Time to Nationalize Ticketmaster
I balked at purchasing some tickets this weekend because of the rapacious service charges of Ticketmaster. The cost of the tickets was already pretty high, at $38.50, but that just seems to be the going rate these days. Generally, I do not begrudge the escalating cost of live performances because artists make most of their money this way, and the advent of widespread file sharing has undermined record sales (even on actual record sales, artists only get a small portion). See this working paper by Alan Kreuger, Rockonomics, for some interesting research on this topic.
What I do object to is, first a $1.50 venue fee added onto the $38.50, a figure that really should be part of the ticket price to begin with. Next comes a Ticketmaster service charge of $7 â€“ seven dollars!! â€“ which means Ticketmaster is making almost five times as much as the host venue. To add insult to injury, I was looking for five tickets, so that is $35 to Ticketmaster. I was purchasing on-line, so Ticketmaster’s marginal cost of selling me the tickets was close to zero (the cost of electricity to move a few electrons around plus some small amortized amount related to the purchase of hardware and development of ticket-selling software). And on-line this marginal cost is the same no matter how many tickets I bought.
In the face of such monopoly pricing, my rational utility-maximizer goes out the window to be replaced with an irrational ball of rage willing to go out of my way to deny Ticketmaster its greedy cut. But I am not sure if I can get tickets from the venue itself, so I may well not go at all. Ticketmaster is a horrible monopoly; others, including some rich bands like Pearl Jam, have tried to create an alternative ticket vendor, but failed. Because Ticketmaster is so entrenched (a lock-in effect), we need to find remedies to ensure fairer (and arguably, more efficient) outcomes.
How to remedy this situation? There are a few options:
1) Nationalize Ticketmaster. Nobody calls for nationalization anymore these days, so I figure this one is that would appeal to everyday people who like to go out to shows. The new Crown corporation would be a ticket-dispensing utility that would charge a service fee equal to marginal cost.
2) Use the Competition Act to break up Ticketmaster into three or four smaller companies, and forbid them to re-combine.
3) Regulate the market for ticket sales by capping service charges at, say, $1-2 per ticket.