'It's called capitalism': Ticketmaster's ex-CEO defends the company's business model

As It Happens10:40'It's called capitalism': Ticketmaster's ex-CEO defends the company's business model

People frustrated with Ticketmaster are just lying in the bed they made themselves, insists the embattled company's former CEO.

Fred Rosen, an attorney who ran the ticket-selling company from 1982 to 1998, has been watching the U.S. Senate hearings on Ticketmaster with frustration.

U.S. lawmakers are looking at competition and consumer protections in the live entertainment industry. At the heart of the hearings is the Taylor Swift pre-sale fiasco, when more than 3.5 million people registered for a Ticketmaster pre-sale for the pop star's concert tour, and the system crumbled under the pressure. 

Fans and artists alike have lashed out at the company. Several U.S. senators are calling for more regulation and oversight, accusing Ticketmaster of holding a virtual monopoly.

But Rosen says Ticketmaster is just an easy target. Here is part of his conversation with As It Happens host Nil Köksal. 

Is Ticketmaster the problem? Are fans directing their frustration to the right spot?

There were [3.5 million] attempts to get into the Ticketmaster system. No system on the face of the Earth can do that.

It's easy to blame Ticketmaster and say it's their fault. But here's the truth. I'm fairly sure that the representatives of the act were told not to put all the shows on sale at one time. And they chose to do it anyway. 

In the normal course of events, if there's enough tickets and enough events and enough times and enough evenings that the act's playing, you would handle that. 

So what you're saying is that Taylor Swift's team, or Taylor Swift herself, put too many shows on the market all at once?

I would have not put all the shows on sale when you knew the demand was going to be that excessive. 

The issues that fans have with Ticketmaster predate any Taylor Swift issues. Ticketmaster was ordered to pay a $4.5-million penalty and $500,000 in costs incurred by the Competition Bureau here in Canada after it investigated allegedly misleading price claims in online ticket sales. In 2018, CBC News investigated Ticketmaster for allegedly recruiting scalpers at a scalpers' conference. So I ... 

You asked me to discuss Ticketmaster, not what happened after I left. I wasn't around for any of that. 

I wasn't asking if you were directly involved. I'm just saying fans have a history of mistrust because of those issues in addition to the Taylor Swift incident…. You told the Los Angeles Times, sir, that you believe fans are, in large part, to blame for what's happening with pricing. So explain why you feel that they're to blame.

It's really simple. They stole all the music. So 90 per cent of an artist's revenue comes from live ticket sales.

You know what I love? This is what I really love. I find it really fascinating. You get on the phone or you want to do these interviews, and everyone wants to take a shot at Ticketmaster. And a lot of it is written because it's misinformation.

Ticketmaster doesn't set prices. Ticketmaster doesn't set what shows go on sale. Ticketmaster doesn't determine how many tickets go on sale. 

When I was in the business before, it was about the same time that the Internet started. About 50 to 60 per cent of an artist's revenues came from recorded music. When Napster came along and … all the artists' revenue went away, except for the superstars, it has to go somewhere. It's physics. 

There's a University of Chicago professor quoted in the L.A. Times, Eric Budish, who says, "Ticketmaster is effectively paid to be a punching bag." But why do you think, then, people focus on Ticketmaster and not the artists? 

I [made] it so that Ticketmaster would take the hit for everyone, but Ticketmaster never got all the money. Do you not understand this is a business? 

Everybody gets mad at Ticketmaster. OK, so let's take Ticketmaster out of business, and now it's your ticket company. Do you think they'd like you any better?

In all due respect, whoever does it, every venue operator knows the following: It's a thankless job. Why do you do it? Because it's economically profitable and because somebody has to do it. So you do it.

You said you built it that way for Ticketmaster to take the heat. But you sound really angry about it all these years later.

I'm not angry about it. I just find it absurd that people aren't smart enough to understand that's the game. 

Is it Ticketmaster's fault that demand is 10 times greater than the number of seats they have to sell?

But is Ticketmaster helping fuel that demand, sir, if they have people ...

We don't fuel anything!

In sports, if prices go up, it's a badge of honour. In concerts, the prices go up, it's the end of the world as you know it.- Fred Rosen, ex-CEO of Ticketmaster

Ticketmaster has the ability to take away the dynamic pricing or the, quote-unquote, verified buyers, who, for a lot of ticket purchasers, it doesn't seem like they're verified buyers. It seems like they're scalpers who are not standing on a corner anymore, but ... sitting in front of their computer and scooping up a lot of tickets that the next day will be so many multiples higher than the original price that the artist had set. So Ticketmaster does have control of that, don't they?

They don't. You give the artists options. You go into a store to buy a blouse. You say, "I want the red one instead of the blue one."

The artist decides that, not Ticketmaster. You're totally wrong.

Well, I'm asking you to look to find out the answer.

I just gave you the answer.

The artist and the promoter determine what tickets go on sale, what the prices are, whether they use dynamic pricing or not.

So should we as fans, then, be demanding of the artists … not the smaller acts, but the big, big acts, that they should say no to dynamic pricing and verified resale?

I would say that, in the end, that the anger is misplaced. Because let me ask you this question. Who's the recipient of all the money? Follow the money. Who's the recipient? The recipient is the act.

If Ticketmaster is doing everything as it should, what's the harm, do you think, in having more competition and oversight?

First of all, it's called capitalism. 

Second of all, this is the great mistake that everybody makes. More ticket companies won't change pricing. What determines pricing is demand. You can have 400 ticket companies and the same number of tickets and the prices wouldn't change.

Do you get frustrated when you're trying to buy tickets?

I don't go to very many events. I didn't go to many events when I ran Ticketmaster.

Maybe if you tried the experience from the user's point of view, you might have made some changes?

I've got to tell you something. And, I mean, you're a very nice woman. Because people [have] got to grow up. People have to recognize it's a business.

The truth is — and here's what nobody wants to deal with — is nobody pays more for a ticket than they want, because you don't have to go. And it's not noblesse oblige. The fact of the matter is it's entertainment.

When the Philadelphia Phillies were in [the World Series] …  the people in Philadelphia were proud of the fact that all the tickets to the Phillies games were over $1,000 a ticket. 

In sports, if prices go up, it's a badge of honour. In concerts, the prices go up, it's the end of the world as you know it, and the ticket company is accused of everything except kidnapping the Lindbergh baby.