Can anyone offer any evidence to confirm or dispute the rumor I frequently see online in message boards that Ticketmaster is passing most of the profit from these fees onto the venues and it's really the venues that are doing the price gouging here?
The idea that is frequently floated is that Ticketmaster bears the brunt of the hate from fans in exchange for letting the performers and venues collect most of the extra fees and giving TM a relatively small piece of the pie.
Sort of. Ticketmaster buys some venues (as LiveNation), and acquires exclusive online-ticket-sale rights to others. They enable this by pouring profit from fees into the venues (either to fund purchases or to afford licensing).
The result isn't greedy venues letting TicketMaster take the heat - if that were the case box office tickets wouldn't be so much cheaper. Instead, it's TicketMaster/LiveNation using venue lock-in to prevent artists from escaping their tendrils. There are some bands that have explicitly attempted to avoid using TicketMaster, and what they usually find is that it becomes very hard to find venues. In smaller cities/towns, it's often the case that there are no large non-TicketMaster theaters, so you can either feed the beast or abandon your fans in that location.
(So in a very indirect sense, TicketMaster is hiding behind zoning/licensing laws and that's why it can offer such anti-competitive pricing.)
It's more complicated than that and has nothing to do with zoning at all. TicketMaster aggressively seeks out venues and lands exclusive contracts, which is a model that makes sense for many venues.
They buy venues and operators/promoters. Some of these "facility" fees are really just payments going into the promoter/operators pockets. In many cases, those people are TicketMaster.
I mention the zoning thing only to explain why you can't push "just open a competitor" one level deeper and create your own vertically-integrated competitor - most regions have an essentially fixed number of major venues, so getting 100% buy-in is totally possible.
But yeah, it's not the proximate cause. That's just vertical control of the market, where TM took over online sales for people who needed a POS service for the web, then merged with LN to get control over promotion and venue operation (which among other things means that many box offices charge fees that get passed on to TM).
>which is a model that makes sense for many venues.
This is the point that so many people miss about Ticketmaster. The customer is the venue and not the ticket purchaser. For the venue, there is no one who offers as complete a package of services as Ticketmaster. They provide so much more than the consumer facing ticket sales website that is the only piece of Ticketmaster that most fans see.
They're ruthless in competing for that business too.
I worked for a startup years ago that got traction with its ticketing solution for certain markets which eventually brushed against TicketMaster. TM was distracted at the time with .com gold rush stuff, and we had traction. They ended up buying the company at a really high premium. A real rarity at the time.
Ticketmaster has exclusive contracts with venues and usually owns the venues outright, so it doesn't matter where the money goes, it's all back into their coffers.
LOL:
"Competition in the live entertainment industry is intense. We believe that we compete primarily on the basis of our ability to deliver quality music products, sell tickets and provide enhanced fan and artist experiences. We believe that our primary strengths include:
TicketMaster's big advantage is that competition between venues isn't intense. Smaller cities will generally only have 1-2 venues of a decently large size, especially if you require things like alcohol licenses and permission to stay open late at night.
In any market where opening a new competitor was easy, someone would be fighting TicketMaster on prices and services. But since they deal in heavy venue lock-in, and opening new venues is essentially impossible (hi there, zoning laws), they get to gouge basically everyone involved.
Hmmm, do you know of a larger small venue group that is owned by a single entity? (or more specially not owned by Live Nation and requires TicketMaster tickets)
"Biggest" and "conglomerate" make it sound like something that it is not. There may not be larger small venue groups but if someone told me that there was a large "conglomerate" operating in the small venue space I'd assume it was more than 10 venues.
It's not necessarily the venue, but also the promoter & sometimes the artist. If you promise a top A-list performer a 105% of the cover ticket price, you've got to find that 5% somewhere. (Not to mention other costs.)
