Why it's so tough to get tickets on TicketMaster

If misery loves company, then cheer up if you tried and failed to get tickets to one of the Tragically Hip shows this summer; you’re certainly not alone. In fact, the army of frustrated Hip fans would probably fill the Air Canada Centre, Bell Centre and Rexall Place several times over.

And in the wake of the Hip ticket panic (can we call it HipGate?), eager concertgoers are once again asking exactly how TicketMaster works, and why they can’t seem to get tickets to the biggest shows.

On the surface, it makes little sense that a quick-fingered customer who taps “buy” the minute the tickets are released still comes up empty.

The ticketless among us often claim that Ticketmaster sells only a fraction of seats through the main website, and distributes the rest to insiders and secondary sellers at a markup.

Ticketmaster did not respond to questions from Yahoo Canada about its ticket sales policies, but the company acknowledges on its website that it sets aside some seats for the artist, and also that it does earn money on the secondary market.

But getting any sense of what exactly that means is tough. Anyone who goes to live events has to deal with TicketMaster at some point, but for most of us, their operations are cloaked in mystery.

“There’s a lot of opacity and not a lot of transparency,” says University of Victoria Economics Professor Pascal Courty, who has studied ticket secondary markets and believes that Ticketmaster holds back large blocks of tickets from advertised sales.

“They used to be called ‘ice’ in the industry,” he says.

“Typically, they’re going to keep a lot of the best seats of the venue and these seats will be sold through different channels and it will end up on the secondary market.”

According to Courty, the number of tickets held back can vary. It could be very few for a concert where a sellout is not seen as likely. But for the big event where demand will outstrip supply by a large margin – such as the Hip’s summer tour – the number of tickets held back can shoot up, though it’s impossible to know what fraction of tickets are offered on the primary market.

“Fans who believe that they have a fair shot at the average seat in the venue, (that) is not the case,” he says.

Lawyer Luciana Brasil of Branch MacMaster helped lead a 2009 class-action lawsuit that accused Ticketmaster of violating Canadian anti-scalping laws by “conspiring to divert” tickets to its own secondary sales website Tickets Now. That lawsuit was eventually settled, and in fact Ontario has since amended its anti-scalping laws to essentially make it legal to divert tickets to the secondary market with certain conditions.

But she takes issue with the “official platinum” tickets that the company also sells through its website. These are generally good seats sold at a substantial premium to regular ticket purchasers, and taken from the pool of tickets that are held back from the general public to give to the promoter or artist.

All this has to be seen within the context of the changing nature of the music industry, where artists no longer make their money on album or song sales, but on touring. To maintain strong demand for shows, Ticketmaster is obviously motivated to keep advertised prices in check. But Brasil says the “official platinum” seats allow the artist and promoter to make extra money by reselling from their own block of tickets.

“I think the motivation is clear,” she says. “It’s difficult to think of a different reason other than to make more money and to cash in on the market value.”

Courty agrees.

“The reality is the best seats of the venue could be 10 or 20 times worth more than the worst seats,” he says.

“The issue is now the artist doesn’t want to print that price on the ticket.”

A report issued this January by the New York Attorney General said that less than half of the tickets issued by the company for top shows in New York between 2012 and 2015 were made available to the general public.

The report, which called the ticket selling business a “fixed game”, said 16 per cent were held back for industry insiders, such as promoters and the artist, while 38 per cent were issued through pre-sales through fan clubs and credit card companies.

Tickets are big bucks

Whether or not it’s a fixed game, it’s certainly a lucrative one.

According to financial statements of concert promoter Live Nation, which bought Ticketmaster in 2010, ticketing revenue rose by 10 per cent year-over-year to US$412.5 million in the first three months of 2016.

This is largely made up of fees on ticket sales, but also on revenue from resales. For the quarter, the number of primary tickets sold rose by 9 per cent, while the gross transaction value of resale tickets sold rose by 41 per cent.

Rich Tullo, a senior financial analyst at Albert Fried and Company, says Ticketmaster might designate as many as 20 per cent of the tickets for a particular show to go to the artist, but that the frustration of quick sellouts doesn’t necessarily suggest anything nefarious at work.

“What’ll happen is the demand for a concert may be a million people and the stadium is 23,000, so the tickets just sell out virtually immediately,” he says.

But with the tie-in to Live Nation and a solid four decades in the ticketing business, he says Ticketmaster is well protected against competition, particularly with its ability to handle millions of transactions in a short period of time.

“They have a degree of scale that’s hard to replicate,” he says.

“It’s really hard for anyone to get into that niche of the business.”