A recent announcement from the White House has confirmed that the ticket sales giants will be ending their controversial revenue structure of high fees upon reaching the checkout page. The new structure will show the ENTIRE cost of the ticket including all fees up front, on the very first page.
Here at SeatRelease, we were very excited to hear the news.
Over the past 10 years, our analysis of price has required a fluctuating estimation of 'how much fees are.' Since 2010 we have seen tickets fluctuate from 15% to up to 55% in fees of the list price of the ticket (original page pricing).
This forces the professional industry of pricing historically to use very low quality estimates - and causes an absurd amount of market confusion.
Example: Seeing a ticket at $100, only to end up at $145 after all of the fees. At this point, after filling out all of your credit card information, there is a statistical high likelihood you will pay the $145 that you originally didn't agree to.
In this new structure, websites will be posting $145 up front - deleting all of the clutter of confusion on where consumers are purchasing.
Currently, we are seeing TicketMaster charging the lowest fees amongst any other website, contrary to popular belief. The market economics make sense as well, if TicketMaster is the original issuer of the ticket, they can charge the lowest fees out of any competitive exchange. This holds the same for any venues that SeatGeek or AXS own.
The ticket exchanges that do not own the venues / manage artist relationships, are forced to charge higher fees, to cover their added marketing costs necessary to acquire inventory and sell it at a profitable price. We believe these exchanges will need to shift business model over the coming months/years to absorb this new legal change. Many websites have had a profit margin above 15% created just from this 'junk fee' process.
What does this mean for the consumer?
Soon enough, the habit of needing to click through 5 pages to find out how much a ticket is will end.
This means, that the up front pricing (from example above) at $145 will be shown on page 1. This means that consumers that were willing to pay just $100, may not even click on the listing to purchase, decreasing demand at these new prices.
Over time, at a macro level, the willingness to purchase from consumers should push prices down. Consumers never wanted to pay $145 when they originally clicked on the ticket, the likelihood of them buying at $145 is much lower if they have to click on it first.
Currently, we are seeing TicketMaster charging amongst the lowest fees between 15-30% compared to other websites. Comparing this to other exchanges charging up to 50% or more in fees, it's safe to say that the average ticket price is set to drop 10-20% as "junk fees" are erased from the ticket supply chain.
We are very excited and happy about this news here at SeatRelease. It will bring further clarity to pricing, and allow us to calculate even better pricing against the market to our customers.