One of the major reasons for Ticketmaster early success was its flexibility. Other systems expected you to conform to predefined contracts. Ticketmaster didn't. Want to slice your inventory into 10 price groups on Friday & Saturday, 5 on Sunday, and 2 during week? No problem. Want a $20 ticket price & $5 fee, no problem. Want a $15 ticket & $10 fee? That works too. Need to sell the Staples Center with one configuration for Madonna on Monday & a different setup for U2 on Tuesday, easy peasy. Need to put 3 more nights on sale? Done.
In a nutshell whatever the ticket owner wants (usually the promoter) Ticketmaster can do.
It was really hard to find that type of flexibility in the 70s. Let alone a system that can scale to the demand associated with live events. (LiveNation spent north of $100M trying to do so before throwing in the towel & buying Ticketmaster outright.)
Whether that cut is "most of the fee" or 50/50 or a smaller percentage like 20% is unspecified. We'd probably need an ex-employee from one of those venues familiar with a Ticketmaster contract to disclose that figure.
While this is somewhat true, what it hides is that Ticketmaster is now a wholly owned subsidiary of Live Nation[1].
Live Nation is essentially the largest music promotor and owns or operates a huge number of venues. The majority of Ticketmaster-branded sales in my city are all at Live Nation operated venues, so those fees in many cases will funnel right back to Ticketmaster's holding company even if they're passed through to the venue operator. And since Live Nation is running the tours for so many acts, they just book them at Live Nation affiliated (owned or operated) venues as often as possible.
I'm curious how the fees are booked on the accounting side. For example, Live Nation won the bid to operate the Nashville Municipal Auditorium for the next three years[2]. Live Nation pays $1mm/yr to the operating fund, the city covers the rest. And Live Nation keeps all profits from the venue until over $2mm in profit is made (then it's split 50/50). That's after $2mm profit, not revenue. The venue is only projected to make $1.5mm/yr in program revenue and costs $2mm/yr to operate[3]. When the city was running the venue, that led to a $500k/yr operating deficit. But if those projections hold with this new contract, our city is on the hook to subsidize Live Nation to the tune of $1mm/yr unless bookings change dramatically. Depending on how they're accounting for those ticket fees, they very well could be shielding that fee revenue from the profit calculation and shafting our city. It's pretty darn easy for "Ticketmaster" (the subsidiary processing the tickets) to siphon off those fees and make them hide from the revenue that "Live Nation" (the promoter booking the tickets) sees. Even if one is owned by the other. Not that I know for sure this is happening, but I've been exposed to enough Fortune 500 accounting shenanigans to know there's usually a tax or liability advantage to these kind of things.
I have some knowledge of the ticketing contract with a small independently owned venue (posting anonymously because I don't want to share their business details in an identifiable fashion). We contract with Ticketfly, a Ticketmaster competitor (Ticketfly is owned by Pandora). Ticketfly may not have as many dark patterns, but they also charge material fees (on a recent transaction, close to 30% more).
I can confirm that while Ticketfly keeps the fees, they pay the venue a pretty substantial contract-signing fee every time we renew. In this fashion, the act gets a certain percentage (even 100%) of ticket sales, but the venue ends up participating in Ticketfly's revenue stream on top of that. I'm sure Ticketmaster and others have similar strategies for creating and concealing incentives. While some ticketing companies may be abusive, there's a certain amount of letting the ticketing companies take the heat for revenue streams that others (venues and performers) benefit from, either directly or indirectly.
Separately, on one point OP is wrong: "Facility Fee" goes entirely to the facility and would be charged at the box office as well.
I can't point to tangible evidence, but I did work in the touring industry for a number of years. In venues that TM doesn't own, the exorbitant fees are not being driven by the venues, nor do they or the artists see any appreciable cut of those fees.
Even if that were true, that fee is definitely not going to the performers. The venue could definitely be getting a kickback, but that's usually owned by the same parent company anyway.
The idea that is frequently floated is that Ticketmaster bears the brunt of the hate from fans in exchange for letting the performers and venues collect most of the extra fees and giving TM a relatively small piece of the pie.