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Comment by ageitgey | Hacker News Reader

This is super sleezy and I think Ticketmaster is one of the most awful companies in the world. But given the ridiculous levels of scalping that goes on every day (including all the companies that attempt to normalize it, like StubHub), doesn't it all imply that the fair market price of a lot of tickets is way higher than what they sell for? Obviously demand is way outstripping supply or people wouldn't pay $500-$1000 for $100 tickets on a daily basis.

By making all event tickets available at exactly the same time for an effectively-lower-than-market price, of course professional scalpers are going to snap up almost all of them and normal people without scripts won't be able to compete. I wonder what would happen if tickets went on sale for a really high price (like $500 each) and then the prices kept dropping automatically every hour until they were all sold. That would kill a lot of advantage that the scalpers have.

I guess customers would hate it and promoters would hate it, but I wonder if there isn't some other kind of sales model that would make this kind of sleezy self-scalping less profitable. Because with market forces this strong, companies are going to do anything that is legal-ish to get a piece of it. If Ticketmaster doesn't figure out a way to get a piece of the massive resell market, they are essentially just giving away free money to StubHub (from their point of view).

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Ticketmaster provides a valuable service for the associated acts:

Reputation shield

If artists started charging fair market prices for their tickets the fans would go ballistic and the artists' reputations would be severely damaged. By ostensibly selling the tickets below, even if normal people never get to buy them at face value, they outsource the reputation damage to Ticketmaster. Since Ticketmaster already has a detestable reputation, they are well-equipped to provide this service with minimal damage to their brand. In exchange, Ticketmaster pays a portion of their revenues to the promoters and their associated acts. It's a win win: artists get more money without damaging their credibility with their fans.

These is seemingly getting less common. Not at all uncommon to see $1000+ VIP packages for major tours these days

Perhaps strange to most of us, $1000+ is not near the full price a VIP package might bear in the current market.

If you are seeing primary market prices of $1k for a VIP package, you can be assured these same packages are going for $3-4k direct to brokers, and $5k+ on secondary markets to buyers.

I saw a $35k (for two) VIP package last year. Bonkers.

Those are separate things. The VIP/Premium tickets are a way to do dynamic pricing without looking like you're proving too many price levels. The extra fees are a way to show lower prices and let the fallout for the end price fall on another group. I outlined a lot of this with real data in another comment here. Just search for "mccartney" in the comments here.

They are - but, where, say, 5-10 years ago VIP might only be the front couple of rows, for some tours now it might entire sections, especially on the floor.

How are the artists getting more money from secondary market? That's like saying an author gets royalties from a used book store.

By getting kickbacks from Ticketmaster.

[citation needed]*

*I'm not implying this isn't true, and it's interesting if it is.

It’s in the article

Do you mind highlighting the line? (Not doubting you. I see where TM benefits. Just not how artists do.)

> That's like saying an author gets royalties from a used book store.

It's like saying an author gets royalties from a "used" book store that is able to sell a pristine version for no extra cost for every resale it makes, but it requires opt-in from the author.

TM+ doesn't just resell tickets, It's opt-in only and artist and venue opt in, it actually reissues new tickets, with new barcodes, to the purchaser with a guarantee.

It would not surprise me at all if the resale system gave a percentage of the profit back to those who opt in, to incentivize them to do so.

>It would not surprise me at all if the resale system gave a percentage of the profit back to those who opt in

This is basically the core value concept of the entire secondary ticket industry...

Interesting point.

I always thought was to maximize ticket sales and leave fewer empty seats. (Not all concerts sell out). You have people that can pay for the convenience of buying later paying more. But the true fans get their tickets early.

It was noted by me when shooting an aerosmith concert that the first 2 or 4 rows were reserved for fan club members.

Lol, "fan club members" are just the subset of ticket brokers who have figured out how to gain membership into that fan club...

Probably true.. but this was in the 90s before the internet changed ticket buying...

My Brother was in the DMB fan club and was able to score good tickets. We got into Phish NYE shows the same way.

Why aren't things getting better....?

Before Ticketmaster, you could go to or call the box office and reliably get tickets to shows in your own city. Now I have to buy them from scalpers in Canada. Ticketmaster artificially expanded the market and used its leverage to force venues into exclusive deals. It's got nothing to do with "market price".

Edit: Also artists get a cut of the bar and to sell their merch. Also also, there is a massive range of costs of tickets already. It's really not a market price issue for tickets.

Yes. But it's not the artists who are in control. It's the event promoters, yes? That is, the band names it's price. A promoter books the band, picks the venue, markets the event, and sets the ticket price. If the tickets are underpriced it's the event promoter who is getting hurt the most.

But when the artist demands a certain payout, and the only way the promoter can make the numbers work is to set a "face value" $X, offer 15% of inventory at $X on the open sale, and then offload everything else directly to ticker brokers at various tiers of price points at several multiples of X, you have to start to put at least _some_ of the blame on the artists for knowingly participating in a "don't ask don't tell" style industry...

Perhaps. But then where do the bands make money? From their Spotify streaming royalties? That's not enough to buy coffee.

In other words, free (or historically close to it) music comes at a price. If you calculate what is __not__ being spent on listening to music, I suspect you'll see that decline made up for via touring / ticket prices.

> But then where do the bands make money?

From requiring a larger payout in the beginning, which started the proposed scenario.

But that's not the start in my scenario. It's the end. It's a symptom. It's the result of what happens upstream in the broader biz model of being a band / musician.

With their revenue streams limited (read: streaming doesn't pay anything close to the way physical media did) they're all but forced to require a larger payout. If they don't get it there, then where? When?

Think of it this way, every time you stream a song for free the cost of that band's live concert ticket goes up a bit.

I'm confused, so like an artist would be paying 80% of his potential revenue ($100 vs. $500) in return for reputation shield? That's how valuable this service is?

On a $50 ticket there is usually $20 in added “Ticketmaster” fees that go to the promoter and artist. That 40% increase is what Ticketmaster protects - the scalping sites mostly make money for scalpers, and also to unscrupulous venues who hoard tickets.

