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When was the last time you attended a live concert or sporting event? How much did you pay for the ticket? As it becomes more and more common to purchase event tickets online, the service fees and extra charges added to those tickets have become more and more expensive.Today on Down to Business English Skip & Dez talk about concert ticket pricing and the controversy surrounding one of the giants in the industry –Ticketmaster.
Skip: This is Skip Montreux in Tokyo Japan.
Dez: And I’m Dez Morgan in Abu Dhabi the UAE.
Skip: And you are listening to an all new episode of Down to Business English.
Skip: Mr. Dez Morgan. It has been a long time.
Dez: It certainly has Skip. I have really been putting my all into my work recently.
Skip: Good to hear.
Dez: How have you been?
Skip: Very well as a matter of fact. Here in Japan the new fiscal year started back at the beginning of April and the last 6 weeks have been very busy with many corporate clients starting new courses.
Dez: Right. For those of you who don’t know, Skip works closely with many Japanese companies, helping employees improve their English skills in order to do business overseas.
Skip: That’s right. A lot of the focus is on teleconference skills, negotiating, giving presentations, those types of scenarios.
Dez: I was just reading about Japan over breakfast this morning as matter of fact. I see that Lady Gaga was recently performing in Tokyo.
Skip: Yes, that’s right. Although she has been running into protests over her act in other Asian countries such as South Korea and Indonesia, she sold out 3 consecutive concerts at the Saitama Super Arena.
Dez: Wow. If I remember correctly, doesn’t the Super Arena have a capacity of something like 30,000 seats?
Skip: 37,000 to be exact. And with ticket prices ranging between ¥8000 and ¥40,000…well the thought of it makes me a little gaga.
Dez: That is certainly a lot of revenue but you have to keep in mind that artists only get a portion of the ticket price.
Skip: That is true Dez. But currently there is a battle brewing in the US over this very topic.
Dez: Is that right. Are artists demanding a higher cut of ticket revenue?
Skip: Not the artists, but fans are raising concerns with the increasing fees being applied to tickets. And the issue doesn’t only pertain to music events, but to any organization that sells stadium tickets, such as professional and amateur sports teams.
Dez: Sounds very interesting.
Skip: Well let’s do it. Let’s get D2B…Down to Business with Front Row Seats: a behind the scenes look at ticket pricing.
Dez: Just to make sure I understand you correctly, this issue is not a battle between the performers and the venues where they hold the events.
Skip: That’s right Dez. This battle over ticket pricing is more between the consumer and the ticket agents who are selling the tickets.
Dez: Alright, can you give us some background?
Skip: Sure. Back in the day, when I actually went to concerts, getting a ticket involved going to the theater or stadium where the event was being held, waiting in line – sometimes overnight, and then purchasing a ticket face to face with a cashier in the box office.
Dez: That’s the way we used to do it, yes. I remember queuing up all night for Santana, that must have been back in the mid-80s.
Skip: Oh Santana! Now, that would have been worth it.
Dez: It was.
Skip: Over the years however, with advances in technology and greater and more secure Internet access, ticket selling has really gone completely online. Now when you want to attend a concert, you simply go to a ticket sellers website and at the precise moment that tickets go on sale, start clicking the buy button.
Dez: A very convenient, not to mention civilized way to do things if you ask me.
Skip: Well yes, it certainly looks good on paper. But in reality, many consumer groups are outraged at the monopolistic tendencies the ticket sellers are exhibiting.
Dez: Monopolistic tendencies. Now you have my attention. Tell me, who are the big players in this market.
Skip: The big name by far is the American company Ticketmaster.
Dez: Of course, they are well known in the UK. I’d hazard a guess that they are one of the biggest, if not the biggest ticket agent in the UK.
Skip: At this point in time, they are very much a global company and sell tickets to concerts and events taking place all around the world.
Dez: So what were you saying about their monopolistic tendencies?
