Online scalpers take center stage
One of the hottest tickets in Boston is the Rolling Stones tour, which swings through later this month. But it took Keri Heffernan only a few minutes to purchase a pair on an Internet site that links buyers with ticket scalpers.
The catch: She paid $1,004.35 for her seats in the arena’s loge level — triple their face value. “It is unfair,” says the 29-year-old pharmaceutical sales representative. “The prices of concert tickets are out of control.”
The Internet has forever changed the economics of rock concerts. Legions of high-tech scalpers now snap up seats instantly when they go on sale. Then they flip the tickets on Web sites like StubHub, where the markup can reach many multiples of the face value. The result is that buying concert tickets is becoming akin to getting in on a hot initial public offering of stock: Scrappy insiders get them at face value, often with an eye on reselling them to regular folks at a big premium.
Indeed, the number of people buying tickets the old-fashioned way — at a ticket outlet, on the phone, or when they first go on sale online — is surprisingly low. At a U2 concert Nov. 22 at New York’s Madison Square Garden, at least 29 percent of the fans said they purchased their seat on the Internet at a source other than Ticketmaster, the authorized ticket agent, according to a survey conducted by Alan B. Krueger, a Princeton University economics professor. Eleven percent said they got their seats through online auctions, especially eBay. Fully 10 percent reported paying $300 or more for a ticket.
This isn’t just rock concerts. Tickets for everything from Broadway shows to sporting events are increasingly resold online (Super Bowl seats can be bought right now on StubHub with the ease of ordering a book or CD online — and the prices start at upwards of $2,000). Classical and opera performances can be found, too, though the offerings usually aren’t nearly as numerous as those for pop-music acts.
But reselling has become particularly widespread in the concert business, bringing scalping out from the shadows and into the mainstream. Anyone with a computer and a broadband connection these days can instantly become a ticket scalper. And the ease with which tickets can be flipped creates tremendous incentives for enterprising resellers to snap up tickets before actual concertgoers can get their hands on them.
The operator of a Web site called Ticket Frontier says he hires eight to 10 “pullers” at $20 an hour — college students who work at their keyboards to purchase concert tickets online through Ticketmaster the moment the tickets go on sale to the general public. The operator, who says he pays taxes on his earnings, requested anonymity out of fear of being locked out of some his purchasing sources. He describes the competition to score tickets for popular performers as fierce. “I’m not just competing against brokers, I’m competing against every fan who decides to sell on eBay and Craigslist,” he says. “It makes it tough. I wish I had 30 people pulling for me.”
From an economic perspective, some argue that the markups seen on these Web sites are making the market for tickets more efficient by letting prices fluctuate with supply and demand. With eBay and countless other Web sites reselling and auctioning tickets, it’s making scalped prices less arbitrary. “It would be very hard to charge something that’s far out of line,” says Princeton’s Krueger, who has studied the rock-concert business.
And while some, like Heffernan, argue that real fans with limited resources are priced out in this new ticket economy, Jeff Fluhr, StubHub’s chief executive, says, “I would argue that the true fans are the ones who are willing to pay the most for the tickets.”
But getting seats at face value has become far more difficult. Shows for big-name acts like U2, Paul McCartney and Coldplay sell out in minutes on Ticketmaster.com, while many of the best seats aren’t offered to the general public. Instead, they’re held back for highly priced auctions and so-called presales, available through fan clubs, some of which charge membership fees.
From a business standpoint, so far the reselling boom hasn’t been a particularly good thing for the music industry, which already is beset by piracy and declining CD sales. Most of the revenue from the resale market is going to scalpers and brokers, not the traditional beneficiaries of ticket sales — the artists, the venues and the promoters.
Though some bands are reluctant to push already-high base ticket prices up further for fear of alienating fans, others want in on the premiums. The Rolling Stones are charging up to $454.50 a ticket for two sold-out concerts at Madison Square Garden in New York on Wednesday and Friday.
For the band Coldplay, resellers have become a growing problem. Last week, StubHub listed seats for the band’s upcoming San Jose, Calif., concert for as much as $2,942 each. Some of the scalped tickets are originally purchased through the band’s fan club, which can be joined for free. Under a deal with Ticketmaster, Coldplay sets aside 10 percent of its seats at its shows for fan club presales, according to the band’s manager, Dave Holmes. The club has more than 750,000 members; it’s growing so fast that opportunities to buy presale tickets must be won through an e-mail lottery system.
For fans intent on getting tickets at face value for sold-out concerts, it is still possible, although it can take a lot of effort and some luck. Ticketmaster.com sometimes releases seats for sold-out shows at the last minute while some fan Web sites, like Backstreets.com for Bruce Springsteen devotees, provide a buy-and-sell ticket exchange that prohibits scalping. Online ticket-buying through unauthorized sources also isn’t without risk. Many states still technically prohibit scalping or limit ticket markups, although the laws often are unenforced. Many state laws were written in the pre-Internet era and may not apply to out-of-state transactions conducted online.
Counterfeiting is also an issue. Several hundred U2 fans learned that the hard way when the band played in Boston last May. Fans showed up with copies of tickets they had purchased online from scalpers. The seats originally had been purchased through Ticketmaster, which, for a fee, sends the tickets by e-mail and allows buyers to print them out at home. The problem was, the scalpers had resold the same print-at-home tickets multiple times, and the fans who bought them — in some cases for hundreds of dollars each — were turned away at the door.
“I have absolute sympathy for them,” says Ticketmaster’s Goldberg. “But it’s one of those things: If someone offers you something too good to be true, maybe it is.”