Artists' reputations may take a hit if they price their tickets overly high, as it's seen as gouging fans. Instead, Ticketmaster charged multiple hidden fees for each ticket, often including a venue fee, service fees, and other interestingly named fees that are different based on the event, venue, and tour (although all events in some tours might have a similar fee, some some venues might have a similar priced venue fee across all events...).

Some of these are collected and go right back to the artist, promoter and venue. Fans are unhappy about this, but they place the blame on Ticketmaster, not the artist or venue. This is the reputation shield Ticketmaster offers. They take the blame for higher prices while passing a lot of those fees back to the artist and venue. They take a cut for processing the order, and probably a higher than normal cut for taking the negative PR, but both Ticketmaster and the artists and venues make more money in the end.

Yes, I recall hearing this reputation shielding explained on Freakonomics:

http://freakonomics.com/podcast/live-event-ticket-market-scr...

The kickbacks go mostly to the venues who then write Ticketmaster into their contracts, making it really hard for artists to find somewhere to play without Ticketmaster being the manditory ticketing provider.

Imagine if you charge 10 times more a fan from a rich city than the fan of other cities? They would feel discriminated.

You should check out how much tickets to the Taj Mahal cost based on where you're from.

Is it possible that charging fair market value would torpedo a performer's reputation so badly that they can't sell tickets at all anymore? The industry is very competitive, so maybe they're afraid fans would abandon them for some other performer?

If so, then 20% of something is better than 100% (or any percentage) of nothing.

Or maybe they are looking at the total revenue picture, of which concert ticket sales are only one part, the others being record sales, private shows (at corporate events), TV appearances, and springboarding from musician into other entertainment roles like acting. Losing some money in one area out of all those might be cheap insurance to protect the others.

The problem is that artists don't make money if they sold a ticket for 50 and a scalper re sold for 500.

Promoters are well aware that they sell tickets for less than they could get but I think it's unlikely to change. There are essentially 2 ways to distribute things. A free market model where the highest bidder gets to buy. Or a price control model where only some people get to buy based on some arbitrary selection model, usually first come first serve. And everybody else is SOL. When people think (emotionally) of what is "fair" they typically think of the price control model, which is why we have rent control, price gouging laws, and people get pissed off at Uber surge pricing. So if promoters try a more market based strategy like the one you mention it will probably cause a backlash from fans for charging $500 for a ticket. Unlike the promoters, scalpers have no perceived connection to the artists, so they (or Ticketmaster) can take the public outrage in exchange for profits without risking future ticket sales.

> So if promoters try a more market based strategy like the one you mention it will probably cause a backlash from fans for charging $500 for a ticket. Unlike the promoters, scalpers have no perceived connection to the artists, so they (or Ticketmaster) can take the public outrage in exchange for profits without risking future ticket sales.

Yeah, which is why the promoter should just present itself as a scalper, "selling out" 100% of its tickets to a subsidiary, which then does a reverse auction like in the GP's comment. Fans won't care, because nothing has really changed from their perspective; the promoter will make more money (that the artist can demand be passed on to them); actual scalpers, economic parasites that they are, will make less money; the market will clear more efficiently; economists will be satisfied. Everyone wins.

Everyone except for—as can be seen in the OP article—non-economically-versed journalists, and those that they manage to incense with their rhetoric.

> actual scalpers, economic parasites that they are

Scalpers/brokers aren't economic parasites, they provide a function to artists and promoters by offloading risk, and they also provide liquidity to fans.

If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it. Brokers trade use of money over time for risk. Sometimes they make money, sometimes they lose money because it's overbought, they misjudged the market, or more supply was provided (a date added at that location). For example, see here[1], where resale tickets are under the cost of primary market tickets, $36.50 instead of $39.50, and that's before Ticketmaster/Stubhub takes 5-10% of the sale price from the seller. On Stubhub[2], the same tickets are going for $27.

1: https://concerts1.livenation.com/event/000054C6CF1B8160

2: https://www.stubhub.com/the-damned-tickets-the-damned-new-yo...

> If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it.

If you have revenue figures to indicate that it's pretty much guaranteed you'll sell out your stock of something eventually, and you want short-term liquidity, you can just issue commercial-paper securities, and people will buy them.

Or, more likely in the case of many smaller privately-held venues, get a loan from a bank secured by the future ticket sales.

Sure, if you don't have people clamoring to buy you tickets immediately anyway that will provide you that money at no interest, that would make sense. In what way is that system advantageous to the current one, given the other incentives that exist to not raise price (public relations, mostly)? Also, given that I suspect brokers are worse at getting this right, since they don't get to see all the data, and you can make quite a lot from brokers on events that undersell...

> provide liquidity to fans

Why is liquidity important to fans?

You can buy a ticket knowing that if something comes up you will get your money back. You can decide to go to an event last minute and tickets will be available.

But they would be available anyway if the scalpers hadn't bought them all up. And if legitimate fans had bought all the tickets (sold out early), you wouldn't be getting a ticket either way, right?

I'm a legitimate fan and willing to pay a fair price for a ticket, but due to my job I usually can't buy the moment the ticket is released. So if it weren't for the "scalpers" I'd never get to see a show.

Because it provides an accurate value indication. Whether brokers or fans are reselling, it's going to happen. I don't imagine.moat fans are going to be keen on making sure their inventory is priced multiple times a day, much less multiple times an hour.

This also helps fans that decide they don't want to (or can't for some reason) go. They get a good indication of what their tickets are worth.

That said, i was also using liquidity as a stand in for increased availability. The fact that the market is liquid allows people a fair level of confidence that in the worst case they can recoup the cost of their tickets (give or take some percent) if they don't go.

Really, how is this any different than investing in an IPO? Those are mispriced all the time too.

> by offloading risk

Offload it straight onto the consumer. If I pay 2x the TM price from a scalper and the event is cancelled and TM offers "full refunds " I'm out the difference.

> I'm out the difference.

No, you usually aren't. Both Stubhub[1] and Ticketmaster (through their TM+[2] resale platform) offer full refunds. If the reseller has already been paid, the amount is either deducted from the next payment to the reseller for sales, or taken out of the linked bank account or credit card. If the reseller hasn't been paid yet (they generally get paid on delivery, not on sale), they just don't get paid.

