Reselling concert tickets costs buyers

• Charlotte Klein

  editor Economics

The three-day music event Paaspop kicks off the festival season today, reviving an old discussion: the one about the opacity of ticket prices and the high costs of selling and reselling tickets. Efforts have been made for years to do something about this, but not much seems to change. Festival tickets are more expensive than ever.

A frequently heard complaint is that ticket seller Ticketmaster is too powerful. In the Netherlands alone, the company sells more than five million tickets annually. Has the ticket seller indeed become too powerful?

In 2010, Ticketmaster merged with LiveNation, bringing ticket sales and event organization under one company. “This makes it difficult for consumers and artists to get around them,” says music journalist Atze de Vrieze. Last year, parent company LiveNation posted a worldwide turnover of 15 billion euros.

Especially in the US, but also elsewhere, this leads to frustration among artists. “Like you guys, I’m sick of Ticketmaster’s service fee debacle,” The Cure frontman Robert Smith recently lamented in a captioned tweet.

To keep his concerts affordable during the upcoming tour in America, the band set the ticket price at $ 20. The service costs sometimes turned out to be higher than the price of a ticket. In the end, Ticketmaster was called back because it could not justify the high service costs, and a compensation arrangement was made.

It is not new that artists are angry with Ticketmaster. In 1994 Pearl Jam already filed a lawsuit against Ticketmaster because of the high service costs, a case that the band eventually lost. In protest, the American rock band did not perform in halls and stadiums affiliated with Ticketmaster for a while, but that did not work: almost all major venues collaborate with Ticketmaster and the tour fell through.

As far as angry artists are concerned, according to journalist De Vrieze, things are not too bad in the Netherlands. “But that is also because the biggest problems arise with the biggest tours, and they are of a different caliber in America.”

Ticketmaster says in a response that the service costs for tickets are determined by the organizer of the event. Ticketmaster itself receives only a portion of the service fees to cover operating costs, the company says.

Ticketmaster is a major player in the Netherlands, but the company also faces competition from Eventim (German) and Paylogic (Dutch). A number of music venues arrange ticket sales themselves.

The discussion here is mainly about resale. Ticketmaster has determined that tickets must be resold through its own website, with the company charging service fees twice.

This garnered a lot of criticism from festival goers, especially with the sale of Lowlands tickets. Ticketmaster can afford it there, because Ticketmaster and Lowlands organizer Mojo are both subsidiaries of LiveNation.

The platform defends its policy by arguing that visitors can then be sure that a ticket has been verified, and that they are therefore guaranteed access.

The trade associations for events (VVEM) and music venues (VNPF) have previously stated that reselling tickets with guaranteed access offers a safe solution and is in the interests of buyers.

“Ticketmaster says this is to the benefit of the consumer, because it is a safe way and you cannot be scammed,” says De Vrieze. “But other parties could of course also do that resale. This puts competitors such as Viagogo, Marktplaats and Ticketswap sidelined in particular.”

Ticketswap is angry about this, as can be seen from the Lowlands page below. De Vrieze thinks that this responds to the flexibility that consumers now demand when selling tickets. “We are used to buying a ticket a year in advance, while we don’t even know if we can. Now how and when we buy that ticket is being restricted.”

Ticketmaster charges a 12 percent service fee to the new buyer for resale tickets. This fee is comparable to other well-known resale platforms in the Netherlands. Ticketswap has a similar sell-through rate to Ticketmaster, but charges both buyer and seller 5 percent. In addition, Ticketswap charges transaction costs for a number of payment methods, the company says on their site.

Ticketmaster only charges the service costs to the buyer. The company says in a response that this is the only source of income they have when facilitating the resale of tickets. Sellers are not charged any fees by Ticketmaster.

According to competition lawyer Annemieke van der Beek, it is possible that Ticketmaster has acquired a dominant position, but that in itself is not prohibited. “It does entail a special responsibility. Companies in such a dominant position are not allowed to do certain things that smaller companies are allowed to do.”

In her view, it is precisely with resale that things go wrong on two points: first of all, when charging service costs twice. “These could be disproportionately high administration costs, and that could potentially be seen as an abuse of a dominant position.”

In addition, Ticketmaster benefits itself because customers can only resell tickets through its website. “This is an example of something a powerful company is not allowed to do, because this could mean an abuse of your position of power.”

The New York Times previously reported that the US Justice Department is investigating possible abuses of power by parent company LiveNation. Whether this also happens in the Netherlands is unclear.

Since the discussion about Lowlands, the regulator Authority for Consumers and Markets (ACM) has been keeping an eye on Ticketmaster. ACM is not allowed to say whether an investigation is ongoing.

Politicians have been talking about earning money from resale for much longer. State Secretary Uslu (Culture) announced yesterday that she will introduce measures in the autumn. She speaks of a “persistent problem”. At the initiative of SP member of parliament Kwint, the House of Representatives had asked her to limit the high costs of resale in the Netherlands.

She would have preferred to make a plan together with other European countries against resale at extortionate prices, but that will not work. The problem is not high on the agenda of the European Union, Uslu notes. Perhaps Belgium will be looked at for inspiration: there you are not allowed to make a profit on resale. In the Netherlands this is (still) allowed, up to 20 percent.