Skip: Well, the way it works is like this. Ticketmaster negotiates directly with venues for the exclusive rights to sell tickets for events held at that location. In essence, they let the stadium or theater keep the entire face value of the ticket so that only they can sell those tickets.
Dez: So if a ticket was priced at $50.00, the venue would get to keep all of that?
Skip: That’s right. Now, in turn, the venue pays the performer or sports team whatever price they had negotiated with them.
Dez: Okay, it sounds like a good system for the venue and for the artist. How exactly does Ticketmaster make their cut?
Skip: This is where things get dicey. Ticketmaster, and outfits similar to them, make their entire revenue from service fees. Typically, fees added to the face value of a ticket are a service charge, a facility charge, a processing charge, and a convenience charge.
Dez: And how much does that all add up to?
Skip: Of course it varies, but on average, a person buying a ticket to go see their favorite singer or watch a sports game, can be looking at paying an additional 25-40% over the original price of the ticket.
Dez: Of course. Now that doesn’t sound great. But Skip, I’m not sure I see the issue here. Ticketmaster is simply charging for providing a service.
Skip: Yes, but remember, they have an exclusive contract with the venue. If a person wants to buy a ticket, they have no other option but to purchase through Ticketmaster.
Dez: Ah yes. That is the rub. So it is not a monopoly in the sense that they have no competitors, but rather they have cornered the market on the product.
Skip: Exactly. This issue has been receiving more and more attention over the last few years as Ticketmaster has been merging with smaller agencies and even buying venues and operating them through subsidiary companies.
Dez: So now they are selling tickets to their own concert stadiums, playing both ends of the field so to speak.
Skip: Yes. Most recently they have added more wood to the fire by introducing a paperless ticketing system. Now when you buy a ticket, it is tied to your credit card. When you arrive at the venue, you only have to show your ID and the credit card that matches the ticket number.
Dez: Sounds very convenient. But what happens if you decide not to go and want to sell your ticket?
Skip: That’s just it. You can’t. Your only option is to sell it on Ticketmaster’s reseller website, and at the price that they set.
Dez: Yes, I am slowly being convinced that there are potential problems with this system. Has there been any blowback against Ticketmaster?
Skip: Lot’s in fact. Over the last decade many artists have complained about the way their fans are treated by Ticketmaster. Some of the bigger names to step into the fray were Pearl Jam and Bruce Springsteen. Most recently however, the Indy band String Cheese Incident has come up with an unusual solution.
Dez: Oh, what’s that?
Skip: They took advantage of a loophole that Ticketmaster has with some of their venues. This loophole allows the venue to sell tickets directly from their box offices on site.
Dez: Okay?
Skip: So, what String Cheese Incident did was hand out $20,000 in cash to their fans and asked them to go in person and buy up all the available tickets. Now they are now selling those directly to their fans via their website at the original face value price.
Dez: I guess that is a very unique way to get around service charges. But now it’s time for us to get D2V…Down to Vocabulary.
Skip: Just before we get started with the vocabulary for today’s report, I’d like to ask a big favor of all of our listeners.
Dez: And what exactly would that be?
Skip: Well two favors actually.
Dez: My, aren’t we being a little cheeky. Go on, what are they?
Skip: First, if you haven’t already, please subscribe to Down to Business English in iTunes. We are hoping to raise our visibility in the podcast rankings and one of the best ways to do that is by having a large number of subscribers.
Dez: And by subscribing it also ensures that every new episode of D2B is delivered directly to you.
Skip: That’s right. And, if you have an iTunes account, please consider writing a review. It is another way we can increase our profile.
Dez: But please, do be kind. Honest, but kind. Shall we get on with the vocabulary?
Skip: Lead the way Mr. Morgan.
Dez: Okay, first up today is the noun venue, which refers to a building that has a specific purpose, usually involving a performance of some kind. At the beginning of the report, I clarified with Skip that this issue was not a fight between performers and the venues. In other words, the disagreement was not between the concert halls and the performers.
