Ticket Price Inflation and the Slow Death of the Live Music Industry

Ed Sheeran’s recent statements decrying the practice of ticket brokers buying up huge blocks of tickets and then re-selling them at outrageously inflated prices has shed light on a problem that truly threatens the industry at-large. If trends continue, the audience’s ability to regularly attend live shows and the artist’s ability to earn a living will go the way of the 8-Track and Ford Pinto.

Ed Sheeran has a beef with Big Ticket but is he part of the problem?

In a recent statement Sheeran said he was “deeply concerned” about brokers and “[he] urged all fans not to engage with them. We are vehemently opposed to the unethical practices that occur in the secondary market. We have written to each of our partners, be they promoters, venues or ticketing companies, detailing the way in which we expect tickets to be sold: direct to fans.”

In the new digital age where artists are hard-pressed to earn a decent living from the streaming sites most people tend to get most of their music from, conventional wisdom within the industry is that the increases in revenue from live shows make up for the loss in revenue from recording, so it all tends to be a wash.

That’s a false argument.

In 2000, when the CD was still king and Spotify was only a wild fantasy, revenue from live shows made up about 30% of an artist’s income. Over the past sixteen years the precipitous decline in revenue from recording has been mirrored fairly evenly by the steady increase in concert income. Last year, income from live shows made up about 60% of an artist’s income so it’s easy to dismiss the fall in recording revenue because of the perceived rise in revenue from performing.

The problem is, most of the increased revenue is from an overwhelming inflation in live ticket prices. With major players like Ticketmaster also supporting online resellers (Ticketmaster owns several online reseller sites) artists can only reasonable expect about 14% of the ticket’s face value to get back to them. That means all of the overhead and expense incurred by an artist to put on a show are paid out of only 14% of the cost of a ticket, regardless of how much a fan pays for it. The rest of the money goes to brokers and resellers. If you’re not U2 or don’t have a huge corporate sponsor behind you, you’re toast.

Recording profit has fallen while ticket prices have climbed nearly to the point that many fans are priced out of the market, but the increased revenue never makes it back to the artist.

Graph published by SeatSmart which advertises “Same Tickets. Lower Prices.” Seat Smart charged about 129% more on tickets over face value for a February 10 show in Nashville at the Grand Ole Opry. 

Ed Sheeran tickets purchased on Stubhub (owned by eBay) were inflated around 258% and over 500% on Ticketmaster owned reseller sites that are based in the UK and not used here, but Sheeran didn’t share in the inflated profits. The extra money went solely to the brokers and their parent companies.

Artists are to blame for allowing this to happen to their products, but it is also reasonable to place blame on fans who pay outrageously inflated prices without understanding the reasons and ramifications.  Asking Ticketmaster or LiveNation not to make as much profit for their shareholders as possible isn’t reasonable so it’s going to be left to fans and artists to take the business back.

It won’t be long before the entire system collapses and fans won’t be able to afford to go to the shows artists won’t be able to afford to put on in the first place. The big, deep-pocketed acts will survive, but the artists who make up the bulk of the industry (and fan interest) will be squeezed out.

Some artists, like Adele and Mumford & Sons, have taken the step of allowing admittance to shows only to ticketholders whose name appears on the ticket, eliminating brokers and large resellers from the equation. The solution to the problem seems simple – fans and artists alike need to stop partnering with giant brokers and sellers, but that’s easier said than done. Huge money machines like Ticketmaster exert a tremendous amount of pressure on a struggling industry, it’s venues and support companies, so don’t expect artists to simply be able to walk away from them. But if enough fans refuse to purchase obscenely inflated tickets and enough artists refuse to be dictated to by Big Ticket, we all just might be able to save the industry from itself.

Details found in this article are part of a story that ran in the Mirror, February, 3, 2017