Islam Zween, Argaam CEO
October 18 could be a big day for Swift’s fans. Tickets for the American pop star are already released on the primary sales platform Ticketmaster. Data isn’t available yet on the number of tickets sold so far, but organisers of the singer’s sixth tour that spans five continents say there’s an endless queue on both the primary and resale venues.
A quick look at the latest data available from the last legs of the 149-show Eras tour by Swift, which kicked off in March last year in Arizona, reveals how powerful the global ticket sales industry is. The ticket vendor platforms sold an estimated 4.35 million tickets across 60 tour dates starting from the pre-sale release on Nov. 17, 2022 to Nov. 15, 2023. That's an average of 72,500 tickets per show, according to Pollstar, the leading publication and data website of the live music industry.
Besides the staggering economic spillovers for tourism in every country, especially in the hospitality sector, the Swift’s tour alone has so far generated about $1.04bn in gross ticket sales. This’s compared to $9bn generated by 100 top global tours last year by all singers including Swift. The average ticket price of Swift’s concert is around $239 compared to a roughly $130 average price for the top 100 tours.
It's an expensive ticket, let alone the mind-boggling sums running in thousands of dollars for just one ticket of a Swift’s concert on resale venues and the secondary market. The Swift’s fans, called Swifties, have created a ‘Swiftonomics’, which actually defies any sound policies in real-life economics.
In 2023, the US concert-ticket industry reached over $22 billion in revenue, compared to only $3 billion in 2017. It’s an evidence on how the ticket sales industry generally speaking has paid off in the world’s largest and most powerful economy. The figure means that more than 20 million consumers attended at least one concert last year in the US alone.
Ticketmaster, with over 80% of the US market share, is the dominant primary platform for concert tickets. Live Nation, the entertainment company that owns the platform, reported a 36% increase in revenue compared to 2022.
Ticket vendors mainly profit from the service fees paid by buyers, which’s about 33% for a ticket and could even run into 52% with superstars like Swift.
How about ticket sales in the world’s most popular sport; football? In fact, revenues accounted for around 19% of the total income of four of the highest earning European football teams ( Barcelona, Real Madrid, Manchester United, and Liverpool). According to the latest data available from Deloitte, revenue in the European football market grew by 16% in the 2022/23 season to €35.3 billion.
Bridging the gap between the two markets
Now, what really matters in the successful business model of ticket sales is the gap between the primary and resale platforms, which could affect a company’s profitability. I found that an integrated platform that combines both the primary and resale markets could be the best answer not only in the ticket sales industry, but in other markets as well including even books
and cars, though I acknowledge that such markets have some differences from the concert and football ticket market in particular. But they share the same economic concept when it comes to sale and resale.
An integrated platform tends to charge lower prices and can be a win-win situation for the star/club, the company and the consumer with positive cross-market spillovers, where more transactions in one market (in this case the primary market) will increase the supply and demand in the resale market.
The main challenge in this lucrative sector is centred around the supply vs demand; namely, when the supply exceeds the demand for tickets due to their extremely high prices. This undermines the concept of the often efficient dynamic pricing strategy, which relies on real-time price adjustments, as the pricing of a ticket wouldn’t be in the interest of the customer, whereas other key stakeholders compete to maximize their revenues. What is certain is that achieving optimal profitability in this sector depends on bridging the trust gap between the primary and secondary markets.
Islam Zween, Argaam CEO
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