Ticketmaster is a major ticket sales and distribution company that sells tickets for various entertainment events worldwide. It dominates the ticket distribution industry and has become a lightning rod for criticism from consumers and observers of the live entertainment business. But why was Ticketmaster created in the first place? Here is a look at the origins and rationale behind the founding of the controversial, yet highly successful, company.
The Pre-Ticketmaster Era
Prior to the creation of Ticketmaster in 1976, the live event ticketing business was highly fragmented. Venues and promoters handled their own ticketing and had to build their own infrastructure for ticket sales and distribution. This led to an inefficient and inconsistent system, with little transparency for consumers on availability and pricing of tickets.
There were some independent ticketing agencies that served promoters for specific events or regions. But there was no unified national system for ticket sales. Each venue or promoter had their own separate process for selling tickets, whether it was through on-site box offices or reliance on select ticket agencies.
This pre-Ticketmaster era of ticketing caused many problems:
- Lack of accessibility – With no centralized ticketing system, consumers had a hard time figuring out where and how to purchase tickets to events. Ticket availability and pricing was obscure.
- Scalping – The secondary ticket market thrived due to lack of price controls and transparency in the primary market. Scalpers could hoard tickets and sell them at inflated prices.
- Inefficiency – Promoters and venues had to spend significant time and resources developing their own ticketing operations and outlets. This took away focus from event production.
- Limited data/information – With ticketing fragmented, neither venues nor consumers had access to detailed ticketing data that could be used to improve events or experiences.
The live event business lacked coordination and standardization in ticketing. This created an opportunity for an organized national ticketing service to come in and consolidate this fragmented landscape.
The Emergence of Ticketmaster
Ticketmaster was founded in 1976 to be the unifying national ticketing service that the event promotion industry critically needed. It aimed to provide the following services and value:
- Centralized event database – Ticketmaster created a centralized database of events and tickets across all its venue and promoter clients. This gave consumers a single place to find tickets.
- Expanded distribution network – Early on, Ticketmaster established partnerships with various retail outlets and stores like Sears and Tower Records to sell tickets. This vastly expanded distribution beyond just venue box offices.
- Tech innovation – Ticketmaster developed one of the first real-time computerized ticket inventory systems. This allowed much greater efficiency and tracking in ticket sales/distribution.
- Data & analytics – With its national database, Ticketmaster was able to collect ticketing data across the industry and provide valuable analytics and insights to its promoter partners.
- Cost savings – By handling ticketing logistics for venues/promoters, Ticketmaster saved them significant time, labor, and overhead costs in running their own ticketing operations.
Fred Rosen, the founder of Ticketmaster, saw the massive potential benefits of centralized ticketing. He stated the company’s purpose as:
“Our plan was to consolidate the highly fragmented ticket distribution industry, and build an electronic nationwide distribution network that would enable us to route every ticket order instantaneously to the box office nearest the customer.”
Rosen capitalized on promoters’ desire to focus on event production rather than ticketing logistics. Ticketmaster sold itself as an efficient, tech-driven ticketing service that could take on all the complexity of ticketing and free up clients to work on their events and attractions.
The First Deals & Early Growth
To establish itself in the industry, Ticketmaster first had to sign venues/promoters onto its platform and ticketing services. Rosen approached major event promoters like Bill Graham in the San Francisco area to make deals. The value proposition was that Ticketmaster’s services and tech infrastructure would greatly improve ticket distribution while also providing detailed sales data.
Some of Ticketmaster’s early client wins included:
- Bill Graham – Major concert promoter in Northern California
- Los Angeles Lakers – Signed in 1978 for exclusive ticketing
- Chicago White Sox – Signed in 1978 for exclusive ticketing
- Grateful Dead – Became a client in the late 1970s
These initial partnerships provided critical mass for Ticketmaster to build out its distribution capabilities. They allowed Ticketmaster to process significant ticket volumes while also collecting valuable ticketing data it could use to improve services. As an example, its deal with the Chicago White Sox in 1978 led Ticketmaster to sell 500,000 tickets for the baseball team in the first season – double what the White Sox had previously been selling on its own. This early result proved the effectiveness of Ticketmaster’s model.
By 1979, Ticketmaster was already processing 10 million tickets. It also expanded into new markets like New York City, through a partnership with the Madison Square Garden Company.
In just a few years, Ticketmaster established itself as a viable national ticketing force and the dominant player in the space.
Rapid Expansion in the 1980s
In the 1980s, Ticketmaster used its early success to expand rapidly through acquisitions and new venue/promoter deals. Some key developments included:
- 1982 – Acquisition of Ticketron, one of its early national competitors
- 1982 – Deal with Los Angeles Olympics for exclusive ticketing
- 1984 – Partnership with Radio City Music Hall in New York
- 1986 – Acquisition of TicketCenter, expanding footprint in the southern U.S.
By the late 1980s, Ticketmaster had over 200 million tickets under contract for distribution. This accounted for around 80% market share of major entertainment events in the U.S. It established many long-term exclusive deals with promoters like Live Nation that locked major venues and festivals into the Ticketmaster ecosystem.
On the technology side, Ticketmaster introduced innovations like barcode scanning and the first transaction fee for ticket purchases. The transaction fee became an important revenue stream, earning Ticketmaster a service charge on top of just the base ticket price. This along with its growing market share led to sizable profits by the end of the decade.