Even if for some reason the exchanges can't recoup the refund cost, they'll just eat it. Exchanges live and die by their reputations, which is also why they punish resellers heavily for delivery problems or invalid tickets.

1: https://www.stubhub.com/promise/

2: https://www.ticketmaster.com/verified

He wrote "from a scalper", not a retail resale marketplace.

Who do you think is selling on the resale marketplaces? The nice name is broker, but multiple people here, and the article these comments are on, use the term scalper. The vast majority of inventory resold by people that purchased with the intent to resell is sold on Stubhub, TM+, or Vivid Seats. The majority of inventory on those platforms is from brokers. Who bothers buying direct from an individual anymore?

The article in question is actually about scalpers (brokers) using Ticketmaster's resale platform (TM+) and Point of Sale for managing inventory (Tradedesk).

Wait, what’s wrong with first come first serve? This works for most Symphonies I’ve been to just fine.

Yes, because first chair violin doesn't make even a fraction of what Justin Bieber makes per show...

That doesn’t explain why tho

(Random numbers to illustrate a point:)

If the symphony was an auction system, tickets might sell for $110 each. It fills up with a $100 each first-come system, most people who want tickets can get them, tickets are sold at only a $10 discount of auction value, and it "feels fair." The first-come-first-serve system works well for the symphony.

If the pop-star concert was an auction system, tickets might sell for $999 each. With first-come-first-serve and a set $100 price, each ticket is sold at a $899 discount of auction value. Moreover, most people who want tickets cannot get them directly as they sell out instantly because of the relatively steep discount (90% discount vs 9% discount).

The first-come-first-serve system only works well when prices are set near a market-clearing value, like with the symphony. As stated elsewhere in the thread, people would get super upset at $999 tickets. They would think "those greedy pop-stars price tickets way too high, it's so unfair." So pop-stars are unwilling to set prices at the high market-clearing value, and use the first-come-first-serve with way underpriced tickets (getting some money back by having agreements with scalpers or Ticketmaster).

Demand way exceeds supply, tickets sell out instantly (mostly to scalpers). Most fans never get to see the concert at the "fair-seeming" $100 price and are upset at "those nasty scalpers" and pay near $1000 to see the concert anyways. But the scalpers (or Ticketmaster) are the ones whose reputations are harmed, saving the artists' reputations.

The purpose of a pricing strategy is to maximize the capture of value from a given market. Auction pricing works when:

1) It is a single event-based POS

2) Every member of audience has the same level of knowledge of what is being sold

For a symphony, the audience is smaller and more homogeneous than a pop-star concert. Symphony attendees are typically repeat buyers, who share similar knowledge of what they're seeing, and will know well in advance if they are going to attend.

Pop-star audience goers will make the decision to buy and will need to confirm purchase at different time points before the event. They also have varying degrees of knowledge as to how much the ticket price really should be, meaning they are not going to be good at bidding and won't fully participate.

First come first serve doesn't work for most concerts and live sporting events because the true market value, meaning the rate at which "the market" will bear a price-point and still relatively easily sell out all the supply (seats), or at least enough to cover costs for the venue/act/promoter, is well above what is printed on the physical ticket as "market value." I would guess that Symphony tickets on the secondary market simply don't fetch enough _margin_ to justify the type of extensive secondary inventory sales infrastructure that pop concerts and pro sports games do. You're starting to see this change though, with NYC broadway at least, with shows like Hamilton and The Importance of Being Earnest fetching just as large secondary market margins as any pop concert.

If you want data to illustrate this point, there's an article on The Ringer site a few years back that was written by a guy who was the CEO of ticketmaster for several years. He said "If you add up the face value for every seat in the venue, that total number is _less_ than what most popular artists are paid out for that show in just the artist appearance fee." This should show you how fake the entire idea of "face value" is...

My comment applies to situations where the ticket price is massively different than the market clearing price. If a ticket is priced close to the market clearing price then it isn't really a price control situation. I'm guessing that this is probably closer to the situation for the symphony.

The problem is when all tickets sell out in a couple minutes (at the unrealistic list price), limited only by the IT infrastructure handling the orders. In this case only "professional scalpers" can win the race to be "first". OK, now we're caught up to present day, is there any way we can make this system less silly and have less of the money end up in the hands of middlemen ...

This makes sense, seems like photo ID would be a way to limit the per customer purchases.

Sure. That'd probably work. That's why the article is so explosive... it shows that TM will never implement anything to make its service fair to the actual fans.

>less of the money end up in the hands of middlemen

This is the deceit of the whole system though. This system isn't just about "middlemen" extracting value. The _artists themselves_ directly profit from the multi-tier selling system. A performer like Bieber or Adelle is actually directly selling large blocks of premium seats directly to ticket brokers ("scalpers") _at a premium over face value already_.

I think there's less of that happening, and more of either agents on behalf of the artists are selling directly on the exchanges, or there's a profit sharing agreement with select brokers. Whether there's a difference between those two things is up to you to decide. But yes, often large chunks of inventory seem to never become available on the primary market, for whatever the reason.

>either agents on behalf of the artists are selling directly on the exchanges, or there's a profit sharing agreement with select brokers

This is just mental gymnastics to absolve performers of economic responsibility for the market in which _they_ are the source of all value in play. The artists are directly complicit because they want to get famous and make the big bucks. The ones who don't play that game are the bands you might see touring local venues and working out a $10-$20 cover charge with the bar they play at.

>often large chunks of inventory seem to never become available on the primary market, for whatever the reason

I worked at a secondary ticket marketplace company and I am trying to explain to you what is _actually happening_ in the real world every day in this industry, from my direct experience. I'm not hypothesizing here...

Edit: can't reply to you again, but I think we're on the same page :)

> This is just mental gymnastics to absolve performers of economic responsibility

I'm fully putting blame on the artists for this behavior. I'm just wording it slightly differently because I think it's less of a "broker approaches artist with a good deal" situation than a "artist decides they want to have their cake and eat it too and quietly sell on the secondary market for more money." That's not definitive though, I'm sure there have been plenty of brokers that have approached everyone in the entertainment industry in the past.

> I worked at a secondary ticket marketplace company and I am trying to explain to you what is _actually happening_ in the real world every day in this industry, from my direct experience. I'm not hypothesizing here...

