Posted by: jonglapa | October 28, 2008

## Ticketmaster… sign of the Apocalypse?

Do the people at Ticketmaster enjoy all the downsides of life (taking money from innocent children, dropped ice cream cones, darkness, stat 110 psets, etc.)? I think so.  I just bought some tickets for a concert via Ticketmaster and found myself paying an additional 20% of the face value of the ticket in fees.  So how is Ticketmaster making money, and what could be a possible pricing formula that they use?

Evidently, some bands in the past have tried to stick it to the Master. Pearl Jam, the most notable, filed an antitrust lawsuit in the early 1990s and even appeared before Congress.  Congress had lawyers investigate the matter, and the Justice Department ruled that people who are buying tickets are actually not Ticketmaster’s customers.  Instead, the almost ten thousand venues Ticketmaster had exclusive agreements with were, and they favored the agreement.  Why?

Take a \$100 ticket for example.  Ticketmaster adds on a “building charge” that averages \$2.50 (cha-ching).  Call this b(x,n), where x is the ticket price and n is the amount of tickets of the same face value placed in a particular order, and it’s constant such that b(x,n)=2.50.  Move on to the “convenience charge,” a hefty \$16.45 for me (cha-ching), and my ticket wasn’t \$100.  Does this vary? Evidently yes.  An article in the Phoenix Sun investigated how Pearl Jam fans going to see the band at a particular venue paid far more in convenience charges than any other event held at the same venue in that year.  Call this c(x,n) then.  Some possibilities might be a fixed percentage of x, we’ll call this p, or a percentage plus a fixed fee, where the fixed fee might be F.  So, c(x,n) = px + F.  If a \$100 ticket had a convenience charge of \$16.45, then one possibility is p=.15 and F=\$1.45 (cha-ching). Finally, why not throw on an overall order processing fee? I checked out three possible orders of tickets on TM’s website, and this one was also a constant at \$3.55.  But! It didn’t vary on the number of tickets bought at the same time.  So, if n is the amount of tickets purchased in the order, o(x,n) =3.55/n. (cha-ching).

If f(x,n) is a very very simplified version of the overall cost of a ticket, f, based on the ticket’s face value and number ordered, then we’d get:

f(x,n) = b(x,n) + c(x,n) +o(x,n) = x + (2.50) + (px + F) + (3.55/n).  Of course, this changes from venue to venue, so it’s a rough approximation. Any ideas on how to improve it?

Articles I looked at FYI:

http://www.thesunchronicle.com/articles/2008/06/30/news/3326220.txt

http://consumerist.com/5062273/ticketmaster-is-evil-and-must-die#c

## Responses

1. ull like it.. if u hate ticketmaster 😀 The Walking Dead – Ticketmaster Apocalypse – https://www.youtube.com/watch?v=RhCmqo9BAgE