Regarding Ticketmaster

The Circus is in Town by Edith Cockcroft, c. 1912

Welcome to America, Earth's official Home of Innovation. Beware, though, not too innovate too much. If you not only solve a problem but solve it ten times better, you will, in the eyes of the State and Public, have no competition.

Lately I've defended two companies accused of being monopolies: Pantone and Ticketmaster (technically Live Nation Entertainment, after a merger). Pantone has long served as a precise color management system that sits between designers and printers. In short, they have a library of colors and technology that allows them to render those colors accurately. Otherwise, CMYK components are mixed together to acheive a color, often with mixed results. Pantone is the standard, and charges a lot of money to use it's reliable system. It doesn't matter if you (or the FTC for that matter) think they are a monopoly. Pantone is a useful technology...period.

Ticketmaster has been in the news for it's (mis)handling of ticket sales for Taylor Swift's latest tour. And before that, there have been all sorts of accusations about scalping and back room dealing and such. I am not claiming that Ticketmaster has a crystal clear reputation, nor am I willing to try to prove or disprove that they are a monopoly.

I am merely here to point out that like Pantone, Ticketmaster is a useful technology. And in a world with a lot of harmful and/or phony technologies, I think we should celebrate the ones who solve legitimate problems, really well.

It's funny to me that people really only complain about Ticketmaster in the exact scenarios where it's existence is most justified. I can't be bothered to look up the particulars of the Taylor Swift case, but there were something like 14 million people (and bots, more on that later) vying for 2 million tickets. That was 10 million more than the company expected. They used their verified presale system some 400 times without fail, but this time it broke. Regardless of this particular outcome, a 0.25% failure rate is exceptional.

I'd wager that there are but a few dozen companies around that have both the infrastructure and experienced talent to handle that kind of volume spike. Most of them are cloud infrastructure companies and large retailers. I can't think of any others which would be handling a surge of 14 million users. Yes, it's unfortunate that it failed this time, but I'm sure the next time will go off without a hitch.

Meanwhile, there are no other alternatives. Sure, there are a few other ticketing platforms (which are working with Congress to break up Ticketmaster...SHAME!) and I'm sure they could, in theory, have handled this situation. It's a hard problem, matching millions of people to tickets and getting them checked out. Even harder is preventing scalpers from commanding bot armies to buy up tickets for resale.

Fighting scalpers has always been Ticketmaster's big selling point. How do you prevent grifters from buying up all the tickets, constraining their supply and thus driving up the going rate? I imagine in the days of the box office, scalpers just paid people to stand in line and buy tickets in exchange for peanuts, or more likely crack. You can't just walk up to the window and ask for 2,000 tickets, but you could send 250 people to do it for you. I'm sure the economics worked in their favor.

Online ticket sales made this simpler: write a little script that spins up some credit cards and identities to avoid having to exchange drugs for tickets. So Ticketmaster has to get sophisticated in attempts that each order is being placed by a real person. It is a never ending arms race. Vigilance is needed to stay one step ahead of the bot armies. Nobody is ever perfect, so some fraud is expected.

As the internet took off, Ticketmaster lobbied the government on two fronts: one that helped them bring charges against scalpers, and another that required state sponsorship of ticket resellers. I imagine the second was pushed in order to prevent a scalper from creating a legal business entity and claiming itself a reseller. This authorized reseller legislation helped bolster legitimate competitors like SeatGeek and StubHub.

Now, if this were healthcare or insurance or some other opaque industry, nobody would really give a damn. We've collectively written off those industries as lost causes when it comes to sketchy behavior. They may get trotted out in front of a congressional committee every so often, but it's not an event. But Taylor Swift tickets? You never get in between a girl and All Too Well.

The big problem that Ticketmaster solves is not scalpers.

No, Ticketmaster allows artists to keep their ticket prices artificially low.

Artists don't want to be perceived by their fans as greedy pigs. In that light, Ticketmaster is not only the engineer of the clearinghouse for tickets, but also a scapegoat. They are the evil capitalists that make artists' and managers' lives possbile.

A big critique of Ticketmaster (that's Live Nation Entertainment) is that it not only collects fees on ticket sales, but it also promotes the shows and operates the venues. And they pretty much force you to buy the total package. This is what's known to grubby consultant types as vertical integration. An arrangement like this helps create more certainty in it's supply chain.

In Ticketmaster's case, it knows that the quality of experience at the event is important to get people coming back. We've all been to events at venues we'd rather not return to. So they create systems that help events run smoothly so that artists and guests can enjoy themselves. That takes planning and costs money.

That money is recouped when people purchase the tickets, hence the fees. But when people don't buy tickets, those venue bills don't get paid. So it's important to get tickets moving. Taylor Swift doesn't have that problem but 99% of the rest don't sell out shows.

In order to sell more tickets, Ticketmaster acts as a promoter of the shows. They buy ads and billboards and work with radio stations to get people excited about concerts. Where else do you think the 99th caller's tickets came from?

Without Ticketmaster's vertical integration, I have a hard time believing that live shows would consistently be of high enough quality to keep people paying the prices these artists are asking.

By now, the Ticketmaster fees have been memed to death. Because the company takes the L and plays the bad guy, the fees for promotion and operation and everything else is tacked onto ticket sales, like an itemized invoice. Sure, it could be a single grand total, with Ticketmaster and the artists negotiating the cut. But that'd be a higher face value and the artists wouldn't be able to maintain their socialist sensibilities.

Which, remember, is the main reason artists still use Ticketmaster. Seeming affordable is of utmost importance to their brands. Laws of economics cannot intervene in the pursuit of cultural relevance.

But, ironically, this turns concert tickets into a status symbol. At the end of the day, if prices are too low, then there are more people willing to buy them. A bidding competition ensues, and suddenly a $60 ticket becomes a $6,000 ticket.

And that's how Taylor Swift, the brand, joins the ranks of Rolls Royce and Gucci. Not by charging obscene amounts of money for an otherwise commodity good, but by making sure that demand for her shows is orders of magnitude larger than the constraints placed on supply.

So, while it may be possible for Taylor Swift to perform outside of Ticketmaster's realm, it won't happen any time soon, both because of technical and social reasons. This does not excuse any past, present, or future misbehavior by Ticketmaster or otherwise. I don't believe that they are pure in any sense of the world. But they are single-handedly enabling showbusiness at scale.

Please stay tuned for my forthcoming essay, On the Origins of Showbusiness. Coming soon.