Bots on the Run
The New Battleground Over Concert and Event Tickets in a Tale as Old as Time
My family is currently on a Beatles and Fab Four solo years music kick. When it comes to the Beatles, my daughter is big into the Lennon’s “Don’t Let Me Down” while my son often requests McCartney’s “Honey Pie.” Both love to groove to “I Want to Hold Your Hand” and “Get Back.”
Currently, Paul McCartney’s solo work is on heavy rotation. Oh sure, some of you may be thinking Macca was never as good without John, George, and Ringo — but hear me out: He has produced some outstanding, albeit uneven, post-Beatles work.
His 1989 album, “Flowers in the Dirt”, where he teams up with Elvis Costello is tight from beginning to end. His 1997 album, “Flaming Pie”, is another great one. On it is his beautiful ballad, “Calico Skies” which is on par with songs like Blackbird. Then there are pop hits like “Coming Up” off his 1980 record “McCartney II” and “Say, Say, Say” with Michael Jackson from 1983’s “Pipes of Peace” and both still stand the test of musical time (admit it — you may say they are too pop and shallow, but you hum along with them every time they come on because they have great hooks).
There’s nothing better than hearing my kids ask for and belt out Sir Paul’s music on vinyl on our home record player and on our daily trips to and from school. McCartney’s 1971 “Ram” is a big hit with the kids, especially “Ram On”, “Dear Boy”, and “Uncle Albert/Admiral Halsey” leading the way. Other big requests from the kids include “Mrs. Vandebilt” from Sir Paul’s 1973 “Band on the Run” and “New” from his 2013 album of the same name.
(You may be thinking this is some Tristram Shandy-like digression for a policy blog given it’s not Rolling Stone...stay with me; I’m getting to the policy.)
McCartney’s music has brought my family together for some great bonding through the power of music. We even signed up for his fan club. You could imagine our excitement when Macca announced a U.S. tour this spring/summer — especially after the long cold concert-less COVID winter. Being fan club members gave us access to an exclusive ticket pre-sale before going on sale to the general public.
Well, as fans, we thought we had access to purchase exclusive tickets. Tickets went quickly on the first day of pre-sales. One news report from the pre-sale for the Spokane, Washington show noted that tickets were sold out in 20 minutes, leaving “aspiring concertgoers flustered”. But who was buying up the tickets? Super fans? People eager to get back to concerts after a couple of long years? Maybe, in part. However, only hours after the official ticket pre-sale began, secondary market websites were already loaded with tickets for resale at a marked up cost.
Here are a couple of examples. The maps below are from a third party ticket resale site. Those areas shaded in purple have tickets available for resale on the secondary market. In fact, virtually every available section had thousands of resale tickets for above-face value the day of the initial official pre-sale — some minutes and most hours after the concert went on exclusive pre-sale. (Note seats behind the stage are not being offered for sale.)
Example 1. MetLife Stadium in East Rutherford, New Jersey
Example 2. Carrier Dome in Syracuse, New York
Among the cheapest seats for the official pre-sale for the East Rutherford, New Jersey show are going for around $105.50 without all the associated fees (those added more than $25 per ticket). Tickets in the same section on the resale site were going for $137.00 to $185 or 30%-75% higher than the official sale price being sold immediately after the tickets officially went on pre-sale.
In Syracuse, New York the official face price for some of the upper level seating is going for around $220.50 per ticket. Again, even before the general public sale has even begun, loads of tickets are already being sold at significantly more. Those $220.50 tickets are going for between $348.00 and $406.00 — or a significant markup.
But this is an unscientific look of a couple of instances for a show I wanted to go to. There have been other more comprehensive studies which reach similar conclusions. For example, a 2016 report by the New York State Attorney General’s Office found that resale tickets went for between 15%–118% higher than face value with the average being 49% above face value.
Man Versus Machine: Bots Deployed by Bulk Buying Brokers
Now don’t get me wrong. I’m not arguing against resale markets. I’ve used the secondary market in the past to secure tickets. Although several states still ban “scalping” at the venue, reports have found that every state allows secondary ticket marketplaces — some with more rules and regulations than others (e.g. caps versus no caps on resale tickets, broker registration, disclosure rules).
Ticket reselling is permitted for consumer choice and secondary markets often provide secure alternatives for people to buy tickets. As part of the transaction, certain economists would argue what that the market will bear should drive some of the cost as part of that freedom of choice. (What’s missing from any of this is what the artist thinks given they aren’t even benefiting from the inflated costs of their work).
An open market-based system can benefit the seller and the buyer — the proverbial invisible hand Adam Smith envisioned in The Wealth of Nations. But when does the secondary resale market go from consumer choice to unscrupulous market manipulation?
