#ticketscalping

The aim of this present essay is to analyze ticket reselling or scalping and the challenges this area of the live music industry is facing concerning this situation. This subject is right now on its peak of “popularity” among the most debated topics of the music industry after the Taylor Swift debacle, that is the frustrated ticket selling management and process with companies Live Nation and its owned and associated ticketing company Ticketmaster.

In order to be able to put the reader in context, the Taylor Swift case occurred back in November when: “Ticketmaster made headlines after its site crashed during the pre-sale ticket drop for Swift’s upcoming “Eras” tour. After hours-long wait times and oversold tickets, Ticketmaster temporarily suspended sales. While the company blamed high demand, Swift said Ticketmaster assured her they could manage the situation. In a statement, Swift said she asked the groups several times “if they could handle this kind of demand and we were assured they could.” Live Nation’s president told Congress last month the industry has faced “industrial scale ticket scalping” that contributed to the issues with the Swift presale.”[1]

However, before getting our feet in the mud of ticket reselling to try to uncover what is happening with scalping, what are the challenges and how they could be tackled, we would like to point out some facts and data that have been surfacing regarding ticket reselling these past few months and that we think that will be useful to understand the dilemma.

Growth of the secondary ticketing market

“Despite COVID-19, the European secondary ticketing market was estimated to be worth €1.83bn in 2021, with predictions to grow to €2.29bn by 2023; money that is drained from consumers and the sports and cultural industries.”[2]

Secondary ticketing fraud and disappointment from fans

““We all know people who have bought tickets to the big concerts, sporting events and festivals who have not been able to attend because the tickets were fake or were duplicates,” she said.”[3]

Huge fees besides the ticket price

“Some customers who bought VIP packages for the tour — already among the priciest and highest-quality experiences at the venue — saw service fees as high as $550 (about a 15% service fee) atop the $3,757 the customer already spent on their seat. The most expensive tickets, of course, will also catch the most eye-popping fees. Among the more affordable seats, one customer’s screenshot detailed a $43.90 service fee on a $162 ticket (about a 27 percent fee), plus another $8 for the facility charge.”

What is happening with ticket scalping?

As it was mentioned, the Taylor Swift case with the selling of tickets for her tour has started a debate over ticketing and secondary market ticketing, reselling or scalping that is putting Live Nation Entertainment and Ticketmaster at stake for their monopolistic practices.

Concretely, the US Senate has asked what happened with Taylor Swift demand for tickets and why people experience problems to get their seats even if they were previously registered in a verified fan program. And, also, they want more information regarding additional fees, dynamic prices, limited availability of tickets and restrictions to ticket scalping.

As it has been mentioned before and stated by the entertainment company, Live Nation response to that petition has been to reflect that the problem occurred with Taylor Swift and other similar cases and the backbone of this problem was the over-demand for tickets to speculate with them in the secondary market and in other landing and re-selling pages and apps such as StubHub for instance. That is also their shield defense method and justification of their practices within their own feud. In that sense, other players and the government have acknowledged that “Live Nation’s model, “makes them a vertically integrated giant,” […]. “They book the concert, sell the tickets and own the venue [and] that makes for little competition. And despite the consent decree which they agreed to extend, we don’t see the competition that we should. We’ve seen evidence of violations of them using monopoly power to cut out competition.”[4]

What are the arguments from the key players regarding this situation?

While the company is under a thorough investigation by the US Senate, they have been calling for action to prevent and limit reselling. To that respect Live Nation recently announced a support statement for a Fair Ticketing Act[5] based on the following premises:

Source: Live Nation Entertainment

So, In its intend to push for a “Fair Ticketing act ”Live Nation — owner of both the eponymous live music promoter as well as ticketing giant Ticketmaster — is advocating for federal laws that could weaken scalpers’ ability to mark up ticket prices and gouge customers for in-demand concerts. Among the changes it proposed are outlawing speculative ticketing in which scalpers try to sell tickets they don’t actually own yet, expanding legislation to stop bots from buying mass amounts of tickets and slowing down on-sale periods, mandating all-in ticketing to avoid hidden fees at the end of purchases, and protecting artists’ ability to decide how their tickets can sell on the secondary market.”[6] However, “Legislation focused around the points Live Nation mentioned doesn’t touch on all the complaints customers often have in the ticket-buying process such as high fees or dynamically-priced tickets, but they could in part address other long-held issues in the market regarding flexibility for artists and transparency for fans.”[7]

