In Defence Of Ticket Scalping
Every year as festival season approaches and the summer’s biggest tours are announced, ticket scalping becomes a hot-button issue, and it’s easy to see why -it’s a convenient punching bag for when you forgot to buy tickets to your favourite band and their show sells out, or when you simply couldn’t get the ticketing website to load for you.
It must be those damn ticket scalpers, right? Well as we learned, that is entirely untrue and you may be surprised to see how little of an issue ticket scalping actually is. Let’s address some of the notions surrounding this emotional issue.
Firstly, there is the perception that ticket scalping is a major issue affecting the ability of the average consumer to purchase tickets directly from the authorised seller. Secondly, it is widely believed that ticket scalpers always sell their tickets above the ticket price for profit. Thirdly, many feel the very act of ticket scalping is unethical and unfair.
We will address each of those concerns, with particular help from a report commissioned by the Australian government in 2010, ‘Consumers and the ticket market, Ticket onselling in the Australian market”, which helps shed some light on the scale of the problem.
The report covers what they call ‘ticket onselling’, which encompasses both the resale of tickets when you can no longer attend an event, and ticket scalping, where you bought the tickets with the express intention of reselling them for profit.
According to the report, ticket onselling is relatively low in Australia compared to the rest of the world due to small number of events that actually sell out here.
The report also found that although technology has made it easier for members of the public to acquire multiple tickets at the same time, an increase in ticket scalping had not followed, and the perception that ticket scalping is a bigger issue is because the internet has made the little scalping there is far more visible.
Before eBay, before Gumtree, or any websites that facilitate the onselling of tickets, ticket scalpers were relegated to hanging around ticket box offices before an event in the hope that someone without a ticket would turn up looking for a scalper.
Now of course, technology has made things a lot easier. Take next year’s Soundwave Festival for example. Tickets went on sale just last week and sold out within hours in Brisbane, Sydney, and Melbourne.
A quick glance at eBay shows us that about 170 tickets are for sale to the Melbourne event. That sounds like a big number, until you consider nearly 40,000 tickets are sold to the event. With some quick math we can see that for every 1000 tickets sold, approximately 4 of them will be onsold.
We say onsold, because not all of them will be technically ticket scalping, which requires the seller to have bought the tickets with the intent to sell them for profit. Some of them will be from sellers who had originally intended to go to the festival but for whatever reason can no longer attend, which will bring down the number of tickets bought with the intent of being scalped.
A similar pattern emerges for a wide variety of events, but all with comparatively low number of tickets being offered online for scalping. Radiohead, also in Melbourne, had around 2 tickets for resale for every 1000 sold as did Weezer’s show in Sydney.
The highest ratio we could find was for The Black Keys in Melbourne, where a total of 40 tickets were available for the seating area of the two show out of about 4300 tickets available, or a ratio of about 10 for resale for every 1000 sold.
So why was The Black Keys concert a focus of ticket scalpers? Because as the 2010 government report told us, a sell-out ticket category or seating type is a precondition for a strong secondary market. At the Sidney Myer Music Bowl in Melbourne where the event is being held, only 2150 tickets are seated, whereas the remaining 20,000 that can be sold are for a sloping lawn area.
But even with this precondition, about 20 seats for each show being offered online for resale is hardly the huge volume of tickets we’ve been led to believe ticket scalpers purchase.
The second commonly held belief about ticket scalping is that the tickets are always sold at a heavily-inflated price above the normal ticket price. It’s not hard to see why many would hold this view. When looking at the tickets available for resale to Soundwave 2013, we found on average a 70% markup on the advertised ticket price.
But this isn’t always the case. If you wanted to attend this weeks Beach Boys concert in Melbourne for instance, you can pick up tickets on eBay right now for nearly 40% less than the advertised ticket price, saving you hundreds of dollars. It’s a similar story for tickets to Gotye in Sydney, where half the tickets available for resale are for cost-price or for around 20% less than the advertised price.
So why would the scalpers be selling the tickets for a loss? Perhaps because they simply need to offload them, and the demand for a premium price just isn’t there. Some shows that are expected to sell out don’t. Scalpers who purchased Big Day Out 2013 tickets for instance have already started selling them for less than cost price.
Billboard magazine in the United States, where scalping is much more prevalent, did a candid interview with a ticket scalper for a look inside the industry.
“I’ll make money on Springsteen and then lose on some country act I thought was going to be hot. I throw those tickets in the garbage, but I still helped you, Live Nation,” said the scalper.
“If I made $200,000-$300,000 in gross profit for a good summer, I could lose $100,000 by fucking up. That’s the nature of the business-we’re gamblers. We can’t pick every horse right. And when we picked the wrong horses, the concert industry still got paid.”
“The hot shows don’t always mean we make money. When Bon Jovi’s charging $175, he takes the money out of the business. The fan doesn’t have money to go to the next show, and I don’t make any money. What can I get-$210? I end up making $20, where I used to make $60, $70, and out of that I’d lose $20-$30 because you don’t pick all winners.”
“It’s very difficult to pick the winners and the losers, and you don’t make as much on the winners these days. I can’t take the marginal shots anymore.”
Indeed, ticket scalpers can only make money when there is significant demand that outstrips supply, and enough demand can push up the resale value to astronomical levels. But for every Soundwave ticket selling for a 70% mark up there’s another selling for a loss.
Ticket scalping is like trading on the commodity market. Sometimes you get lucky as demand for your commodity rises, and sometimes it’s a bust when supply outstrips demand. If it were a sure-thing, wouldn’t we all be doing it?
Possibly not, because the Australian government’s own report highlights that the negative impacts of ticket onselling for consumers predominately relate to dissatisfaction, particularly about fair access to tickets and a perception that ticket onselling is a problem.
The report found that the broad issue of ticket onselling does not cause significant consumer detriment, and in fact that onselling has benefits for those staging events including increased revenue and attendance at events, while onselling can also reduce the risks for suppliers associated with staging an event due to the quick sale of tickets.
Much like any other part of the economy, ticket scalping is just an extension of the laws of supply and demand, and when those staging an event can’t meet those economic realities, third parties are more than not happy to step in and fulfil our needs.
This is why some promoters in the United States have begun experimenting with the age-old method of selling tickets to an event for a set price, instead adopting a model closer to that of modern airlines where almost no-one on the same flight has paid the same price for a ticket.
The airlines change the pricing of tickets daily, sometimes hourly, in anticipation of demand and other economic factors affecting the price of a flight. Why shouldn’t a concert be any different? After all, isn’t this the role that ticket scalpers play, by showing us the true value of the tickets we’re purchasing?
Sometimes the promoters get it wrong. Sometimes tickets are far too expensive, and when that happens we all benefit because scalpers end up selling their tickets for less than they’re worth. Sometimes enough of us are willing to pay far more than the promoter is selling the tickets for, and that’s ok too.
Because the idea that a ticket to a concert is worth the same amount to each fan is obviously wrong, some will value that ticket far more than others. Until the industry steps in and addresses these very real needs, a robust secondary market will continue to thrive.
Sometimes that works out nicely for both you and I. After saving $150, it’s certainly worked out well for my Dad who will now be going to The Beach Boys for Father’s Day.