May 26, 2013

Shadowy evil robots victimize poor Ticketmaster

The New York Times explains how Ticketmaster is a victim of shadowy malign robots:
Concert Industry Struggles With ‘Bots’ That Siphon Off Tickets

By BEN SISARIO
Published: May 26, 2013
As the summer concert season approaches, music fans and the concert industry that serves them have a common enemy in New York.

Paul Allen, former CEO
of TicketMaster
You know, I haven't bought concert tickets in a few years, but when I was paying 40% "service" charges to Ticketmaster so my son could go to shows, my impression was that the concert industry "serves" fans mostly in the Rod Serling sense.
And in Russia. And in India.

That enemy is the bot. 
“Bots,” computer programs used by scalpers, are a hidden part of a miserable ritual that plays out online nearly every week in which tickets to hot shows seem to vanish instantly. 
Long a mere nuisance to the live music industry, these cheap and widely available programs are now perhaps its most reviled foe, frustrating fans and feeding a multibillion-dollar secondary market for tickets. 
According to Ticketmaster, bots have been used to buy more than 60 percent of the most desirable tickets for some shows; in a recent lawsuit, the company accused one group of scalpers of using bots to request up to 200,000 tickets a day.
Ticketmaster and its parent company, Live Nation Entertainment, have stepped up efforts to combat bots, in part to improve the ticket-buying experience for concertgoers, but also to burnish the company’s reputation with consumers. 

In a previous century, I got into an email argument with Paul Krugman over the economics of the concert ticket business. Krugman announced that he was working on explaining how oddities of the concert ticket business could be accommodated to microeconomic theory. For example, why are concert tickets priced at X, but routinely a huge fraction of them end up at third party resellers being sold for say 2X? Why don't the artists charge 2X in the first place? (Krugman is most celebrated today for his opinions on macroeconomics, but back then he didn't seem very interested in macro.) Before he published his theoretical breakthrough, however, he wanted to know if anybody else had any theories.

So, I wrote to Krugman to explain my theory: The Ticketmaster monopoly is a big skim-scam. Either the corporate bosses are themselves skimming tickets for resale before the public can buy them, or they are letting employees skim as a form of untaxed compensation. 
The result has been a game of cat and mouse between the company and the bots. 
“As with hackers, you can solve it today, and they’re rewriting code tomorrow,” said Michael Rapino, Live Nation’s chief executive. “Thus the arms race.”  On a recent Thursday afternoon, the screen showed that the red visitors were making 600 times more ticket requests than those the system identified as being most likely human. ...
Bots are not kicked off the system, but rather “speedbumped” — slowed down, sent to the end of the line or given some other means of interference, to allow a regular customer through. 
“We’re not trying to stop anybody from buying tickets,” Mr. Carnahan said. “We’re just trying to make sure that a fan can buy the tickets.” ...
Live Nation will not say how many of the 148 million tickets it sells each year are bought using bots, and in many cases it may not know. Few ever admit to using the programs; official groups like the National Association of Ticket Brokers, which represents many of the biggest resellers, condemn them and say they supports anti-bot measures. But people at nearly every level of the concert business blame bots for wreaking all kinds of economic havoc. 
“There are sold-out shows in reserved-seat houses in New York City where we will have 20 percent no-show, and that 20 percent will be down in the front of the house,” said Jim Glancy of The Bowery Presents, an independent concert promoter in New York. “It’s speculators who bought a bunch of seats and didn’t get the price they wanted.” 
Concert promoters, artist managers and ticketing services say that bots are now an ever-present force, not only during the high-traffic moments when a big show officially goes on sale, but also at the odd moments when a promoter releases a few dozen extra seats with no announcement. 
Three years ago, four men connected with a company called Wiseguy Tickets were indicted on conspiracy, wire fraud and other charges, for apparently using bots to get tickets to Bruce Springsteen, Hannah Montana and other concerts.

I'd be more sympathetic toward this story of Ticketmaster being plagued by bots if Bruce Springsteen tickets hadn't been notoriously skimmed before the Internet existed. In my 1999 discussion with Krugman I pointed out my friend Kevin's experience in 1980 camping out on the sidewalk in front of a Ticketmaster window (or perhaps Ticketron, back then which was later bought by Ticketmaster, anti-trust laws be damned) to be first in line so he could get front row tickets for one of Bruce Springsteen's four shows at the L.A. Forum. At 9:00:00 AM he tried to buy front row seats ... and all that was available was something like the 37th row.

Springsteen, who back then would set moderate ticket prices that he thought would affordable by working class folks, was publicly outraged by the vast amount of skimming for his 1980 Los Angeles shows. (It would be really interesting to have a frank discussion with Springsteen -- a well-intentioned, intelligent, and not naturally cynical man -- about what he's learned over the decades about the theory and practice of the music industry.)

The NYT article eventually gets around to a red pill perspective:
Not everyone is convinced that bots are the primary villain of the everyday concertgoer. The Fan Freedom Project, a nonprofit group financed by StubHub, has pushed for anti-bot laws around the country, and Jon Potter, its president, praised Ticketmaster for filing its lawsuit last month. 
But he also criticized the industry practice of “holds,” in which sometimes large blocks of tickets are reserved for sponsors, fan club members and industry contacts, and never go on sale to the general public. 

