With yesterday’s story about Senator’s Blumenthal and Klobuchar asking the DOJ to take a look at Live Nation’s business and to renew a consent decree meant to ensure competition in the ticketing market, it brings up a lot of questions for consumers, ticket companies, and interested parties in the entertainment industry.
Here are a few big ones that come to mind for me:
The ticket business is broken:
Senators Blumenthal and Klobuchar’s letter to the DOJ begins with a claim that they have “concerns” that the online ticket market isn’t working for consumers.
I think that the challenge isn’t whether or not the ticket market is broken or not, short answer, it is in a lot of ways.
The bigger issue is why?
There are probably countless ways that the business is screwed up or broken. The root cause isn’t just one thing either, but many.
As with most economic issues, it does pay to start by looking at incentives and how they are impacting the marketplace for tickets.
I’ll just point to three:
- The rise of on-demand entertainment: because consumers have all the entertainmnet in the world at their fingertips, the barrier to attention is much greater. This means that the average concert, game, or event has a tougher time breaking through.
- The rise of ecommerce: this has altered the marketing and sales process beyond belief. Before, the mystique and mystery of standing on-line at the box office for an on-sale created a sense of excitement and mystery to the ticket buying process. That doesn’t exist now because everything happens online. This means that the on-sale process can be perverted by technology and it means that any transparency in the process can puncture the mystery or mystique of needing to get the ticket right away.
- More competition for consumer’s spending dollars: consumer spending on experiences was always big, but it has become bigger since the economic crisis in 2008. As the economy has recovered, people’s spending on experiences came to gain more attention and more money was invested in getting people to make their night’s out be with them. This has led to the rise of more dining options, microbreweries, scavenger hunts, bars, and more. This translates into the way that concerts, sports, and other live events have more competition than ever before.
How does this apply to incentives?
Well, look if you are tackled with dealing with on-demand entertainment, your experience is going to have to keep up and you are going to have to spend money on adding value to the entire experience for consumers through better game presentation, better F&B, better service, and a whole list of other items.
Because if you don’t, people will have every incentive to stay away when they can have comfortable clean restrooms at home with a fridge full of their own selection of beer and food. Or, why go to the game when you can go to the local bar that has 50+ beers on tap, a full bar, great food, and good service?
The same incentives apply to ecommerce and the rise of the secondary market platforms like StubHub, Vivid Seats, and others.
The on-sale and marketing of shows, sports, and events has fallen flat, so consumers have no incentive to buy early. So they wait because the incentive created by the platforms is that in a majority of cases the tickets will drop in price.
That incentivizes patience.
Which may pay off in a purchase or it might not.
Both of these incentives are evident in the rise of consumer experience spending and how those dollars can be spread across any number of potential purchase points.
As an example, let’s say that you want to go see the Wizards vs. Lakers game and you are holding off on purchasing your ticket due to trying to find a friend to go with you. Then your co-workers talk about going over to Pi Pizzeria instead for Happy Hour and to catch part of the game.
You may want to see LeBron, but you’d much rather hang out with your co-workers.
So you don’t buy.
So, yes, the ticket business is broken because the incentives that are driving purchasing behavior are not aligned properly.
That said, nothing is likely to happen from this letter:
The letter ends with a request for the administration to protect consumers.
Spoiler alert: Ain’t going to happen.
Back around the time of the online ticketing workshop, I wrote about the idea that the ticket industry and people in the ticket business were most likely to end up as easy targets for political grandstanding.
Exhibit A was the reintroduction of the BOSS Act almost as soon as the online ticket workshop finished.
Exhibit B is this call for investigation.
Neither one of these things have a snowball’s chance of turning into anything substantial due to any number of factors like the fact that Donald Trump is president and it goes without saying that his career isn’t known for his worker protections or taking care of the little man, split control of Congress, and the fact that nothing gets done in Washington, especially nothing necessary or needed.
But knowing that nothing will happen due to historical precedent doesn’t mean you should ignore the issue.
You should continue to advocate for consumer protections, improved transparency, and everyone should be focusing on digging into the root causes of a market that is struggling under its own weight by digging into the root causes of some of these issues.
Do keep an eye on the presidential election of 2020:
Because depending on how the election goes, everything I wrote above could be wrong.
If Donald Trump wins re-election, pop the champagne corks because the ticket companies and any kind of behavior that consumers feel is misleading or in bad taste is likely to continue and accelerate.
All those allegations that Live Nation is using its power to impact bookings and other parts of the ticket industry that are easily dismissed now will likely not even get a dismissal.
Fees, expect more.
Transparency in the market about pricing, or competition, or anything of the sort….ha!
By the same token, if Elizabeth Warren or Bernie Sanders wins and sweeps in a stronger Democratic Party led House and a Democratic Party led Senate, all bets are off because you could see a renewed focus on antitrust regulations and enforcement, stronger consumer protections, and penalties for bad actors.
Or, I could be wrong on all of these things because having lived in Washington long enough, I can tell you 3 things with certainty:
- You can’t trust a word anyone’s saying.
- Don’t expect things to happen fast or at all.
- People will talk just to hear themselves talk.
So that means, all of this could lead to nothing.
But I wouldn’t leave my success to someone else not doing something. Because the winds of change can be fickle.
What say you? Let me know below!
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