But, just as StubHub – a major reselling company among others - claims, the act is missing any mention of Live Nation and Ticketmaster behavior, as we were also pointin out in this essay.  In particular, regarding the Fair Ticketing Act, a StubHub rep stated that: “LNE and TM’s “Fair Ticketing Act” specifically focuses on regulating the secondary ticketing market and does not include any significant reforms to their own practices. Anything but fair, the proposal is meant to strengthen the control LNE, TM, and their venues and artists have over this industry and consumers at large.

Ticket transferability laws that empower consumers in the ticket buying transaction have long had the support and advocacy of consumer groups. LNE and TM’s regular opposition to these laws and their frequent use of derogatory terms like “scalper” are a veiled attempt to maintain the control they’ve had over consumers and cover up their own willful failures in helping to enforce existing statutes like the BOTS Act that go after bad actors.

This proposal is particularly concerning in a marketplace where LNE and TM regularly manipulate the release of ticket supply and availability to take advantage of high demand through dynamic ticket pricing.

LNE and TM’s own resale marketplaces cater to the same consumers and professional ticket resellers (or in their words, “scalpers”) as their secondary marketplace competitors, AND they provide services, such as their TradeDesk inventory management system, to encourage professional resellers to utilize their own resale sites“.[8]

Live Nation, however, responded to that by stating “The artist will always make the best decision for fans. FAIR Ticketing is not about locking down resale to our site, all resellers can take part as long as they are abiding by the terms the artist sets on their content. This isn’t theoretical, that is exactly how the NFL Ticket Exchange works. StubHub is pushing to make it illegal for artists to have choice – even choices that are good for consumers.”[9]

So, in summary, what StubHub is accusing Live Nation of is that they want restrict certain behaviors and practices for resellers and competitors, while they continue acting the same way, to which Live Nation claims that they are looking for the artist interests, and that is why they see suitable to sometimes have higher fees or prices, to prevent the Artist wishes from having all their sold out tickets from a concert being sold in a secondary market, for instance.

The debate is served, and the opinions on whichever secondary should be legal or not, and under which circumstances as well.

Is there any regulation of the secondary market that could outline some kind of solution to overcome this situation?

Thereunder, unlike the United States, Europe (the European Union) already started making steps to respond to this ticket scalping situation some time ago. To do so, they adopted regulation secondary ticketing markets in the Digital Service Act (“DSA”)[10] which aims to prevent abuses on online marketplaces, including ticket resale sites. To that extent, it includes measures to ensure professional sellers are identifiable, prevent certain manipulative sales tactics and requires regular reporting to try to improve transparency for consumers. In more detail, online market places will be required to obtain essential information about third party professional sellers, from their name and contact details, to their bank details and ID, before traders are allowed to list tickets on the platform, to increase accountability for marketplaces, resale platforms should make it clear throughout the buying process that the tickets listed are provided by a third party, dark patterns (user interfaces designed in such a way as to trick users into making certain decisions, such as “pop-ups” or giving prominence to specific choices) will be prohibited; those platforms will be required to provide with transparent annual reporting and finally, every Member State will be required to appoint a Digital Services Coordinator (DSC) to enforce the rules laid out in the DSA.

So, while the DSA may not be the most extensive or even demanding regulation, it is a step further on, not limiting secondary ticketing, but making it fairer and more transparent, to prevent, above all, fraud. Right now, lots of fans are willingly buying in secondary ticketing pages or apps, such as Ticket Swap, as they see a guarantee for the tickets they’re buying, and they rely on those providers to attend their favorite events. However, speculation is still an open debate.

Conclusions and ideas to handle this disjunctive

In conclusion, what is being discussed here goes beyond the regulation and what kind of regulation ticket reselling or scalping should have, as the Taylor Swift debacle and the US government saying in all this opened up much more debates regarding ticketing and the music industry.