An open market-based system can benefit the seller and the buyer — the proverbial invisible hand Adam Smith envisioned in “The Wealth of Nations”. But when does the secondary resale market go from consumer choice to unscrupulous market manipulation?
The ticket industry is a complicated world with ever-changing rules and regulations — and too much to get into in one blog. The liberalizing of the secondary ticket market is a relatively new regulatory practice of the past decade or so in many states, so it’s still an evolving system of trial and error. In New York, for instance, there have been various tweaks to the law since it was more broadly authorized in 2007.
But one area which has been a particular focus by policymakers, regulators, and consumers alike is the bulk purchasing of tickets by brokers using sophisticated software bots. In one recent study, software bots accounted for 40% of the online traffic purchasing tickets. Given the increasing ease of sophisticated software programs to circumvent software verification systems and quickly gobble up thousands of tickets for resale before a consumer or fan could even click on the purchase link, the federal government prohibited the practice and authorized the Federal Trade Commission to enforce with the Better Online Ticket Sales (BOTS) Act in 2016. Other states, like New York and California have enacted laws to stop bots from bulk purchasing tickets before real people have a shot at buying them.
Although there have been enforcement actions brought against brokers under state and federal law, because of constant technological advancements, policymakers, regulators, and law enforcement are playing a game of cat and mouse against bad actors. More often than not, the mice — here the machines — are winning.
Is what I was experiencing with the McCartney show a case of sophisticated bots buying up thousands of tickets for resale in mere moments? I don’t have definitive evidence, but the anectodal evidence certainly looks as if something is amiss. If so, what is it and how can policymakers and law enforcement stay one step ahead?
What’s Past is Prologue
Bulk purchasing of tickets is not a new issue. In the 1800s there were ticket speculators — the analogue to online brokers — who bought tickets in bulk to sell at a higher price. As illustrated in the articles below from the New York Times in 1885, policymakers debated the merits of the practice then, with often annoyed patrons left steaming in the middle of the policy debate. As one theater patron fumed in a letter then, “I have been at the box office early in the morning that all the chairs were sold, and at a same time a lobby speculator was standing in sight with choice seats at $2 each.”
Technology is the great disrupter and technological advancements are great for consumers and economic growth. The problem is technological advancements outpace regulation and the regulators. Professional ticket brokers have replaced ticket speculators that bought in bulk and sold to patrons outside the venue, but the practice is the same — the technology is the only thing that’s different.
As the antiquated phrase “ticket speculator” connotes, bulk purchasing is a risk taking venture. The broker is banking on the fact that there is a resale market for the tickets they are buying. And although several recent reports have found that the secondary market took a hit because of the pandemic, it likely to rebound given pent up demand — i.e. people are jonesing for live shows. In fact, a 2019 analysis found the secondary ticket market generated more than $15 billion in revenue — and projections found that future revenue will only grow. So, there is a reason why the bots beat me to many of the McCartney pre-sale tickets — brokers are going to make money.
A 2019 analysis found the secondary ticket market generated more than $15 billion in revenue — and projections found that it will grow. But the current practice seems untenable.
Beating Back the Ticket Broker Bots
In addition to changes in that law that have been slow to stop bots thus far, venues, artists, and promoters are trying to find ways to work around bots. The Federal Trade Commission’s “Cracking down on ticket bots that leave you out in the cold” notes venues are holding back tickets and adding dates to tours. This is happening with the Sir Paul tour. Another date was added to the stop at Fenway Park in Boston. At the top of this piece I mentioned the Spokane, Washington show selling out in 20 minutes. The venue held back 8,000 tickets and other venues like MetLife Stadium did as well. These actions give consumers another bite at the apple.
After the McCartney shows went on sale to the general public this Friday, many of these newly available tickets have been and are currently being bought up for the secondary market. But, as of now, many are still available on the official sites at face value. Hopefully, fans beat the bots to them.
But as currently constructed, the system seems untenable. Perhaps the federal BOTs Act and corresponding state laws will rebalance the market. Perhaps the marketplace will correct itself because consumers will get fed up and stop going to shows or paying inflated ticket prices. (After a long pandemic, this seems unlikely.) Or Perhaps fans will simply submit to their new bot dystopian reality. Or the system will continue to morph as technology changes because the ticket resale market is as old as time itself. But something’s eventually got to give. Right?
Post Script…
After an involved effort of repeatedly clicking sites, checking maps, hundreds of open browsers, and lots of coffee, I ended up securing some official tickets. It’s going to be a blast and I look forward to sharing this experience with my kids. A Beatle. A music legend. It’s not the original British invasion, but after a grueling period of social distancing and remote concerts, it is a bright spot on the horizon. We’re going to enjoy the show, sit back and let the evening go.