I work in it currently, and have for years. Everyone in the industry believes that, but few will outright say they have access to that definitively (for obvious reasons). If you have direct knowledge that it was happening at your company or direct knowledge of another company doing so, I'm happy to have confirmation. I just didn't want to be overly assertive about something I didn't know as fact, and wanted to express what I saw as the general industry consensus ("it happens, there's no proof"). :)

I'm a big fan of the system that the sneaker companies have slowly adopted. Interested people sign up ahead of time with a registered account. You get a notification right before the release that you have to confirm. Then a raffle takes places where the winner gets charged immediately. It's about a ten mInute investment, which with how sneaker quality has gone down in recent years (especially Nike) is about all the time it is worth it to me anymore.

Only issue I can see is that with sneakers there is almost no reason to get more than one pair unless you're reselling. Buying multiple tickets for a concert makes more sense. There could possibly be some increasing fee charged over a certain number, that could suck profit away from scalpers. The fee only occurs if the tickets are all presold.

What would be the market incentive for _anyone_ in the industry to "suck profit away from scalpers"?

Profit.

Non automatable hoops to jump through can definitely be a good way to determine who “deserves” the tickets. There’s technological ways to do that, but it’s a magic sauce that would make a company a lot of money.

This is effectively the system used by the popular festivals in the UK, particularly Glastonbury. You need to pre-register for tickets, which involves uploading photos. When it goes on sale, only pre-registered users can buy, and the photos are checked on entry. Other festivals do the simpler thing of checking the names on the booking against ID. Many allow a secondary market in tickets, but only at or below face value for those who are unable to go. This shows what can be done if they really do want to stop scalpers.

I feel like the New York Comic Con has a done a good job preventing scalpers from ruining the experience for its customers with Fan Verification. Since it was implemented I haven't had to worry about tickets being sold out in minutes.

http://www.newyorkcomiccon.com/Attend/Badges/Fan-Verificatio...

It's not clear from the FAQ but what else goes into Fan Verficiation that creating an account on TicketMaster can't accomplish?

Presumably the ticket is tied to the purchaser's id in some way (picture, name, or payment info) and at the event ticket holders need to present such information. It'd be a trade-off against people who can't make it to the event being out of luck (no way to resell), but stopping more of the scalper's bad behavior. You could alleviate the trade-off by tying the ticket to a second factor like a CC that you could entrust to a friend for the event, or allowing more refunds before a certain date.

Nope. For Springsteen on Broadway you just signed up in advance and hoped to win their lottery. No actual verification of anything.

That's an interesting approach. San Diego Comic Con takes the approach of making you jump through so many hoops that only obsessives can make it through the processes.

To buy a ticket, you have to create an account to buy a ticket before the ticket sale date is announced. Once the date is announced, you are no longer allowed to create a new account for that year's sales. Then you get assigned an hour-long time slot in the far future during which you have to be actively present online to enter a lottery to see if you have the chance to even buy a ticket. Then you have to buy the kind of ticket you want before that batch sells out.

And if you went the previous year, there's a whole different set of rules to figure out of how to maintain your eligibility to buy a ticket the next year with it's own different set of dates and forms to fill out.

All of this is incredibly hard to figure out if you don't spend your life trying to figure out how to buy Comic Con tickets. There are multiple dates you have to plan around and you have to show up during your 1-hour purchase window even if it's in the middle of the night for your location.

So while it prevents most scalping effectively, I personally think it's a crappy experience and a crappy solution.

It ensures they get attendees willing to deal with hours of lines, though.

Haha, true!

I just don't get it. For almost any event I can barely gather the enthusiasm to raise myself from my rather pleasant sofa, cope with the trauma of travel and missing that night's TV not to mention the "oh god how do I get home again" nightmare.

Any event has to be:

1. Absolutely unmissable 2. Astonishingly convenient

for me to even consider leaving the house...

Why is television such an important fixture in your life that everything revolves around it?

I guess it’s a choice between watching show X in comfort or standing in line for 6 hours for a chance to spend 10 seconds with an actor/actress from show X. Probably not even the main star as they have better things to do. Put it like that and it’s a no-brainer.

There was a touch of exaggeration for comic effect there. But only a touch.

It's the simplest way to relax with my significant other. It's almost infinitely varied and can be as demanding or undemanding as we choose.

Why even comment if you don't like going places?

I have no idea why you think I shouldn't be able to comment on this!

you forgot: 3. My mother makes me go

Knowing ticketmaster, they would milk such a verified fan program for all it's worth. They'd want full access to the user's social media information for instance.

They've been there and done that:

https://www.theverge.com/2018/2/7/16923616/ticketmaster-veri...

> The most elaborate (and controversial) example of this so far was Swift’s choice to offer “boosts” that could be procured by buying her album several times (on her website, from Walmart, from Target, from iTunes), buying merchandise, engaging with sponsors on social media, or watching her music videos. The boosts supplement Verified Fan and sort fans into a line, with the most dedicated — measured both in time and money — bumped to the front.

Swift’s choice to offer “boosts” that could be procured by buying her album several times

I am really shocked and disappointed, Tay-Tay always seemed so nice. Whereas you would expect it from, say, Metallica, who take contempt for their fans to a new level

There's usually more than one perspective. How else do you identify real fans from people that sign up to get presale codes? Rewarding those that are part of a fan community is pretty easy if you have that info. The fact that you can easily track all that is a little disturbing, though.

Making fans buy more than one copy of the same album is pretty low. If it was just “buy all the singles” then at least you would get the B-sides or remixes too. I am a big fan of T-Swizzle but I like her a bit less now.

If that's true, yes, it's pretty crappy. It could also be an unintended loophole brokers discovered that allows higher likelihood of getting a verified fan code, which wouldn't surprise me.

>Tay-Tay always seemed so nice

Are you only thinking about her public marketing image? I feel like any amount of digging into who she is as a person makes this "nice girl" thing way more complicated...

Are you only thinking about her public marketing image?

Sure, I am aware of that, but making fans buy multiple copies of the same album to be in with a chance of spending even more money on a concert ticket is part of that image too.

Ticketmaster has "Verifed fan". It doesn't work. It's just a lottery for the scalpers to play with.