In our personal opinion, the way to tackle this great challenge of ticket scalping is not by making it illegal. It’s a question of assuming there’s always going to be a secondary market for ticket demands. However, the way Live Nation, for instance, wants to regulate it, by making it difficult for companies that aren’t theirs, such as StubHub or Ticket Swap, for instance, to resell tickets, while they can still “play” with the dynamic pricing isn’t the solution as well. That’s why we think there’s a necessity to push these new players of the industry, like the European Parliament did with the DSA Act which, even if it’s not perfect or covers all the demands by other players such as promoters, has put the focus on, at least, guaranteeing that the fans that buy tickets from the secondary market can actually attend the event and purchase it from a “legal owner” if it can be said like this. This would make ticketing companies and ticketing reselling companies “official channels” for the purchase of live performance tickets from Artists.

Moreover, other innovative ideas could go by the usage of NFTs. Right now, the usage of NFTs is being under scrutiny as well after some experiences with “crypto-art” that may have damaged their reputation. However, there are already companies advocating and working on multiple uses for these tokens, regarding royalties, digital merchandising, ticketing. A combined usage of a NFT in the ticketing and “fan-artist” engagement fields could be creating exclusive tokens for fans to be able to have priority in those live performances and/or in the venues and other kind of associated experiences to their ticket, what is now VIP or Golden Ticket for instance. This would also help ensure that the reselling of the token has traceability and counts on the benefits of the blockchain technology. A lot has to be worked in this area but those companies, some of which have already presented ideas at the MWC or 4YFN events, may be a great tool for the future of ticketing.

Finally, what the US Senate is doing right now with the scrutiny over Live Nation still has no other outcome more than trying to discover Live Nation and Ticketmaster practices and make them work with the same rules as the other promoters in the country and globally. Our thought regarding that subject is that this exercise should be an empowerment to be able to do things right and combat the lobby this company and their associates are doing, by making a “fresh” start for other promoters and stopping the monopolistic practices they seem to be using right now. Nevertheless, the regulation and re-position if it can be defined like that of promoting and ticketing companies in the music industry may not be as easy as it may seem on paper, so we wouldn’t advocate 100% on that idea, even though practices like this in the market should be avoided and tackled.

In a nutshell, ticketing scalping may be more moral or immoral and overflows a much bigger complexity than saying yes or no to letting people and companies resell one or more times a ticket, as it needs a deeper thought on the limitation of those selling and reselling prices, the demands from fans, the impact on Artist’s careers and fairness in the future.

[1] As stated in the article “Ticketmaster Urges Congress To Crack Down On Ticket Scalping As Lawmakers Take Aim Over Taylor Swift Debacle” published on https://www.forbes.com/sites/anafaguy/2023/02/23/ticketmaster-urges-congress-to-crack-down-on-ticket-scalping-as-lawmakers-take-aim-over-taylor-swift-debacle/?sh=1c042495c4c5

[2] As stated in the article “European Parliament approves new digital rules with major impact on secondary ticketing” published on https://www.feat-alliance.org/2022/07/05/new-eu-digital-laws-resale/

[3] Quote extracted from the article “Why didn't we make ticket scalping illegal?” published on https://www.stuff.co.nz/business/131244894/why-didnt-we-make-ticket-scalping-illegal

[4] As stated in the article “Ticketmaster Takes Aim at Resale Sites, Scalpers with ‘Fair Ticketing Act’ Proposal” published on https://www.rollingstone.com/music/music-news/ticketmaster-live-nation-ticket-scalpers-fair-ticket-act-1234685502/

[5] The full statement “Live Nation Entertainment announces support for a Fair Ticketing Act” can be read at https://www.livenationentertainment.com/2023/02/live-nation-entertainment-announces-support-for-a-fair-ticketing-act/

[6] As stated in the article “Ticketmaster Takes Aim at Resale Sites, Scalpers with ‘Fair Ticketing Act’ Proposal” published on https://www.rollingstone.com/music/music-news/ticketmaster-live-nation-ticket-scalpers-fair-ticket-act-1234685502/

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[8] As stated in the article “StubHub Slams Live Nation’s ‘Anything But Fair’ FAIR Ticketing Act Proposal” published on https://variety.com/2023/music/news/stubhub-slams-live-nation-fair-ticketing-act-1235537266/

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