Skip: Another example might be that as we record this, the leaders of NATO countries are meeting in the US. The venue of their first meeting is at Camp David, the US Presidential retreat just outside of Washington DC.
Dez: That is the same venue where the historic peace treaty was signed between Egypt’s Anwar Sadat and Israel’s Menachem Begin, back in 1977 I believe.
Skip: Yes, the very same place. Next, let’s talk about the expression to look good on paper. When you say that something looks good on paper, you are saying that in theory it looks like a good idea, it should be successful. However, at the same time you are communicating that it might not work in practice.
Dez: In the story, you commented that the Ticketmaster business model looked good on paper.
Skip: Yes, I was acknowledging that it looks like a convenient and fair way to sell tickets, but I was also communicating that it had some weaknesses in practice.
Dez: Do you know what else looks good on paper?
Skip: No, what?
Dez: My stock portfolio. I have positions diversified over several industries, I tend to stay away from overly risky investments, I do everything a prudent investor should do. On paper, it looks very good. Unfortunately, my returns are not that stellar.
Skip: Well I am sorry to hear that.
Dez: Oh no worries Skip. It was just an example. Moving on, I want to talk about the financial term face value. The face value of something is its base price, before any service charges or commissions are added. In the story we talk about the face value of a concert ticket. What we are referring to is the base price of the ticket, before a ticket agency adds its service fees.
Skip: Earlier today I was pricing airline flights back to Canada for this summer. The face value of a return ticket is not so bad but once the airline add in their fuel surcharges and the airports tack on their airport fees, and the governments add on their taxes, the final price is unbelievably high.
Dez: A very painful example.
Skip: You can say that again.
Dez: A very painful example.
Skip: Oh now look who’s being cheeky. Next up today is the adjective dicey. This term actually comes from the world of gambling.
Dez: Careful Skip. I can hear your heart beating faster from way over here in UAE.
Skip: Don’t worry Dez, I’m fine. Now from personal experience, many dice games look very simple and fairly harmless. But, in truth, they move very, very fast and before you know it, you have lost a lot of money.
Dez: That’s quite the play by play.
Skip: Thank you. So, when you describe something as dicey, you are conveying that it is risky and perhaps not a very honest situation.
Dez: In the story you referred to Ticketmaster’s service fees as getting dicey. In other words, the situation is potentially risky on the consumer’s pocketbook.
Skip: Not only that, but the customer is always left with the feeling that they have been cheated.
Dez: Another example could be how the recent losses at JP Morgan were a result of dicey trading practices.
Skip: Perfect example. Dez, what’s our final word?
Dez: Our final word today is actually a phrase, to corner the market. I think this is easy enough to get a mental picture of. Imagine getting all of one product and putting it in a corner so that no one else could get at it except by going through you.
Skip: So when you say that something has cornered the market, you are saying that it has complete control of that market.
Dez: Precisely. In the story I commented that Ticketmaster had cornered the market on selling tickets. In other words, by negotiating exclusive rights with concert stadiums, they had achieved the dominant position compared to their competitors.
Skip: Just like Amazon has cornered the market on selling both print and digital products online.
Dez: Yes, but even though they have cornered that market, they are facing stiff competition from both other online companies such as Apple as well as physical outlets like Costco.
Skip: And that is all the time we have for vocabulary today.
Dez: Thanks for that report Skip. I have never really given much thought to the business of ticket pricing before.
Skip: My pleasure Dez. I hope all our listeners found it interesting as well. Everyone, don’t forget to download your free PDF audio script of today’s show. It is available on our website at downtobusinessenglish.com. One more time downtobusinessenglish.com.
Dez: Yes, and as Skip mentioned before, don’t forget to subscribe to Down to Business English in the iTunes store and, if you are so inclined, please leave a comment as well.
Skip: Thanks everyone, see you next time.
Dez: Yes, thank you. Good bye.
