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Comment by JayNeely | Hacker News Reader

I thought his question about why they weren't using their technology to make money from buying underpriced tickets themselves was much more damaging.

The SeatGeek founder's answer to the question you're referring was actually much more useful than it seemed when you look at it in context. He was able to say that ticket prices for baseball games varied by 40%, on average, over a month... for sold out games.

Although pg seemed dissatisfied with this response, and was looking for ticket price variation for all games, why should the SeatGeek guys know that? It's not important to their business, because their service is only valuable when there's an active secondary-market for ticket sales, in other words, when tickets for games are rare, which most of the time is because they're sold out.

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I sell tickets on the secondary market, so I'll answer for them. They aren't doing it because it's risky and the margins are small. Probably the least risky thing they could do with ticket trading is monitoring ticket listings in real time and buying ones that are listed below the prevailing market price, for events that are expected to have an increase in prices over time. However, 85% of events decrease in price as it gets closer to the event, until the last 48 hours which are harder to predict. Of course, the most money is to be made from buying from Ticketmaster at face value before events sell out.

Also, the secondary ticket market is very sensitive to momentum, so if SeatsGeek did a lot of trading they could unintentionally move the market in ways that cancelled out their profit.

They can make more reliable money from the affiliate fees on their sites. The prices for sold out events may vary by 40%, but the sites like Stubhub and Ticket Network take another 20% which makes it very difficult to flip tickets for already sold out events.

Something that often works better is short selling tickets for events that haven't gone on sale yet -- the price will crash down to the true market value after the market has more than a few tickets available.

There are a lot of reasons, but here are the two largest:

1) We've modeled how much we could make as a "hedge fund". We think we could turn $500k into another $500k in a year. We'd need to raise money to be able to do that. The upside for the business in its current form is far larger. This is an industry with huge transaction fees--a "round trip" transaction of buying and then reselling a ticket on StubHub will cost you at least 30-35% of the purchase price. Just because you can accurately forecast prices doesn't mean you can become an instant millionaire.

2) Buying and selling tickets is a far cry from trading stocks. You have to hire a staff to actually open envelopes, manage the physical inventory, deal with individual buyers, make runs to FedEx, etc. There are thousands of brokers out there who have mastered these logistics, whereas we have no experience with them. So we'd prefer to serve as a platform to enable all those brokers to make money, keeping a cut for ourselves.

I think it would be important for them to know it, because the market for the non-active games might be a large part of the $15B market number they quoted -- meaning that SeatGeek is targeting a smaller market than they think. Also, getting people to purchase their tickets on SeatGeek might be a sort of impulse function based on the deviation of the ticket prices; if there is a low variation on most games, people won't be motivated to play the market.

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