The Man Who Broke Ticketmaster
February 22, 2017 1:20 PM   Subscribe

The scourge of ticket bots and the immorality of the shady ticket scalpers using them is conventional wisdom that's so ingrained in the public consciousness and so politically safe that a law to ban ticket bots passed both houses of Congress unanimously late last year. But no one actually involved in the ticket scalping industry thinks that banning bots will do much to slow down the secondary market.
posted by Chrysostom (32 comments total) 13 users marked this as a favorite
 

As long as demand at certain price points outstrips supply, scalping - and the opportunity to make profit - will never end.
posted by fizzix at 1:29 PM on February 22, 2017 [1 favorite]


The supply/demand equation is set off-kilter, though, if the ticket brokers are creating an artifical scarcity by cornering the market.
posted by hwyengr at 1:55 PM on February 22, 2017 [11 favorites]


Before bots there were brokers who hired the homeless to wait in lines.
posted by ZeusHumms at 2:04 PM on February 22, 2017 [1 favorite]


All the money made by scalpers is money that could have been made by performers and the venue. It's easy to see why Ticketmaster makes a big fuss about scalpers: they're proof that it's not serving its clients well.
posted by Joe in Australia at 2:07 PM on February 22, 2017 [3 favorites]


The article makes the argument that Ticketmaster and Stubhub actually like scalpers, a lot of whom have to offload tickets right before a show at below cost. Ticketmaster and Stubhub still get their cut.

I wonder if this guy's consultancy business will actually change anything. I know Louis CK has tried to fight back against scalpers as well as cut out Ticketmaster and Stubhub by selling tickets directly and subverting resales. But it seems like a sisyphean effort. You can try to work your way within a broken system, but it'll still be broken.
posted by mama casserole at 2:15 PM on February 22, 2017 [3 favorites]


The problem is the artists or the promoters pricing the tickets much less than market value. Often, a promoter will guarantee the artists per show and take the risk of the ticket sales exceeding cost. From the artist standpoint, they are paid, but they want to play to full or nearly full houses. A promoter will maximize his revenue which means selling to scalpers in bulk. Scalpers take the risk of being able to resell them at a higher price. The only band I have seen that was able to go directly to the fans were the Grateful Dead. They had a mail in system that required you to send a sase with a money order for the exact amount and they would pick envelopes and mail tickets or unused money orders back.

If a fan wants to take the risk of not getting a ticket, they can wait until the day of a show and almost always get a face value ticket in the arena on StubHub. You cannot corner a market for a wasting asset. The value of a ticket goes to practically zero at the time the show is supposed to start or even about a half an hour beforehand. If you want to pay for insurance, you can pay a premium and buy the ticket on the open market from a scalper (or StubHub) well in advance.

Scalpers actually provide a service to the public, to the artists and to the promoters. Ticketmaster can pay lip service to hating the bots, but they pay the fees like anyone else. The only thing that is in discussion is who gets the money and who takes the risk of the market. Turns out, Towson recognized this risk and did not want to take it and presold all his tickets to other wholesalers. He went for a small markup on volume versus the large markup on small volume.

The real inefficiency here is that the artists and promoters are not clear with the public about how many seats are actually going on public sale and at what price, and the artists do not want to appear too greedy and keep prices below market and supply below demand so that they play to sold out houses.

About 35+ years ago I used to scalp tickets outside Madison Square Garden. It is how I got into the option trading business. Scalping is a very interesting real world study in free markets, scarcity, time risk, etc.
posted by AugustWest at 2:18 PM on February 22, 2017 [29 favorites]


Cornering the market works by controlling supply and then reducing supply.

Even if a broker manages to buy every single ticket, they aren't "cornering the market" any more than whoever originated the tickets (artist/promoter/venue). As soon as tickets are (re-)sold by more than one party, the market is less monopolistic than the natural state.

Even if a broker (or the ticket originator) has every single ticket, there's no evidence that they're reducing supply. Seats aren't going unsold: the profitable (for the scalpers) shows are the the ones that are never in jeopardy of not selling out. The broker can't do things like stockpile or hoard goods, because you can't use Friday's tickets at Saturday's show.

