On October 11, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule to prohibit so-called “junk fees” in connection with the sale of consumer goods and services. According to the FTC, the proposal, known as the Rule on Unfair or Deceptive Fees (the “Rule”), will regulate and/or prohibit “hidden and bogus fees that can harm consumers and undercut honest business.”1 Specifically, the Rule aims to regulate the omission of mandatory charges and fees from the listing price and the misrepresentation of the nature and purpose of the charges and fees.
New Requirements for Ticket Sellers
For purposes of the live concert industry, the Rule will require ticket sellers to “clearly and conspicuously” disclose the “total price,” or “all-in” price, for tickets wherever the cost of tickets is listed, including any advertising copy. As defined in the Rule, the “total price” is the “maximum total of all fees and charges that a consumer must pay for a good and service.” Sellers must also label the “purpose and nature” of any charges and fees that are included in the total price. This means that common add-on costs ranging from service and processing fees to electricity and security surcharges will be included (and denoted as such) in the total price of a ticket. Failure to comply may result in substantial civil penalties up to $50,120 per violation (i.e., per consumer impacted).
Motivation Behind the Rule
The FTC specifically identifies “live event ticket fees” as a motivating factor behind the Rule proposal. The Notice of Proposed Rulemaking asserts that “it is nearly impossible to obtain tickets at advertised prices because ticket sellers inflate these prices with fees.”2 Further, the FTC cites a Consumer Reports analysis claiming that ticket prices are inflated by “as much as 30% or 40%” due to “convenience fees” and “processing fees.” The FTC views most, if not all, ticketing-related fees as unnecessary, arbitrary, and potentially unfair and deceptive.
Industry Reactions
While the FTC aims to eliminate “junk fees,” many charges and fees applied to ticket prices serve as pass-through payments for services related to the production of concerts. Ticket processors often include surcharges to recoup cash advances and other financial benefits provided to concert promoters and venues. Venues utilize the catch-all “facility fee” to offset costs, such as rent, utilities, insurance, staffing, security, taxes, and maintenance. For many venues, these fees are necessary to keep the lights on and music playing. In recent years, various concert promoters, from industry-giant Live Nation to small-scale independent venues, have voiced support for “all-in pricing” as they believe it accurately reflects the cost to produce a concert.
However, some artist teams and advocacy groups are reluctant to accept or wholly oppose the “all-in” model. Currently, artists can cap their advertised ticket price, while deflecting the negative public perceptions surrounding “junk fees” away from the artist and placing blame with the selling parties. On the flipside, ticketing companies and concert promoters have long accepted their role as perennial “bad guys” as a necessary cost of doing business.
Highlighting this narrative, the battle of Taylor Swift versus Ticketmaster in early 2023 yielded Congressional hearings with calls to break up the ticketing company and legislative proposals directed at ticketing practices. The trend line toward regulation of the event ticketing industry has a long tail with Ticketmaster and Live Nation as the perennial bogeyman. It should be noted, however, that prices and fees are the result of negotiated terms among interested parties. For instance, it is no secret that some “savvy” artists double dip by claiming to benevolently cap ticket prices while secretly collecting a share of the fees negotiated by management, ticketing companies, promoters, and venues.
In the immortal words of Ice-T, “Don’t hate the player, hate the game.”3
Impact and Future Outlook
“All-in” ticket pricing is certain to fundamentally change the existing business model for ticketing and the live event industry. It is less clear, however, whether enforcement of the Rule will reduce the bottom-line price of concerts for the consumer. This commentator predicts that a ban on so-called “junk fees” will have little, if any, impact on ticket prices while simultaneously increasing the cost to attend a concert as venues and promoters, along with artists, find creative ways to supplement their margins and pad the bottom line.
[1] 16 CFR Part 464.
[2] Id. at 12.
[3] “Don’t Hate the Playa” by Ice-T (1999).
