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Ticket Scam Resource Center - A Consumer's Guide to the Ticketing Industry

Paciolan measured the North American secondary ticketing market in 2005 to be as large as $25 billion annually, which is probably larger than the primary market. The Wall Street Journal in September of 2006 estimated the 2005 secondary market to be $5 billion, about the same as the face value of tickets sold by Ticketmaster, which suggests that the primary market is larger than the secondary market. Pollstar reported that 2006 concert revenue in North America (concerts only, excluding sports, etc.) was $3.6 billion and the top 100 concert tours sold 37.9 million tickets at an average ticket price of $61.45.

Artists and Teams

Artists and teams need a place to perform and/or play. Communities and private interests therefore build facilities in which the artists and teams can play. Fans are willing to pay for these performances and games, so the artists, teams, and venues need to collect entrance fees and distribute the revenue. Particularly with respect to large, high-demand events, it's unrealistic to charge fans at the gate. So, we have seen the rise of a ticketing industry that can provide for advance sales, reserved seating, etc.

Ticketing Services

The ticket purchase transactions, printing, mailing, tracking of seats, tracking of reports of lost or stolen tickets, etc., combine for a pretty complicated process, especially for large venues that sell thousands of tickets per day. This process can be outsourced to ticketing agencies, such as TicketMaster.
The largest service, TicketMaster has exclusive contracts with a large percentage of the large and otherwise important venues in North America. Artists and teams are, to some extent, forced to deal with TicketMaster in order to perform in these venues. Some people call it a monopoly, and lawsuits have been filed, and the US Supreme Court has issued rulings. In general, TicketMaster has not been found to be in violation of US laws concerning monopolistic practices. TicketMaster is a division of IAC/InterActive Corp.
Many venues, especially the smaller ones, either do their own ticket processing or use a ticketing service other than TicketMaster. TicketMaster gets all the press because they are involved with the major events. But consider what your most recent ticket purchase was for; was it for a major sporting event or concert, or was it for your child's school musical? TicketMaster does not sell all the tickets on the continent, no matter what your Yahoo group says.
Other important services include StubHub and RazorGator. In 2006, the big news is that TicketMaster now supports a repeal of anti-scalping laws because they restrict the ability of ticketing services to run their own auctions. These big services have hundreds of millions of dollars with which to lobby for whatever legislation that suits them.
This site is concerned with scams, though, and there isn't a lot of fraud at the small events. So what happens once a venue schedules an event and contracts with a service to sell tickets?

Who Gets the Tickets?

The ticketing service provides tickets to individual consumers and certain commercial interests, such as ticket brokers, the artist's girlfriend, media outlets, etc. Most tickets to most events are sold to individual consumers. This isn't always totally true, and we'll get to that later. For most events, some tickets are withheld from the general public for use by the artists or teams, promoters, media outlets, and other contracted organizations. For example, a show in Las Vegas may allocate tickets to various casinos for distribution to gamblers. This sort of contract may have been written to get the cooperation of the casinos when building the arena and marketing shows. It's not illegal, and in most cases, good seats are still available to individuals at face value.
There are some documented, and probably lots of undocumented instances of holding back large numbers of tickets. This site is concerned with scams that cause individuals to lose money, so this site is not especially concerned with a consumer who wasn't able to buy a ticket at all. However, other pages on this site note that fraud exists in the ticketing market. There are instances of bribes paid by brokers to venue insiders in return for access to prime tickets. Still, it is the opinion of this site's operator that most tickets to most events are sold to individual consumers at face value. Yes, even when TicketMaster is involved.

