In recent years, there has been a huge rise in the number of ticket resellers operating in the live events industry. Ticket reselling, also known as ticket scalping, is when tickets are resold for profit above their original face value. Resellers use a variety of methods to obtain tickets, often utilizing specialized software or bots to buy up large quantities of tickets the moment they go on sale. The tickets are then resold on secondary marketplaces at inflated prices.
This has led to growing frustration amongst consumers who are forced to pay well above box office prices to get access to popular concerts, shows and sports events. The prevalence of resellers and rise of prices on the secondary market has raised some key questions – why are there so many ticket resellers? What’s driving this booming industry? And who is enabling this activity to take place?
Factors Driving Growth of Ticket Resellers
There are several economic and technological factors that explain the rampant rise of ticket resellers in recent years:
1. High Demand for Limited Supply
For high profile events, there is extremely high demand but a limited supply of tickets available. When tickets go on sale, demand massively outweighs the number of seats in the venue. This creates a scenario where resellers can thrive. They utilize bots and technology to swiftly buy up large volumes of tickets, creating an artificial scarcity. They then sell them on secondary sites at inflated prices to consumers who have no other means of accessing the tickets.
The box offices typically underprice tickets for high profile events due to various marketing and PR factors. This further fuels the speculation of resellers, as they know the market value far exceeds the original prices. The lure of huge profits is an incentive for resellers to aggressively take control of the limited ticket supply.
2. Advances in Bot Technology
Modern day ticket resellers have the benefit of sophisticated bot technology that can buy tickets at warp speed. When an exclusive presale or sale goes live, an army of bots can work simultaneously and purchase huge volumes within milliseconds. This instantly gobbles up the supply before regular consumers can even get access. The evolution of bot tech has enabled resellers to run large scale operations that corner the market.
3. The Rise of the Secondary Market
There has been a boom in secondary marketplaces that facilitate ticket resale. Sites like StubHub, VividSeats, SeatGeek and more offer a platform for resellers to list their marked up tickets. They also provide an aura of legitimacy to the practice. The rise of these high traffic resale sites has led to more speculators and brokers entering the market across the globe.
4. Higher Ticket Fees and Prices
As the live event industry continues to grow globally, promoters have been raising ticket prices consistently over the last decade. Consumers are more willing to pay higher prices for coveted experiences. This gives more wiggle room for resellers to mark up tickets and still find buyers. Additionally, high ticket fees charged by primary sellers also push up prices and provide incentive for resellers.
Key Players in the Ticket Resale Market
There is an entire ecosystem of companies and players enabling the ticket resale market to operate at such a large scale:
Ticket Brokers
Ticket brokers source large volumes of tickets to resell at a premium. They employ sophisticated software and have developed close ties with insiders to gain ticket access. Many brokers run their operations full time as lucrative businesses.
Secondary Marketplaces
These are the websites like StubHub and SeatGeek that provide the platform for resellers to list and sell marked up tickets. They earn commissions from the transactions. These sites have become enormous in scale.
White Label Ticket Sites
Some secondary sites actually source their tickets from specialized white label vendors. These b2b companies have proprietary technology to obtain tickets that they then supply to secondary marketplaces.
Ticket Harvesters
Harvesters are skilled with using bots, scripts and tactics to sweep up ticket inventory in bulk. They are hired by brokers or may work freelance to get the source tickets.
Visa Gift Cards
Gift cards are a key tool of resellers to circumvent ticket limits. They use an army of gift cards under fake names to avoid detection when buying tickets.
Insiders
Having an inside connection is crucial for large brokers to gain inventory access ahead of on-sales through pre-sales, holds or allocated inventory. This may involve corrupting industry insiders.
Fake Accounts
Some resellers create and utilize thousands of fake or automated user accounts across ticket sites to shortcut security measures and purchase tickets under multiple false identities.
Overseas Operators
International brokers have crept into lucrative American and European secondary markets to move their operations abroad. The internet has enabled this global spread.
How Brokers Get Source Tickets
There are a variety of strategies and tactics ticket brokers rely on to source the supply of tickets they later resell at inflated prices:
Bots –
Sophisticated automated softwares that can rapidly process transactions.
Pre-Sale Codes –
Getting insider pre-sale codes provides first access.
Gift Cards –
Using a deck of gift cards helps bypass ticket limits.
Multiple Accounts –
Controlling dozens to hundreds of ticket site accounts.
Onsite Purchases –
Hiring locals or sending reps to box offices.
Group Sales –
Pooling capital to hit group sale quotas.
Ticket Insiders –
Leveraging industry connections like venue workers.
Sponsorship Deals –
Becoming official partners of leagues or venues.
Travel Packages –
Buying bundled deals to get guaranteed inventory.
Why Prices Are So High on Secondary Markets
There are several key factors that allow ticket resellers to inflate prices so drastically on secondary marketplaces:
Market Value Pricing
Secondary websites utilize real-time data on demand to dynamically adjust prices. As events get closer or more scarce, they hike prices.
No Price Ceilings
Unlike primary sellers, secondary marketplaces do not impose any price limits or caps. So prices can be marked up infinitely.
Limited Supply
With finite ticket inventories, resellers create artificial scarcity to justify higher prices as events near.
No Overhead Costs
Resellers don’t incur the costs of venues, staffing, promotions etc – allowing extreme markups.
