Why I Hate Ticketmaster

Yesterday's Planet Money's podcast had a pretty good explanation of why Ticketmaster is able to get away with its evil pricing practices. It's a short podcast, so go ahead and take a listen.

Here's the story in a nutshell: for every concert, sports event, children show or whatever, there are a fixed number of tickets available and a certain number of buyers willing to pay for them. The Ticketmaster price, after the fees and surcharges, is basically the equilibrium price for those tickets. I guess that makes sense...

(from flickr user Godverbs)

The reason I (and presumably many others) hate Ticketmaster is because of the way the company presents the price of its tickets.

Here's an example. Last winter, Angels and Airwaves, one of my favorites bands, was headlining a tour which was coming to Dallas (where I was living at the time). For what it's worth, it was a great show and one of the best concerts I have been to; but I digress. I probably would have been willing to pay up to $75 to see the show. I logged on to Ticketmaster. The tickets were listed at $32, so I went ahead and bought one. But by the time I actually had the ticket in my hand, my credit card had been charged about $50, meaning the fees and surcharges amounted to more than 50 percent of the ticket's listed price.

Now, theoretically, I should have been thrilled. I was willing to pay $75, I only paid $50, so my consumer surplus was 25 dollars. But I wasn't happy. I was quite angry, because when I first inquired about the price of the tickets, it appeared that my consumer surplus would be closer to $43. Psychologically, what originally looked like a great deal now became only a good deal. I wanted the great deal back!

Ticketmaster pisses people off because they screw with expectations. If the equilibrium price point for that Angels and Airwaves concert was really $50, I would have probably been more satisfied if Ticketmaster had listed the price as $50 and not charged any over-the-top fees.

This strategy basically seems to be the opposite of what every retailer on the planet utilizes. Think about going to a store like a JC Penny's. Nearly every item is always "on sale". You can look at something in the store that used to be really expensive, now it's marked down and is much less expensive, and it feels good to make that purchase, regardless of whether or not you actually get a good deal. JC Penny charges less than the price you are originally presented with. Ticketmaster charges much more.

I can understand why Ticketmaster's pricing strategy might work in a competitive market. Airlines have tons of fees tacked on to their base fares because buyers are really bad at taking the "full cost" into consideration during the purchasing process, and many will book a flight with a slightly lower base fare thinking they are getting a good deal. But Ticketmaster is a monopoly, so they have no need to advertise ticket prices lower than what they are going to change. Where else am I going to get my concert tickets? But they do, and it makes them one of the most hated companies in the world of business...

5 comments:

    An article in the New Yorker tackled Ticketmaster and their pricing issues. It was an excellent article, but it didn't leave me hating Ticketmaster any less than I already do.

    The article is at: http://archives.newyorker.com/?i=2009-08-10#folio=034 but you might need a username/password to view it. [If so, contact me and I'll get you a copy.]

     

    Thanks for the tip, Nathan.

     

    The reason I personally hate them is that I can't see why they need to get 18 dollars for that transaction. Its insane. Regardless of whether I would have paid more or not. There is simply no reason for 18 dollars to print out a ticket or email it to me.

     
    On January 14, 2012 Butch Ellis said...

    I HATE Ticketmaster! They lie! I was on line the split second Buffett tickets went on sale and the best they offered was way up in the 300's. That's BS! This happens with them all the time! They force early buyers to get inferior tickets to save better ones to tempt later buyers. Ticketmaster abuses their virtual monopoly. They need to be honest and transparent about all "pre-sale" options and how to access them. They need to be honest and transparent about any seats "held back" for any reason and when they will be available. They need to be honest and transparent about any tickets sold to entities (such as scalpers/brokers) other than private individuals who are limited to eight tickets. They need to be honest and transparent about the actual price you will pay for a ticket. They get away with these unethical practices because there is no real alternative. It's time for "TRUTH IN TICKETING" legislation! Who's with me on this?!?  
    Butch

     

    I couldn't hate Ticketmaster more. They rip you off with fees, don't let you resell your tix without them charging a ton, and then they make it almost impossible to get your moneyback.

    I hate them!