The competitive advantages accrued in the 1980s cemented Ticketmaster as the dominant national ticketing service. Rivals struggled to keep pace as Ticketmaster expanded its reach through acquisitions and exclusivity deals.
Continued Growth and Consolidation in the 1990s
While the 1980s was a period of rapid early expansion for Ticketmaster, the 1990s saw the company focus more on consolidating its power through technology improvements and strategic partnerships.
Some of the major developments were:
- Launch of Ticketmaster Online – One of the first event ticketing websites. Allowed online ticket purchases.
- Partnership with Microsoft – Microsoft licensed Ticketmaster’s technology to integrate into its city guide websites across various markets.
- Deals with major MLB, NBA, NHL teams – Expanded rights for exclusive ticketing with major sports franchises.
- PACIOLAN acquisition – Gained a leading ticketing software/inventory management vendor.
Ticketmaster saw the importance of investing in technology early on, as evidenced by its launch of Ticketmaster Online. It recognized the potential of the internet as a sales and marketing channel. This along with its integration deals with Microsoft helped further solidify Ticketmaster as the dominant ticketing brand.
Sports partnerships also remained a key part of Ticketmaster’s expansion strategy. Deals with the vast majority of teams in the MLB, NBA, NHL, and NFL drove ticket sales volumes even higher.
The PACIOLAN acquisition allowed Ticketmaster to provide enhanced ticketing software capabilities and analytics to venues and promoters. This helped it diversify from just ticket processing into more consultative services with clients.
Challenges and Criticisms Emerge
While Ticketmaster enjoyed tremendous growth and profits due to its high market share, it also began facing greater criticisms and legal/regulatory challenges in the 1990s:
- Complaints about high ticket fees – Consumers started protesting the “exorbitant” fees Ticketmaster charged on each ticket transaction.
- Anti-competitive allegations – Critics claimed Ticketmaster’s exclusive deals unfairly locked out competitors in the market.
- Lawsuits – Ticketmaster faced multiple lawsuits in the 90s over anti-competitive practices. It lost one major suit brought by the U.S. Justice Department over its deals with promoters.
These complaints and allegations stemmed from Ticketmaster’s position of dominance in ticketing. Consumers felt they had no choice but to pay Ticketmaster’s fees if they wanted tickets to major concerts and shows. Many felt Ticketmaster’s scale and reach gave it too much pricing power.
However, Ticketmaster argued that:
- Its fees helped fund technological improvements and were reasonable costs for its ticketing services.
- Its exclusive deals were mutually beneficial partnerships, not anti-competitive monopolistic tactics.
Criticism also arose over a lack of innovation from Ticketmaster due to its entrenched market position. Rivals questioned whether a lack of serious competition had led to stagnation in Ticketmaster improving its services and capabilities.
Despite the growing chorus of complaints, Ticketmaster still managed to maintain its dominant position through the 1990s. Its exclusive deals across such a wide network of venues and promoters made any competitor unlikely to challenge its scale. The company also highlighted its continued investment in new technology like online ticketing as evidence that it was still innovating.
Ticketmaster Joins Live Nation (2010s)
One of the most pivotal moves for Ticketmaster came in 2010, when it merged with the promoter Live Nation. Key facts about the merger:
- Combined the world’s largest ticketing company (Ticketmaster) with the world’s largest promoter (Live Nation)
- Formed new company Live Nation Entertainment – Went public and trades on NYSE
- Ticketmaster CEO Irving Azoff became CEO of new Live Nation Entertainment company
- Allowed cross-promotion between Ticketmaster and Live Nation events/venues
The merger faced significant anti-trust scrutiny from regulatory agencies. Critics argued the combined company would have too much vertical integration and control over the live event value chain.
However, Live Nation Entertainment succeeded in getting approval. The merger gave the combined company unparalleled reach across ticketing, promotion, artist relationships, and event venues. Ticketmaster could now leverage Live Nation’s vast network of festivals, concerts, and clients for even further ticket sales and distribution.
Since the merger, Ticketmaster has continued expanding its ticket volumes and revenues. It has added new capabilities like digital ticketing and developed a ticket resale/exchange with the company Vivid Seats. The combined company now offers clients a huge spectrum of ticketing services and event management capabilities across music, sports, theater, and more.
Criticism remains about Ticketmaster’s fees and market dominance. But it has succeeded in turning itself into an end-to-end event technology giant by combining forces with Live Nation.
Key Takeaways on Why Ticketmaster Was Created
Looking back at Ticketmaster’s origins and evolution yields some key takeaways:
- It filled a major void – The pre-Ticketmaster era was highly fragmented. Ticketmaster provided a unifying national ticketing solution the industry critically lacked.
- It drove efficiencies – By handling ticketing logistics, Ticketmaster created major cost efficiencies for venues and promoters.
- It brought new capabilities – Computerized inventory management and online ticketing were transformative innovations.
- It leveraged partnerships – Deals with promoters, venues, and sports leagues gave Ticketmaster the event volume and exclusivity to dominate ticketing.
- It capitalized on integration – The Live Nation merger provided vertical integration across ticketing, promotion, and artist management.
Ticketmaster’s capabilities, innovation, and strategic partnerships allowed it to become the major force in event ticketing over the past 40+ years. Despite ongoing criticism of its fees and market power, Ticketmaster succeeded in its mission to consolidate and modernize ticketing. No competitor has yet managed to seriously challenge its market leadership across multiple live event types. The company’s long-running reign is a testament to the value and service it provides to venues, promoters, and rights owners worldwide.