Ticket Brokers

A ticket broker is licensed by a state or province to resell tickets. Traditionally, most of these tickets originate with individuals, such as season ticket holders who want buyers for unused tickets. However, as the size of the ticketing industry has grown, brokers have found that they can increase their profit by increasing their inventory. So, the modern broker typically buys some tickets directly from the primary sources (TicketMaster and the venue box office). The primary sources may limit individual transactions, so the brokers hire people to buy tickets. The employees sell the tickets to the brokers who again resell the tickets.
Brokers sell to individual fans and to corporations. Typically, brokers charge seemingly exorbitant rates for prime tickets, or for any tickets to sold-out events. If they can sell just a third of their tickets for three times their cost, they'll break even. For big events, some corporation will need tickets for a big client, and will pay a big charge. Brokers can afford the up front cost of tracking events across the continent, hiring employees, and buying up dozens of tickets. If they have to eat a few lousy tickets, it's no big deal (to the broker). There are reputable brokers; look for membership in the National Association of Ticket Brokers. But when there are only a few hundred tickets available to a high-demand event, most will go to corporations and rich people who weren't going to stand in line in the first place, so it can be difficult to get a good price, and there is little hope of eliminating brokers.
Note that many online ticket brokers are really just e-commerce store fronts. The brokers need as many outlets as possible, so you'll sometimes see the same seats to an event for sale by multiple online dealers. When dealing with a broker, ask if that broker actually has possession of the tickets, or if they're someplace else. While there are dozens of these minor dealers, and small brokers in each local market, there are probably just a handful of national-scope brokers.

Scalpers

Scalpers ("touts" in Britain) are essentially unlicensed brokers. They are individuals who attempt to make a profit on tickets by selling, usually face to face, to individual consumers, on the streets outside venues. Tickets are also scalped at online auctions such as eBay. Brokers may hire scalpers to sell off remaining inventory on the street, which is why you'll sometimes see a scalper with handfuls of tickets. Some scalpers with handfuls of tickets may also be selling counterfeits.
The Internet in general, and eBay in particular, have changed the dynamics of brokering and scalping across the continent. It is now cost effective to buy four tickets to a high-demand event when only two (or none) are desired, because the extras can be sold on eBay for a profit, from the comfort of a living room. The secondary ticket market has exploded, incidents of fraud have exploded, and the artists, venues, and primary ticketing agencies are unhappy about all the revenue that is going "somewhere else". And the government isn't collecting tax revenue on those gray market transactions.
It is the opinion of the operator of this web site that fraud by scalpers is so common that it's not worth the risk, no matter how many web sites explain the process for safely dealing with scalpers.
Brokers can be honest and reputable, but would honestly and reputably gouge their grandmothers out of the rent money. It seems unethical for a broker to skirt TicketMaster's rules in order to buy tickets on the primary market for the purpose of reselling the tickets on their secondary market. It doesn't change the number of patrons attending an event, it just changes the way the money is redistributed. But it's usually not illegal, and if you don't like it, the best way to fight it is to avoid buying from brokers and scalpers.

Fraud

Individuals can be defrauded in many ways, as described elsewhere in this site. Part of the price of valid tickets is the cost to venues and ticketing services in fighting fraud. The innocent consumer is paying the price. If you see an illegal scalp occurring, tell a cop. See the links page to find out more about state laws against scalping.
It is in the interests of the ticketing industry, including TicketMaster, to satisfy consumers. They're individuals, but there are millions of us, and we have a voice. This site is not affiliated with any artist, team, venue, broker, or ticketing service, but it is the opinion of the site operator that most legal businesses desire to treat consumers fairly and honestly. In exposing scams, the idea is not to shut down the ticketing industry. The idea is to make the legitimate market safer for everyone.

The Future

In 2006, we have seen the early stages of artists, teams, and TicketMaster auctioning off their own tickets. Currently, a top artist is paid for an arena full of seats that were sold at face value, even though some of those seats were re sold at many times their face value. Why doesn't the artist just buy the whole ticket inventory from TicketMaster and auction off the tickets on eBay? TicketMaster can't be eliminated because they have contracts with the venues. Then again, why doesn't TicketMaster auction the tickets without selling them to the artist? There are many legal issues to be resolved, but the government would love to collect taxes on all the extra revenue. (By the way, in 2005, New York State relaxed resale limits for large venues, which allows brokers to make more money in NYS, and presumably, brings in more tax dollars.) Someday, we'll be viewing 2003 as the good old days, when there was such a thing as "face value".
Another development we'll see is the elimination of paper tickets. They'll be replaced with some sort of electronic process that will be much more difficult to counterfeit. Street scalpers will carry wireless devices capable of transferring ticket ownership.