If you have more (net) buyers than seats available, you have to either raise prices or find some other way of deciding who get to buy tickets: a lottery or race or waiting in line. Brokers don't factor into it because they're not net buyers--they're not using or leaving tickets unsold.

From the artist's perspective, where higher prices are bad PR, the value of using Ticketmaster is that TM takes the rap for high fees on a reasonable base price, when in fact the artist is getting a cut of the fees.

If an artist really wants to make sure all of their fans can see them play for a reasonable price, they have to play more shows in bigger venues--there's no way around it.
posted by lozierj at 2:19 PM on February 22, 2017


It's easy to see why Ticketmaster makes a big fuss about scalpers: they're proof that it's not serving its clients well.

Artists don't want to be seen as the ones ripping off customers - while U2 could charge $500 per ticket (and maybe they do) it would be perceived as a cash grab. The artists themselves are mostly content to let someone else soak up the bad press.

Kid Rock Takes On The Scalpers from Planet Money... the short answer is that high-demand groups should just book more gigs if they want to keep prices down. But again, the U2s of the world aren't that keen on doing 20 NYC gigs or whatever it would take to meet market demand. And Kid Rock also markets his own tickets on StubHub, etc so he gets both sides of the business.
posted by GuyZero at 2:30 PM on February 22, 2017 [2 favorites]


Scalping is a very interesting real world study in free markets, scarcity, time risk, etc.

Now that I've read the full article, this makes much more sense to me.
posted by ZeusHumms at 2:32 PM on February 22, 2017


If I were an artist that could sell out more giant arena shows that I could possibly play, my (incredibly hypothetical) solution would be to sell tickets at the price the market could bear, with the promise to donate the proceeds (less the socially acceptable revenue) to charity.

The extra money has to go somewhere. You can try to return it to fans in the form of a price ceiling, but stamping out the inevitable grey market is a herculean task.
posted by lozierj at 2:33 PM on February 22, 2017


Before bots there were brokers who hired the homeless to wait in lines.

Another example of unskilled jobs lost to automation. They're everywhere.
posted by overhauser at 2:35 PM on February 22, 2017 [2 favorites]


The article mentions that brokers who get the sweetheart deals on desirable tickets do so because they're willing to also buy the presumably high-risk or loss-making tickets to other shows. So people that want to see the big names on the weekend are effectively subsidizing tickets for those who want to see the less popular acts during the week. I guess I can support that.
posted by lozierj at 2:41 PM on February 22, 2017 [1 favorite]


The three times I've been to Glastonbury my friends and I have had to register online before sales open and provide uploaded photo IDs / user registrations in order to purchase. At point sales open, it's a race to conquer Glastonbury's slow web servers.

I guess a better ticketing system (to address the article) would have a lot to take into account. An arduous registration system would complicate legitimate resales, last minute ticket purchases and buying in general. I guess I'm just chiming in to say the situation with bots and ticketing monopolies is dodgy and can be really unfair to fans.
posted by radiocontrolled at 2:44 PM on February 22, 2017


The one thing that really surprised me in the article was the amount of pre-reserved tickets.
posted by Chrysostom at 2:55 PM on February 22, 2017 [1 favorite]


You could make tickets nontransferable, but thats not necessarily consumer friendly either. Like at some cons, where you have to register with a name when you buy the ticket and show photo ID at the venue to change your online receipt into an actual ticket at time of entry.

But then if you get sick or plans change or whatever you're just out the money. Ticket reselling is a good thing if not abused, but of course abuse is guaranteed given the incentives.
posted by thefoxgod at 2:55 PM on February 22, 2017 [1 favorite]


By the way, this is not solely applicable to musicians. I have friends with season tickets to various sports teams that will eat seats, but pay for their entire season with the overage on a few games (Yankees v Red Sox) and with the markup or scalped price on playoff tickets. Teams have tried using market pricing for different games or different opponents. However, the fans expect the teams to try to maximize revenue when they feel that artists should not be a capitalistic about it,

One of the big changes in the music industry that affects ticket prices and sales is when music purchases, albums, CDs, even downloads became free. Streaming music services for a flat fee changed where artists make their money. Now, it is from ticket sales and merch sales. To make a lot of money, artists need to be on the road a lot more than in the recent past. I hate to bring up the Grateful Dead again, but they pioneered this. They could not sell a studio album if their career depended on it. They realized early on that they would give away their music in the form of a taper's section and letting certain tapers plug into the soundboard and they would just be on the road 150+ days a year. They would play 5 nights in a row at MSG. They would play two nights in Hampton. They would play Boston one night, Hartford the next, then Albany, then MSG. Fans could get tickets. The new country stars do it too. They go on the road.

