Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers / How Ticketmaster Uses Dynamic Pricing to Maximize Concert Revenue
Transcript
- Lucas: So a few years ago, November 2022, Ticketmaster sold over two million tickets for Taylor Swift's Eras Tour in a single presale. The website crashed, tens of thousands of fans got locked out, and the ones who got through saw prices that were way higher than the so-called face value. Luna: I remember that. People were furious. They felt like they were being gouged. Lucas: Right. But what a lot of people didn't realize is that those higher prices weren't a mistake or a glitch. They were the result of a deliberate pricing strategy called Platinum pricing. Luna: Okay, so what exactly is Platinum pricing? It sounds like a fancy name for just charging more. Lucas: It is, but with a specific mechanism. Standard tickets have a fixed face value — say $150 for a seat. But Ticketmaster, using its own data and algorithms, sets aside a portion of tickets as 'Platinum' and prices them dynamically based on real-time demand. So if thousands of people are trying to buy for that section, the price might climb to $800 or more. Luna: So it's like surge pricing for concerts. Like Uber during a rainstorm. Lucas: Exactly. And the justification is that if you have a finite number of seats and massive demand, why should the first person in line get the windfall of buying at $150 when the market-clearing price is $800? From Ticketmaster's perspective, the artist and the promoter should capture that extra value, not scalpers. Luna: That's the economic argument. But fans felt like they were being punished for being excited. Lucas: And that's the tension. The model absolutely captures consumer surplus — the difference between what someone is willing to pay and the price they actually pay. By letting the market set the price, Ticketmaster eliminates that surplus. In 2022, for the Eras Tour, the average price for a ticket on the secondary market was well over $1,000. Ticketmaster's Platinum pricing essentially brought the primary market closer to that secondary market price. Luna: But didn't Ticketmaster also have a 'Verified Fan' system to prevent bots? How does that play in? Lucas: Verified Fan was designed to keep scalpers and bots out. Fans register ahead of time, they get a code, and only code holders can buy. In theory it reduces resale. But in practice, during the Eras Tour presale, the demand was so massive that even Verified Fan didn't prevent the site from melting down. And once dynamic pricing kicked in, fans with codes still saw prices jump in real time. Luna: So the system worked as intended for Ticketmaster, but it created a PR nightmare. That's got to be a tough line to walk. Lucas: It is. And it gets complicated when you factor in Ticketmaster's market position. They control roughly 80 percent of the primary ticketing market in the US, and they merged with Live Nation in 2010. That combination gives them enormous leverage over venues and artists. If a venue wants to book a Live Nation tour, they basically have to use Ticketmaster. Luna: And that's where the antitrust scrutiny comes in. The Department of Justice sued Live Nation and Ticketmaster in 2024, arguing they have a monopoly. Lucas: That case is ongoing, and it's the biggest challenge to the company's power in decades. But even if a breakup happens, the pricing model itself might survive. Because the logic is seductive: if you let the market clear, you leave less money on the table. Luna: You know, Lucas, this reminds me a bit of how we operate this show. We don't have a monopoly on your attention, but we do rely on listeners like you to keep going. If these conversations have sharpened the way you think about pricing in your own work or just given you a better lens for the world, there's a simple way to support us. Lucas: Yeah, and it's a small gesture — buying us a coffee over at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No ads, no sponsors, just your support keeping this ad-free. And it genuinely makes a difference. Luna: Absolutely. We put a lot of research into each episode, and knowing someone finds it valuable is what keeps us going. So thank you. Lucas: Alright, back to Ticketmaster. So where does this leave the average fan? Well, there's been a push for more transparency. Some states are considering laws that require all-in pricing — showing the total cost including fees from the start. That would at least eliminate the sticker shock at checkout. Luna: That seems reasonable. But would that reduce the ultimate price? Or just make it visible? Lucas: It would make it visible. The total cost might not change, but at least you'd know upfront. The more fundamental question is whether dynamic pricing itself is fair. Economists would say it's efficient. But for something like a concert, which is part cultural experience, part civic event, the idea that a fan pays $800 while someone in the same row paid $300 feels arbitrary. Luna: And that's the catch. Pricing power is only sustainable if the customer doesn't feel ripped off. Ticketmaster has been pushing that boundary for years. Lucas: Exactly. And as the DOJ case unfolds, we might see structural changes. But even if Ticketmaster is broken up, the pricing strategy — dynamic, market-based, data-driven — will probably stick. It's simply too profitable for promoters and artists to abandon. Luna: Unless regulation explicitly bans that pricing model for certain events. Lucas: That's possible. Some European countries already cap resale prices. But in the US, the political will is uncertain. For now, if you want to see a big act, you're playing Ticketmaster's game. And their game is about capturing every last dollar of demand. Luna: Which brings us back to the core of this show: pricing power. The ability to set and enforce prices is the ultimate business advantage. Lucas: And Ticketmaster has it in spades. For better or worse, they've turned the concert ticket into a financial instrument. Luna: That's a great way to put it. Thanks, Lucas. And thanks to our listeners for joining us. Lucas: Next time, we'll look at another industry where pricing is both an art and a battleground. Until then, keep questioning the price tag.