The future of event ticketing, maybe

Some of you may remember my previous post on ticket scalping made in response to Trent Reznor’s post on the NIN forums. Well, I was recently reading Mashable and found this post about a new startup called SaveFans! (abbreviated SF in following text) which is an offer-based ticket platform. Now if you remember my original post, I quote Trent Reznor as saying:

My guess as to what will eventually happen if / when Live Nation and TicketMaster merges is that they’ll move to an auction or market-based pricing scheme…

At the time, I said this would be a bad thing, and as suggested, with the ticket providers unilaterally setting “market-based” prices, it would indeed be disastrous for fans.

The twist with SF is that buyers are allowed to negotiate with sellers. This, by itself, is not a bad idea on the surface. It is still a possibility true scalpers will use the system and not accept perfectly reasonable offers for tickets they hold.

However, it does give the fans a chance to say what they think about truly usurious and monopolistic pricing. SF is not a panacea. Ticket buyers still need some form of protection against egregious scalping as well as not being stuck with unusable and yet non-transferable tickets. Ticket sellers need some form of protection against scalpers profiting at their expense as a result of an attempt to keep shows affordable for fans.

The only way I see to keep everyone happy is to allow event managers/promoters to opt an event out of SF or similar sites or move to a model where ticket transfers are tightly regulated or simply cannot happen without the express approval of the ticketing agency or the event’s management/promoters. Many event managers/promoters nominally prohibit the resale of tickets above face value; it is a long-standing policy of most venues (at least those in Houston) that resale of tickets on the property of the venue and adjoining parking lots is prohibited, sometimes just resale above face value, sometimes any resale. It should be noted that platforms such as SF can be used for good or evil. They aren’t much different from eBay or Craigslist in this regard. It’s still up to the ticket buyers (fans) to promote responsibility and defend their rights.

I see it as unlikely, here in 2010, that more states/cities will pass anti-scalping legislation. In 1999, the New York Office of the Attorney General released a report on scalping. In that report, several suggestions were made on how to reform the ticketing process, and protecting licensed ticket brokers by raising the premium they are allowed to charge above the listed price (at the time of this report, the greater of $5 or 10%; it’s not clear whether or not the extra fees are included in the amount the 10% is calculated on). It is interesting to note that some of the ticket brokers (and I am deviating a bit from my usual “scalper” terminology here, since this is New York we are talking about, where the types and quantity of ticketed events are vastly different) label their markup as a “service fee” which was not addressed by the applicable law. This, however, should be seen for what it is: an attempt to exploit a legal technicality.

I’m not sure what became of the release of this report. I do know that a decade later, scalping is still a major problem.

Ticket scalping: My commentary on Trent Reznor’s post

It dates from 2009 March, but I just recently found a forum post where Trent Reznor rants a bit about ticket scalpers. Trent really explains everything that’s wrong with the current system of Ticketmaster, Live Nation, and the venues they partner with.

Loaded or not, I’m using the word “scalpers” to refer to ticket resellers. I believe ticket resale above face value is bad for the fans of artists who just want to see the show and is inherently an evil and greedy practice.

I’m going to quote bits and pieces of the post here and add my thoughts:

NIN decides to tour this summer. We arrive at the conclusion outdoor amphitheaters are the right venue for this outing, for a variety of reasons we’ve throughly considered*. In the past, NIN would sell the shows in each market to local promoters, who then “buy” the show from us to sell to you. Live Nation happens to own all the amphitheaters and bought most of the local promoters – so if you want to play those venues, you’re being promoted by Live Nation.

This smacks of anti-competitive behavior. Except for the fact this appears to primarily be occurring on a local level, I’m surprised the DOJ hasn’t stepped in to stop these shenanigans. Maybe they still can.

Now we get into the issue of secondary markets for tickets, which is the hot issue here. The ticketing marketplace for rock concerts shows a real lack of sophistication, meaning this: the true market value of some tickets for some concerts is much higher than what the act wants to be perceived as charging. For example, there are some people who would be willing to pay $1,000 and up to be in the best seats for various shows, but MOST acts in the rock / pop world don’t want to come off as greedy pricks asking that much, even though the market says its value is that high. The acts know this, the venue knows this, the promoters know this, the ticketing company knows this and the scalpers really know this. So…

As usual in the music business, the actual artists are the good guys here. The venue, promoters, and ticketing company who also know this are the ones that see nothing but dollar signs. How many of you would honestly pay a $500 to $1,000 face value plus fees (the latter of which I have ranted about before)?!

