Fred Rosen, our SEVT 2004 Pioneer in Sport and Entertainment Award Winner, has never been without an opinion. A pioneer in ticketing, the creator of the current ticketing model when he was CEO of Ticketmaster, has been out of the industry for 18 years, but his depth of knowledge is still unparalleled. He has taught students of sports and entertainment business in the Los Angeles area, and he agreed to share his thoughts on today’s ticketing world and the evolution of ticketing.
What has changed in ticketing in the last 20 years?
What’s changed is the explosion of the secondary market. People are a lot more attuned to getting value for the ticket. The people who have risk and are responsible for the pricing — the artist or the team — are becoming the beneficiaries of a significant amount of the rise in prices in the secondary market because now they are involved in the process.
What hasn’t changed in ticketing in the last 20 years?
Nobody pays more for a ticket than they want. You can price them and then the free market takes its toll. The advent of StubHub changed the marketplace because it put the laws against scalping out of business. You can’t go after Mary Jane in Iowa. When I left, Ticketmaster allowed the fan clubs to take 10 percent of the tickets for the fans. Mary Jane, a fan, bought four tickets and she realized that, through the Internet, she could sell two and pay for four. Then she realized she could sell four and pay her rent and go sit where she always sat with Ticketmaster and complain about the service charge. When people ask me now, how did I deal with the noise, I just say, ‘I shut off my hearing aid.’
How are ticket prices really decided?
The public decides this stuff. This is not housing or food, it’s not life and death, it’s a show. Prices get scaled. I remember when we started Golden Circles (VIP seating), because it used to be one price fits all. People thought that was crazy. And we all remember the controversy about the $2 facility fee. The truth of this is that people pay it, therefore that’s what it’s worth. Case closed. None of that has changed in 30 years. If I go back to the beginning, people would say to me there is no money in tickets and I would look at them like they’d left the planet. I remember saying to people, ‘okay, if you’re not going to take the money I will.’ I wasn’t being a jerk about it. I understood that there was a market value. When the first row and the last row were the same price, there was no way it would sustain itself in the aftermarket.
Scaling, Golden Circles, market demand — what else goes into determining prices?
I learned a lot about that from Jerry Buss [owner of the L.A. Lakers and the old Fabulous Forum]. Jerry had floor seats that were $1,000, then $1,500 and then $2,000. But Jerry also had tickets for $7.50 and $9.50 in the nosebleeds. His point was that everyone should have a right to see the show, but you don’t get the same seat. Not to mention those events were all on TV. You don’t have to go.
So nothing has changed?
You’re not having the same fights you had before. You had presales, then the presale to the presale and then the sponsor sale. Ticketmaster is not even part of these conversations, because ultimately the primary business, which is a great business, gets lost in the bigger conversation and no one is focusing on what Ticketmaster is charging, which is great for Ticketmaster.
But Ticketmaster always gets blamed, don’t they?
The reason the public has a bad taste when you say Ticketmaster is because they want someone to blame. We live in a nation of scapegoats. I created Ticketmaster as the strawman for the industry. That was intentional. Even at the height of all the controversy in 1994 [when Pearl Jam alleged Ticketmaster was a monopoly and was driving up service charges] our sales went up, because most of the people didn’t understand what the controversy was about. You have to recognize that when I built the business, the arenas needed someone to hide behind. The acts were taking more of the money. It went from 50/50 to 80/20 to 90/10 to taking a fee and Ticketmaster was the one revenue stream that the acts couldn’t control. I created a perception I was pretty tough to deal with. When the buildings needed money or they were being hammered, the service charge was something that was flexible and could move and we moved it. What the public never understood, which is why all these antitrust actions generally did not succeed, is that Ticketmaster doesn’t control pricing or how many tickets it gets or when the tickets go on sale. It has very little control.
Why does ticketing generate so much controversy?
It’s human nature. If you sell a ticket in the back third of an airplane, no one cares because hopefully you land at the same time as the front. But if you sell a ticket in the back third of the arena, people are angry. Even though the screens are better today and you have the digital experience, it doesn’t change that fact, and it’s someone’s fault. They equate the ‘service charge’ to where they sat. You can’t fix that, because a third of what you sell people hate.
Don’t they also think it’s greed?
When I taught at the business school, I asked people how many of you stole music when you got your laptops? Now I ask who didn’t steal it. Then I say, let me tell you the physics of what you’ve done. For every action, there’s a reaction. You push, there’s a pull. So if you’re complaining about concert prices and service charges, you have no one to blame but yourself. You took the money out of the artist’s pocket for their recorded music and they got it back by making you pay to see the show. No one pays more for a ticket than they want. It hasn’t changed. I am bemused by where prices have gone. I’m not surprised. There is a great emotional connection between teams and artists and their fans. That’s what a capitalistic system does. You cannot in anyway lessen that as an issue.
It is all about the act or the team, in the end?
I was always astounded that our business never declined. It was solid based on the functionality of the acts. And while there was a lot of noise, the truth is that as facts became known, the reporters never wanted to write the story that you are an inventory control system. Fundamentally. Nothing more than that. You give people accurate counts and so on. And what Ticketmaster is proud of is that it cleaned up an industry, gave people a distribution system that works. And it keeps evolving and works quickly. The artists have straight accounting now, and they get paid. People aren’t standing in line at 3 in the morning. It’s a business.
Hasn’t it always been a business?
When I first got into the business, you’d walk in a room to make a deal and there would be the owner, the head of marketing, VP of operations and then they’d call the box office person into the room to ask if it would work. Now, it’s 12 people and they’re all MBAs. The business grew up because people found out these are interesting careers. But the basic premise hasn’t changed. It’s putting bodies in seats. Now you have more data, data mining, more understanding of who your customer is. But when they’re all through playing around, it’s bodies in seats. If you have a good act, you don’t have enough seats, and if you have a bad act, it’s like being on a gerbil wheel. What do I need to do to put people in here?