Ticketmaster is one of the largest ticket sales and distribution companies in the world. Founded in 1976, Ticketmaster sells tickets for live entertainment events on behalf of event organizers such as sporting teams, music artists, theaters, festivals, and more. Ticketmaster uses a variety of business models and revenue streams to generate billions in annual revenue.
How does Ticketmaster make money?
Ticketmaster makes money in several key ways:
- Service fees – This is Ticketmaster’s primary revenue source. Service fees are added onto the base ticket price. Ticketmaster keeps this as revenue.
- Convenience fees – This is an additional per ticket fee that Ticketmaster charges for the convenience of secure online or phone ticket purchases.
- Order processing fees – This is a per order fee that Ticketmaster charges on top of service fees.
- Upsells – Ticketmaster makes money by upselling customers on additional products and services during the ticket buying process like prepaid parking, VIP packages, ticket insurance, etc.
- Data & advertising – Ticketmaster generates revenue by collecting and selling data on customers, traffic, ticket sales, demographics, etc. It also earns ad revenue on its platforms.
- Ticketing deals – Ticketmaster has deals with many venues, promoters, sports franchises, etc. For being their official ticketing provider, Ticketmaster receives a percentage of each ticket sold.
- Secondary ticket market – Ticketmaster owns secondary ticketing sites like Vivid Seats and GETMEIN! where tickets are resold at higher prices, generating more revenue.
Ticketmaster’s service and convenience fees business model
The core of Ticketmaster’s business model relies on charging service fees and convenience fees on ticket sales. This accounts for the majority of their revenue. Here’s how it works:
- Venues, events, teams, artists, etc. hire Ticketmaster as their official ticketing partner.
- Tickets go on sale for an event on Ticketmaster’s platform. Face value base ticket prices are set by the client, not Ticketmaster.
- On top of the base ticket price, Ticketmaster tacks on a service fee that is typically around 25% of the base ticket price.
- A convenience fee of around $5-15 per ticket is also added if the ticket is purchased online or by phone.
- Ticketmaster collects the entire base ticket price and keeps the fees as revenue.
- The clients receive their owed base ticket sale revenue, while Ticketmaster keeps all the fees.
These fees add up quickly, generating billions in revenue each year for Ticketmaster off of what is essentially a surcharge layered on top of the initial ticket prices. The convenience ofTickets. These fees generate massive profits since Ticketmaster has virtually no cost to sell an incremental ticket online or by phone.
Ticketmaster’s operating scale
In addition to charging fees, Ticketmaster also benefits greatly from enormous scale and market dominance. Key advantages include:
- Massive inventory – Ticketmaster sells tickets for over 30,000 venues and 4,500 artists and attractions each year. This huge inventory entices customers to use their platform.
- Consumer reach – With 80% market share of major event tickets, Ticketmaster has unparalleled consumer reach and traction.
- Data analytics – Vast ticket sales data provides Ticketmaster incredibly valuable insights into event, customer, and sales trends.
- Brand recognition – Ticketmaster has strong brand name recognition that drives consumers to use their platform.
- Industry dominance – Their scale, partnerships, and long track record make Ticketmaster the incumbent ticketing leader.
This operational scale enables Ticketmaster to maximize sales volume and charge higher fees across their massive customer base. It also deters competition and increases Ticketmaster’s leverage with business partners.
Ticketmaster’s evolving business
While fees from primary ticket sales are the core revenue driver, Ticketmaster is evolving their business model by:
- Expanding secondary ticket resales – Owning resale sites like Vivid Seats allows Ticketmaster to earn fees on the active secondary market too.
- Acquiring technologies – Ticketmaster has acquired companies that expand capabilities around mobile ticketing, analytics, marketing, and upselling.
- Offering new services – Ticketmaster now provides clients ticket sales analytics, fan CRM tools, dynamic pricing, onsite activation, and other services for additional revenue streams.
- Pursuing integrated ticketing – Ticketmaster wants to offer clients integrated ticketing services across primary, secondary, mobile, CRM, access control, marketing, data, and more.
These efforts aim to embed Ticketmaster further across the live events business and open up new revenue opportunities beyond just the initial ticket sale.
Ticketmaster’s competitive advantages
Ticketmaster maintains several key advantages that have allowed it to remain the primary ticketing leader despite shifting industry dynamics:
- Network effects – As more venues, artists, and consumers use Ticketmaster, it entrenches them as the dominant marketplace.
- Consumer reach – Their brand recognition and scale give them unmatched access to ticket buyers.
- Client relationships – Longstanding exclusive deals with major venues, promoters, and leagues keep inventory flowing through Ticketmaster.
- Technology – Ticketmaster spends heavily on technology to power its platforms and offer innovations.
