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This article was published on February 24, 2012

The great ticket scandal has made everyone a tout and scalper

The great ticket scandal has made everyone a tout and scalper
Paul Sawers
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Paul Sawers

Paul Sawers was a reporter with The Next Web in various roles from May 2011 to November 2014. Follow Paul on Twitter: @psawers or check h Paul Sawers was a reporter with The Next Web in various roles from May 2011 to November 2014. Follow Paul on Twitter: @psawers or check him out on Google+.

Last night, the UK’s Channel 4 broadcast The Great Ticket Scandal, an exposé into ticket touting (scalping, if you’re in the US) in the UK.

Earlier this week, we reported that ticketing company Seatwave had preemptively written to its customers ahead of the broadcast, to essentially say that it would “likely” appear in the documentary, whilst reaffirming that it had done nothing wrong. Then another one of the featured companies, Viagogo, failed in an attempt to have the documentary blocked by the High Court.

In the aftermath of the broadcast yesterday, it seemed like Twitter exploded into an anti-ticket-touting frenzy, with little obvious sympathy shown by the baying mob.

Firstly, it’s clear that documentaries can make good people look bad. I don’t doubt that most of the people at all these ticketing companies are all good people, which is why I’m not going to focus too much on the content of the documentary. Without the full context, programme-makers can skew things a little and make you believe whatever is on its agenda. Yesterday’s Dispatches documentary was almost irrelevant anyway, in the broader scheme of things.

Following on from The Next Web’s interview with Seatwave’s CEO Joe Cohen earlier today, I really wanted to get into the nuts-and-bolts of the issue at hand and look at why everyone’s getting so outraged here. After all, it’s not like a crime has been committed.

Everyone is now a tout

Touting (scalping…) was an industry long before the Internet came along, but with the Internet it makes it a lot easier for people to be touts who would never have considered it before.

Think about it – you’re one of the lucky ones that manages to get through online or by phone on Take That or U2’s opening ticket day and you are about to buy two briefs for you and a friend then…you realize you may as well buy 6 because you’ll have no worries getting rid of them, and you might even make a profit out of it.

They probably wouldn’t have bothered standing outside the venue waving their tickets in the air like a Cockney market trader, but they’re happy to list them online for what is essentially very little effort.

Now, let’s look at an average, say, 20,000 capacity concert arena. I’d say the percentage of fans who would buy a ticket for it to only then discover they can’t attend would be relatively small. Shall we say a few hundred for argument’s sake? If you compare that to the number of tickets that end up on such ticket exchange sites, there is a clear disparity.

There absolutely should be a way of shifting tickets for events that you can no longer attend, few would disagree with that. But why should someone be able to make a profit because of it? Make their money back, sure, but not a profit.

Print-at-home ‘convenience fee’?

The whole ticketing industry needs to be shaken from the ground up and it needs to be taken to task for the way it operates – this includes primary ticketing outlets, which charge exorbitant fees to buy tickets online. I normally like to have tickets delivered, so I pay the £3-odd fee (sometimes more) for them to be dispatched. But if I do choose the print-at-home option, some sites charge exactly the same amount – known as a ‘convenience fee’. Surely that’s a sick joke?

Once you factor in credit card charges, delivery fees and other arbitrary costs that magically appear from nowhere at the checkout, you can end up paying significantly more than what you expected. The same problem exists with many airline websites too, but I digress.

Even if you rock up on the day of an event to see if you can get one at the actual box office, you’re still charged a ‘booking’ fee on top of the face-value of the ticket. The ticketing industry needs big changes.

Ticket-selling sites: Why charge more?

The main gripe people have against ticket exchange sites is that the seller often charges significantly more than the face-value of the tickets. Why is this allowed to happen? Well, Seatwave, for example, says:

“We believe that fans should have the right to do what they want with tickets they have bought, including selling them at the going market rate if they choose to.

Sellers can list tickets to any event of their choosing and can select their own selling price. We provide tools that show the market value of their tickets on our exchange over time.  Our experience tells us that when sellers know where the market price is they are more successful selling their tickets.”

A lot of fans will find this difficult to stomach. Surely the fact that people buy more tickets than they need – which is essentially what happens, be it a bona fide tout or a genuine fan – creates an artificial shortage that then drives this ‘market rate’ sky-high?

