Ticketmaster is the leading ticket sales and distribution company in the United States. They sell tickets for concerts, sports events, theater shows and more. Ticketmaster has managed to secure its position as the dominant player in the ticket sales industry through a combination of factors.
Early Mover Advantage
Ticketmaster was founded in 1976, which gave it a significant head start on competitors in the ticket sales space. In the early days of computerized ticketing, Ticketmaster invested heavily in building out its technology platform and signing exclusive deals with venues and promoters. This allowed Ticketmaster to lock up supply and make it very difficult for new entrants to compete. They were essentially the only game in town for large-scale ticket distribution for many years.
Exclusive Agreements
Ticketmaster has been aggressive about signing exclusive agreements with venues, sports teams, promoters and bands. They promise to help clients maximize ticketing revenue in exchange for an exclusive contract. This locks out competitors and forces consumers to use Ticketmaster if they want tickets to major concerts and sporting events. Some of Ticketmaster’s notable exclusive deals include:
- Live Nation – In 2010, Ticketmaster and concert promoter Live Nation merged. Live Nation owns, operates or has exclusive booking rights for hundreds of major venues and festivals.
- NFL – Ticketmaster has had exclusive contracts with the NFL and individual teams for over a decade.
- Madison Square Garden – MSG signed an exclusive sales and marketing deal with Ticketmaster in 2019.
Vertical Integration
In addition to exclusivity agreements, Ticketmaster benefits from vertical integration with its parent company Live Nation. Because Live Nation is the world’s largest concert and event promoter, they own or control many of the venues and tours that Ticketmaster sells tickets for. This gives Ticketmaster unparalleled access to tickets and touring data.
High Barriers to Entry
Breaking into the ticket sales market is incredibly difficult due to Ticketmaster’s entrenched position. Key barriers to entry include:
- High fixed costs – Developing a ticketing platform requires major upfront investment in technology and security systems.
- Venue deals – Securing relationships with arenas, theaters and stadiums is challenging when most are locked into Ticketmaster contracts.
- Promoter deals – Artists and promoters often have existing partnerships with Ticketmaster that are hard for new entrants to displace.
- Consumer habits – Consumers are used to purchasing tickets through Ticketmaster, which creates inertia.
Dynamic Pricing Technology
Ticketmaster utilizes dynamic pricing software to maximize the revenue from ticket sales. The system adjusts prices in real-time based on supply and demand cues such as:
- Event popularity
- Seat location
- Competitor pricing
- Time until event
By constantly optimizing prices, Ticketmaster is able to capture more value from high-demand events. Competitors lack the data and algorithms to replicate Ticketmaster’s dynamic pricing model.
Industry Relationships and Expertise
Ticketmaster has spent decades developing deep expertise in event ticketing and cultivating industry relationships. Their sales, client services and technology teams have experience handling massive ticket launches, complex venue setups and peak demand scenarios. New entrants can’t match Ticketmaster’s institutional knowledge of the live events business.
Ticket Resale Marketplace
Ticketmaster operates one of the largest ticket resale marketplaces through their site Ticketmaster Resale. This allows Ticketmaster to monetize secondary market ticket sales, which accounts for a massive chunk of revenue in live events. Having inventory and buyers on the primary and secondary market gives Ticketmaster wider reach and more pricing power.
Anti-Competitive Behavior
There have been accusations over the years that Ticketmaster uses anti-competitive tactics to preserve its dominant status. Some examples include:
- Excessive service fees – Charging fees well above costs on every transaction makes it hard for rivals to compete on ticket prices.
- Predatory pricing – Temporarily reducing fees to block competitors from gaining market share in certain areas.
- Blocking competitors – Using exclusivity deals and control of inventory to restrict consumer choice.
While not all these behaviors have been proven illegal, they can limit choices for consumers and event organizers. There have been numerous lawsuits and regulatory actions taken against Ticketmaster over anti-competitive concerns.
Network Effects
Ticketmaster benefits from powerful network effects that reinforce its dominant position. Consumers want to use the platform with the most ticket availability and venues/promoters want to use the platform with the most customers. This self-reinforcing cycle consolidates power with the largest player – Ticketmaster.
High Switching Costs
There are high costs for venues, promoters and consumers to switch ticketing platforms. Integrating a new ticketing solution is complex and time-consuming. Customers would have to learn a new purchasing process. Venues and promoters often rely on Ticketmaster’s technology and support services. These high switching costs discourage adoption of rival ticketing services.
Lack of Viable Alternatives
No competitor has yet succeeded in displacing Ticketmaster as the premier event ticketing solution. Players like AXS and Eventbrite have gained some traction in certain niches but lack Ticketmaster’s content relationships and scale. The combination of exclusive deals, vertical integration and other factors have effectively neutralized threats from major companies like Amazon and eBay.
Conclusion
Ticketmaster has managed to secure a hugely dominant position in event ticketing through aggressive deal-making, technology innovation and leveraging their vast scale and data advantages. Competitors face immense challenges in trying to compete given Ticketmaster’s entrenched relationships and industry expertise. While some practices raise anti-competitive concerns, Ticketmaster’s dominance will be difficult to disrupt without major changes across live entertainment industries.