The secondary ticket market refers to the resale of tickets through unauthorized third party sellers after the tickets have already been sold through the primary market such as Ticketmaster or AXS. This secondary market has grown substantially in recent years thanks to the internet and sites like StubHub making it easier for buyers and sellers to connect.
Size of the Secondary Ticket Market
According to various estimates, the secondary ticket market is now worth $10-15 billion annually in the United States. Some key facts about the size of this market:
- Roughly 10% of all tickets for major concerts and sporting events are resold through secondary marketplaces.
- For extremely high demand events like playoff games or major music festivals, the resale rate can be as high as 25-30% of all tickets.
- StubHub, the largest online ticket resale marketplace, currently has over 16 million live events available on its site with hundreds of thousands more added daily.
- Vivid Seats, another major secondary ticket site, claims to offer tickets for over 125,000 live events in a given year.
The volume of transactions has also grown substantially. For example, StubHub facilitated $5 billion in ticket sales in 2019, up significantly from $1 billion in sales in 2007. Other secondary sites like Vivid Seats and SeatGeek have all seen transaction volume multiply over the past decade.
Driving Factors Behind the Growth
Several key factors have driven the rapid growth of the secondary ticket market in recent years:
- Internet marketplace platforms – Sites like StubHub, Vivid Seats, and Ticketmaster Plus have made it seamless for buyers and sellers to connect online.
- Mobile adoption – Secondary marketplaces are now easily accessible on smartphones, expanding convenience and spurring more transactions.
- Big data analytics – Advanced data tools allow sites to recommend ideal pricing and identify hot tickets.
- Social media – Marketplaces utilize platforms like Facebook to expand their reach.
- Regulatory changes – Alterations to state laws have made the resale market fully legal and normalized.
Profitability for Sellers
The secondary market has grown in large part because it offers substantial profit potential for sellers. Some key elements driving seller profits include:
- Ability to set own prices – Sellers can typically price tickets at huge premiums above face value.
- Demand-based pricing – Tools provide pricing guidance based on real-time demand.
- Convenience fees – Buyer and seller fees imposed by the marketplaces.
- High liquidity – Large numbers of buyers enables fast sellouts.
Sellers on StubHub for NFL, NBA, MLB and NHL events make roughly 10-25% returns on their ticket investments. Extremely high demand events can see returns of 100% or more. These returns make speculative ticket purchases worthwhile for sophisticated resellers.
Buyer Rationale
Although secondary market ticket prices are higher, there are reasons why buyers are still drawn to these platforms:
- Immediate access – Get tickets instantly versus waiting in queues.
- Wider selection – Access tickets that are sold-out from primary sellers.
- Anonymity – Avoid attaching personal info to purchases.
- Ease of transfer – Seamless digital ticket delivery & transfer.
For high demand events where primary market sellouts happen quickly, the secondary market may be the only viable option for late-coming fans to gain entry.
Effects on Primary Sellers
The growth of secondary resellers has had some important impacts on primary ticket sellers like Ticketmaster:
- Lost revenue from marked up resold tickets.
- Incentive to raise prices on prized tickets to recapture revenue.
- Investments made in fan identity tools to limit mass resellers.
- Creation of official resale exchanges throughplatforms like Ticketmaster Plus.
Despite the challenges, primary ticket firms now see secondary sites more as marketing partners than adversaries. The massive secondary demand actually validates the attractiveness of the primary inventory.
Attempts to Curb Resales
Some leagues and artists have attempted different strategies to limit secondary reselling activity, with mixed results:
- Ticket limits – Capping each buyer’s purchase quantity to 4-8 tickets.
- Cancellation policies – Refunds and reissues if tickets are resold.
- Paperless tickets – Requiring ID of purchaser for venue entry.
- Higher face prices – Cutting out reseller profit margin.
- Platinum seats – Super premium primary tickets with market-based prices.
Despite these efforts, secondary exchanges continue to thrive given the technical challenges and customer inconvenience of many restrictions. The most effective curb may be primary marketplaces offering more variable and transparent pricing.
Future Evolution
Some possible ways the secondary ticket market could evolve in the future include:
- Use of blockchain and smart contracts for more secure exchanges.
- Virtual reality previews of seat views before buying.
- Tighter integration of primary and secondary marketplaces.
- More risk management features like cancellation protection.
- Subscription pricing for season ticket holders on exchanges.
As millennials accustomed to mobile commerce become the prime entertainment spending demographic, secondary marketplaces should only continue to flourish.
Conclusion
The secondary ticket market has experienced rapid growth over the past decade, driven by internet platforms, mobile technology, analytics, and regulatory changes. Major sites like StubHub and Vivid Seats now see annual ticket sales in the billions. For high demand events, over 25% of all tickets may get resold through secondary channels. This market looks poised for continued expansion as consumer behaviors and technology evolve.