Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped
I recently bought two tickets to see The Thermals at Hoboken’s historically cool Maxwell’s. As much as I love The Thermals (have you heard Returning to the Fold?), I was even more delighted to discover that tickets were just $15. Maybe I could treat my date to a nice plate of ravioli and a glass of amusing house wine.
Tickets were only available through a site called Ticketfly.com, so I logged on. First I was asked to create an account—fine. Each ticket had a service charge of $2.88. Still OK. Stranger, though, was Ticketfly’s refusal to allow me to pick up my tickets at will call or even print them out at home. Instead, tickets had to be sent to me via 2nd Day UPS, at a cost of $16.95—more than the cost of a ticket.
I played bass on that same Maxwell’s stage 25 years ago. In the time since, technology has changed the way we acquire everything. I can’t think of an item other than concert tickets that has become so much slower, more expensive and more frustrating to purchase.
In Ticket Masters, Dean Budnick and Josh Baron offer a very thorough—and very good—explanation of why my tickets were so absurdly packaged and priced. A clear, comprehensive look at a murky business, the book is also an encyclopedia of information about the rise, decline and rebirth of the live music industry.
The story begins in 1966 in New York, when Jack Quinn—a man with a notion to manage Broadway ticket sales using a computer—met a frustrated computer engineer named Harvey Dubner. At that time, theaters sold tickets exclusively from a box office, which was inconvenient and inefficient. Opportunities were rife for box-office personnel to steal tickets to sell or give to friends. Baseball teams used to print out a season’s worth of tickets and store them by the thousands in gigantic racks.
When Ticket Reservation Systems was founded, computers were still gargantuan contraptions—the initial computer cost more than $2 million. The business showed potential and soon spawned imitators. Regional ticket reservation companies began springing up across the country, such as Computicket in California and Select-a-Seat in Arizona. The Select-a-Seat story is particularly charming: Its code was devised in the early 1970s by one of the first female programmers, Dorothy McLaughlin, who wrote it all in BASIC, staying up late after she put her kids to bed.
By the late 1970s, customers across the country could buy tickets from machines in banks and stores. All these ticket-selling companies eventually ran into difficulties. Select-a-Seat, Dorothy McLaughlin’s brainchild, attempted to expand too quickly and was forced to file for bankruptcy after initiating and losing a bruising intellectual property lawsuit. Not long after, an Arizona grad student named Albert Leffler, who had worked as a box-office manager at the Santa Fe Opera and admired Select-a-Seat’s business model, decided to start his own computerized-ticketing operation. He found a brilliant programmer, Peter Gadwa, and they eventually named their little start-up Ticketmaster. The first event it handled was a 1977 ELO concert at the University of New Mexico. Tickets were $6.50 with a surcharge of a quarter.
It wasn’t until 1982, when Fred Rosen became CEO, that Ticketmaster began its meteoric ascent. The company’s competitors, such as Ticketron, charged venues to install its computers and software. Ticketmaster made its available free, earning money instead by taking a cut of the service charges. These the company quickly doubled, promising venues and acts a share of the additional profits. To finance these guarantees, Ticketmaster required complete monogamy from its venues. “Everything was exclusive from day one in every building,” Rosen tells the authors, correctly theorizing that, “if the competition didn’t have any [tickets], people were going to find our distribution system real quick.” The company quickly claimed the market; sales ballooned from $1 million in 1982 to $400 million in 1987.
Budnick and Baron admirably render this corporate history readable, though the most interesting episodes are those in which bands (or their fans) have clashed with the industry’s much-reviled middleman. The chapter on the Grateful Dead—titled “A Bunch of Wooly Freaks”—is a little work of art. In 1991, just as Ticketmaster was beginning to exert its dominance over the industry, the Dead pushed back and won an incredible concession from Rosen: The Dead’s fan club would be permitted to sell 50% of the tickets at arena shows. Rosen made the concession after learning that The Dead’s lawyer, Hal Kant, wasn’t bluffing and had already contacted pit-bull antitrust law firm Morrison & Foerster—known as “MoFo” for its toughness. He figured that The Dead were an unusual case that would not set a precedent.
He was right. Perhaps emboldened by the Dead’s success, Pearl Jam picked a fight with Ticketmaster in the early 1990s. The band was incensed by Ticketmaster’s service fees, and rather than lowering its own cut of the ticket price (as bands like Green Day would), Pearl Jam took its case to Congress and Janet Reno’s Justice Department, seeking to prove that Ticketmaster was an unfair monopoly. They found little support. The Justice Department noted that no venues complained about Ticketmaster. Pearl Jam then booked an entire tour without Ticketmaster—which further proved Ticketmaster’s assertion that it was not a monopoly.
While Ticketmaster survived the brouhaha virtually unscathed, Pearl Jam found itself a home with entrepreneur Robert Sillerman’s new conglomerate, SFX—which a few years later would be sold to Clear Channel and a few years after that would merge with Ticketmaster to form Live Nation. Given the billions at stake and the big personalities involved—Ticketmaster has been majority-owned, over the years, by Chicago hotel magnate Jay Pritzker, Paul Allen and Barry Diller—the book’s chapters on industry deal-making are disappointingly dull.
In the past decade, much has changed in the business of ticket-selling. The Internet has given rise to small independent competitors such as Ticketfly. Secondary-sales sites, such as Stubhub (owned by eBay) and Ticketmaster’s TicketsNow, have taken over the market-making role that illegal scalpers once played. Automatic ticket-buying software (“bots”) now dominate online purchasing. Once the bots sweep up all the tickets, they are resold by the purer marketplaces, and the price ratchets up dramatically.
Recently Ticketmaster again found itself in a public spat with a beloved act, in this case the underground artists LCD Soundsystem. In April, the group ambitiously planned its farewell show at Madison Square Garden, a much larger venue than any they had ever played, where the lead singer James Murphy fondly recalled seeing the Jackson Victory Tour back in 1984. The band thought it would take 10 days to sell out; it took about 10 minutes.
Fans were furious, the band was baffled and bloggers spread rumors that LCD Soundsystem had rigged the process by withholding the best seats for friends. In fact, what happened was the same thing that always happens: Ticketmaster had sold the tickets online for the agreed-upon price and virtually all the available tickets were immediately purchased by bots. The face price for the MSG show ran between $35 and $49.50, but on StubHub floor seats reached a ludicrous $350,000.
It may be tempting to think that government intervention will “solve” the problem of competition on the open market. But it is impossible to eliminate the invisible hand just because you can’t get cheap seats. Charlie Watts said that once you get away from a 4/4 beat, it might be good music, but it isn’t rock ‘n’ roll. The laws of supply and demand exert a similarly oppressive math. So long as there is a limited number of tickets for artists capable of producing songs as perfect as LCD Soundsystem’s “New York, I Love You, But You’re Bringing Me Down,” desire will always push prices higher.
So who’s to blame for the ridiculous service and UPS charge for my Thermals tickets? Fans like me, because we are willing to pay.
Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped by Dean Budnick and Josh Baron (ECW Press, 372 pages, $24.95)