Ticketmaster

Ticketmaster

Type	Subsidiary of Live Nation Entertainment
Industry	Live Entertainment
Founded	1976 in Arizona, United States
Founder	Albert Leffler Peter Gadwa Gordon Gunn Charles H Hamby Jr.
Key people	Michael Rapino (CEO) Jared Smith (President of Ticketmaster North America) Mark Yovich (President of Ticketmaster International) Kip Levin (Executive VP of Product) Joe Manna (CTO)
Products	Ticketing technology, Ticket Sales, Ticket Resales, Marketing, Distribution of event tickets and information, support of venue renovation
Revenue	Sold 142 million+ tickets valued at $8 billion in 2007
Number of employees	6,678
Parent	Live Nation Entertainment
Website	www.ticketmaster.com

Ticketmaster Entertainment, Inc. is an American ticket sales (primary ticket outlet) and distribution company based in West Hollywood, California, with operations in many countries around the world. In 2010 it merged with Live Nation to become Live Nation Entertainment. As a primary ticket outlet, most US ticket sales for US venues are fulfilled at Ticketmaster's two main fulfillment centers located in Charleston, West Virginia, and Pharr, Texas. Typically, Ticketmaster's clients (promoters) control their events, and Ticketmaster acts as an agent, selling the tickets that the clients make available to them.

On 10 January 2008, Ticketmaster completed the acquisition of Paciolan Inc. after the deal was subject to months of litigation over the potential breach of antitrust laws. Paciolan is a developer of ticketing system applications and hosted ticketing systems.^[1][2] Ticketmaster sold Paciolan to Comcast-Spectacor in 2010. In January 2009, Ticketmaster acquired a UK ticket exchange site, Getmein.com.^[3] Getmein is a ticket exchange site that allows sellers to list the tickets at whatever price they choose. It claims to have over 500,000 tickets listed at any one time.

On 10 February 2009, Ticketmaster and Live Nation, the largest concert promoter, officially announced their merger deal.^[4] After almost a year of review, the two companies merged on 25 January 2010, under the name Live Nation Entertainment (NYSE: LYV).^[5]

Service fees

Much of the price for a ticket advertised by Ticketmaster is earmarked for its own service fees.^[6] Consumers often find these markups unreasonably excessive, especially because there are many instances where no alternative purchase method is offered that would allow avoidance of the fees. This business practice, along with a dearth of competitors, has led many to view Ticketmaster as monopolistic.^[7][8][9] Alternative ticketing companies have emerged, but, due to Ticketmaster's exclusive agreements with a large percentage of venues, the company does not need to lower service fees. In some instances customers may be able to buy tickets directly from the venue, which may add its own service charges.^[6]

Typical fees added to a ticket's face value include:

• Service Charge – This is Ticketmaster's charge for the general service they provide and maintain. The amount paid may depend upon the method of payment (by phone, online, or in person).
• Building Facility Charge – This is determined by the venue, and not Ticketmaster.
• Processing Charge – This is Ticketmaster's charge for processing an order and making the tickets available. This is usually not a per ticket charge, but rather a per order charge.
• Shipping Charge, E-Ticket Convenience Charge, Will Call Charge – Ticketmaster charges a fee for ticket delivery, whether the tickets are mailed to the customer, printed out at home, or collected from the venue. The charge for printing out the ticket at home is often higher than the fee to have the ticket mailed. In other sectors, such as airline ticketing, companies usually do not charge (and in some cases even offer a discount), for electronic ticketing. Economist Emily Oster of the Chicago Booth School of Business suggests that this reflects the lack of competition in the industry, with customers willing to pay more for the convenience of obtaining the tickets immediately due to a lack of alternate options.^[9]

In most instances service charges amount to up to 50% of a ticket's face value.^[10]

Ticketmaster has been criticized by some who claim its fees are excessive, with forty British MPs signing an early day motion criticizing the company for overcharging and for the lack of transparency in its pricing structure.^[11]

In 2003, a class action lawsuit was filed against Ticketmaster in Los Angeles District Court alleging that Ticketmaster misrepresented the exact nature of the shipping and processing fees included in certain ticket sales. That dispute then spilled over into a related lawsuit filed in 2010 against Ticketmaster’s liability insurance carrier Illinois Union Insurance Company, a subsidiary of ACE Limited (NYSE: ACE).^[12]

Ticket sales market

Ticketmaster frequently maintains exclusive ticket-sales contracts with major venues as a competitive strategy.

