How Facebook Could Save Ticketmaster from Scalpers

Illustration for article titled How Facebook Could Save Ticketmaster from Scalpers

Live Nation Entertainment, the live music behemoth forged in the mega-merger between ticket seller Ticketmaster, artist manager Front Line Management Group, and promoter and venue owner Live Nation, finds itself at a crossroads.

Nevermind the "convenience fees" that people still hate paying (and which incidentally go not only to Ticketmaster but also to artists, managers, venues, and other third parties). This is about the move to paperless tickets and what it could mean for ticket scalpers and the various parties who despise them.

The problem with traditional tickets in today's networked age is clear. After LCD Soundsystem's farewell show at Madison Square Garden sold out almost immediately, frontman James Murphy posted a heartfelt diatribe (NSFW language) against scalpers for forcing his fans to pay through the nose to see it (slightly edited here):

We were more than taken aback and surprised about the speed of ticket sales for the April 2nd Madison Square Garden gig, as well as the effectiveness of scalper[s]… at getting their hands on said tickets before fans could, and it's knocked us on our asses.

No, we didn't have a smart paperless ticketing system in place, and no, we didn't have the pre-sale worked out very well… My main concerns at the time were things like Ticketmaster charges - how they were going to make the tickets ridiculously costly… We never dreamed some [scalpers] would try to get thousands [of tickets] for our show.

It's insane, but it happened… fans were pissed. Nancy from the band tried to buy tickets. Failed. I tried. Failed. Our best friends, not wanting to hassle us for guest list spots tried, failed. I bought two tickets to my own show for three times the value, like an idiot, to see if real tickets showed up. My family got burned.


The price of most goods and services in this country is dictated at least vaguely by the laws of supply and demand, reflecting scarcity, but concert tickets reside in a special category. If you buy an iPhone and decide you don't want it anymore, nobody has a problem with you selling it, but almost no one likes it when ticket scalpers buy up the majority of tickets to a popular show and turn around and sell them at collusively high prices on StubHub.

Scalpers are annoying to all other parties - not least of all to promoters, artists and venues, who generally don't see any of the money they pocket. Smart paperless tickets eliminate scalpers completely, by requiring that concertgoers present the credit card used to purchase the ticket, along with a driver's license or other identification.


However, that creates another problem. If you have an extra ticket to a show, you should be able to sell it to a friend, but you can't do that with tickets that are tied to your identity. Granted, for certain shows, when promoters and venue owners allow it, Ticketmaster lets buyers sell their paperless tickets using its own secondary ticket market, TicketExchange. After all, the people putting on the show want "asses in chairs," in the words of one executive, because empty chairs purchase no burgers and pay for no parking.

Assuming we're willing to allow Ticketmaster (or any other ticket vendor) the exclusive right to manage the resale of the tickets it sells (which Ticketmaster already does in certain cases), a solution exists for denying scalpers while allowing a concert-goer with a sudden case of the flu to offload a ticket.

Illustration for article titled How Facebook Could Save Ticketmaster from Scalpers
Illustration for article titled How Facebook Could Save Ticketmaster from Scalpers

The solution: People should only be able to resell tickets to people with whom they have been Facebook friends for at least 30 days. The specifics could be tweaked, of course, but this concept of selling only to friends would solve the scalper problem - at least until street corner and StubHub scalpers are replaced by Facebook friend networks. But do you really want anyone willing to set themselves up as a professional scalper to have access to your Facebook profile?

Some would argue that Facebook, a massive, proprietary communications system owned by a private corporation, already wields too much power, and threatens our privacy. (The Onion recently joked, convincingly, that the whole thing is just a front to help the CIA monitor citizens.) However, those very elements of trust and identity verification would allow it to introduce trust into, and remove scalpers from, the online ticket resale market, and the general theory I'm proposing here could work with multiple social networks.


For now, "like" it or not, Facebook has become the most viable way for people to confirm their identity and relationships for something like ticket resales. We may not want to see Live Nation Entertainment/Ticketmaster turn into the new scalpers, or for Facebook to become the world's verification engine for secondary ticketing and similar transactions between consumers. However, in this case, we might be better off with the devils we know.

(Image courtesy of Flickr/AndyH)

Illustration for article titled How Facebook Could Save Ticketmaster from Scalpers
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Madison Square Garden has always had a mismatch between the face value of the tickets and the market value of the tickets. In the 1920s, you might pay $50 a seat in one of the front rows for a top bracket fight. That's maybe $500 now. In the 1930s, a guy named Mike Jacobs controlled the ticket sales, and the deal was usually to give away blocks of tickets to various insiders as payment. They would then resell them for big bucks. They paid off the newspapers through Mrs. WIlliam Randolph Hearst's milk for baby fund. It was wonderfully sordid. If anything, it is ever so slightly less corrupt now. (At least I don't think that Rupert Murdoch's wife is laundering payoff money with an adopt a child in Africa scheme.)

There are lots of Broadway customs that keep ticket prices out of phase with ticket values. In the 1930s, most tickets were sold in blocks to resellers as a way to raise money to fund the production. They were speculating in futures, so buttering up the ticket agencies was extremely important. A lot of this was cleaned up, which is where the anti-scalping laws came from. Some oddities still survive. In the 1990s, Actor's Equity got one row up front in the orchestra at each show to scalp with the benefits going for actor's health care and disability. That's how I got my amazing tickets to Angels in America.

The right answer is probably to price tickets differently, maybe a Dutch auction with ticket prices starting at $1,000 a seat and slowly dropping. But look how that works with the airlines. Everyone hates their yield management pricing. Still, there is room for improvement. When Google went public, they didn't want all the profits to go to the underwriters and their cronies, as most IPO profits do, so they arranged for a more sophisticated auction, and they got a lot more money. Of course, the offer was so rich that even the underwriters made out like bandits.