Hardly. As someone that works for a broker, it is exceedingly hard to get verified fan to work at scale, and you burn that account and work put into it after it's used. I know a broker that was buying access to gmail accounts that had been around a long time, facebook accounts with lots of activity, and using AT&T phones to get the verified fan SMS. The cost was about $40 for the gmail/facebook accounts, not including the phones. According to him, both accounts and the phone number are basically unusable for verified fan afterwards. That's not a system that scales easily for brokers, and even if they scale costs them a lot to implement, which means it's only useful on things you're sure will go up quite a lot in value.

In short, it's not what I would call a lottery for scalpers.

Combined with Amex's new tour limits for amex presales (not on all tours), where they limit you to two purchases per tour per person owning an amex (doesn't matter if you have 10 cards, two orders total), and the fact that they heavily fingerprint to identify and and wedge up brokers by putting in waiting rooms, and I find the idea from the article that the primary market department of Ticketmaster is actively working with brokers at any scale laughable. It's an arms race between the people that are entirely willing to ignore the AUP and TOS (there's a spectrum here) and Ticketmaster, and has been for years.

If you throw the entire event yourself, you get to sell tickets however you want. Some bands that use TM have enough leverage to do presales or lotteries for their fans before the main sale on TM.

Most acts, at most venues, are forced to use Ticketmaster/Livenation/StubHub, because That's Just How It Works.

Louis CK made a splash a few years ago by completely avoiding ticketmaster. While a live band is very different than a stand up, I feel like if bands cared they could try something very similar.

https://www.csmonitor.com/Business/2012/0628/Louis-C.K.-Comi...

> You win if FanDuel ever pays this bettor the full $82,610 – whether due to public outcry or any action by relevant legal authorities. I win if the bettor accepts a settlement for less, such as the tokens-of-apology that FanDuel has already offered.

They could try, but Ticketmaster owns a greater portion of the venues suitable for live band shows of any size than of those suitable for stand-up comedy, so they’d probably be a lot less successful with it. Especially if multiple touring bands tried to do it at the same time.

It's subtly more complicated than this.

There's the price people are willing to pay before something is "sold out" and exclusive, and the price people are willing to pay to get access to an experience they can't otherwise get.

It's the fact that someone can press a button and get summoned to a show that they wouldn't otherwise have access to that provides some kind of dopamine rush that isn't the same as waiting in line on a website madly refreshing a page hoping for a ticket.

Lesson: If you base your buying decision on whether it's sold out, expect the market to exploit you.

I agree that is one factor at work, but performers have caught onto this in the last couple of years and have started to offer a lot of exclusive VIP packages to try to capture this price-insensitive market.

I'm thinking more about mass scalping for events like Hamilton where every single ticket is bought up instantly by bots for the next four months. There is essentially no way to reliably buy the tickets at normal prices. I tried to buy tickets for Hamilton's touring show and there were hundreds of resell tickets listed on StubHub while I was still trying to get through the process of even seeing if I could find tickets myself. It was completely absurd. A significant percentage of the total available seating must have been scalped.

I've done a little work in this space tangentially in the past. The resale market is highly developed with a lot of money at stake and inventory is readily available at every price level and ticket type.

Have you ever noticed how every resale site has more or less the same tickets for sale? There are a few middlemen companies that provide the ticket inventory for any reseller to sell instantaneously via API feeds. Stubhub is in both businesses - selling to customers and acting as a middleman to other sellers. It's way more developed than most people think.

> performers have caught onto this in the last couple of years and have started to offer a lot of exclusive VIP packages to try to capture this price-insensitive market.

Artists/promoters have also started using dynamic pricing. Ticket prices might raise or lower after some presales depending on demand. Wednesday the cheapest ticket to the venue might be $49, while on Friday they've raised the price on existing unsold inventory to $69.

> I'm thinking more about mass scalping for events like Hamilton where every single ticket is bought up instantly by bots for the next four months.

It sucks that the situation is happening, but it's also very easy to fix. Either increase supply, or do something to reduce demand (like raise the price).

> I tried to buy tickets for Hamilton's touring show and there were hundreds of resell tickets listed on StubHub while I was still trying to get through the process of even seeing if I could find tickets myself.

Some of the is spec listings, where they don't have inventory yet but plan to get some, some of that is brokers/people listing items they've reserved but haven't finalized the process of buying, and some may very well be brokers, or even the venue or promoters themselves listing on Stubhub. If you're an artist, venue of promoter and you want to make more money but don't want to look likeyou're gouging your customers, and you have access to inventory you're allowed to sell yourself, what would you do? That's what they're doing.

> I've done a little work in this space tangentially in the past. The resale market is highly developed with a lot of money at stake and inventory is readily available at every price level and ticket type.

I've done, and am doing, work in this market. It's like any other, except that the ratio of good actors to those acting a bit excessively is a bit skewed for historical reasons.

> There are a few middlemen companies that provide the ticket inventory for any reseller to sell instantaneously via API feeds.

It's not that they sell instantaneously via API feeds, they just help push inventory to multiple exchanges, and help sell out the inventory in the point of sale when it sells on an exchange and remove it from the other ones. I'm sure there's software that does something similar for Amazon and Ebay too.

I've written about this before here[1], and there's some more detail in that. Specifically, I think the secondary market performs a useful function, as much as it's vilified, as explained in that link.

1: https://news.ycombinator.com/item?id=16379207

Thanks, I appreciate the additional insights!

One way to get around this without relying on the secondary market is purple pricing:

https://hbr.org/2013/05/any-business-trying-to-sell

It was cheaper to buy an entire 'season pass' for the local theater (~8 shows? Including Hamilton) than to buy a single Hamilton ticket. Just crazy.

>It's way more developed than most people think.

Totally. I like to tell people that it's an "iceberg" industry, in that you don't see 80-95% percent of the whole thing "above water."

>There are a few middlemen companies

cough cough TicketUtils cough

Iron Maiden require that the credit card and matching ID used for the original ticket purchase be presented, in order to enter the show venue. There's no scalping of Iron Maiden tickets.

This also means that you can't buy the tickets as a gift, nor can you pass the ticket if you can't go.

