Money

Why Concert Tickets Come With So Many Hidden Fees

Plus, who actually gets the money.

When was the last time you purchased a ticket for the actual price listed? Whether you’re catching a movie, watching your favorite team play or enjoying a concert, a host of fees added on during checkout means you pay much more than face value to be there.

In fact, a study by the U.S. Government Accountability Office found that ticketing companies charge an average of 27% of the ticket value in fees. On the secondary market, fees are equal to 31% of the ticket price, on average.

In other words, event ticket fees are out of control.

It hasn’t gone unnoticed. In 2014, for example, Ticketmaster settled a $400 million class-action lawsuit for charging fees such as “order-processing fees” and UPS “delivery fees” that were used for no such things and went straight to profit.

The lawsuit may have curbed the practice of charging deceptive fees, but the root of the problem ― the fact that exorbitant fees even exist, regardless of why they’re charged ― hasn’t been fully addressed.

Unfortunately, these fees aren’t going anywhere soon, due to a lack of federal intervention. So here’s a look at why tickets require so many fees and where that money goes.

Why are so many fees tacked on to tickets?

When I pressed Ticketmaster to comment on why event tickets come with so many extra fees, a representative simply referred me to its Ticketing 101 page. Here, the company explains all the wonderful benefits you, the customer, receive for paying fees, including better customer experience and stronger measures against scalpers.

Ticketmaster explains that fees are added after the ticket price is displayed. “They’re split among the venue and others involved (including Ticketmaster) in bringing events to life, but who don’t receive any portion of a ticket’s face value.”

But what, exactly, are the fees ticket buyers can expect to pay? Though fees will vary according to the particular ticketing company, and Ticketmaster certainly isn’t the only one, they are by far the largest ticketing agency with an estimated 80% of market share. The company breaks down its fees this way:

  • Service fee: Also known as a convenience fee, this charge is applied to each ticket and varies according to the particular event and agreement with the client.

  • Processing fee: In addition to the service fee, a single processing fee is applied to each order (regardless of the number of tickets per order). This charge offsets some of the cost of ticket shipping and handling, as well as support. If you buy tickets at the box office, this fee may not be applicable (Ticketmaster notes that order processing costs may be lower than the fee, in which case it earns a profit).

  • Delivery fee: There is also a charge to deliver tickets, which varies depending on the method, such as U.S. mail, UPS, will call and even mobile and print-at-home.

  • Facility charge: If the client decides they want to charge a facility fee, the charge goes toward helping the client “operate and invest back in the venues themselves.”

  • Taxes: Ticket buyers are required to pay city, state and local taxes, when applicable. This cost is either rolled into the face value of the ticket, added as part of a fee or charged as a separate item.

Ticketmaster notes that most of these fees are determined in collaboration with their clients:

“In exchange for the rights to sell their tickets, our clients typically share in a portion of the fees we collect. The portion of fees we keep helps us to provide our clients with software, equipment, services and support to manage their tickets and box office, and provide the sales network used by clients to distribute tickets to fans. The remainder, when taken with other revenues, is how we earn a profit.”

So the big question: Why not simply raise face-value ticket prices to include fees, making pricing more transparent and comparison shopping easier? There are a few reasons, and, as you may have guessed, they all have to do with improving everyone’s bottom line (except yours).

“It’s a very deceptive pricing practice,” said Rafi Mohammed, a pricing strategy consultant and author. “They’re doing it to deceive customers.”

Last-minute fees result in higher ticket sales.

One of the main reasons fees are tacked on to the end of the checkout process rather than displayed from the start is to remain competitive. Even though transparent pricing is better for the consumer, allowing better comparison shopping, ticket buyers are ultimately willing to spend more money when the fees are hidden until the last minute.

“The greatest example is what happened at StubHub,” Mohammed said. In order to better serve customers, StubHub conducted a survey and learned that users did not like the fact that fees were hidden from the total ticket price until they were ready to check out. So, in an effort to do better by their customers, the company decided to load all their fees upfront into the ticket price that’s shown immediately. Once they made the change, StubHub’s revenue decreased.

“Even though they know that all the fees are included, [consumers] will go the other route because the initial price is lower,” Mohammed said. So StubHub reversed its all-in pricing model, and other ticketing agencies have continued to follow the practice of tacking on fees last-minute.

The ticketing industry is essentially a monopoly.

As Ticketmaster mentions, fees are set in collaboration with clients. The problem is that clients (i.e., artists) are often represented by the same company. With no industry competition, fees can be set to excessive levels and consumers have no choice but to pay them.

In 2010, the world’s largest concert promoter, Live Nation, was allowed to merge with Ticketmaster, provided that they wouldn’t interfere with industry competition. Together, they represent more than an 80% market share of the ticketing industry. In the nine years that followed the merger, ticket prices increased 50%.

The U.S. Department of Justice recently investigated claims that Live Nation had repeatedly broken that antitrust settlement and coerced venues into using Ticketmaster over other ticketing agencies. They came to an agreement, however, extending the consent degree between Live Nation and Ticketmaster through 2025. Live Nation stock rose 9.1% following the news.

Live Nation and Ticketmaster have also come under fire for releasing large numbers of tickets to the secondary market without giving fans a chance to buy them first at face value, jacking up the prices and subsequent fees. StubHub (owned by eBay) controls half of the market, while Ticketmaster is the next largest ticketing agency via its exchange TicketsNow.com.

Are ticket fees avoidable?

“Sometimes the service charge for a sporting event or a concert ticket is different if you buy directly from the box office,” Mohammed said. “There’s still a service fee, but it’s lower.” Of course, that means rather than sitting in your living room and ordering tickets, you have to leave and purchase tickets in person.

As long as ticket buyers demand convenience, ticketing agencies will continue imposing service fees. “And this is why I think you’re starting to see this practice go into other facets of consumer products and services,” Mohammed said. In fact, you’ve probably experienced the same type of last-minute fees when booking a hotel room or eating at a restaurant.

Right now, not much is being done to curb added fees in the event space. “This practice is really going to start to negatively affect how people purchase … and something that I feel should be banned,” Mohammed said. Until it is, buyers need to keep in mind that the face value of a ticket is likely only 60% to 80% of the total cost they’ll pay.