How New Scalping Technology Is Keeping You Out of Concerts
At 10AM on a Friday morning in April, several friends and I jumped on Ticketmaster’s website and mobile app. Tickets for the Madison Square Garden stop of Radiohead’s latest tour had just gone on sale, priced at $80 each. After staring at the loading bar for a nerve-wracking 10 minutes, though, we all saw the same message: no tickets available.
I went straight to StubHub, a leading ticket resale website, where the same seats were already listed—for about $350 a pop. Frantically Googling “cheap Radiohead tickets” took me to a lesser-known site called TicketDown, where I bit the bullet and bought four tickets for $300 each—a 400 percent markup from the original price.
In about 10 minutes, I had been reduced from a (supposedly) fiscally responsible adult to a desperate groupie. I messaged my girlfriend: “I feel a bit sick.”
“There is that frenzy, and you’re frustrated—that’s when scalpers get you.”—Dean Budnick, co-author of Ticketmasters: The Rise of the Concert Industry and How The Public Got Scalped
Ticket scalping is nothing new; it’s practically ancient. “The greatest evil that theatergoers in this city have to contend with is the ticket speculator,” wrote a New York City magistrate in 1901, during the arraignment of a man caught hawking tickets outside the Garden Theater. “They are practically highwaymen and hold up everybody that goes to a place of amusement.”
You can still spot dogged profit-chasers loitering outside music venues, but in the digital age, street scalping is old-school. Thanks to the growth of online marketplaces, accessible technology for getting around security restrictions, and the decriminalization of ticket resales in some states, scalpers can cash in without leaving their living rooms. Profits are ripe for the taking: according to data from Northcoast Research, the secondary ticket market—meaning anything outside official channels, including resale sites like StubHub, as well as Craigslist, eBay, and other ticket broker websites—was worth $5 billion dollars as of last year.
Despite constant complaints and outrage from artists and fans alike, the ticket scarcity problem only seems to get worse—with neither the authorities nor the music industry seemingly able to keep up with increasingly sophisticated scalpers. In the online era, making money off our thirst to see our favorite acts has become a frighteningly efficient process. How did it get so bad—and why can’t anybody stop it?
A street scalper (Photo via Flickr)
No one I know was able to get Radiohead tickets at their original price that morning, likely because of bots—computer programs used by scalpers to scoop up the best seats on official sites like Ticketmaster and Eventbrite quicker than any human can. Scalpers quickly flip these prime tickets for a profit on resale sites like Stubhub, which generally market themselves as “fan exchange sites,” claiming to offer a reliable marketplace for music lovers with tickets to spare. Still, my bank statement revealed the tickets I bought were sold not by fellow fans, but by two private companies seemingly set up with the sole purpose of reselling tickets at higher prices: StubStop LLC in Chicago and Swagg Seats in La Jolla, California.
Professional scalpers like these generally call themselves “ticket brokers.” The rules governing them are somewhat flimsy: there is no federal law against reselling tickets for profit, and while some states still outlaw the practice, those laws are often outdated and focused on street sales.
Due in part to lobbying by ticket scalpers, many states now favor regulation over criminalization. In New York, for instance, scalping tickets was illegal until 2007, when it was decriminalized in an effort to better monitor and tax the underground resale market. As a result, many formerly illegal scalpers moved above ground, becoming licensed brokers who have to pay a $5000 annual fee to the state and abide by certain guidelines, including disclosing sales to the state regulator and offering insurance against fake tickets.
Using bots to buy tickets is still illegal in New York, outlawed in 2010 on the grounds that they give an unfair advantage to brokers over regular fans. (Legislation has been proposed to criminalize bots on a federal level as well). But according to a January 2016 report by the New York State Attorney General Eric Schneiderman, bots are still widely used by scalpers—and they’re becoming more sophisticated than ever.
The Ticketmaster bot page on Ticketbots.com
Getting your hands on bots to bulk-buy tickets is easy. On Ticketbots.net, a website that claims to have provided brokers with “literally everything you need to skyrocket your business profits” for a decade, the best-selling Ticketmaster bot will set you back a cool $990.
