Lessons in online ticket scalping

Kai Ryssdal Dec 5, 2006

KAI RYSSDAL: If you’re trying to score tickets to a college football bowl game or maybe just a concert this weekend, you could try going to the box office. Or Ticketmaster. Or you could try to buy them day of from a scalper outside the stadium. But that can seem so tawdry, slipping a guy some cash for tickets on the sly. And you don’t really have to anymore. Steve Knopper covers the concert industry for Rolling Stone. He says scalpers have gone online, just like the rest of us.

STEVE KNOPPER: It used to be those shady guys in trenchcoats on corners near the stadium. But now, thanks to sites like e-Bay and Stub Hub, pretty much anyone can do it and they can sit around in their office or their living room and be a scalper.

RYSSDAL: How does it work?

KNOPPER: It’s basic capitalism. You buy a ticket and you try to resell it. It used to be that you tried to do this in person — and that kind of thing still goes on. But now you buy the face-value tickets on Ticketmaster, then you go to a site like Stub Hub and you just post them for sale for whatever price you want to set.

RYSSDAL: And you’d found out that there are people making a living doing this.

KNOPPER: The people who are mostly making a living doing this are the professional brokers. The Joe’s Tickets or whatever local ticket broker you have in your city. And they’ve been doing it for years and they’ve adapted to the Internet. But there are also people that I mention in my story who are getting quite a healthy business out of what we call day trading in tickets.

RYSSDAL: You know, the thing about day trading, of course, when you’re talking about stocks is you can make a whole lot of money but you can lose your shirt, too. Does that ever happen in the ticket business?

KNOPPER: Oh, yeah. And it’s not completely analogous to stocks because the stocks are regulated and they also have the Nasdaq and the Dow Jones and certain places that you do this. Whereas this is completely deregulated, completely decentralized. And there’s a lot of fraud that goes on and there’s a lot of traps that you can fall into.

RYSSDAL: And, of course, it’s a supply and demand kind of thing. Artists must be paying attention to the secondary market too.

KNOPPER: Well, a lot of artists and their managers actually try to combat the secondary market — the scalpers and brokers. And one way of doing that, a very basic way, is an example of a couple of years ago — or last year, I should say — U2 was doing a series of shows at Madison Square Garden. Part of this is just demand from the original sales, but they also couldn’t help but notice on their Stub Hub prices that there was a lot of demand and prices were going through the roof. So what did they do? They added shows. And once they add shows, the people who bought the tickets intending to sell them . . . the demand goes down, tickets are less scarce and suddenly you have a bunch of useless tickets or far less profitable tickets on your hands than you thought.

RYSSDAL: Sure. Now, I don’t want to play the bad guy here but I always thought scalping tickets was illegal.

KNOPPER: Well, it is in some states. In some states it’s perfectly legal. And what’s happening now is Ticketmaster itself, which is certainly not a scalping entity — it’s the legitimate place that you buy tickets — is lobbying in many different states, including Florida, Louisiana, South Carolina, Massachusetts, to actually relax these laws against scalping. Part of the reason for that — it’s kind of a change of course for Ticketmaster — is because they want a piece of the secondary market too. They want to be able to have people in those states go to Ticketmaster for their auctions, being in the secondary market.

RYSSDAL: You know, when you buy a ticket to a concert from, say, Ticketmaster in the primary market, the artist gets his or her agreed-upon share of that ticket. But if you pay triple that price in the secondary market, the artist isn’t getting that cut. I mean, does that give any of these people who are doing this qualms?

KNOPPER: There’s kind of two ways of thinking about that. One is, artists are just frustrated. Tom Petty last year, people infiltrated this fan club that he had and got deals on tickets and resold them and his manager just canceled those tickets. Just canceled them and sold them again because he hates scalpers. He thinks scalpers shouldn’t exist. So that’s one way of thinking. The other way of thinking is, for example, Madonna’s producer actually finds the secondary market interesting. And he says, If we set a certain price that’s too low, we’re going to see it in the secondary market. Let’s set it a little higher and then the legitimate person will get the money as opposed to some Joe Schlup who’s trading tickets on Stub Hub or wherever.

RYSSDAL: Right, but then the person who gets squeezed in the end is the person who’s buying tickets for their 17-year-old daughter to go see Justin Timberlake.

KNOPPER: Well, yes and no. I actually talked to a person who was buying tickets for her 17-year-old daughter to go see Justin — and I’m not trying to make a statement about this one way or the other — but her personal philosophy was: I wasn’t able to get up at 8 in the morning on a Thursday and reload Ticketmaster’s Web page over and over and over again for two hours just for a small chance of getting a ticket. So, I’m going to pay twice as much, cuz I have it, to get this ticket to this Justin Timberlake show. And it’s convenience for me.

RYSSDAL: Steve Knopper covers the concert industry for Rolling Stone magazine. The piece on ticket scalping, actually, is in Wired magazine this month. Steve, thanks a lot.

KNOPPER: Thanks very much for having me.

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