Cross-Market Arbitrage
Brokers leverage price differences across regions, sites and currencies to maximize profit.
Speculative Investment
Tickets for high demand events are treated as appreciable assets by resellers seeking ROI.
Deceptive Practices
Some resellers leverage urgency, false scarcity and other psychological tactics to drive sales of marked up tickets.
The Costs of High Ticket Resale Prices
The rampant price inflation seen on secondary ticket marketplaces has some major costs and detrimental effects:
Priced Out Fans
Many loyal, working class fans get priced out from attending events as prices soar. This reduces access.
Unfair Prices
Consumers end up having to pay exorbitant rates, 2-5x the original prices. This is seen as unethical.
Reduced Spontaneity
Fans lose the ability to make impulse purchases, having to meticulously plan far in advance due to volatile prices.
Decreased Affordability
Tickets become unaffordable expenses rather than accessible entertainment options.
Event Reputation Damage
Artists and teams face backlash over the actions of third-party resellers, harming their brand image.
Overlooked Fan Bases
Price hikes diminish niche fan bases who cannot compete with wealthy buyers for hot event tickets.
Anti-Competitive Effects
The dominance of automated reseller bots squeezes out regular consumers from the market.
Reduced Market Efficiency
The scalping market distorts prices and impedes effective distribution of tickets to willing buyers.
Why Primary Sellers Allow Resellers to Operate
Many criticize primary ticket sellers for enabling scalping activity to persist rather than stopping it. There are some reasons why ticket issuers tolerate and even indirectly cooperate with professional resellers:
Large Upfront Revenue
Primary sellers earn substantial revenue upfront from initial ticket sales to resellers. This provides them guaranteed income early.
High Selling Prices
They allow third parties to set high market-driven prices that they cannot be seen setting themselves. This avoids PR issues.
Data Collection
They gain access to valuable ticket sales data from secondary marketplaces.
Wider Distribution
The secondary market expands their circulation, making more of their inventory available to consumers through third parties.
Diffusion of Blame
Issuers can shift blame onto “rogue resellers” for any issues, while still profiting indirectly from scalping activities.
Stimulates Demand
The perceived scarcity and high valuations on secondary markets actually amplifies demand for the primary product.
Maximizes Profits
Ultimately, a thriving secondary market drives up prices and revenues across the board – benefiting issuers substantially.
Legislative Loophole
Vague ticket laws allow major vendors to enable resellers through limited regulations and enforcement oversight.
Proposed Policy Solutions
There is growing public pressure for regulators and lawmakers to take action curbing unchecked ticket reselling activity. Here are some solutions that have been proposed:
Capping Resale Value
Placing legal limits on resale prices could limit extreme price inflation. But this may be tricky to enforce.
Banning Scalper Bots
Outlawing the specialized bots used by brokers could help level the playing field. But again – enforcement is difficult.
Improving Ticket Verification
Better ticket authentication could help identify illegitimate sales or scalped tickets.
Regulating Resale Marketplaces
Increased oversight and regulations specific to secondary sites could limit manipulation. But this faces political barriers.
Taxing Resold Tickets
Special sales taxes on resold tickets could discourage markups, with proceeds funding enforcement. But this penalizes consumers.
Mandating Transparency
Forcing resellers to disclose specifics on sourcing and pricing could improve accountability and fairness. But many brokers operate anonymously.
Capping Bulk Purchases
Limits on mass purchases could impede large-scale ticket harvesting. However, limits are technically difficult to impose.
Invalidating Resold Tickets
Artists or leagues canceling and reissuing scalped tickets could discourage reselling. But this causes huge logistical issues.
Why Resellers Won’t Disappear Anytime Soon
Despite public frustration over ticket scalping, major economic forces ensure the resale industry will persist and even grow for the foreseeable future:
High Profitability
Extremely lucrative profit margins give intense incentive for scalpers and ensure new brokers will keep entering the market.
Low Risks and Costs
Minimal risks and overhead make ticket resale a relatively safe and attractive investment compared to other industries.
Difficulty of Enforcement
The complexity and ingenuity of scalping tactics makes effectively enforcing laws and bans nearly impossible.
Persistent Demand Outpacing Supply
As long as demand continues massively exceeding ticket supply for major events, scalping will remain viable.
Tolerance from Primary Sellers
Until issuers truly crack down, resellers have room to thrive due to the direct and indirect support of major vendors.
Advancing Technology
New innovations like AI, data mining and crypto will enable resellers to further exploit the ticketing market.
Globalizing Scalping Industry
Overseas resellers penetrating new markets makes enforcement exponentially harder across jurisdictions.
Weakening Regulations
Deregulation and lack of political will to tackle lobbying weakens oversight of the resale business.
Conclusion
In summary, ticket reselling persists as a massive industry due to:
– Extreme unmet demand for limited event tickets
– Lightning fast scalping technology outpacing regulators
– Limited concrete incentives for primary sellers to meaningfully intervene
– Enormous profit potential and minimal risks or barriers to entry in the resale business
– Difficulty enforcing regulations or bans against sophisticated brokers
Until the underlying economics change, ticket scalping will likely remain a common reality at major entertainment, music and sporting events worldwide. Though unpopular with consumers, resellers satisfy demand profitably where primary vendors fall short. With the right protective regulations, an equilibrium may someday be reached between enabling access for fans at fair prices while accepting the inevitability of a secondary market.