The live event market is experiencing some very strange growing pains. The problem has been festering for decades, but the pandemic causing live events to be practically non-existent has caused a new hunger for concerts and other events that higher ticket prices can’t seem to discourage. Fans across the world are desperate to get out and see their favorite artists, and as one CNBC report stated, when there are more people that want to go than there are tickets available, the price is going to go up. This same report made the case that while high, this is open market capitalism acting naturally, and who are we to create artificial boundaries around the higher and higher prices?
Bad Faith Ticketing
While it is a fair point that trying to stifle an open market often increases black market activity, or at best creates massive non-value efforts to make the market artificial, there is a lot more at stake. It would be one thing if fans were faced with high prices and chose to pay them. But the situation is more complex, and in many cases seems to be far from a “fair market”, with the Ticketmaster under nearly constant scrutiny from the government for violating antitrust laws, and having been fined for their behavior leading to artificially high prices. They were even implicated in a 2020 Justice Department memo that showed how the company had threatened venues to force them to work exclusively with Ticketmaster, and retaliated against the few who didn’t.
However, as if this wasn’t enough, even if the illegal activity were prevented, there is still the question of the “technically legal”, but highly unethical practices Ticketmaster has admitted to conducting. The largest of these is not actually putting event tickets for sale on the open market, but rather selling the majority of event tickets to brokers who are able to massively raise prices. While the few lucky fans who can get a ticket will pay between 25-78% above ticket price in various fees, those who have to go through a secondary market are faced with additional marked up costs that average 49% but were noted to reach up to 7,000%
The Difference Between Fair Market and False Market
Those who claim the system is brutal but acting within the confines of a fair market are ignoring key elements. First, the system is effectively a monopoly, with a single firm controlling the vast majority of the market. Second, there is almost zero transparency in how ticket fees are introduced and where the majority of the tickets go. Because Ticketmaster hosts some of the secondary sales sites, they benefit directly for any ticket sold, then sold again with a massive markup.
These elements turn what should be a fair market into a “False Market”, one that appears to operate through supply and demand, but is manipulated in a number of ways to ensure that supply is seemingly very scarce, demand is high, and the prices are artificially spiked before the market can even react.
While the biggest victims in this false market are fans, the event organizers (EO’s) should be highly concerned about what this damage could do to the event market in a few years’ time. Right now the market has massive demand and is highly inelastic (meaning concert goers will pay nearly whatever it takes to get a ticket), in large part because of the post-pandemic desperation we feel to get back out to public events. But what happens when this desperation calms? It could lead to a cooling of the market, a massive drop of interest for live events, and an overall disillusionment as fans see that the ticketsellers, EOs, and even at times the artists are conspiring to abuse them.
Speaking about this possibility, UTIX founder Maxwell Mayhew said “I believe the main issue here is the primary e-ticketing distributors’ awareness of the price inelasticity of consumer demand for these events. Fundamentally, they’re able to charge whatever additional fees they want because the consumers drive to attend these events is so high, that the fees are written off as just an unfortunate circumstance of seeing their favourite artists, for example. It is extremely damaging to the industry, but my fear is that ticket purchases have become Pavlovian in their expectations of being forced to pay unnecessarily high prices and fees, that it has sadly become the norm. Additionally, these negative externalities which are a direct result of e-ticketing greed and laziness (to an extent) harm artists and event organisers too; they see no financial or material benefit of the ticket spikes but instead, feel the brunt of customer fury. I firmly believe that attendance across events will drop if the trend of ticket price gauging increases, and consumers will realise the juice, isn’t worth the squeeze.”
UTIX is a Web3 based company that is working with EO’s to combat the effects of monopolistic aggression and murky secondary markets. The platform uses blockchain technology such as smart contracts to ensure that all parties have full transparency, and it conducts transactions as an automated, tamper-proof third party. The company also works with artists to establish clear rules for secondary markets so that the artist is in full control of what can be sold on secondary markets, when (using ticket timing to prevent illegal scalping), and using two-factor authentication to prevent brokers from creating fake accounts and taking large numbers of tickets unethically (a common practice today that Ticketmaster has done little to prevent).
Shining A Light On A Better Ticket Industry
What is unique about the current live event industry is that while those defending it claim that fair market practices should be allowed to behave freely, the lack of transparency is actually preventing the true fair market. This is a manufactured crisis, and it may very well bring down the live event market for generations. While it’s hard to imagine, there are other “live” industries that were once heralded as an irreplaceable experience, but are now dying out. Going to the mall used to be a massively popular event, but now (especially in North America) malls are dying because they didn’t adapt and other alternatives were better. For the mall, the online shopping aspect was important but not the full story, as some malls who have adapted continue to draw in their communities and are thriving. Adaptation and ensuring customers won’t find something better are what keep industries alive.
So what should we do? Rebuilding trust with fans seems to be a very important priority right now. Mayhew spoke about the importance of trust between EO’s and fans: “Much of the early blockchain voicing was positioned around the removal of a middleman, decentralisation, bringing power to the parties. In today’s environment, I think there needs to be some middleman in e-ticketing, as it is too complex of an issue to trust entirely to smart contracts (event insurance, mediation, entry control features etc.) but by trusting as much of the process to the event organisers and consumers, through smart contracts, at least puts more power in their hands than they’ve ever had before. It is no secret that the ticketing companies work for themselves, then the EO, and finally the consumer; this needs to change. Without both buyer and seller, the marketplace ceases to exist. It is time to empower both equally and bring trust, and more importantly integrity, back to the system.”
With platforms like UTIX and others focused not on maximizing ticket prices but rather finding the best experience for venues, artists, and fans alike, we may be able to save the live event industry from implosion. With regulators getting more and more irate, fans disillusioned, and Ticketmaster continuing to live up to its title of one of the most hated companies around, we need to act fast.
Photo by BRUNO CERVERA on Unsplash