Why are concert ticket fees so high?
Even fans who have ever booked tickets for a popular concert can attest to the experience of having their tickets’ price inflated by additional charges. You discovered some tickets for $50 Each, and you are willing to make a bid for 2 tickets, meaning you are ready to pay $100. However, $25 in fees per ticket are added further, increasing the total cost up to $150. Ouch. Where does this sort of money originate from and why does it cost so much to get a ticket for this concert today? I want to list the following few considerations:
Convenience and Processing Fees
Many of those high fees are paid for the convenience and processing fees that are provided by the ticket-selling platform and the event organizers. These can cost anything from five dollars to fifteen dollars or even more per ticket. The rationale of this is that you are charging for the privilege of being able to purchase a ticket online as well as the cost of a ticket sale being processed online. Well, nothing comes cheap in this world and the cases do not differ either. Companies argue that Ticketmaster and similar services are essential to recoup costs such as web hosting, security features, call centers, legal responsibility insurance, and credit card charges. The critics argue that these fees appear to be inflated, and the amount of work that the law firms perform does not justify the fees they charge.
Promoter and Venue Fees
Apart from that, some of the added costs are incurred directly from the event promoters and the concert venues of the tickets. Similar to many businesses, these organizers and venues experience increasing running costs; expenses such as machinery costs, production costs, salaries, advertising, and insurance costs are likely to increase in the long run. Those cost increases are shifted to fans through add-on processing and facility fees in thousands of venues. Promoters, witnessing how lucrative those add-on charges can be, wish to get a piece of it as well. The end product of this process is even more so-called miscellaneous charges added to the basic ticket price.
Dynamic and Surge Pricing
Another thing that keeps prices and fees high is referred to as “dynamic pricing,” which is another trend in concert ticketing. As Uber and airlines charge additional fees depending on demand, tickets increasingly are sold at variable or ‘surge’ prices, where tickets for the most popular events are more expensive due to their popularity. Therefore, the nosebleed seat for Taylor Swift, which may have cost about $60 initially, may now cost $100+ during the most popular period for its sales. This, according to Ticketmaster and other self-sellers, is useful in equalizing the supply and demand of tickets and, at the same time, discouraging scalpers. While some view it as a good opportunity for fans, many others think it is a clear way of making money at the expense of fans. In a nutshell, fans are forced to pay a lot more than they anticipate the moment they fail to book tickets as soon as they are released.
Legal Monopolies
There is one more crucial business explanation for why the costs of concert ticketing remain so steep: a lack of competition due to industry consolidation. Until 2010, Live Nation and Ticketmaster were two separate entities that went head-to-head in major promotions and ticketing services. But what did the world of business and stock exchange do when they unveiled plans for a merger worth $2.5 billion? It effectively created a vertically integrated behemoth that owned or controlled a vast amount of top venues, promotions, artist bookings, and ticketing space. The opponents always claimed that one kept on dominating the other in terms of competition and transparency in pricing, to the extent of charging very high fees. There are, of course, other competitors with a much smaller market share but still, Ticketmaster is the king of the hill and can pretty much set the price. Promoter relationships have smothered other attempts by various artists, such as Bruce Springsteen, to escape the arrangement. Opening up markets again may be the only way to tame fees through new legislation that has the backing of legislators.
Scalpers and Bots
And lastly, the increased presence of scalpers and ticket reselling bots has also exerted upward pressure on fees of every type. Ticket resellers utilize automated software programs that quickly purchase massive quantities of tickets once they become available, and then they sell the tickets for much higher prices on second markets. When you try to get a ticket through a scalper on StubHub, there are an additional 25% or more charges on top of the already high resale price. Primary ticket sellers have accordingly priced their services higher (and retained more of the fees) as a result of this reality. A few economists theorize that regulating scalpers would lead to a reduction of fees in the long run, but new scalper-friendly legislation and constant bots make that highly improbable.
Well, convenience, processing, facility fees, dynamic pricing, consolidation of the ticket industry, scalpers, and more are all factors that together create a perfect condition where the fans feel like they are being charged a dime for every little thing they do to buy a concert ticket. Promoters and ticket sellers argue they have genuine incremental costs for which they need to be compensated and that they are merely putting ticket prices where they can afford to. So long as concert-going is a high-demand experience, venues have their top talent signed to exclusivity deals, and ticketing platforms keep their monopoly, do not be surprised to see the $50 base price of tickets turn into a $150 all-inclusive pricing model. Outraged fans do have some limited options though: not buying from a reseller, which will involve paying a markup, joining the fan club for presale privileges, writing to lawmakers who may limit fees for concerts through legislation; and boycotting until ticket prices are lowered.
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