Ticket scalping: Is there a problem, and is paperless ticketing the answer?

With the technology now in place to sell scalper-proof paperless tickets (concertgoers must show ID or swipe a credit card to prove they were the original ticket-buyers), the national debate over ticket reselling is heating up. On one side are StubHub, eBay, and others who argue that in a free market, a ticket holder should have the right to do what he/she wishes with it. On the other side are artists, venues, and promoters who argue that scalpers are buying up tickets and charging fans much more than the artists ever intended to pay—while privately pocketing the profit.

This spring in the Minnesota Legislature, a bill was introduced that would essentially ban paperless ticketing when used to restrict resale of tickets. (The bill had strong support from the Senate's Commerce and Consumer Protection committee, and is currently being revised to mandate stronger protection against software bots.) Similar legislation is pending in other states. At issue, legally, is whether a ticket is a piece of property that is in the control of the buyer; or a lease (effectively, a venue is renting a seat to you for the duration of the show) that remains in the control of the seller.

This debate is most relevant to high-demand national acts, but legislation regarding paperless tickets could have wide-reaching effects. I asked some local music insiders to weigh in on the debate.

Arzu Gokcen, musican, Pink Mink:
"My most recent experience was when the Cars tickets went on sale at First Avenue. I seriously could not sleep the night before because I was so excited. When I finally fell asleep, I dreamt about waiting in line and the tickets selling out right before I got to the window. Needless to say, I was excited...and neurotic. I woke up as soon as The Depot opened and ran down to get my tickets. I was so dismayed to see so many scalpers in line; it was surprisingly easy to pick them out. I thought about how much it meant for me to see one of my favorite bands in the world, and how for some of the people in line it was just a business. Then I thought of my friends and how expensive their tickets would be. It was difficult enough for me (because I'm cheap) to loosen my purse strings for $50...I didn't want them to have to spend more, especially at First Avenue, which is usually reasonable. It was pretty disheartening to witness, but I went to the Cars and had a blast!"

Kermit Carter, booker, Triple Rock Social Club:
"Isn't this merely another way to eliminate third party cash transactions that go untaxed? [...] Make it a people issue, but at core it's about money and control. Let's say a Neil Diamond ticket at face value is $50. A scalper finds a customer that is willing to buy it for $200—there's $20 in tax revenue that goes unreported and Live Nation/Ticketmaster missed out on $150 that could have been theirs. Add that up a few thousands of times all throughout the country and we have a pretty sizable amount of cash that those folks are missing out on. If you had the resources to get it, wouldn't you? That's my take: fascist, capitalist piggies going after every last nickel they can grab. Oh great, now I have to book bands! Luckily I am not yet jaded about the power of music!"

Mark Mallman, musician:
"I've never paid more than $40 to see a rock concert. Everybody knows those big money tickets are rarely worth the price to begin with. But the convenience might be worth the price for people who enjoy sitting 300 feet away from the singer. An 'artist' who asks 75 bucks a ticket isn't thinking about the fan anyways; his/her management team is concerned about the fan's money. At the end of the day, you'll have a better experience at a smaller venue like the Triple Rock or First Avenue where the sound is better and a larger percentage of the money goes to the actual musicians who you see, not some dude in front of a computer."

Andrea Swensson, music editor, City Pages:
"I find it ironic that scalpers are using the 'free market' argument to further their agenda. The supply and demand equation for concert tickets is based on an exchange between the venue/artist and the people paying to see the show; people who have no interest in attending the gig and are only intervening in the process for their own private profit are unfairly taking the power away from everyone else involved. It'd be like if I walked into the only grocery store in town, bought everything on the shelves, and then re-sold it for three times the price just because I could. What is 'free' about that?"

For me, it's a tough call. On the one hand, we've all known someone—probably been someone—who legitimately wanted to attend an event, but then had a conflict come up and had to sell a ticket. I also appreciate the value of the economic argument that scalpers are profiting from the kind of supply-demand imbalance that naturally occurs in free markets, and that the market should look to correct by increasing supply rather than artificially restricting price. Everyone hates scalpers, except those people who were dying to see Adele but somehow missed the legitimate on-sale window. They would have preferred to pay face value, but obviously they're glad to have the opportunity to pay the higher price the scalper can now demand.

But on the other hand, the fact that paperless ticketing works is itself proof of the validity of the lease model: unlike a CD, a concert ticket has no value in and of itself. It's a little contract with the venue, and as pro-paperless advocates note, it's only fair that concert venues be able to impose the same kind of terms that housing landlords can. I can't just hand my lease over to someone else without my landlord's approval.

Of course Kermit's right that if fans are going to pay an extra $150 for a ticket, then Ticketmaster, artists, and venues would like to have that extra $150 for themselves rather than for a scalper; if paperless ticketing is widely implemented, I wonder whether we'll see big-name acts essentially scalping themselves by holding a certain number of tickets in reserve, to be sold at a later date at a price that varies depending on how the initial sales went. Buying a ticket in the first round would be like a gamble: you'd guarantee yourself a ticket, but would miss the chance of buying a ticket for less if sales are poor upfront. I'd guess that there will also be the creation of authorized resale hubs, where holders of paperless tickets can electronically transfer ownership—if scalpers could somehow be excluded from those hubs, which would certainly prove difficult.

But artists and venues are also thinking about people like Arzu. The music business is a business, no doubt, but it's an extremely volatile business that trades in a very subjective product. Artists, venues, and promoters want to make a quick buck—who doesn't?—but they also appreciate the importance of building a diverse long-term fan base. Ticket prices are set with a number of considerations in mind, and my instinct—like that of most venues, artists, and promoters—is that we'll all be better off if scalping can be curtailed.

For that reason, I don't support legislation banning paperless ticketing. Venues and artists should have the right to issue either transferable or non-transferable tickets, as they see fit.

Read a response to this post by the director of operations at Ticket King Minnesota.


Photo: Mumford & Sons' extremely sold-out show at First Avenue in October made for some of the most sought-after tickets in recent local memory. Photo by Meredith Westin.

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    Jay Gabler's picture
    Jay Gabler

    Jay Gabler (@JayGabler) is a digital producer at The Current and Classical MPR.

    Comments

    not legislating the right thing

    if the real problem is scalpers buying up all the tickets to charge a premium, why not go back to the old way - tickets can only be resold for face value?  i thought that worked pretty well.  you can still sell or give away any ticket you can't use yourself (yep, this has happened to me as well), but you've eliminated the aftermarket scum, and opened up ticket sales for the people who actually want to see the concert.

    i also buy tickets for other people - will they be like greyhound where you get charged extra to buy a ticket for someone else to use?

    it's completely wrong to disallow this type of transaction, restrict the actual problem part.

    I agree that the legislation is a bad idea...

    But on the virtues of using paperless ticketing to prevent scalping, consider this, too: I buy tickets to various events and concerts as gifts for people. Often I am not going to those events with these people. And every paperless security system I've seen would essentially prevent me from doing that.

    And that makes me sad.

    They could set it up so that

    They could set it up so that at the time of purchase you enter the ticket holder's name. They would then use their credit card to pick up the ticket. It woudl still accomplish the denial of later transfer, but allow you to purchase tickets for someone else.