>This also means that you can't buy the tickets as a gift

how so? you just specify the gift recipient's name at the time of purchase.

>nor can you pass the ticket if you can't go.

don't speculatively buy tickets then? nobody seems to mind that you can't (cheaply) cancel airplane tickets.

And the companies that do it like this almost always have a “sell it back to us if you can’t go, and we’ll sell it back on” policy. It’s hard to lose if you’re an honest fan.

The above was downvoted, but I thought of the same issue (tickets as a gift) immediately. Before I was 18, my father let me use his credit card to orders tickets for all the shows I went to. Imagine if he had to come to the venue with his credentials to get me in every time.

I also have donated my tickets to friends when a show that was scheduled three months out becomes unappealing due to illness or other unpredictable factors.

Scalpers solved this _immediately_ by buying Visa prepaid cards, put only the total purchase price amount on the card, buy the tickets with the card, then mail that physical card to the secondary ticket buyer...

Edit: Sorry, didn't see at first glance that you mentioned ID as well. Maybe that does close this loophole?

Kid Rock, much as I dislike him in other ways, also has a sound strategy - "just keep adding shows until supply outstrips demand". Eventually the scalpers get tired of buying tickets that won't be sold, and his fans get face value tickets.

Now they rarely bother even trying, because they know it's the strategy that will be employed.

Wow, having worked in the ticket industry, I'm fairly impressed. This is a _real_ way for an artist to impact supply and actually fight for the ticket prices they want to be known for to their fans.

That was my impression when I first heard about it too (through a Planey Money podcast episode, which has actually covered the industry mostly fairly a couple times).

Garth Brooks is also known for playing enough at a location to usually meet demand, including adding dates. He'll start out with a single date (maybe two) where he plays two times in a day (who else does that?!), and add dates two times a day as demand indicates. In 2017 seemed to average 3 days (but 6 events) per location. That's dedication.

> But given the ridiculous levels of scalping that goes on every day (including all the companies that attempt to normalize it, like StubHub), doesn't it all imply that the fair market price of a lot of tickets is way higher than what they sell for? Obviously demand is way outstripping supply or people wouldn't pay $500-$1000 for $100 tickets on a daily basis.

Scalpers are the ones choking off supply by monopolizing huge numbers of tickets. A market with too few sellers gives those sellers price control. If Ticketmaster put a stop to the practice, prices would likely drop.

Exactly. That’s extortion, not a free market.

> A market with too few sellers gives those sellers price control.

There isn't a set amount of supply. Artists could (and do) easily add dates, increasing supply. Many events are bought by brokers and then end up selling below cost because a date was added, and there's just not enough demand to be able to charge premiums on the face value (which is almost never the purchase cost, because of additional fees during checkout).

People usually overestimate how much the brokers affect the ability to get tickets, and how many events that happens on. There are many things that contribute to low supply and high demand, but brokers are convenient villains to point to. Artists have full control over this, and they can often easily solve the problem by playing larger venues or multiple dates, but they don't because that might cut into profits if the venue doesn't sell out.

>Scalpers are the ones choking off supply by monopolizing huge numbers of tickets

The only way this would actually have any effect on "supply" is if scalpers were just eating tickets and leaving empty seats in the venue. The number of seats at the venue is more the "supply" than the number of tickets outstanding on the sales markets.

If a scalper was able to buy 100% of the tickets for an event, and then sell all of them at 3x "face value", then that means that the market was able to bear a price of 3x. The scalper did not change "supply" here...

Or buy a large amount and then sell them slowly, imitiating low supply?

> This is super sleezy and I think Ticketmaster is one of the most awful companies in the world. But given the ridiculous levels of scalping that goes on every day (including all the companies that attempt to normalize it, like StubHub), doesn't it all imply that the fair market price of a lot of tickets is way higher than what they sell for? Obviously demand is way outstripping supply or people wouldn't pay $500-$1000 for $100 tickets on a daily basis.

Yes, and this is the entire reason Ticketmaster exists. Artists and venues don't want to look like they're gouging their fans, so they post lower prices (with hidden fees). These then get resold on the secondary market.

You're making quite an assumption with your use of the phrase "fair market price". In this case the market price isn't fair.

It's pretty eady to solve this. Require ID for ticket purchases, and prevent resale except through authorised channels at face value.

I stopped using ticketmaster years ago, but it seems like a reverse auction would be the best way.

Start each ticket at $500. Every X minutes, knock the price down by Y percent.

So only rich people should be allowed to see major artists in concert?

No. Rich people can allready afford a scalpers price, and dont really care if their tickets are 500 dollars or not.

In capitalism, high demand and limited stock means that you (as a seller) should set the price as high as you can, while selling all stock. If you set your price lower, you're loosing potential income

Sometimes people have interests other than or in addition to maximizing revenue.

Sure. Ticket master though?

that's what makes this so shitty - promoters are setting the prices initially and ticketmaster is trying to remove their choice by removing all the stock and reselling it at the maximum possible price

The alternative is what ? Someone buys them all and it's the same all over again ?

Or you put some safeties in place and only the fastest ones can have a ticket

Well, I think the alternative is the fan-to-fan resale service Ticketmaster is already preparing to launch (in the UK at least)

https://www.ticketmaster.co.uk/ticketmaster-resale

I mean artists are free to reserve discounted tickets for fans and sell them fcfs but they would be intentionally losing money by doing so. Sometimes this is a good choice because you don't want to make your fans mad.

It's just a system where people are incented to pay the most they're willing to. Pay before your price and you lose money, pay after your price and you risk the show being sold out.

Except it wouldn't be intentionally losing money. Long term fans are what make a band the most money - they buy tickets and merch, and albums (games, movies, etc). By cashing in on big gigs and maximizing the sales for those tickets an artist would potentially be giving up a lot more long tail revenue, and possibly killing their fan base altogether.

Maximizing long term profitability is often not the same as maximizing short term revenue.

There's an easy way to charge market prices and have them be lower. You can raise supply by playing more shows. And if a band values its long term fans, they should have an interest in getting as many people into their shows as possible. Just stay an extra night or two and play another show.

Use some of the extra funds to give away some free seats to fans.

I think identifying which fans are worthy of free seats is a very hard problem - particularly if using an online system.

