Paperless Tickets—A Bad Deal for Consumers

For many years, a fight has been ongoing between Ticketmaster and consumers, represented by secondary ticket markets like StubHub. At stake is consumer freedom to resell or easily give away the tickets they’ve already purchased. Ticketmaster, the far and away leader in the ticketing market, is increasingly making it difficult for consumers by increasingly instituting paperless ticketing, a very unfriendly consumer practice.

Many lawmakers are trying to ban the practice of fans being able to sell tickets for more than face value, also commonly known as ticket scalping. While everyone has been in the situation of being upset over not being able to buy the tickets they want, it’s even worse having tickets you can’t sell. There are some bright spots—like in Michigan, where lawmakers are attempting to legalize the practice of selling tickets for higher than face value.

The problem of nefarious ticket scalpers who use computer programs to buy up massive amounts of tickets to resell is a problem Ticketmaster should work harder to solve with software, if it’s interested in solving the problem at all. Banning a consumer the freedom to do what they will with their purchased tickets only increases the monopoly power of Ticketmaster, which already controls 80% of the primary ticketing market.  Instead of Ticketmaster being concerned with solving their software problem, they are trying to use government to get rid of the secondary market by taking out the knees of competitors like StubHub.

The goals of Ticketmaster are fairly clear—not only do they want to control the primary ticketing market, they want to gain a large share of the secondary ticketing market as well, strangling out their competitors.

In fact, Ticketmaster has already gone to great lengths to undercut the secondary market wherever they can—by creating an environment where it’s nearly impossible to sell your tickets on the open market. By using paperless ticketing, which has been phasing in around the country, Ticketmaster makes the transfer of tickets from one party to the other very difficult, to the point where it’s really not worth it for many consumers.

These paperless tickets require the purchaser to appear at the venue box office with government identification in order to pick up the tickets and then the entire party to enter the venue at one time, making transfer to another fan very difficult. If a fan does want to transfer the tickets more easily, Ticketmaster charges large fees. By doing this, Ticketmaster is cutting out the secondary ticketing markets—making money first on the ticket sale, and then again on the second sale.

Ticketmaster’s practices have also come under scrutiny recently, as it’s become evident how little of the tickets that Ticketmaster controls make it to regular consumers. In one instance for a Justin Bieber concert, just 7% of the available tickets actually made it to regular consumers through the Ticketmaster website. Consumers should rightly be concerned about this issue—Ticketmaster seems to be just as much at fault for the run on tickets as the nefarious ticket scalpers.  This makes the monopoly the bigger risk for consumers and competition the answer.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research.

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