Well, Look Who’s Scalping Tickets

Paperless ticketing is becoming an increasingly common way to issue tickets for events–in sports and entertainment especially. From a convenience standpoint, this seems to be a win for consumers—no need to worry about losing your tickets along with the appearance of efficiency through technology. But while that may be the appearance, it’s anything but the case.

In reality, paperless ticketing puts restrictions on consumer’s ability to resell their tickets, limiting choice in what they do with their purchases. Ticketmaster, the leader in the space with an 85% market share, has been issuing paperless tickets for many of its concerts and shows. When a buyer purchases a ticket, the ticket is in their name and their name only. It requires the buyer to show up with a credit card and identification, and making the entire party enter at once. Not so convenient, but it gets worse.

Should the buyer not be able to use the tickets and want to transfer them to a family member or sell them, he or she is put into a precarious position. One way to transfer tickets is through Ticketmaster’s proprietary system, where Ticketmaster controls the entire process and is able to charge additional fees.

Why has Ticketmaster been pushing paperless ticketing? Because the secondary ticket market is big business, one that it doesn’t want to miss out on. While there is some competition in this market from companies like StubHub, Ticketmaster has its own secondary market reseller TicketsNow. With Ticketmaster already controlling so much of the primary marketplace, they’re looking for another source of revenue—cornering the multi-billion dollar secondary market.

Attempts to monopolize the resale of these tickets is bad for the consumer—having one company control both the entire first and second markets can only result in bad outcomes for consumers.  That secondary market provides about $2 billion dollars in savings to consumers, which makes it a tempting target for the dominant ticket provider.

One stated reason for limiting secondary market sales has been to stop counterfeiting and ticket scalping, but there are many stories you can point to where artists and concert venues are, in fact, scalping their own tickets.

For example, a story from 2012 looks at a Justin Bieber concert where only 1,001 tickets were ever on sale to the general public—out of about 14,000 seats. The rest were doled out to various Bieber fan clubs, American Express and other organizations. And many of the tickets that we’re supposed to be reserved for Beiber’s tour ended up on the aftermarket at much higher prices than face value.

Like Bieber’s concerts, the same thing was found in other prominent artist tours as well, including concerts by Keith Urban and Taylor Swift. It’s no wonder artists and concert venues often scalp their own tickets—one study found that tickets on Ticketmaster’s secondary market platform went for, on average, $93 more than face value.  By selling only a few thousand or even a few hundred tickets, they sell out in minutes, the event is hyped and ticket prices skyrocket.  For the artists, it’s not about ending scalping; it’s about making money.  If artists are only selling a fraction of their concert seats to the general public, they should be transparent about it.

The stated purpose of paperless ticketing, on the surface, seems good, but a closer look shows paperless tickets to be inconvenient for consumers and financially convenient for artists and concert venues.  The purpose of paperless tickets has little to do with stopping scalping.  What paperless tickets are all about is limiting consumer choice and creating a monopoly in the secondary market.  They are not consumer friendly.

Zack Christenson writes on digital tech issues for The American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information about the Institute, visit www.theamericanconsumer.org.

FacebooktwitterredditlinkedinFacebooktwitterredditlinkedin