Artists, Venues, And Fans Are Responsible For Inflating Ticket Prices, Not Scalpers

ticket scalper

Ticket scalpers are widely-cited for gouging fans by scooping up tickets using advanced web bots and selling them at a premium, with none of the extra loot apparently going to artists and others involved with putting on their shows.

In an exclusive interview with Evolver.fm, however, StubHub head of communication Glenn Lehrman lent credence to the idea that artists, venues and promoters are often directly responsible for inflating prices by essentially scalping their own tickets.

We’ve heard this sort of conjecture before, which is why it’s interesting to hear the same accusation coming from someone at StubHub, which makes big profits from secondary sales by charging both buyers and sellers to use its ticket auctioning web and mobile apps, regardless of who’s doing the selling.

For those who don’t have time to read the full interview, here’s a condensed view of scalping — and who’s doing it — as seen from StubHub’s seat:

  • Much of the scalping problem is due to artists withholding tickets from the general public and selling them directly through auction sites such as StubHub.
  • Another big chunk of the scalping market, says StubHub, is due to fans buying more tickets than they need and offloading the surplus at a profit.
  • Scalpers are merely a case of the free market in action, according to the company.
  • Facebook has a place in the ticket resale market — just not as a method of preventing scalping (hardly a surprising answer, as that plan would also put StubHub out of business).
  • Charlie Sheen’s tour is the “perfect example” of demand (or lack thereof) driving ticket prices in StubHub’s secondary market.

The following interview was edited for length and clarity.

Eliot Van Buskirk, Editor, Evolver.fm: Should ticket holders only be able to sell concert tickets to people with whom they’ve been friends for 30 days on Facebook, as I recently suggested?

Glenn Lehrman, StubHub head of communications: Well, I think you know what my answer’s going to be: I would say, ‘No.’ In my mind, a ticket is a commodity like anything else, and you shouldn’t have to pick and choose who you sell it to — just like you wouldn’t have to pick and choose who you sell a stock or a hat to. I [read your earlier piece, which also appeared on Gizmodo], and I do believe there is a place for Facebook in the ticketing world. I don’t know that any of us have figured it out — and I don’t know that Facebook has allowed anyone to figure it out — but I think that the “share” function is the wave of the future in ticketing.

Evolver.fm: With scalping, it seems like on the fan side, prices just go up while bands, venues and promoters don’t see any of that extra money.

Lehrman: Well, I don’t know if I agree with that notion. There’s a transparency issue. You don’t know how many of the tickets are actually making it on sale to the public. We’ve seen reports where only 13 per cent of the tickets ever went on sale to the public. There’s a vibrant business — with the promoters, venues and artists — on our website. I can tell you for a fact that I know a number of artists and promoters list substantial amounts of tickets for their tours through StubHub, because that’s probably what they want to charge for a ticket, but can’t do so publicly.

Evolver.fm: Really.

Lehrman: Yes, and this is the way of the world forever. You’ve had promoters selling tickets in back alleys, and now they have found a legitimate way to do it. People condemn us for having the brokers, resellers, scalpers or whatever you want to call them buy up all the tickets and list them on our site. But those are not necessarily the people who list them on our site. Yes, they exist, but they’re a smaller percentage than you would ever believe.

Evolver.fm: I suppose that if StubHub is a free market, that its tickets must regularly drop under the original asking price.

Lehrman: Almost 50 per cent of the tickets on StubHub are at face value or below. That’s the beauty of the marketplace: People should have the right to pay a lot of money for a popular, sold-out, Lady Gaga sort of event, and people should also have the right to pay a dollar to see the Cleveland Cavaliers play the New Jersey Nets.

Evolver.fm: What about StubHub’s processing fees?

Lehrman: We have fees. Everyone has fees. We charge a 10 per cent fee to buyers and a 15 per cent fee to sellers, and that’s how we pay to protect tickets, and how we quite frankly make our profits. We’re a managed marketplace, so we never own any of the inventory on the site.

Evolver.fm: It seems technology has accelerated the scalper problem. It didn’t used to be possible for the first 100 people in line to be resellers. Do you think technology has the answer as well?

Lehrman: I don’t know that technology has the answer to that problem now, but I do tend to question how pervasive the use of bots is. I know Ticketmaster likes to say [as does ABCNews] that brokers with bots are buying up all the tickets, but it’s just not the trend we see with our ticket sales. We see almost 60 to 65 per cent of our ticket sales as being from individuals, not from what we would deem large sellers or brokers.

It’s not necessarily brokers or scalpers buying up those tickets early on. Those tickets are just never made available, period. What you end up seeing are backdoor deals where the promoter, venue and artist either sell those tickets to brokers as a way of guaranteeing themselves some income, or they list it on the secondary market themselves.

Even with the LCD Soundsystem show [at Madison Square Garden, mentioned more extensively here], something like 75 per cent of the resellers were individuals, which means people buy four and sell two or whatever it may be.

Evolver.fm: So it’s people lucking out and getting to the front of the queue, and deciding they might as well buy four instead of two because they can pay for their two with the profits?

Lehrman: That’s exactly right. We see more of that type of sale than we see somebody marking up tickets substantially because they’re a broker… [In either case], how much someone is willing to pay is the purest indicator of demand. If someone’s willing to pay $1,500, someone else has the right to charge that. Or if fan demand isn’t what the asking price is, tickets prices come down.

Charlie Sheen is the perfect example. You saw a ton of tickets [to his live show] scooped up really early, and there was this sense from everyone that tickets were sold out. They were listed high on StubHub, and then no one bought them. The prices have steadily gone down, and now they’re half of face value on StubHub.

Evolver.fm: What about the argument that it’s not fair — that if all kids want to see Miley Cyrus, why can only the rich ones go to the show?

Lehrman: This goes back to my transparency answer. There’s just not enough tickets being made available to the public. If there’s only 3,000 tickets going to the public from a 20,000 seat venue, then, of course, prices are going to be high.

Evolver.fm: To be clear, where are the other 17,000 tickets?

Lehrman: I think what’s happening is, say 20,000 tickets are available for a show. Of those, 4,000 go to a pre-sale, 2,500 go to a fan club, and then it comes time for the actual public sale, say 10am on a Saturday, and only 3,000 are on sale there.

You’ve got about 10,000 tickets that have gone on sale, and 10,000 that have been held back in some capacity. Most of those held-back tickets are funneled onto the secondary market. Enough tickets were never available in the first place, so people are able to get a premium for them.

Again, part of what Lehrman said is discredited by the fact that at least one group of “wise guys” made millions by creating bots to buy tickets then pretending to be individuals scalping the tickets. However, if what he says about artists, promoters, and venues holding back tickets in order to sell them on auction sites such as his own StubHub is true, then music fans who hate the high prices caused by ticket shortages might have another problem, in addition to bot-happy scalpers: Their biggest problem could be standing on stage.

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