Ticket Sales and Resale, unbalanced sides of the same concert coin
The online ticket sales industry is a very successful one, generating about 9 billion dollars (USD) in 2017 (US only). It has an annual growth of 12,5% and these numbers are expected to grow. In 2025, on a global perspective, this industry will reach gigantic numbers of 67.99 billion dollars (USD)2 of market size. This generates a high interest in this economic area dominated by Live Nation Entertainment Inc. and eBay1. However, this is not a business without its caveats. Alongside the regular sales, there is a secondary market predating these regular tickets and gouging the average consumer.
It might not be clear at first, but anyone who has tried to buy a ticket knows what type of challenges they face ahead. Ticket scalpers, responsible for buying huge volumes of tickets and reselling them for exorbitant prices, are the main adversaries that fans face when they want to buy tickets to see their favorite artist. The most interesting aspect of this situation is the fact that the resale of a ticket yields significantly more money to the resellers than to the rest of the industry.
This is where the problem with online selling ticket starts. It is far more profitable to resell a ticket than to sell it firsthand.
Reselling tickets is not a recent practice. Even before the online market, scalpers would find any possible way to hoard vast quantities of tickets and sell them at higher prices. It started by payments made to homeless people to stay in line (when tickets were only available in stores), then it developed into managing “40 person boiler rooms” responsible for making phone operators hit the keys faster (when tickets were sold by phone) and they finally culminated into the development of bots in the internet era, where every second counts.
There is a very high interest in this secondary market and “Everybody’s making money on scalping. Everybody from top to bottom.”, says Ken Lowson, cofounder of Wiseguy Tickets (NOT WiseGuys Presale Passwords) and TixFan.
Ticketmaster, working all the angles
After the merger with Live Nation,Irving Azoff, the CEO of Ticketmaster at the time, stated his concerns regarding the state of the music industry and the rampant competition that inevitably would propel secondary ticketing4. As of now, Ticketmaster’s CEO believes that both the secondary market (resales) and primary markets should be controlled. Therefore, they provide a platform were fans can sell their tickets, complimentarily to their normal services.
Ticketmaster charges a fee for each sold ticket using its platform. However, the profits from a resold ticket are significantly higher due to scalping.
Given that there are no restrictions on this secondary market, prices can cost up to 10 times more.
Effectively, this means that Ticketmaster’s profits also go up in considerable amounts. This is where the questionable business practice starts. Ticketmaster can now charge twice the amount of fees per ticket and can freely sink its teeth into this profitable unregulated secondary market cake.
Recent events seem to further validate the questionable business practices made by Ticketmaster and its resale policies. While the company has strived to make it so that fans can truly access their favourite performers’ shows, with a “verified fan” label, it also has made its interest in the secondary market a priority.
This was clearly visible by their presence at the Ticket Summit 2018 held in Las Vegas, in July, with their “Ticketmaster Resale” product, TradeDesk. This new software functions as a “web-based inventory management system for the brokers”.
Pockets all open, Ticket Summit 2018
The true Ticketmaster’s scandal happened when reporters from the “The Star” and CBC went to Ticket Summit 2018 in July, posing as ticket scalpers. They asked a few questions regarding TradeDesk (Ticketmaster’s service) and their policies. What they found out was very interesting. Normally, the number of seats that can be bought is about 6 or 8, depending on the event.
Ticket limits - routinely bypassed?
Ticketmaster’s own terms of use forbid purchases superior to this number. Furthermore, the purchase of tickets by automated means is also strictly forbidden. However, the TradeDesk representatives told them that they don’t look into the Ticketmaster account of each user. They implied that they have many clients that have multiple accounts, adding:
“They have to, because if you want to get a good show and the ticket limit is six or eight (seats), you’re not going to make a living on eight tickets.”
Regarding their bot banning policies, they said: “We don't share reports, we don't share names, we don't share account information with the primary site. Period.”. They also commented that “We don’t like bots”, but “We have all these clients who may use bots”. Even their current president, Jared Smith, issued a statement regarding the TradeDesk incident, but the company continues to pile up complaints about their shady practices.
Nonetheless, this incident clearly demonstrated the interest of Ticketmaster in entering the resale business and claiming the big portions of money that fly on the resale market. Ticketmaster’s services clearly favour scalpers and the reselling of tickets to increase their company’s profit.
Time ticks away.
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Livenation CEO Michael Rapino[/caption]
In January of 2018, the Canadian Competition Bureau expanded an investigation into Ticketmaster and its parent company, Live Nation. In the U.S.: two senators, Jerry Moran, a Republican from Kansas and chair of the Senate subcommittee on consumer protection, and Richard Blumenthal of Connecticut, have also started taking measures against Ticketmaster. They have written to Live Nation CEO Michael Rapino giving him until Oct. 5 to explain their reseller program. There are also reports of several lawsuits against Ticketmaster for withholding tickets to inflate the prices of initial ticket sales, which further enhance the scalping problem.
All in all, the world’s biggest name in the ticket selling industry (Ticketmaster) is starting to delve into questionable practices, by not punishing or banning scalpers and actually helping them with questionable software like TradeDesk. Their presence at the Ticket Summit 2018 along with their resale division was the clear demonstration of their true interest. Several class action lawsuits have been filed against Ticketmaster and the Competition Bureau is demanding answers from the company. Meanwhile, Ticketmaster is still profiting off this lucrative reselling market and both tickets and time tick away.
- Frank (Box Office Hero)
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