As the LA Times reported, SeatGeek was selected to appear at the TechCrunch 50 in San Francisco earlier this week. In the Times article, Co-founder Jack Groetzinger is quoted as saying, ”We have an algorithm that can forecast ticket prices.” Indeed, the casual consumer is often baffled by secondary market ticket prices making forecasting is interesting proposition. The challenge is that most of the academic research I have performed or read indicates that resold ticket prices usually go down following the on-sale date. Though this is mostly true for concert tickets, I have seen these price patterns occur with sporting event tickets, too. However, sporting events can be subject to price fluctuations driven by unique influences such as weather and rankings,  so that is likely where there is a value in forecasting. As cool as the forecasting piece could be down the road, I don’t agree that SeatGeek is (right now) as impressive as its competitor, FanSnap.

FanSnap walks around the forecasting question and gets to the point. If one is on the site, they are on the market for a resold ticket; what are the options? Unlike SeatGeek, which only lists section and ticket price data before linking to the resellers site, FanSnap has a really well done user interface that allows one to easily locate tickets on a high-resolution seat map with pop-ups that indicate price and number of available tickets. FanSnap also seems to have a pretty large pool of ticket resale partners providing data to them which provides prospective buyers with more price variety. They key to getting the best deal on a resold ticket is knowing all the price options, not just a portion.

While SeatGeek has potential, it has a ways to go. Regardless, these two ticket resale plays are proof that the ticket search / aggregation battle is on – good news for the price conscious consumer.

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A good example of incomplete reporting is John Seabrook’s piece in the August New Yorker titled, The Price of the Ticket. The crux of this book-report-style review is that the ‘live music business is broken’ and he uses the infamous February 2009 Bruce Springsteen ticket debacle as a vignette to support this claim. While the article offers a useful and unique report on the evolution of the concert promoting business, it fails to fully explain ticket scalping and does not even come close to explaining the mess that is ticket pricing and distribution. In addition, the artice fails to examine why Bruce Springsteen and other artists who claim to be irate about scalping don’t use their star power to productively address the issue instead of writing angry letters or blogs posts about it.

At the outset Seabrook claims that “Almost everyone agrees that the business of live music… is dysfunctional.” This claim is poorly supported and is also untrue. Going by the numbers, Ticketmasters ticketing revenue from 1998 to 2008 grew ten-fold (Rolling Stone, July 9, p.28), and as Seabrook points out himself, live music is actually saving the business of music by providing a strong source of revenue to artists as the rise of the digital music (and piracy) has reduced record sales revenue. Following ticket sales, many acts young and old, are raking in huge revenues every year. Seabrook reports that “forty-percent of all Live Nation seats go unsold…” what he does not report is the reason for that has more to do with ticket mis-pricing and acts like Jessica Simpson being staged in venues that are too large for a limited following.

Seabrook also states that “Both Live Nation and Ticketmaster are loathed by fans…” a claim that is true, but not because the live music business is dysfunctional. In fact, what is dsyfunctional is concert ticketing – and that is the exact reason why fans have little love for Live Nation and Ticketmaster. Seabrook points out that billions of dollars in ticketing revenue are lost to the secondary market without providing a single explanation for this very important observation.

While it is unclear if the secondary market is a $2 billion or a $25 billion business, one thing is for sure, that the size of resale profits is absolute evidence that Live Nation and Ticketmaster cannot effectively sell tickets. It is a wonder how Seabrook could write an article called ‘The Price of the Ticket’ and not want to find out why artists like Bruce Springsteen and Trent Reznor (who both despise scalping) do not depart from letter writing and blogging and take an activist role in addressing issues that have a huge impact on ticket pricing.

For example, as Seabrook points out in his article, Springsteen’s own management team kept 2,262 of the best seats out of the public sale for his May 21, 2009 show, leaving only 108 available. This common practice constrained supply and put a huge price premium on the 108 tickets put up for sale – making them prime targets for secondary market speculation. If Springsteen hates scalpers, why would he stand for under-supplying the market and feeding resale demand? We never get a clear answer other than that his management needed to hold back tickets for potential VIP’s. It is inconsistent to claim your concerts are intended for regular people and that tickets should be equal access and then hold back the best seats for celebrities who can well afford their own tickets.

Finally, Seabrook claims that “ticket scholarship is a neglected field.” To the contrary. there are a good number of scholarly papers on ticket resale, including a small sample posted on this blog. While there are few dedicated ticket scholars, the topic has been widely covered for over ten years. It is true that there are not many studies that examine actual pricing and resale, but this is because Ticketmaster and Live Nation generally refuse to support resale scholarship (though they have done so in two limited cases). [And, Seabrook, if you happen to read this, Kruger's 'Rockanomics' paper studies primary ticket markets and its tiny reference to resale is not empirical. The Sorensen/Leslie paper is the most current and complete analysis of both primary and secondary ticket sales.]

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As a Wall Street Journal article from last week correctly suggests, Miley Cyrus is Ticketmaster’s guinea pig; will the test be successful? Though there is not enough information on hand to know for sure, it is clear that the decision to sell “paperless tickets” for all of Miley Cyrus shows has raised the eyebrows of fans and resellers alike putting Ticketmaster on the defensive while ticket resellers try to figure out how to carve a market in a paperless ticket system. I have read a good amount on the topic over the past week and have a couple observations.