Ticketmaster has been the subject of complaints of high ticket service charges.^[13] Notably, in the 1990s, Pearl Jam's complaints about Ticketmaster led the U.S. Department of Justice to open an antitrust investigation into the company's practices. The investigation was ultimately dropped because, according to former U.S. Attorney General Janet Reno, other competitors were entering the ticket industry, and there was a lack of evidence to proceed.^[14][15]

In 2008, an anonymous source alleged that TicketsNow, an acquired subsidiary of Ticketmaster, assisted with the sale of more than $1 million worth of Radiohead tickets on the TicketsNow website. Due to heavy marketing by the band, Ticketmaster quickly sold out of tickets, but then began referring customers to a "partner site", without disclosing it as a subsidiary, where many tickets were resold at much higher prices.^[16]

Ticketmaster is the primary ticket seller for 27 of the 30 NHL teams and 28 of 30 NBA teams, but in 2005, Major League Baseball acquired Ticketmaster rival Tickets.com. MLB sells approximately 75,000,000 baseball tickets per year, and might be expected to transfer those sales to Tickets.com when Ticketmaster contracts ended.

Also of concern to the company is declining sales in the highly profitable concert business. Off by double-digit percentages in 2005 from 2004, the summer concert season is a major profit center for the company with its high per-ticket prices and accompanying high service fees.

Ticketmaster has had only limited success in the secondary ticketing market. In September 2003, Ticketmaster announced plans to sell tickets in internet auctions, which would bring the price of tickets closer to market prices, but its market share compared to that of eBay or Stubhub remains small, and Internet auctions are still a relatively minor part of its business. Indeed, since around the time of the 2003 announcement, Ticketmaster has lost the lead in the secondary ticketing market to new entrants like Stubhub, who have developed a popular and effective person-to-person market for tickets. In 2006, Ticketmaster President Sean Moriarty, interviewed on NPR, pleaded for legislation that would make the selling of tickets from person to person illegal except through Ticketmaster's own product for this purpose.^[17] Ticketmaster established the Ticketmaster Ticketexchange to compete with Stubhub, their main tagline being that tickets are 100% guaranteed to be authentic, since they are sold through the season ticket holder's account. (Some NFL teams, such as the New England Patriots, New York Giants and New York Jets, require people to be on the waiting list in order to use the service.)

In Canada, Ticketmaster is trying to overturn anti-scalping legislation that is in place in some provinces. They are lobbying the Ontario and Manitoba governments to review rules banning the resale of tickets.^[18] The Premier of Ontario, Dalton McGuinty, stated on March 23, 2009 that his government was planning to introduce legislation that would prevent Ticketmaster from reselling tickets through its TicketsNow website after they would not agree to do so when asked by the Province.^[19]

In early January 2008, an AC/DC show in Vancouver made local headlines after being sold out in mere minutes, only for tickets to be quickly available for higher prices on TicketsNow. The resale site also charged up to $1,199 for a $44 face-value ticket to a recent Killers concert in Toronto — roughly a 2,500% markup.^[20]

In an article by the CBC, Ticketmaster has been quoted as saying, "You and I both know there is a thriving ticket-broker industry ... so the law is really a fiction ... We very strongly feel the law needs to be modernized to reflect the reality of internet commerce. By keeping a price cap in place, you're really just driving the [resale] business into the shadows."^[21]

In late summer 2009, Ticketmaster developed a new way to resell tickets hoping to circumvent brokers and scalpers.^[22] This new system relies on a "paperless" ticketing platform, which makes customers prove their purchase by showing a credit card and ID.^[22] Paperless tickets account for fewer than 1% of all ticket sales.^[23]

