Breaking news: Big event ticket sales are a broken marketplace that hurts both consumers and entertainers. Just kidding, everybody knows that. It’s remarkable that both the industry and regulators remain seemingly helpless to fix the problem.
With Bruce Springsteen songs still hanging in the air above Madison Square Garden, New York Attorney General Eric Schneiderman released the results of an investigation into the seedy ticket business called “Obstructed View: What’s Blocking New Yorkers from Getting Tickets.”
“Ticketing is a fixed game,” Schneiderman said. “This investigation is just the beginning of our efforts to create a level playing field in the ticket industry.”
Here’s what the report found:
- For the most popular concerts, many tickets are never made available to the general public in the first place. On average, more than half of all tickets — 54 percent – are reserved for insiders. Those reserved tickets are split between insider holds (16%) and pre-sales (38%).
- Concert venues and ticket sellers like Ticketmaster regularly tacked on fees that added more than 21% to the face price of tickets, and in some extreme cases, added more than the face-value price of the ticket.
- Third-party brokers resell tickets on sites like StubHub and TicketsNow at average margins of 49 percent above face-value — sometimes more than 1,000 percent.
- Brokers are using illegal specialty software – called “ticket bots” — to quickly purchase as many desirable tickets as possible and resell them at a significant markup. The investigation, for instance, found that on December 8, 2014, a single broker used a bot to purchase 1,012 tickets to a June 2015 U2 show at Madison Square Garden within the very first minute of the sale.
- Sale of “speculative tickets” is rampant and also leads to fraud. For example — In early December 2015, tickets purporting to be for Bruce Springsteen’s 2016 “River Tour” began appearing on secondary sites like StubHub, TicketNetwork and Vivid Seats. Some tickets were even advertised for inflated prices of as much as $5,800 per ticket. The catch? No such tickets had yet been released. What brokers were selling were “speculative tickets,” that is to say, tickets that they planned, or hoped, to buy later. But often, consumers don’t get the tickets they’ve paid for, or worse: the tickets never arrive because prices never go down, a plague that hit last year’s Super Bowl.
Most important, Schneiderman shined a light on a relatively anti-consumer, anti-free market scheme called “price floors” that prevents ticket holders from selling tickets below a certain price. The policy prevents season ticket holders from unloading unpopular games, and artificially inflates prices. Schneiderman specifically called out NFL price floors in the report. The league pushes fans towards its own ticket sales platform, NFL Ticket Exchange, where it enforces price floors. The Denver Post recently reported that season ticket holders who sell on outside sites, like StubHub, risk losing their season ticket rights.
Price floors have crept into many sports, however. There’s even questionable promises between bulk ticket buyers (brokers) and teams to keep prices high when games become unpopular — late-season games when a team is eliminated from postseason contention, for example.
Schneiderman said to expect some kind of multi-state action to “correct” the price floor issue within the next couple of months, according to NYStateofPolitics.com.
It’s a good start, but so much more needs to be done to clean up ticket sales. Technology and the entrance of third-party providers like StubHub help out the promise of cleaning up ticket sale markets. Instead, the market is as murky as ever.
Chris Grimm is executive director of a fan advocacy organization called FanFreedom.org. He welcomed the report, but said much more needs to be done to restore fairness and transparency to ticket markets.
“Ticket distribution practices put fans at a huge disadvantage when trying to buy tickets and combined with bot use makes it nearly impossible for fans to score face value tickets,” he said. “Artists and venues have long argued that more transparency regarding ticket distributions just makes it easier for scalpers to make a profit. Which is ridiculous. Everyone know which shows are going to be in high demand. Simply being honest with fans that, for example, 50% of tickets are sold through the American Express presale, 30% through the fan club, 10% are held back for industry insiders and 10% are sold at the general on-sale does not sound onerous or similar to giving away trade secretes to us.
“If we can clean up the primary market by increasing transparency to prevent the artificial manipulation of ticket supply and really do something with some teeth to crack down on bots, the problems with the secondary market will likely also be fixed,” he said.
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