The bot cheats the system by taking advantage of a grace period Ticketmaster gives customers to confirm their seat and complete their orders. During this short interval of time, seats are effectively closed off to other customers, allowing scalpers grab hundreds of tickets simultaneously and choose the best ones before ordinary humans get a chance. (Ticketmaster did not respond to multiple requests for comment.)
Then there’s the Insomniac browser, which claims to help music fans better their chances of getting tickets by allowing them to browse for seats across multiple tabs. If you’ve ever tried to snag in-demand tickets by using multiple devices like your iPhone and iPad at the same time, you’re probably already familiar with this method, which theoretically gives you several spots in the queue rather than just one. Problem is, the Insomniac browser has no way of distinguishing between real fans and scalpers.
“The fact that there are regular Joes out there scalping is a large part of the problem.”—Dean Budnick
Services like the Insomniac browser and ticketbots have lowered the barrier to entry for scalping, making it possible for anyone with an internet connection to become an amateur ticket broker.
“Not only do people have to compete with professionals, they also have to compete with a whole range of amateurs,” says Dean Budnick, a music journalist and co-author of Ticketmasters: The Rise of the Concert Industry and How The Public Got Scalped. “The fact that there are regular Joes out there scalping is a large part of the problem.”
Another problem, says Mark McIntyre, chief technology officer at online concert ticketing site SongKick, is that trying to stamp out scalping is like playing whack-a-mole. “Whatever step you put in to block malicious activity, you will always find a service popping up to get around it,” he says.
More advanced bots can get around the most common security defenses, including automatically solving CAPTCHAs—those annoying boxes that force you to type a distorted word to prove you’re a real human—and using multiple IP addresses, credit cards, and post boxes to masquerade as different purchasers in order to get around limits on how many tickets one person can buy. According to the same Schneiderman report, one professional scalping firm grossed $40 million in 2013 by using bots to sidestep these sorts of restrictions.
SongKick claims to have some of the best defenses in the industry, but even so, McIntyre says that within the first few minutes of sales opening, it’s not uncommon to see 80 percent of the site’s traffic coming from suspicious sources—namely, specific IP addresses that have been active on the site for weeks in advance, likely searching for weaknesses in its armature and customising bespoke software to exploit them.
“Long before the sale happens, the scalpers are already ahead,” McIntyre says. “Their level of operation is way beyond the ability of real fans.”
An anti-scalping sign (Photo via Wikipedia)
There are signs that authorities are cracking down on scalpers not playing by the rules. In April this year, Schneiderman’s team fined five ticket brokers a total of $2.7 million for using bots and reselling tickets without proper licenses. Schneiderman later proposed legislation to increase fines and punish the use of bots as a criminal offense (rather than a civil one, as it is currently), saying, “Ordinary New Yorkers deserve a fair shot to see their favorite performers and teams, and protection from those that use illegal software to rig the system.” The legislation was passed by the state Senate in May 2016 and is awaiting further approval.
But the more disturbing reality is that bots are just a small part of the ticket scarcity problem. Schneiderman’s report found that on average, only 46 percent of concert tickets in New York go to the public; pre-sales account for 38 percent, with the remainder going to insiders like the artists’ friends and family. Which means that before official sales even begin, most of the proverbial pie is divvied up in advance between industry insiders, fan clubs, licensed brokers, and credit card companies—leaving the public fighting for leftover crumbs.
Joe Cassito, director of broker relations at TickPick, a relatively new fan exchange site, explained how brokers negotiate deals for early access: “They get a certain allocated number of tickets for the entire tour, or they promise the venue to buy tickets for a certain portion of events that year and get guaranteed tickets.”
While these arrangements might seem like savvy deals, they result in a fixed system where fans end up losing out. Darnell Goldson, a director at an online ticket marketplace called TicketNetwork, assured me the brokers his company works with are “trustworthy businesspeople who provide a much sought-after service: providing hard-to-get seats.” But when I asked him why those seats were so elusive in the first place, he pointed me to a section in Schneiderman’s report that explained how brokers work the game by securing tickets in advance.
So ticket brokers help create the problem (scarcity of tickets), and then make a profit from solving it (making those tickets available again for a higher price). While you can’t deny that is a very efficient business model, it’s not exactly ethical.