- Data analytics – Their vast volume of sales data provides critical consumer and event insights competitors cannot match.
- High switching costs – Large clients face high technical and business costs to change ticketing providers once integrated with Ticketmaster’s systems.
These advantages reinforce Ticketmaster’s industry leadership and make replicating their full suite of capabilities daunting for competitors.
Criticisms and controversies around Ticketmaster’s fees
Despite its dominance, Ticketmaster faces ongoing criticisms about its business model and fees. Some common complaints include:
- Excessive fees – Service and convenience fees often add 25-50% over base ticket prices, which many consumers find excessive.
- Lack of transparency – Breakdown of fees is confusing, not disclosed upfront, and makes base ticket prices feel deceptive.
- Captive customers – Given Ticketmaster’s reach, most major events require using them, leaving consumers little choice.
- No fee benefit – Fees don’t seem to confer benefits to consumers beyond basic ticket delivery.
- No fee alternatives – Unlike airlines, Ticketmaster offers no low-fee ticket options.
- Misleading messaging – Terms like “convenience fees” seem misleading when online/phone purchases provide minimal extra convenience.
Ticketmaster insists fees cover the costs of operating their platform and serving customers. But many see their fees as a way to extract profits by locking in both venues and fans.
Is Ticketmaster a monopoly or duopoly?
Ticketmaster’s industry dominance and dependence on fees fuels an ongoing debate – are they an illegal monopoly or part of a duopoly?
Key factors in these arguments:
- Huge market share – Ticketmaster controls over 80% of the US primary event ticketing market.
- Merged rival – Ticketmaster’s main rival, Live Nation, merged with them in 2010.
- Few competitors – Besides small players, no major national competitor exists.
- Captive inventory – Ticketmaster has exclusive deals on the vast majority of major concert venues.
- High barriers to entry – Developing competing technology, infrastructure, and partnerships is extremely difficult and costly.
- Abuse of power claims – Critics say Ticketmaster’s dominance allows them to charge fees unchecked by competition.
However, Ticketmaster rebuts these claims. They argue:
- Live Nation merger was approved – DOJ permitted the Live Nation merger in 2010 after review.
- Fees are not evidence of monopoly power – Fees are simply Ticketmaster’s pricing model.
- Healthy competition persists – Smaller players like AXS, eTix, and Eventbrite prove Ticketmaster has viable competitors.
- Clients have choices – Teams, venues, promoters all willingly choose and negotiate deals with Ticketmaster.
While Ticketmaster retains huge market share, they avoid being labeled a pure monopoly by having Live Nation and other smaller players active in ticketing. How competition continues to evolve in the industry remains to be seen.
Key financials and valuation
As a subsidiary of Live Nation, Ticketmaster does not report standalone financials. However, we can still summarize some key Ticketmaster financial details:
- Est. annual revenue – $10+ billion per year
- Est. annual fees collected – $6+ billion in fees
- Est. operating income – $1+ billion
- Est. ticket sales – 500+ million per year
- Est. market share – 80%+ of major event tickets
In terms of valuation, according to multiple reports, Ticketmaster could be worth $15-20 billion+ as a standalone company based on its revenue, profits, and growth trajectory.
Ticketmaster’s future outlook
Ticketmaster faces some key opportunities and uncertainties looking ahead:
- Live events rebound – Concerts and ticket sales are expected to continue recovering post-pandemic, driving near-term growth.
- Threat from clients – Large clients like Taylor Swift have threatened to leave/bypass Ticketmaster if they don’t address criticisms.
- Tech innovation – Ticketmaster is investing heavily in new mobile ticketing, digital ticket NFTs, and data analytics capabilities.
- Regulatory risk – Continued antitrust scrutiny around fees, market power, and exclusive deals loom as ongoing risks.
Despite controversies around its fees, as live events continue flourishing, Ticketmaster looks poised to maintain its dominant position in event ticketing for the foreseeable future given its immense scale and integration across live entertainment.
Conclusion
Ticketmaster’s business model relies heavily on charging convenience fees and services fees on ticket sales. Enabled by its vast scale and dominant market position, these fees generate billions in extremely high-margin revenue with minimal incremental costs to Ticketmaster. Despite ongoing criticism that its fees are excessive and anti-competitive, Ticketmaster has maintained its position as the primary ticketing provider for live entertainment thanks to the network effects from its platform, strong client relationships, advanced technology, and data analytics. Competitors and critics argue Ticketmaster has monopolistic power that enables them to charge above-market fees unchecked by rivals. However, Ticketmaster contends they face meaningful competition and their ticket pricing reflects fair market rates. As the primary ticketing gateway between fans and events, Ticketmaster remains in an extremely lucrative position, even if their profit engine based heavily on fees faces increasing pressure to adapt over time.