Fans complain about paying scalpers for tickets, but they won't pay a buck for a download. There is a lot of blame to go around for the scalpers thriving.
posted by AugustWest at 2:55 PM on February 22, 2017 [2 favorites]


I went to a Smashing Pumpkins concert back in 1997 or so in an intentionally small venue. In order to prevent scalpers from re-selling they had a system where you would first buy a ticket, and at the point of sale they would take down your info and maybe write it on the ticket as well. On the day of the concert you would take this ticket and your ID to the venue and they would match it off against their list. They made it very clear at every step that if you didn't show up with ID and your ticket then you wouldn't be getting in to the concert. There are definitely things like this that could be done to prevent scalping, but like the article says, everyone in between the artists and their fans is pretty happy making money under the current system.
posted by any portmanteau in a storm at 2:56 PM on February 22, 2017 [1 favorite]


If the goal is to seem fair to the average fan, first-come-first-serve is pretty terrible (because the pros will get there first). I think it's main advantages are ease of administration and the promotional power of reporting how fast tickets sold out: "Be the 107th caller and get your tickets to the show that sold out in only seven seconds!"
posted by lozierj at 2:58 PM on February 22, 2017 [1 favorite]


They made it very clear at every step that if you didn't show up with ID and your ticket then you wouldn't be getting in to the concert.

So this isn't perfect either as there are legitimate reasons to sell a ticket. I suppose if prices are low enough that people are willing to eat the cost if they can't go then everyone is happy.
posted by GuyZero at 3:39 PM on February 22, 2017 [1 favorite]


Capitalism is just going to ensure that corporations get rent from ticket sales. The government should be setting prices for tickets or selling the tickets directly.
posted by jpe at 4:01 PM on February 22, 2017


Biometrics might make it easy for artists and venues to do what airlines do, and sell a ticket which is only good for a specific person.

At the time you bought a ticket, say, you would take a selfie and send it along with your payment, and the ticket taker would input the number of the ticket, a scanner would identify you as you, and you'd be admitted.

If you couldn't attend, a refund would be offered at the discretion of the seller, and someone else could buy it.
posted by jamjam at 4:04 PM on February 22, 2017 [5 favorites]


Right, but that kind of situation could be dealt with by being able to return the ticket, on the condition that you only get your money back if they are able to sell it to someone else.

On preview, what jamjam said.
posted by any portmanteau in a storm at 4:05 PM on February 22, 2017 [2 favorites]


You don't need biometrics. Ticket sellers already do that today, all you need is to provide a name at purchase time and match that to ID at show time. This is fairly common, just not done by Ticketmaster or several other big venues.

I've also seen it done for extra stuff like meet and greets even when the normal ticket process didn't have it.
posted by thefoxgod at 4:14 PM on February 22, 2017 [1 favorite]


I wonder if you could redesign the whole thing around a Dutch-auction style system for shows that will probably sell out. Give people the opportunity to say the most they would pay to sit in a given tier of the venue -- they might willingly pay $200 to sit in the upper deck or $600 to sit in the front row, while someone else might willingly pay $1000 for the front row, but be unwilling to sit in the upper deck at all. Pick the highest bid that would still fill each section and everyone who bid that or more gets to sit in that section.

Set a minimum price to ensure the artist doesn't get totally hosed. At the same time, they aren't the ones setting the ticket prices (other than the minimum) so they should potentially avoid the 'you're just greedy scum' backlash.

Scalpers can play in this auction, too, but since they're already bidding against the max that people are willing to spend for tickets, the chances of them paying for the tickets and making a profit reselling them should become much lower.
posted by jacquilynne at 4:42 PM on February 22, 2017 [5 favorites]


Sell non-transferable tickets for $X. Sell transferrable tickets for $2X.
posted by fings at 6:28 PM on February 22, 2017


Right, but that kind of situation could be dealt with by being able to return the ticket, on the condition that you only get your money back if they are able to sell it to someone else.

