a different god. Tech is all about transparency, there’s a different playing field. I’m not saying there are not shenanigans, but much fewer, and the music business HATES THIS!

Music has been a thug business. Based on intimidation forever. Music wants no light shined upon it the same way Trump doesn’t want you to see his tax returns. If you saw how the sausage was made you’d be horrified. And heads would roll.

Will heads roll at Ticketmaster?

Now what you have to know is all the money is in ticketing. Once Clear Channel became Live Nation and Michael Rapino failed in trying to get the acts to take a haircut, promoters have overpaid the acts, given them all the ticket revenue, the profit is in the ticketing itself.

The fees. Those don’t all go to Ticketmaster. They’re shared with the building, the promoter, sometimes the act itself. But almost all the profit is in selling the ticket itself. That’s the essence of the CBC article, one people will miss while they rail at the damn scalpers.

“…resale tickets are particularly lucrative for Ticketmaster because the company charges fees twice on the same ticket.

So, for example, if Ticketmaster collects $25.75 on a $209.50 ticket on the initial sale, when the owner posts it for resale for $400 on the site, the company stands to collect an additional $76 on the same ticket.”

That’s all you need to know.

All this Verified Fan hogwash, all these paeans to the customer, they’re all secondary to the bottom line. It’s very simple, this is a business, Ticketmaster is part of Live Nation, and the company is public and the numbers have to go up. How can they?

Well, via festivals and sponsorships. Festivals are owned by promoters and there’s tons of money left over after paying the acts, assuming the gig is successful. And sponsorship is the hidden profit center. But really, it’s about those fees. All those shows promoted by Live Nation, think of all those profits on those resold tickets, that’s GOLD!

So what happens now?

The acts are afraid of looking greedy. They don’t want to charge what the ticket is worth. There’s been some improvement, with gold circle/I Love All Access, great seats for their true market value. But the rest of the house?

Then there’s flex pricing. Works for the Stones, but they’re in a league of their own, and they’ve been seen as mercenary for decades. As for Taylor Swift… The grosses were high, but fans were pissed off at the prices and sales were soft, especially in the U.K.

So what’s the solution?

Either sell the tickets for what they’re worth or go paperless.

But no one likes these options. Ticketmaster makes less money, the act is seen as ripping-fans off and these same fans want transferability, they don’t want to be tied to the ticket, in some cases the fans are trying to resell the tickets themselves, although this is a fool’s errand in today’s bot culture.

But, once again, all the blame is put upon the scalpers. The bad guys. Who are giving people what they want, the ability to pay fair price to attend shows. The scalpers are not going away as long as tickets are underpriced. And now that Ticketmaster has integrated the scalped tickets with the primary scalping has been institutionalized.

You might see this as an inability to stop technology, but really it’s nothing of the sort. This is all about making MONEY!

Will there be a Congressional hearing? Will there be laws? Elected officials can’t understand the ticketing business and the laws always get it wrong.

Since Live Nation is a public company will heads roll?

Possibly, look what happened after the #MeToo movement.

Furthermore, especially in this era where experience is king, don’t expect fans to hold back, they want to go.

So I don’t expect any real change.

But there could be.


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