“Market value” is a rather touchy subject. I believe the so-called market value does not always represent a truly fair deal for everyone. The scalpers love being able to resell tickets at markups approaching 80% of face value, or beyond in some cases (that is, $250 for $50 tickets, where the markup is 80% of the scalper’s price). In fact, a 95% markup for scalpers is not entirely unheard of.

The venue, the promoter, the ticketing agency and often the artist camp (artist, management and agent) take tickets from the pool of available seats and feed them directly to the re-seller (which from this point on will be referred to by their true name: SCALPER). I am not saying every one of the above entities all do this, nor am I saying they do it for all shows but this is a very common practice that happens more often than not. There is money to be made and they feel they should participate in it. There are a number of scams they employ to pull this off which is beyond the scope of this note.

Note Trent’s use of the word “scams.” I think that more than adequately summarizes what is going on here, but of course, the real devil is in the details because that’s where we figure out what can be done about it.

Here’s the rub: Ticketmaster has essentially been a monopoly for many years – certainly up until Live Nation’s exclusive deal ran out. They could have (and can right now) stop the secondary market dead in its tracks by doing the following: limit the amount of sales per customer, print names on the tickets and require ID / ticket matches at the venue.

So we know there’s a solution. Ticketmaster has the power to make the concert ticket buying experience a much better and fairer one for fans who are honestly getting screwed by the current system.

We know this works because we do it for our pre-sales. Why don’t THEY do it? It’s obvious – they make a lot of money fueling the secondary market. TicketMaster even bought a re-seller site and often bounces you over to that site to buy tickets (!

So, it’s not enough for Ticketmaster to make their money by being in cahoots with the scalpers these days. They now own some of the scalpers too! Can you say “greedy?”

NIN gets 10% of the available seats for our own pre-sale. We won a tough (and I mean TOUGH) battle to get the best seats. We require you to sign up at our site (for free) to get tickets. We limit the amount you can buy, we print your name on the tickets and we have our own person let you in a separate entrance where we check your ID to match the ticket. We charge you a surcharge that has been less than Ticketmaster’s or Live Nation’s in all cases so far to pay for the costs of doing this – it’s not a profit center for us. We have essentially stopped scalping by doing these things – because we want true fans to be able to get great seats and not get ripped off by these parasites.

I assure you nobody in the NIN camp supplies or supports the practice of supplying tickets to these re-sellers because it’s not something we morally feel is the right thing to do. We are leaving money on the table here but it’s not always about money.

The NIN camp is doing a commendable thing here. It’s not always about money. To be fair, even Ticketmaster, in the months since this was written, appears to have rolled out paperless ticketing at least for some shows. I’d like to think this is not just a passing fad.

The bitter irony here is that the arts scene (orchestra, ballet, opera, etc.) has always fought the perception of being expensive. The most expensive ticket for a SPA (Society for the Performing Arts) show this season is $65; it wouldn’t surprise me if something somewhere goes into triple digits ($100+) per ticket, but I’d expect that to be rather rare.

On the other hand I’m pretty sure $100 for a rock concert ticket is frighteningly common.

My guess as to what will eventually happen if / when Live Nation and Ticketmaster merges is that they’ll move to an auction or market-based pricing scheme – which will simply mean it will cost a lot more to get a good seat for a hot show. They will simply BECOME the scalper, eliminating them from the mix.

I certainly hope this doesn’t happen. This would be a truly bad thing for the fans. I believe tickets should be available at a fair, fixed, affordable price.

I don’t see arts organizations ever doing this. You rock concert guys want to go to auction-based pricing? Fine. I’ve always wanted to see the Wortham Center and similar venues sell out for a ballet or opera. And it’s not to say that most of the younger set will suddenly dump rock for Bach. It certainly wouldn’t be a bad thing, however, for the evil concert cartel to shoot themselves in the foot and for a few in the younger set to wind up really getting some culture in the process (and I don’t mean a fad yogurt diet, either).

The ultimate way to hurt scalpers is to not support them. Leave them holding the merchandise.

I feel for the artists that will play to half-empty venues because the fans that just want to pay a fair price to see the show are unable to because the scalpers have bought up all the tickets, and refuse to support a system that is so corrupt it almost makes the Mafia look squeaky clean.

In summary, I wish Trent and NIN the best of luck in the good fight, and hope that Ticketmaster is truly serious about stopping scalpers instead of just making a token effort to try to shut up people like me. My regular readers should know by now how I feel about censorship and insincerity; if I encounter either, this won’t be the last rant about the industry.