You don't need biometrics. Ticket sellers already do that today, all you need is to provide a name at purchase time and match that to ID at show time. This is fairly common, just not done by Ticketmaster or several other big venues.


This. Why not just do it on a real-name basis paired with an ID number or phone number? It's 2017 and we can build a government panopticon, but Ticketmaster can't slap up some servers that can resell tickets and refund money in real time?

And it WOULD work, because China implemented this very system for train tickets to combat scalpers, your ID number is printed on the ticket and you can't board without your ID, and capped fees online resellers can charge to use the ID verification network. Scalpers disappeared almost overnight. Event ticketers are much the same in China, except they use your cell phone number and cap the number of tickets you can buy per number, you show a verification text or QR code to get in, or sometimes just tell them your name & phone number at the door. Refunds for cancellation are pretty universally guaranteed. There are lots of different ticketing platforms, and I don't know why that is, but there's a state monopoly on train tickets and a jungle of third-party platforms for entertainment tickets (movies/concerts/festivals). All first-come first-serve, and I can count the number of times I've managed to not get tickets on one hand.

And I do understand the thicket of issues and local regulations we'd have to hack through in the US to get there, it's much easier for China to fiat this system into existence, but after having lived it, a world with scalpers feels like superstitious capitalist barbarity.
posted by saysthis at 6:56 PM on February 22, 2017 [2 favorites]


Doing the ID thing is actually illegal in New York state. Radiohead is using where legal in their US tours.
posted by JPD at 7:54 PM on February 22, 2017 [1 favorite]


Doing the ID thing is actually illegal in New York state.

And in California if I recall too. I worked at Outbox, part of AEG / AXS in the ticketing side of things. "Ticketless" shows were meant to combat scalping, or at least the primo GAPIT sections for Katy Perry for example. Usually just ended up with a giant headache that most scalpers would use pre-paid debit cards to purchase the tickets and sell the ticket with the debit card.

Scalping is actually institutionalized and legitimized now with Stubhub, our system had API hooks into their system to re-issue barcodes upon resale.
posted by wcfields at 11:11 PM on February 22, 2017 [2 favorites]


Were people really not generally aware of holds 10 years ago? It was plainly obvious just based on the tickets available 5 seconds after presales opened, and it was pretty clear further shenanigans were taking place given how often one could eBay a presale password days or even weeks before fan club and venue presale emails went out.

Maybe my cynicism was slightly spiked by using my own..shady..methods to buy tickets before presales came up with only mildly decent seats available at multiple events, but it seemed obvious even before stooping to less than ethical means to get the best of what remained after the direct sales were made.

Still, seeing some of the actual details was interesting, especially Ticketmaster's pregenerated captcha system. That suit should have been kicked at summary judgement, assuming that is true. (Of course, the entire theory that one would need source code to defeat a captcha is bullshit all its own)
posted by wierdo at 4:03 AM on February 23, 2017


What people are suggesting about the credit card and ID thing was covered in the article:

So-called "paperless" tickets are an antiscalping measure that requires the purchasing credit card to be presented at the venue on the night of the concert. This requirement makes scalpers' lives much harder but is regularly circumvented by the most serious operations. Wiseguy, for instance, told its wholesalers to ask their customers for their credit cards before a sale happened. Wiseguy then used its bot to buy paperless tickets directly on fans' credit cards.

No reason why they couldn't already have the ID info at the ready, too.
posted by knownassociate at 10:25 AM on February 23, 2017 [1 favorite]


No reason why they couldn't already have the ID info at the ready, too.

I guess, but do a lot of people actually pre-register with scalpers? I've never heard of this before, despite having bought a bunch of tickets on StubHub/etc.

And in California if I recall too.

Maybe for concerts, but its fairly standard for conventions (Anime Expo, etc). The law is weird though and maybe it treats cons differently than concerts, even though they're the same to me as far as tickets go.
posted by thefoxgod at 1:00 PM on February 23, 2017


No reason why they couldn't already have the ID info at the ready, too.

True, but at this point you're paying someone to make a purchase on your behalf and I don't know if "scalping" is still the right term.
posted by vibratory manner of working at 3:45 PM on February 23, 2017


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