Artificial scarcity is a real problem, whereby all the tickets are instantly taken off the more-controlled primary market, and placed on secondary markets where prices are at the arbitrary discretion of people who have played absolutely no part in making the event happen. Why should they make money from it? They haven’t added any value to the service – collectively they contributed to the shortage in the first place.

Sure, for the bigger events, demand will almost always outstrip supply anyway. And for fervent fans of a band or football team, they probably won’t mind paying well over the odds to persuade a lesser-fan who was just lucky enough to get a ticket, to part with it. Such a scenario doesn’t actually sound too bad – everyone’s a winner.

But the problem is, people are deliberately capitalizing on this fervency and feeding this viscous ‘shortage cycle’ in the first place. Had it not been for some fans snapping up more tickets than they needed, the other fans would have stood a much better chance of getting one first time ’round.

If a ticket site takes a percentage of the proceedings, then a face-value+commission restriction would clearly dampen profits, so it wouldn’t be in any company’s interest to actively push for such a scenario, even though that is clearly the fairest solution for everyone. Talk about free and open markets disguises what’s really going on here.

The pre-sale problem

Okay, many of the big gigs fall under a pre-sale arrangement, whereby tickets go on sale through certain avenues to a select group before the wider public. This could be a fan club, or a subscriber on a particular mobile network.

Again, Seatwave explains that this is one of the reasons why much-coveted briefs appear on its site so soon after it has gone on sale through the primary channels:

“The Wireless Festival in Hyde Park provides an apt illustration of how this reality has an impact upon customers: this year there were five different pre-sales for Rihanna’s Sunday performance. In some cases, a third to a half of the venue is actually sold before the official sale date for tickets to the public. This squeezes capacity – making tickets harder to get and driving up prices on the re-sale market.

Here’s what I would like to see happen:

1. Eliminate pre-sales. Let everyone, fans and re-sellers alike,  have a fair go at 9:00am on the day.
2. Ask venues to publish the percentage of the tickets that are available for sale at 9:00am on the day, so that everyone wanting to buy tickets has a reasonable view of their chances.”

I don’t disagree that this contributes to a problem, but I don’t see how it contributes to the main problem we’re talking about here. Namely, tickets being sold for exorbitant prices on legitimate websites.

If people know they’ll be able to shift briefs for x-times their face value for next-to-no effort, then they will do so. Remove that ability, and what you’ll have is real fans buying tickets and a much smaller proportion of profit-seeking touts getting their hands on them, who will have to revert to more traditional illegal touting means to sell them – e.g. outside venues. This would go some way towards discouraging ticket touting on the whole.

The black market

Seatwave also asserts that any price cap would create a black-market of sorts:

“Some people argue that a pricing cap should be imposed, limiting the mark-up on all tickets to a fixed percentage.

We believe — and more importantly, every economist in the world will tell you — that if you cap prices, you push the market underground. Less scrupulous people who know they can command high prices for in-demand tickets will sell them illegally (outside venues, down dark alleys), exposing fans to fake tickets and scams. Search Google for “Chelsea Tickets” and you will see what I mean.  This is exactly the situation we’re trying to tackle with Seatwave.”

Okay, a fair point. Such sites certainly give a much safer platform for ‘real fans’ to buy and sell (real) tickets. But this only serves to highlight the need for a legitimate site that has all the safety mechanisms offered by the likes of Seatwave…but with a face-value policy in place. Would this create an underground ‘black’ market? Perhaps it would feed into it a little bit, but this market already exists and many fans are buying their briefs outside venues. The way to deal with one problem isn’t to completely create another huge problem – i.e. vastly over-priced tickets for the masses.

If we’re trying to enable real fans to sell tickets to events they can no longer attend (remember, this is the justification many ticket exchange sites give), I honestly don’t see why a face-value policy should be a problem. If they want to earn more than the face-value, then they’ll have to go to a lot more effort to do so – we certainly shouldn’t be encouraging it through legitimization.

Many ticketing websites have created great businesses and such entrepreneurial endeavors should be encouraged. Nobody would ever begrudge a site making a profit for providing a platform for fans to sell-on tickets they can no longer attend.

However, the number of tickets that end up online after an event has sold out indicates that people – whether they are professional touts or genuine fans subsidizing their day out by procuring extra briefs at the point-of-sale – are buying them with the express intention of making money from them. We should do all that we can to stop this from happening.

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