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Joe Biden calls for regulation of ‘junk fees’ in ticketing
By Chris Cooke | Published on Thursday 2 February 2023
Political pressure on the US ticketing market continues to build with President Joe Biden now calling for new laws to regulate “excessive online concert, sporting event and other entertainment ticket fees”.
In a statement yesterday, the Biden administration said: “Many online ticket sellers impose massive service fees at check-out that are not disclosed when consumers are choosing their tickets”.
“In a review of 31 different sporting events across five ticket sellers’ websites”, it went on, “service charges averaged more than 20% of the ticket’s face value, and total fees – like processing fees, delivery fees, and facility fees – reached up to more than half the cost of the ticket itself. A family of four attending a show could end up paying far more than $100 in fees above and beyond the cost of the tickets”.
The ticketing sector – and Live Nation’s Ticketmaster in particular – was in the spotlight in US Congress last week at a hearing instigated by the Senate Judiciary Committee.
That was prompted by all the issues that occurred when tickets for Taylor Swift’s upcoming tour went on pre-sale via Ticketmaster’s Verified Fans system last year. However, it also provided a forum for those who have long been critical of the ticketing sector in general or, more specifically, the market dominance of Live Nation and Ticketmaster since they became one company in 2010.
Various issues with the ticketing business – and the live entertainment industry more generally – were raised during last week’s hearing. However, the issue that generally gets the most attention in political circles – because it’s the thing that most annoys consumers and therefore voters – is the fees charged by ticketing platforms on top of the face value of any one ticket.
People obviously get annoyed by the size of those fees in relation to the cost of the ticket. But another issue is the common practice – except in countries where industry regulators or consumer protection laws don’t allow it – of ticketing platforms only declaring all the add-on fees at the end of the ticket buying process, not upfront where a ticket is initially listed. That initial listing will usually only state the face value of the ticket.
There has long been a debate about why the add-on fees on a ticket purchase aren’t just bundled into the face value of the ticket. The argument against that practice normally goes something like this: “The supermarket doesn’t add its cut onto the price of a loaf of bread at the checkout, so why does a ticketing firm only add its cut at that final stage”.
There are two reasons for declaring and charging the ticketing firm’s fees separately. First, where tickets for a show are available via multiple primary ticketing platforms, different platforms can charge different fees and the customer can choose which platform to go with.
Maybe one platform charges a slightly higher fee, but the customer support and consumer experience is better. And with each platform setting its own fees, they are encouraged to compete with each other and provide the best value.
That said, that reason doesn’t really stand if the vast majority of tickets for any one show – maybe even 100% – are being sold by a single primary ticketing platform, meaning the consumer has no choice, and there is no competition between platforms on fees.
“Often, if Americans want to attend a particular concert or sporting event, they only have one online option for making the initial ticket purchase”, the Biden government’s statement continued yesterday.
“That means that even if consumers knew they might have to pay a large fee on top of the ticket cost, they would have no way to avoid it if they wanted to attend a particular show. One company has exclusive partnerships with a reported 80 of the top 100 arenas in the United States, allowing it to charge fees to attend events at those leading venues without fear of competition”.
The other reason for the ticketing fees being managed separately is to do with the way the live sector does its own deals.
The box office, so all the money generated by the face value of the ticket, is shared with the performers, plus a small cut goes to the music industry collecting societies to license the songs that are being performed.
In many cases a majority of the box office ends up with the performers. The ticketing company then covers its costs via the add-on fees, and the venue and promoter may also be supplementing their incomes by taking a cut of that extra cash.
But, critics would say, why are consumers having to deal with a shoddy and annoying ticket buying experience because of deal conventions within the live sector?
Plus, they might add, a shoddy consumer experience on the primary ticketing sites makes it harder to hold the secondary ticketing platforms to account for the tactics they sometimes employ to confuse and trick the customer.
Biden’s statement yesterday noted that where it is the market dominance of certain players that are causing the problem – by which it presumably means Live Nation and Ticketmaster – then competition regulators, principally the US Department Of Justice, should intervene.
However, “the President urges Congress to act now to reduce these fees through legislation. Specifically, the President is calling on Congress to prohibit excessive fees [and] require the fees to be disclosed in the ticket price”.
This is all part of wider proposals from Biden for a Junk Fee Prevention Act. These proposals, the President’s office says, will “provide millions of Americans with fast relief from these frustrating and costly fees”.
“This will not only save Americans billions a year, but make our markets more competitive – creating a more even playing field so that businesses that price in a fair and transparent manner no longer lose sales to companies that disguise their actual prices with hidden fees”.
“In the coming weeks and months”, the statement added, “the Biden-Harris Administration looks forward to working with Congress to crack down not only on these fees, but also other junk fees that take cash out of Americans’ pockets and hide the true cost of products”.
The proposals from Biden were welcomed by Bill Pascrell, a long-time critic of the US ticketing market who has proposed his own legal reforms via a thing called the BOSS Act. He said yesterday: “Today President Biden announces one of the most consumer-friendly platforms ever uttered by an American leader”.
“For decades”, he added, “American fans have cried out for help, cried out for regulation of a marketplace that has become more larcenous than a Wild West saloon. This is something all Americans – Democrats, Republicans and independents – agree on: fees are strangling Americans and at long last they must be stopped”.
“President Biden supporting our cause the week after industry reforms were also demanded by a bipartisan Senate panel proves that the time for action is now”, he concluded. “We can institute many of these reforms by enacting my BOSS ACT, longstanding legislation I’ve put forward to reform the ticketing marketplace”.