LCD Soundsystem at Madison Square Garden (Photo via Rebecca Taylor/MSG Photos/Madison Square Garden)
Beyond evolving technology, insider deals, and the lack of consistent regulation, the most sensitive issue driving up scalping might also be the most deeply systemic: the way tickets are priced when they go on official sale.
Joseph Asaro, head of security at StubHub, argues that exorbitant resale prices are a function of basic economics—namely, a lot of people vying for a limited number of seats. You cannot put more seats in Madison Square Garden or the O2 Arena—although you can add more shows, as LCD Soundsystem did in 2011 after scalpers gutted fans for tickets; or, in the case of some venues, deliberately oversell the show on the down-low and slap on more dates later.
“What could look like unjust profiteering is in essence just a flat marketplace,” Asaro explains. “If there is demand, you see upward price pressure.”
This fixed supply makes pricing tickets a delicate process: charge too much, and you won’t sell out; charge too little, and demand goes off the charts. Scalpers are good at spotting when the balance isn’t right, which is often; when popular artists sell tickets for accessible prices, demand will almost always outstrip supply.
Scalpers will thrive as long as artists and promoters set official prices at levels that are too low compared to what people are really willing to pay, says John Zhu, a former HSBC economist. Zhu argues that changing how tickets are sold, including better security measures, cannot fix this underlying pricing mismatch. “You can perhaps imagine better technological protections in the queuing process, or simply change the first-come first-serve system to a random ballot system—itself open to questions of fairness,” he posits. “But you still haven’t solved the fundamental problem of matching supply and demand.”
Sites like Stubhub claim they have made it easier for this supply and demand seesaw to play itself out through enabling people to sell tickets at the market price, while allowing others to attend last-minute without resorting to shady street scalpers. But they also provide a more efficient sales platform for scalpers—and normally charge a fee from both buyer and seller.
(Photo via Alux.com)
Still, the system could be fairer—and some companies are paving the way in making it so. A relatively new resale site called TickPick, for example, only charges sellers (who are usually professional ticket brokers) a service fee, not buyers. It also allows buyers to bid on tickets, resulting in a fairer picture of where prices should be.
Resident Advisor’s ticketing platform tries to cut scalpers out entirely. In August 2014, the site added a new feature allowing fans to return unwanted tickets for a refund. When an event sells out, these spare tickets are offered at the same price as the final release tier, with the event promoter pocketing the difference.
“It comes down to simplicity and confidence,” says Paul Clement, co-founder of RA. “Most fans with unwanted tickets are happy to just get their original investment back and will opt for the simplest way of doing that. Buyers need confidence that the ticket they are buying is legitimate.” RA’s system, Clement continues, results in a marketplace with happy buyers and sellers on both sides.
However, outside closed systems like RA’s, nothing can protect you from market prices and the desperation you feel when your favorite artist comes to town. Buying tickets for a concert or rave is an emotional purchase. It’s not like a new pair of shoes, a car, or even a house; you’re buying into a communal experience, and the returns on your investment are intangible. Scalpers count on this emotional vulnerability to drive you into their arms. “There is that frenzy, and you’re frustrated—that’s when they get you,” Budnick puts it.
“Ordinary New Yorkers deserve a fair shot to see their favorite performers, and protection from those that use illegal software to rig the system.”—New York State Attorney General Eric Schneiderman
But knowing more about the dynamics at play in the ticketing market offers two benefits. First, it helps you decide how and when you should buy (hint: sign up to fan clubs and credit card reward schemes, and don’t rush to the secondary market straight after official channels sell out, because that’s when prices tend to spike—wait till the frenzy dies down instead.)
Second, it helps you manage your expectations: if you know you’re unlikely to get tickets at face value, you can at least prepare yourself for the pain of parting with more cash.
The one thing this knowledge can’t fix is the feeling that scalpers and the industry players they work with are making live music experiences—supposed to be open and unifying—less accessible and more divisive. And by playing along with their game, we are all complicit in perpetuating a broken system.
Then again, perhaps the fact that such a brutal scalping market exists is a testament to the power of music and the innate human desire to experience it together—no matter what the cost.
“If it’s a band you really love, you kind of just accept it,” says Brendan Lorbach, a New Yorker who goes to several gigs a week. “When you actually get there, any negative feelings are gone.”
“Unless the band plays an awful set,” he says with a chuckle. “Then I’d be pissed off.”