Ticketmaster defends charging its customers a service fee (also called a booking fee) by saying it covers the company’s costs. It’s understandable that Ticketmaster needs to pay staff and cover credit card processing costs and the technology used to process purchases — as well as make a reasonable profit — yet concertgoers may ask themselves why these booking fees fluctuate so much.
As these costs tend to be static, how come the cost to the customer can range from $2 to $20 per ticket? Why does it cost four times as much to process the purchase of four tickets than to purchase one? And why does the fee vary for different artists playing the same venue?
Testimony during an ongoing court case in Ireland over who controls local music festival Electric Picnic confirmed what artists and their managers have known for ages: part of the fee is used to pay promoters, in the form of rebates. In return, Ticketmaster remains the “preferred” ticket solution.
Rates are all over the place. According to the Irish edition of the Sunday Times, Electric Picnic founder John Reynolds claimed he could get a [Ticketmaster] rebate of 75 euro cents ($1) per ticket on his own. Together with promoter Festival Republic Dublin, despite its “financial might”, he could only get a €1 ($1.30) rebate. “He argues that previously the total rebate was €1.75 [$2.30] at a time when tickets were a third of the price,” said the newspaper.
Comments by Denis Desmond, another promoter involved with the festival, illustrated how the size of a promoter can sway the size of these rebates. “[My companies] sell 1.2m tickets in Ireland. When [Reynolds] sells 1.2m tickets in Ireland, he will get the same Ticketmaster rebate we get.”
But it’s not just promoters that get a slice of the booking fee. Though Ticketmaster won’t comment on the specifics of its deals, according to the talent agents and artist managers I’ve spoken to the company was rumoured to pay at least £1 million ($1.5 million) a year to be the preferred ticket agency of London’s O2 arena. AEG, the promoter that owns the O2, recently launched its own ticketing service late last year, which is of course the new “company of choice” for the venue.
The £1 million may not have been a straight fee — some believe such payments could be made in other forms, such as contributions to the venue’s marketing costs. Considering that the O2 arena has been crowned the world’s number one music venue five years in a row, selling over 1.9 million tickets in 2011 alone, it’s easy to see it could be deemed worth it.
One manager of an arena-filling artist voiced his frustration with not being able to keep the cost of tickets down for the fans.
“Ticketmaster can charge whatever they want for booking and transaction fees, and since they’ve got pretty much all the arenas locked up, my artist and I have to accept it or not tour at all.”
A UK talent agent claimed that Ticketmaster often makes more money than the artist from a concert, once the act’s management has paid for the venue, promotion, sound and lights, road crew, transport, hotels etc. And, he pointed out, unlike the artist, Ticketmaster doesn’t lose money if the gig doesn’t sell out.
This is of course not unique to Ireland and the UK. Last year the New York Times reported on how String Cheese Incident went to incredible lengths to help their fans bypass Ticketmaster’s hefty booking fees. That included sending 50 fans and friends with $20,000 in cash to the Greek Theatre in LA to buy eight tickets each. The group then put the tickets on sale on their website at face value.
A couple of weeks ago, the UK government introduced new guidelines alongside regulations to combat excessive booking fees (not exclusively in regards to concert tickets). A new set of Consumer Protection Payment Surcharge Regulations declared it “unlawful for businesses to charge consumers fees for using a particular payment method that are higher than the costs to the trader of accepting that payment method” (a particular favourite among certain budget airlines).
The Department of Business, Innovation and Skill (BIS) guidelines declare that “indirect” costs are not eligible as a cost to be considered in the pricing of consumer fees. “The Department does not consider that indirect costs, such as general administrative overheads or staff training, should be included in the calculation of costs borne by the trader. Indirect costs should be reflected in the headline price of goods and services, as they ought to be for any general cost categories.
“Operating costs could be included only where they can be shown to result directly from processing the method of payments; in such cases, the appropriate cost would likely be the marginal cost.”
The question is how much these guidelines will affect the size of the booking fees concertgoers are forced to pay. I guess it depends on if the government will require ticketing agents to show complete transparency in regards to where the fees really go — and if promoter “rebates” are considered direct or indirect costs.
Image by kc7fys@flickr, licensed under Creative Commons Attribution 2.0 Generic.