Ticketmaster executive David Butler claimed on CNBC that Ticketmaster was not trying to thwart ticket scalpers, but “to give more tools to artists to control their relationship with fans.” Later in the interview he stated “the fans decide what the right arrangement is…” but then goes on to say that “Miley believes that her fans are best served by [paperless tickets].” Miley may have had good intentions when supporting the concept, but the brains behind the paperless tickets is Ticketmaster, and at best the concept is half-baked.

Paperless tickets are great for fans who have a credit card, valid photo ID and the complete confidence they can attend the event for which they are buying tickets. But those requirements disqualify a huge portion of the ticket buying population, including kids without credit cards or ID’s, those who buy tickets and later wish to sell them if the cannot go, those who wish to gift tickets and those who buy ‘okay’ tickets for one date and then get better tickets after a second date is announced. All of these cases are quite common and paperless tickets easily restricts the buyers choice. To Mr. Butler’s comments, I am not confident most fans would choose paperless tickets given the option. So Mr. Butler, if “fans decide what the arrangement is” where is the choice? And what mis-guided artist management would push Miley to be a guinea pig in this half-baked idea unless the management was owned and controlled by Ticketmaster… oh wait, it is! And let me guess who will have the sole right to resell the tickets? TicketsNow – the reseller owned by Ticketmaster?

Don’t get me wrong, paperless tickets are a great option – but they should be just that - an option, not a mandate. Miley Cyrus management team should have recognized this, but they did not and the fan banter on Twitter and elsewhere suggests that people are more frustrated than happy.

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Amidst the excitement over the proposed merger of TicketMaster and Live Nation exists one popular thread of discussion; high ticket prices. Many fear that the merger of these two companies will result in a monopoly that will ultimately increase ticket prices. While I am opposed to the merger because of potential anti-trust issues, the real problem is not the threat of high ticket prices, but continued mis-pricing and inefficient selling methods. In plain speak, whining about high ticket prices overlooks the fact that present selling methods attract scalping and buying frenzies. Let me explain…

First, tickets for many events are intentionally under-priced, this is something that has been widely discussed by economists. In plain speak, John Mayer does not want to be seen as gouging his fans so he and his promoter prices tickets below what one may be willing to pay as a good will gesture. That also helps ensure a sold-out show, which makes for more concession and t-shirt sales. While setting prices low makes fans happy and accomplishes business objectives, it opens up the door for people to resell tickets at a higher price.  Compounding the problem is that a limited number of tickets end up on the resale market, which can artificially increase the perceived value of an available ticket.

Second, TicketMaster and Live Nation have failed to adopt ticket selling methods that make it possible for the most desired tickets to sell at a price that more accurately represents what fans are willing to pay. Under the present system, tens of thousands of people line up to buy a limited quantity of under-priced tickets which results in a near instant sell-out. Though the appearance of a first come – first served system seems fair, there are too many ways to abuse the system. 

The solution to both the pricing problem and the inefficient selling method is not original, and it is proven to work. I will explain here:

Bon Jovi Concert in X City on X Date: 20,000 seats available, 2,000 seats are taken by the band, radio stations and promoters, so 18,000 seats to sell.

1. 1,000 seats are considered the best; 200 sell for $300, 200 sell for $200 and 600 sell at auction with a $70 min price.
2. 4,000 seats are considered decent; 1,500 sell for $100; 3,500 sell at auction with a minimum price of $50
3. 3,000 seats are considered fair; sell them in two sets of 1,500 at auction with a min price of $40
4. 10,000 seats are considered bare bones; sell half at face value and half at auction.

Seller varies  times when auctions begin and end, and also sells tickets that were not auctioned at face value over course of time leading to show date.

How does some variation of this method help people efficiently get tickets at a fair price?

a. Ticket scalpers would be forced to either buy a pricey ticket they may not be able to resell for a profit, or compete against other scalpers in auctions.
b. While some ticket prices may be higher, they will overall be more consistently priced in line with demand. 
c.  As this method evolves, buyers will learn that auction ticket prices fall after the on-sale date. If you really want the  tickets now, you  pay a premium. If you are willing to wait, you will usually get what you want for a lower price in a couple weeks.
d. Fans who want the cheap seats don’t get caught up in a holding pattern behind people trying to get the best tickets. 

This method was tested. I also explain on this blog that most resold tickets tend to fall in price over time, I am quite sure this would happen in primary markets too. The caveat is that this method would take a little time to tweak, but it would work. 

I do not know about everyone else, but all I care about is buying tickets at a reasonable price. If you want to seriously put a dent in scalping and artificially high prices, urge TicketMaster & Live Nation to change their selling methods.

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This news is bad for consumers, but that will never matter. If it were bad for artists, you can bet it would never happen, but as long as it is only the fans who are getting shafted, well, so what? The problem is that TicketMaster is an old school corporation with a ‘stiff suit’ culture that has no interest in serving consumers. Though Live Nation is far friendlier to fans and is more progressive, TicketMasters size and management will surely screw this marriage in short order.  As far as TicketMaster is concerned, the customer is the artist and promoters, the public is basically a second class citizen that has no choice but to deal with TicketMaster and its ridiculous fees. As exampled by their most recent snafu with Bruce Springsteen tickets where they basically re-directed people from the ticketmaster.com to ticketsnow.com (a high-priced ticket reseller owned by TicketMaster) the company is a self-centered abomination who was only motivated to apologize when Bruce Springsteen called TicketMaster out on its grave error.

Given the state of the economy and the fact that TicketMaster needs the ticketing business that Live Nation will return with the merger, we can expect that there is little chance this deal will cave. Once again, fans are literally left in the waiting line.

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