Battling Ticket Markup in an Age of Gougers and Bots

Revenue / 01.16.18

Teddy Durgin

In the United Kingdom, FanFair Alliance recently released a survey that found that two-thirds of respondents who had paid more than face value for a concert ticket on a resale website would attend fewer concerns in the future. In addition, around 50 percent said they would spend less on recorded music in 2018.

London's The Guardian recently quoted FanFair Alliance campaigner Adam Webb, who said fans were not against all resale vendors. But he was quick to add that a majority are "in favor of measures to curb mass-scale online ticket [gouging]." In response, the British government this month passed legislation that bans the use of automated software known as "bots" to harvest tickets. It is set to become a criminal offense under the Digital Economy Act. However, British lawmakers have shied away from championing any broader restrictions.

Other initiatives have proven more successful. In the United States, brokers have used bots to snatch nearly half the tickets to in-demand concerts and other shows. In 2016, though, Ticketmaster launched Verified Fan, which utilizes a special algorithm that weeds out fishy sales. So far, it has worked. Thanks to Verified Fan, only 3 percent of the tickets for Bruce Springsteen's recent mega-popular Broadway run were resold.

To date, more than 70 artists have joined in. One of the latest big-named performers to sign on was Taylor Swift. But she did so with a twist. Fans who watched her newest videos or purchased her branded merchandise received priority. Other stars and bands are expected to follow her lead. Larry Rudolph, manager of Britney Spears, told Rolling Stone, "Ticketing has been lacking that sort of innovative thinking."

Then, there is the whole paperless revolution that may or may not be on the horizon. The Broadway mega-smash "Hamilton" recently opened on London's West End, and it's practically impossible to get seats because ticketing for the show has indeed gone entirely paperless. Producers are in favor of the move, calling it the most effective way to freeze out price-gouging scalpers and bots.

The strategy will likely not hit Broadway anytime soon as it remains illegal in New York state for a live event's ticketing to go entirely paperless. At the core of the debate is the nontransferable entry that is also the reason paperless works so well. Instead of receiving a hard copy of a ticket with purchase or even an electronic ticket, attendees show up at the venue with an ID and the credit card they used for purchase. Basically, entry is tied to the identity of the ticket buyer.

"Hamilton" in England appears to offer proof that paperless works as a major roadblock for scalpers and bots. However, opponents gripe that paperless limits consumer choice, curtailing the ease with which purchasers can, for example, give tickets as a gift or resell them for an event they are suddenly unable to attend.

Legislation, though, has emerged as the deterrent most are pinning their hopes on. Arizona State Sen. John Kavanagh (R) has proposed Senate Bill 1011, which aims to stop bots from scooping up hundreds of tickets that are then resold for much higher sums on sites like StubHub. The law would make it illegal to use a computer to impersonate a human for "nefarious" reasons. Kavanagh, though, has acknowledged concerns that outlawing bots in Arizona would not fully safeguard Arizona consumers because bots run from other states could still snap up tickets to sporting events and live music performances before real people are able to purchase them online.

In Canada, lawmakers are getting it done. On Dec. 13, the Canadian province of Ontario passed the Ticket Sales Act as part of a larger consumer-protection bill. The law not only bans the use of scalper bots; it also makes it illegal for resellers to market tickets that were knowingly bought that way. In addition, tickets cannot be resold at more than 50 percent of their face value, and resellers are now required to disclose the proper face value of the tickets in question.

Not surprisingly, both Ticketmaster and StubHub opposed the legislation. Both are now cautioning the public that capping resale prices will result in unintended consequences for consumers. Chiefly, buyers will migrate away from their websites to find tickets elsewhere on other platforms that offer no protection against fraud.

StubHub North American general manager Jeff Poirier wrote in an open letter to customers: "Ticket resale prices will continue to be driven by supply and demand, not by arbitrarily set price caps. The fact is, if a venue holds 20,000 fans, but 100,000 fans want to attend the performance, ticket prices will reflect that demand."

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