Managerial Application 102

Is Ticketmaster a Monopoly?

In the 1980s, a small upstart named Ticketmaster decided to pay arenas millions of dollars for the right to sell their tickets and helped them develop effective marketing tactics. With Ticketmaster's help, selling tickets went from being a costly headache to a care-free and revenue-maximizing endeavor. As part of the bargain, Ticketmaster gained exclusive marketing rights for initial ticket sales. Because on-site box offices open later, and only when tickets are left over, Ticketmaster often accounts for 85 to 90 percent of sales for hundreds of on-site facilities.

Most people concede that Ticketmaster provides valuable services for venue operators and their customers. However, few would describe Ticketmaster service charges as modest. Long ago, Ticketmaster recognized that customers would pay a lot for ticket-buying services. Ticketmaster levels convenience fees, building facility charges, and order handling charges. For example, on April 14, 2002, Crosby, Stills, Nash & Young gave a concert at the Ice Palace Arena in Tampa, Florida. A first-level seat cost $125. The Ticketmaster convenience charge was $11.75, the building facility charge was $2.75, and the order handling charge was $3.30 (see table below). That's $167.80 for a single ticket, provided standard mail delivery was okay; UPS delivery cost more. That's a price that might bring tears to Suite Judy Blue Eyes.

In defense of such high fees, Ticketmaster argues that venue promotion services do not come cheap. As the sole ticket vendor, Ticketmaster can also assure venue operators that tickets will be priced properly in light of booking alternatives. However, it is Ticketmaster's marketing savvy and choke-hold on information concerning the ticket-buying habits of the general public that has trustbusters worried about monopoly power in the computerized ticketing services industry.

At what point is it reasonable for society to limit the success of dominant, innovative companies like Ticketmaster? Are such limits ever reasonable?

The Cost of Being a Fan: Selected Prices for Tickets Sold Through Ticketmaster

Convenience Ticket Charge + Building Handling Venue Primary Act Location Price Facility Charge1 Fee2

Philips Arena

Creed

Atlanta, GA

$40.50

$6.00

$1.65

Pantages Theatre

Walt Disney's The Lion King

Los Angeles, CA

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