Download The Secondary Ticketing Market • Tickets originate from “primary

TheSecondaryTicketingMarket
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Ticketsoriginatefrom“primarymarket”issuers,namelydirectlyfromateam,musicartist,or
boxoffice,andinmanycasesthroughLiveNation’swell-knowncompany,Ticketmaster.
Ticketmasterservesasthelargestcontractissuerofticketsintheprimarymarket(nottobe
confusedwithTicketmaster-ownedTicketsNow,whichTicketmasterpurchasedin2008toenter
thesecondarymarketaswell).
The“secondaryresalemarket”forticketsiswhereticketsareresoldortransferredby
ticketholders(akintopre-ownedvehicles)andiscomprisedofseveralcomponents:
o Exchanges.Thesemarketplacesites,likeStubHub,SeatGeek,andVividSeatsprovidea
platformforticketholderstoreselltheirtickets.Whiletheseexchangesarebestknown
fortheireasyaccessibilityforanyoneonline–fansorbrokers–tobuy,sellandtransfer
tickets,somehaveagreementswithteams,leagues,andmusicartiststoprovide
ticketholderswithanexclusiveresaleplatform.Exchangesdonotnecessarilyown
tickets,rathertheyprovideaplatformwhereaticketholdercanmarketandselltickets
toabuyer.
o NATBTicketBrokers.TheMembersoftheNATBareprofessionalticketresale
companieslocatedthroughouttheU.S.andabroad.EachabidesbyaCodeofEthics,
whichprohibitstheuseofsoftwarebotsforpurchasingtickets.ThisCodeofEthicsalso
prohibitsmemberresalecompaniesfromengaginginso-calledspeculativeticketsales.
ThismeansthatNATBMembersonlysellticketstheyeitherhavein-hand,havealready
purchasedandareawaitingdelivery,orhaveanexpectationtoreceivethroughprior
purchaseorothercontractualmeanssuchasaseasonticketholderaccount.NATB
membersprovidea200%moneybackguaranteetocustomers.
ManyMembersofNATBhavebeeninbusinessfor20yearsorlongerandtheirsuccess
isbuiltonrepeatcustomers.NATBMembershavephysicalplacesofbusinessandmany
employteamsofstaff.Theyareinvestorsinliveeventsinthattheypaytheoriginal
sellertheirfullaskingpriceplusallapplicabletaxesandfees,therebytransferringany
financialriskfromtheoriginalissuertothebroker.Whiletheintentionofthebrokeris
toearnaprofitontheirinvestment,thereisrisk.Reportsestimatethatapproximately
40percentofticketsontheresalemarketsellforbelowfacevalue.
o NonNATBTicketBrokers.Notallticketbrokersarethesameandthereforebrokers
shouldnotbepaintedwithonebroadbrush.BrokerswhoarenotMembersofNATBor
whohavenotappliedforNATBmembershipcannotandshouldnotbeassumedto
followthesameCodeofEthicsandbusinesspracticesasNATBMembers(suchas
providingarefundguarantee).TheBetterBusinessBureau,NationalConsumersLeague,
andsomestateAttorneysGeneralsadvisecustomerstoensuretheirbrokerisa
MemberoftheNATB.
o
SeasonTicketHolders.Manyseasonticketholdersresellticketsto,inpart,recoupthe
ever-risingcostoftickets.Itisvitalthattheseseasonticketholdershaveachoiceinhow
theymarketandselltheirticketsandthattheirticketsbefreelytransferable.Attempts
underwaytolimitthatabilitywouldleaddownapathtomonopolisticpractices,anticompetitivemeasuresandhigherprices.
o
RogueTicketResellers.Thesearetheoccasionalresellerwhoareoftentheoneswho
postticketsonwebsiteswithoutguarantees.Ortheypostticketsonexchangesat
exorbitantandunrealisticprices.Itisimportanttoknowthatjustbecauseyousee
ticketspostedonanexchangeatanastronomicalcostcomparedtoothers,thisdoes
notreflectthecostoftickets.Thosespecificticketsareunlikelytosellbecause
purchaserswillnotbearsuchaprice.
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Thesecondarymarket’sdynamicpricing,whichisbasedpurelyonsupplyanddemand
principles,isdesignedtofillseats,andthereforeprovidesubstantialbenefitstoconsumers,
teams,artists,andotherplayers,whichinclude:
o Thedynamicpricingofthesecondarymarketprovidesanoptionandaconsumer
marketforfanswho,forinstance,mightbelookingfordiscountticketstoabigsporting
eventortryingtosnagseatstoasold-outconcert.
o Theticketresalemarketisimportantasithelpstoensureseatsarefullbyconnecting
consumerswithticketsthathavealreadybeenpurchasedbutriskgoingunused.Ithelps
putfansinotherwiseemptyseats,whilehelpinghimorherrecoversomecosts.
Importantly,themarkethelpsplayersplayinfrontofacouplelessemptyseats,and
concessionsbenefitwhenfansareinthestadium.
§ Demonstratingthis,considertheMiamiMarlinswhichregularlyranktowardthe
bottomofMLBattendance.MiamiMarlinsPresidentDavidSamsonrecently
remarked,“Thepoorattendanceishurtfulbecauseitalsomeanslessrevenue
fromparking,aswellasretailandfoodandbeveragesalesatthestadium.And
thenumberofpeoplewhoactuallycometogameshasoftenbeensubstantially
belowthenumberofticketssold.”(MiamiHerald,March31,2016)
o Brokershaveriskexposurebecausetheypaytheaskingpriceforticketsfromtheissuer
–theteam,theartist–andthentakeonthefinancialrisk.Theoriginalissuernolonger
needstoworryaboutthatseatgoingunsold.Inthisregard,professionalticketbrokers
arefinancialinvestorsforeveryeventinwhichtheypurchaseticketsandtransferthe
financialrisk.Brokersactasthesecondlineofdefensetoensuringthatseatsarefilled
whethertheybeataballbark,arena,orauditorium.
o
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Thedynamicpricingofthesecondarymarketallowstheconsumerorbrokertochoose
whereandforhowmuchtoresellatickettheconsumerorbrokeralreadypurchased,
basedonsupplyanddemand,andderivedfrommarketcompetition.Accordingtothe
InstituteforPolicyInnovation,“thesecondarymarketcreatesgreatereconomic
efficiencyforallpartiesinvolved.”
However,restrictionstothedynamicpricingstructureofthesecondarymarketprevents
consumersfromhavingaccesstoaffordableandface-valueticketsontheresalemarket.
Forexample,areportfromtheMinneapolisStarTribunefoundthatabout5percentof
Adele’sXcelEnergyCenterticketsinMay2016wounduponStubHub,becausenew
ticketrestrictionsrequiredthecreditcardholderwhopurchasedthemtoshowthecard
andIDatthedooroftheevent.Thisrestrictiveticketpolicy,however,droveupprices
forticketsonthesecondary—whichaveraged$700-$850(facevalue:$39-$147)inthe
hoursimmediatelyafterthequicksellout.Incomparison,thesamereportfoundthat
ticketsonStubHubtoaBeyoncéshow,thathadnoticketrestrictions,remainedcloseto
face-value.Theserestrictionsreduceconsumerchoice,degradestheproductthat
consumerspurchase,andcausesharmtocompetition,whichforcesconsumerstoeither
payhigherprices,enjoylessvalue,or(mostlikely)both.