Who's saying this about Tesla cars or other luxury goods?

It would make the artists (and venues) more money, meaning that they could make more concerts and seats.

How about everyone that wants to buy a ticket enters a free lottery and at the end of the week, winners are randomly selected and they then get to buy tickets. Any unsold tickets are then made available to the general public after the winners had a chance to look.

This is how the London 2012 Olympics worked, and it meant you didn’t have to try be refreshing your browser like mad the minute the tickets were released.

This is how the band Phish runs presales.

How do you prevent scalpers from stuffing the lottery with thousands of entries?

You need to show ID when entering the event that matches the ticket.

This is how a popular music festival does it in Germany to prevent scalping. There is no way to transfer tickets to other persons. Instead you can refund tickets up to a week before the festival which then go back into the lottery.

What if there was a "cash back" rebate available inside the venue? So TM sells each ticket for $1000, and you get $500 back once you get inside? This would make it very expensive for scalpers to be left with extra tickets. There would still be the problem of preventing people from claiming multiple rebates but I think that's solvable.

That would mean the only people who could buy tickets are that who can afford to tie up hundreds of dollars for months.

> Obviously demand is way outstripping supply

You're right that people are willing to pay more than the current face value, but we shouldn't take the scalper prices as the fair market value either because the true demand is dramatically skewed by a group whose only goal is to raise the price to the highest number people will pay, and they do that by reducing the supply. They can buy hundreds of tickets and only list a few at a time.

I've paid $500/ticket before, so I'm part of the problem too... but sometimes we do unreasonable things when we're unreasonably big fans of a particular band, comedian, performer, etc. There's no easy solution, but it would be cool if there was a way to offer reasonably priced tickets to true fans.

>They can buy hundreds of tickets and only list a few at a time.

I don't think ticket brokers really ever do this... It wouldn't _always_ increase their profits, and would substantially increase their risk (of not selling all inventory). Not all events increase in secondary market price as the event date approaches, you just hear about when it happens for really popular events. The price is set by the demand of the fans, and with the supply of the number of shows the performer is willing to put on.

>reasonably priced tickets to true fans

Yeah, I mean, this kind of idea sounds nice in theory, but it doesn't really match up to the way capitalism works in the real world in this industry. Say you started with an environment where every event was priced "reasonably" and every seller/promoter used the same scale to evaluate "true fans" and decided equally who were "true fans". Any single company could increase their own profits over competitors by marginally reducing the acceptance bar of "true fans" they sell to, and then increasing the price point to match the increased demand they've just created (remember, supply is fixed unless the performer adds more shows). This is a unilateral action by that company, they don't need to gain the cooperation of any other entity in the marketplace, and it increases profits.

This means that the system is _not_ in a Nash equilibrium, and, without accounting for regulations or any other outside forces, the industry will naturally shift over time towards an equilibrium where no single company could financially benefit from reducing restrictions on buyers and increasing the price point. At this point they probably lose _more_ in the hit to their reputation than they _make up_ in the increased profits. So they shift towards "gouging fans" just enough to increase profits without being bad enough to reduce demand for their product and shift market price point below costs (unprofitable).

Another option would be to make tickets nontransferrable and make venues require photo ID before accepting anyone's tickets.

Which would translate to queues that make airport security feel like a breeze.

let's use face recognition for it, maybe we can put it to use for something that isn't policing

Maybe you are joking, but there are several companies trying this, like https://zenus-biometrics.com/

I wasn't joking at all. Tokyo is gearing up to use face recognition to process people at the 2020 Olympics as well.

https://www.theverge.com/2018/8/7/17659746/tokyo-2020-olympi...

Also you made a python face recognition library right? I like it a lot, so thanks for making it!

I've been to a few shows that have done something like this. The credit card I used to buy the ticket was used as my "ticket" to get in to the show.

Scalpers can just buy tickets with prepaid credit cards and send those to the buyers

Then require the purchaser to provide high-resolution scans of identity documents (both sides, and all pages for multi-page documents) with nothing blocked out at the time of purchase. If the scans don't match your physical documents, you are made to leave the premises.

If they are a US citizen, they must scan both driver's license/state ID/passport/military ID and social security card. If not a US citizen, they must scan their home country's passport and if they come from a country that requires one, their visa.

Also, require the purchaser to type in (not check a box, but actually type the words and disable the browser's paste function) "I swear under penalty of perjury that I will not transfer this ticket to anyone else and that I will do everything I am physically capable of to not let anyone do so on my behalf".

And what happens when that database leaks?

And this is why you should have good IT security policies from the start. If your database leaks, you done fucked up.

Uh...no.

You could use the same logic to excuse storing passwords in plain text instead of hashes.

You say "good IT security policies", but you really mean "perfect IT security policies"?

Welcome to a totalitarian state

Shall we send in a stool sample as well?

> Also, require the purchaser to type in (not check a box, but actually type the words and disable the browser's paste function) "I swear under penalty of perjury that I will not transfer this ticket to anyone else and that I will do everything I am physically capable of to not let anyone do so on my behalf".

I don't understand what this is meant to accomplish.

> Shall we send in a stool sample as well?

No, I think a cheek swab should be sufficient.

> and disable the browser's paste function

This is evil. Browsers should not even permit basic UI functions like paste or context menu to be overridden by arbitrary sites. Fortunately, it's not difficult to put together a script that simulates typing in the contents of the clipboard, which is my go-to solution for sites that disable paste. (Ctrl-V doesn't work? Just press Ctrl-Shift-V instead. It takes a few milliseconds longer but gets the same result.)

> If they are a US citizen, they must scan both driver's license/state ID/passport/military ID and social security card. If not a US citizen, they must scan their home country's passport and if they come from a country that requires one, their visa.

A single decent image of an official photo ID, checked at the gate, should be more than sufficient to prevent unauthorized ticket transfers. However, I would only apply this system to a small minority of discounted promotional tickets; non-promotional tickets should be sold at the fair market-clearing price, freely transferable, and usable by any bearer with no ID verification required.

Airlines don't have a scalping problem. There's no reason why venues couldn't end the practice for concert tickets as well.

of course the problem is the largest venue owner in the US is live nation who owns ticketmaster.

