For a long time I have wondered why the fees that online ticket vendors charge are so high. I went to go see Architecture in Helsinki at Neumos recently. When I bought the ticket online, Neumos charged me $15, but TicketsWest, the online ticket retailer that the Neumos uses, charged me fees that came to $6.50 which is a very significant portion of the total ticket price. The large fees from TicketsWest are what I find interesting, and have so far been unable to explain them.

I find it very difficult to believe that the costs of running a ticket website are anywhere near 30% of the ticket price, because there are many other online retailers for different products that don’t charge fees nearly as large. Additionally, I remember paying much lower fees to TicketsWest just last year.

I would expect competition in the online ticket sale market to be strong because essentially anyone could start an online ticket sales site. Looking at the number of websites listed as competing with Ticketmaster on its Wikipedia entry, suggests the market is very competitive. Strong competition should make prices closely reflect costs because every online retailer will try to maximize their profit by reducing prices (fees) a small amount.

I found that competition is limited to two major players, so competition is relatively low. I looked at 8 different Seattle venues, and I found that except for Chop Suey, all the venues used either TicketsWest or Ticketmaster/TicketWeb (Ticketmaster owns TicketWeb). Chop Suey sold tickets to a very limited number of shows (3 when I checked) through both TicketsWest and Ticketmater/TicketWeb. Five of the eight venues sold through Ticketmaster/TicketWeb and three of the eight sold through TicketsWest (not including Chop Suey).

That at least one venue, Chop Suey, sells tickets through multiple retailers is strong evidence against the notion that selling tickets through multiple retailers is particularly difficult, but the limited number of tickets available TicketsWest is very confusing. I have difficulty imagining a reason why Chop Suey would sell tickets through both services for only a very limited number of shows. What confuses me more is that even when both retailers are selling tickets for a given show, they both charge large but significantly different fees.

Venues should find it easy to sell tickets through multiple online retailers, because the internet makes commercial transactions very inexpensive and repeatable. Even if it is very difficult to sell through more than one online retailer, venues should find it easy to switch to a different retailer that charges lower fees. One might argue that switching to a relatively unknown online retailer might reduce sales enough to make it unprofitable, but I find it difficult to believe that it would reduce sales by 30% in the long run (which would be enough to offset the increase in ticket prices a venue could enact due to much lower fees from the online retailer), especially since most venues have websites where they advertise their shows and usually link to an online ticket retailer. For some reason, however, venues appear to choose not to sell through multiple online retailers or sell through relatively unknown online retailers, but not because those alternatives don’t exist. This is what I am at a loss to explain. Does anyone have any insights?

Advertisements