Issues and hearings regarding anti-competitive practices

In 1994-1995 LA Times reporter Chuck Philips broke a series of stories ^[6] that helped trigger a federal anti-trust investigation.^[24] In 1994 Ticketmaster's tickets often had surcharges as large as 25% of the base ticket price. Moreover, an unwanted and unnecessary “tying” of services (such as parking and “conveniences”) to the cost of the concert placed an unfair burden on customers and constituted an anti-competitive practice according to a legal analysis ^[7] of investigative pieces by Philips.^{[25][26][27][28][29][7][30]}

The grunge band Pearl Jam petitioned the Antitrust Division of the United States Department of Justice, complaining that Ticketmaster adopted monopolistic practices and refused to lower service fees for the band's tickets ^[24] Pearl Jam wanted to keep ticket prices under $20.00, with service charges no greater than $1.80. Fred Rosen of Ticketmaster refused and because Ticketmaster had exclusive contracts with many of the large venues in the United States they threatened to take legal action if those contracts were broken. Pearl Jam was forced to create from scratch its own outdoor stadiums in rural areas to perform. Pearl Jam’s efforts to organize a tour without the ticket giant collapsed which Pearl Jam said was further evidence of Ticketmaster’s monopoly. An analysis of Philips' investigative series ^{[26][27][28][29][30][31]} in well known legal monograph ^[7] concluded that it was hard to imagine a legitimate reason for their exclusive contracts with venues and contracts which covered such a lengthy period of time. The authors said, “The pervasiveness of Ticketmaster's exclusive agreements, coupled with their excessive duration and the manner in which they are procured, supported a finding that Ticketmaster had engaged in anticompetitive conduct under section 2 of the Sherman Act.” Members of Pearl Jam testified on Capitol Hill on June 30 of 1994. Pearl Jam alleged that Ticketmaster used anti-competitive and monopolistic practices to gouge fans. Congressman Dingell (D-Mich.) after Pearl Jam’s testimony before congress wrote a bill requiring full disclosure to prevent Ticketmaster from burying escalating service fees. Pearl Jam’s manager said he was gratified that Congress saw the problem as a national issue.^[32]

Later in the year the Justice Department opened an investigation into anti-competitive practices in the ticket industry. It continued for close to a year until July 6 of 1995 when the Justice Department abruptly closed its antitrust probe in a two-sentence press release.^[8] Chuck Philips was told by sources close to the case that the investigation was closed due a combination of shortage of resources and the case being difficult and having uncertain prospects.^[8] A spokesman for Pearl Jam told the LA Times Chuck Philips, “Unfortunately, those who will be most hurt by the Justice Department’s cave-in are the consumers of live entertainment…The consumers are the ones who ultimately pay for the lack of choice in the marketplace.”

Prominent lawsuits

On April 28, 1997, Ticketmaster sued Microsoft over its Sidewalk service for allegedly deep linking into Ticketmaster's site. The suit was settled after a two-year legal battle in which Ticketmaster claimed that linking to specific pages on an Internet site without permission was an unfair practice.

In 2003, the jam band The String Cheese Incident and its associated booking group, SCI Ticketing, sued Ticketmaster arguing that Ticketmaster's exclusive use contracts at most US venues was a breach of the Sherman Anti-Trust Act. This lawsuit was settled in 2004 with no publicity of the settlement terms.^[33]

In 2009, Ticketmaster faced several lawsuits across North America, claiming they conspired to divert tickets to popular events to its ticket brokering website TicketsNow, in which the same tickets were sold at premium prices.^[34] This also raised the ire of musician Bruce Springsteen, who said he was 'furious' at Ticketmaster,^[35] and "...the one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing".^[36][37]

Key staff

• Jared Smith: President^[38]
• Terry Barnes: Chairman

See also

• Ticket resale
• Live Nation Entertainment

References

External links

• Recent Claims of Entertainment.com "scam"