Well that's a pretty good point.

I wonder if this might be an anti-trust issue?

There was definitely an anti-trust investigation when the merger was proposed, but the deal somehow went through.

Thanks to lobbying from the ticket industry, this isn't allowed in some states including NY: https://www.stubhubconcourse.com/en/learn-more/blog/virginia...

Also, thanks to lobbying from me. If I buy tickets to something and later find out I can't attend, I want to be able to give or sell those tickets to a friend.

In such a system (it's typical in Germany for example) you can sell it back to the ticket site which resells it for face value

Blizzard Entertainment has a conference every year and the height of their popularity demand for tickets far outstripped the capacity of any venue they could reasonably get.

I recall in the first years hearing of friends or acquaintances who sat up in a group and spammed the server right after tickets were posted. In later years I heard they went with a lottery system. You had a window to sign up that gave their servers a break and at the end you either got a ticket or you didn't.

Where a convention differs from a concert is that you can show up at a convention without a ticket and still participate in some fashion. You can hang out at off-site events that are affiliated, and it's common (if not entirely legal) for people to timeshare a pass, going for a few hours and then letting a friend or coworker go for the rest of the day.

The scalpers could still of course flood a lottery system, but if you make sure that only 4 tickets go to the same human (via ID or some other means) then the scalpers are limited to how many people they can get to agree to pretend to be the purchaser, and they open themselves up to identity fraud and/or theft charges if they get caught faking it.

In Germany there's a law saying you cannot sell a ticket for more than the price listed on the ticket.

Are you sure? The first result I found on Google was https://www.lhr-law.de/magazin/sportrecht/schwarzmarkt-recht...

8. Darf ich die Karte teurer als zum Normalpreis verkaufen?

Ja, der Weiterverkauf von Karten zu einem erhöhten Preis ist nicht verboten. Eine Grenze stellt diesbezüglich lediglich der sogenannte Wucher nach § 138 Abs. 2 BGB dar, bei welchem sich jemand unter Ausnutzung einer Zwangslage eine Gegenleistung sichern lässt, die in einem auffälligen Missverhältnis zur eigenen Leistung steht.

Nun könnte man annehmen, dass bei einem Weiterverkauf einer Eintrittskarte ein zehnfach überhöhter Preis nach gesundem Menschenverstand in einem auffälligen Missverhältnis zum tatsächlichen Fussballspiel oder zum tatsächlichen Konzert von Helene Fischer, den Rolling Stones oder anderen Künstlern steht und damit unzulässig ist. Dies ist aber gerade nicht der Fall, weil keine Zwangslage vorliegt, die ausgenutzt werden könnte (vgl. OLG Köln, OLGE 93, 193, 194f., wonach der um das Zehnfache erhöhte Preis für eine Eintrittskarte für ein Fussball-WM-Endspiel mangels Ausnutzung einer Zwangslage keinen unzulässigen Wucher darstellte).

Im Ergebnis kann jeder frei entscheiden, wieviel ihm der Zutritt zu einer bestimmten Veranstaltung wert ist.

but if you can cite something else I'd be interested.

Controlling the secondary market is an attempt to continue providing the first sale below market price.

It wouldn't be hard to experiment with sales models and price curves to simultaneously increase profits and suffocate the secondary market.

You have to factor in the artist/fan relationship as well.

By increasing the price, you very quickly alienate large portions of your fanbase.

I've seen some artists sell tickets at $200+, and the fan backlash was noticeable. But perfect if you only want to attract rich boomers, I guess.

There is an economics research paper that shows that ticket auctions on Ticketmaster can reduce the arbitrage profits of scalpers (https://faculty.chicagobooth.edu/eric.budish/research/Ticket...) They compared the primary auction price to the ebay resale price and found they were about the same. It's unclear why ticket auctions never took off, although it may be that the only work well for shows with high demand.

Planet Money did a story[0] on this a few years ago, which helps articulate why artists see value in the traditional way of selling tickets.

[0] https://www.npr.org/sections/money/2013/06/25/195641030/epis...

Ticket auctions seems like a reasonable way to be fair , and ticket master supports that http://www.ticketmaster.com/ticketauctions

I guess it depends on the artist for whether the auction is allowed or not?

You would end up massively favoring the wealthy fans, who have a lot of disposable income, leaving less fortunate fans with basically no chance to get tickets.

The solution is to either make tickets non-transferable or make it illegal to sell tickets above face value.

Not everything needs to hit a perfect profit ratio.

Exactly, it's not always about maximizing profit. Artists also to play for their fans. This is one of the main reasons artists have fan club email lists, to let actual fans get first go at tickets before the public sale date. Of course, there's nothing stopping scalpers from signing up.

I mean couldn't you just solve all this by tying a ticket purchase to a name, and make them non-transferable? Can't sell a ticket if the buyer will have to provide your ID.

Or alternatively, release tickets on a randomized basis leading up to the event, coinciding in probability with the frequency of event advertisement.

I think the ticket should be matched to a government ID or passport. Drivers licenses have barcodes on them. Sell cheap tickets that rewire ID and sell "unlocked" tickets for 2x as much.

Paying $500 for a ticket is conspicuous consumption, and I have no problem at all with Ticketmaster, or anybody else, gouging people as much money as they possibly can.

The problem I have, is that most of these facilities are publicly owned, while the team is a for-profit adventure, and thus heavily subsidized under the fake notion that it's good for the community, when in fact the community is being screwed over. If this were really anything approaching free market, there'd be none of that. But the massive public subsidy is why there's downward pressure on ticket prices and why you see scalping.

I suggest looking for junior clubs, college games, or one of many pro sports leagues you've never heard of (lacrosse, rugby, arena football). I pay $35/game for 4th row from the glass seats at one of the best college hockey teams in the country, and it's way more interesting than NHL hockey where that same ticket would cost $250.

I'm not sure how the dollar amount makes Ticketmaster's actions more acceptable, and I don't think you're using "conspicuous consumption" correctly.

Right, it's not conspicuous consumption to pay more vs less for the ticket, since almost no one observes the purchase. Now, attending the event is conspicuous consumption, but the specific amount you paid is irrelevant to that, except to the extent that people in general know you have to pay a lot for the tickets.

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