Study: Resellers, Online Ticketers Add $11B To Cost Of Live Events Annually

A new study says that large-scale ticket resellers and online ticketing platforms inflate the price of live events by $11 billion annually.

The white paper from the Vanderbilt Policy Accelerator argues that in tandem, those two factors have a push-and-pull effect that creates wildly inflated prices.

“The core problem with the modern ticket broker industry is that it inflates the price of live events without providing any value to either customers or event producers. The brokers contribute nothing to the actual production of live events. And unlike other ‘brokers,’ like a mortgage or real estate broker for example, they do not help consumers navigate and make decisions in a competitive market of providers. Their sole economic function is to profit by increasing the price of a good that someone else is already producing, promoting, and selling at retail,” the paper reads. “Conversely, the main problem with the online ticketing platforms’ service charges is that they are charged in a monopoly environment, and as a predictable consequence, they are far too high. Customers cannot choose between platforms because the venue, not the customer, selects a single platform that is exclusive for practical reasons. Regardless of how competitive the primary ticket platform market is across multiple shows, it is usually a monopoly as to a particular show. Therefore, platforms do not face competitive pressure and are able to charge monopoly prices.”

The paper’s author estimates that resellers alone add $4.5 billion to the cost of tickets, using data from StubHub and a study from the state of New York on average above-face mark-up.

“Brokers do sometimes sell below face value when they misread demand. Protect Ticket Rights, a ticket-resale advocacy group, claims this happens about 10 million times a year and saves consumers $414 million. Because the markup averages cited above already net out those sales, brokers upsold by roughly $4.6 to $5.2 billion. In other words, for every $1 consumers save from the broker market, they lose about $12,” the paper says.

The paper further estimates the average fees charged by ticketing platforms adds another 20% to the cost. The study concedes that some fees are necessary to operate the platforms and generate a profit, but says that because Ticketmaster and its competitors have continued to operate in states that have already implemented 10% fee caps anything above 10% is unnecessary rent seeking and adds $6.8 billion.

The paper calls for an outright ban on “ticket profiteering” – that is a bar on any sale above face value — and a fee cap of 10%.

“Vanderbilt has given Congress, governors, state legislators, and attorneys general the most convincing evidence we’ve seen that resale price gouging has to be reined in. This report uncovers that fans and consumers lose $12 on the resale market for every $1 that scalper advocacy groups claim they save,” NIVA executive director Stephen Parker says, “That is shocking, and it calls for action. Protecting fans with ticket resale price gouging regulations, allowing for resale at the original ticket price or less, is the future of resale in America.”