In other words, the ticket-selling industry is skimming tickets, just like Springsteen said in 1980.
When it comes to the secondary ticket market, Live Nation has a complicated position. As much as it is trying to block bots, it also profits from the ticket resale market through TicketsNow — its own version of StubHub — as well as through deals with major sports groups, like the National Basketball Association. Mr. Rapino sees no contradiction in Live Nation’s stance.

I bet it's complicated.

Live Nation Entertainment was founded a couple of years ago by the merger of Live Nation concert promoters, which had pretty much of a monopoly on big concert promotion, and Ticketmaster which had pretty much of a monopoly on ticket sales. The Obama Administration cleared the merger with some stipulations to promote competition.

Sure, why not let two monopolies merge into a super-monopoly? What are you, some kind of conspiracy theorist?

Basic economic theory suggests that profit maximization occurs through price discrimination.

The reason why third parties go to the trouble of crafting bots is to profit from price discrimination: resell tickets to some 37-year-old lawyer who wasn't paying attention when the tickets first went on sale.

But, economic theory also suggests that ultimate profit maximization occurs through perfect price discrimination under monopoly conditions. In other words, economic theory suggests that it would be pretty stupid for the Ticketmaster / Live Nation monopoly to let a bunch of third parties vacuum up much of the price discriminating profit, rather than proactively grab that piece of the pie for themselves. If the bands don't like it, they can ... well ... What can they do?

Typical fan's reaction to Pearl Jam's
defiance of Ticketmaster monopoly
A couple of decades ago, the biggest band in America was Pearl Jam. They were outraged by how much in fees Ticketmaster insisted on adding onto their fans' ticket costs. So, they decided to defy Microsoft billionaire Paul Allen's TicketMaster monopoly. They wound up getting frozen out of most of the prestigious venues with only State Fairgrounds and the like available to them. In theory, you could make a pretty good Frank Capra movie about how the public rallied to support the spunky rock band bravely standing up to the corporate monopolist. But, instead rock fans mostly decided that Pearl Jam had to be uncool losers to defy a billionaire.

When I pointed out to Krugman in (I believe) 1999 this long history of corruption within the concert ticket business, he was offended. There was no place in economic theory for this kind of insinuation, so why was I bringing it up? We went back and forth for awhile, but Krugman became increasingly acrimonious at the very idea that the music industry wasn't completely on the up and up.

Interestingly, a 2010 NYT profile of Krugman reveals:
Certainly until the Enron scandal, Krugman had no sense that there was any kind of problem in American corporate governance. (He consulted briefly for Enron before he went to the Times.) Occasionally, he received letters from people claiming that corporations were cooking the books, but he thought this sounded so implausible that he dismissed them. “I believed that the market was enforcing,” he says. “I believed in the S.E.C. I just never really thought about it. It seemed like a pretty sunny world in 1999, and, for all of my cynicism, I shared a lot of that. The extent of corporate fraud, the financial malfeasance, the sheer viciousness of the political scene—those are all things that, ten years ago, I didn’t see.”

54 comments:

sunbeam said...

I don't really know squat about this kind of thing, but my impression is that the Grateful Dead pretty much did whatever they wanted.

Is that mistaken or did they play ball with these ticket monopolies too?

Heck I think the Dead could have played fairgrounds exclusively and they would still have had a crowd wherever they went.

Of course they were one of a kind, whether you like or hate them.

Anonymous said...

I don't know how you keep it up, Steve, year after year. Most of the stuff you write about save golf course architecture, or music, or IQ studies... is depressing. True, but depressing.

I'd rather enjoy obvious, intentionally fantastical fiction than fiction purporting to be news or analysis. So I don't really have anywhere else to turn.

Dave Pinsen said...

When Pearl Jam was bucking Ticket Master, they had to hold their NYC concerts on Randall's Island, a rock that holds up the Triboro Bridge.

Kaz said...

People deserve those prices for wanting to pay such exorbitant prices for garbage.

The only reason ticketmaster has such a deathgrip on the market is because record companies are in with them. The reason bands don't leave these record companies is because for most of these bands their success falls solely on the record company pumping their image, advertising, keeping them out of control, making their music, what have you.

If the public decides to pay for such mass produced garbage they deserve everything that comes with it.

Tinnitus is just an added bonus I guess.

I don't mind pop music all that much, but I would never pay to see their 'acts' in person.

Anonymous said...

Funny fact:

Krugman defended slave wages in the 1990s and was a raging neoliberal.

Something his leftist friends now wish they didn't know about or, in many cases, actually don't know about.

He defends this by saying "I am changing my views depending on the facts" but a more truthful saying would be: I change my views depending on the popular opinion as of this moment.

Even though he has tried to pretend that in recent years he has been alone, oh so alone, in warning against austerity, the sheer fact that he can link people all the time who agree with him, even going back to 2010 and before that, defies his opinions.

After all, America's leftist class have always liked the European welfare state model. And it's actually better than many on the right in America think it is(Europe's problems today have to do with partly demographics, countries like Italy basically look like Japan demographically but also due to the fact that their monetary union, the Eurozone, is a totally misconstructed beast which actively harms them and prevents them from doing things you'd normally do, like doing a devalvation).

If you read his writings in Slate from the 1990s, for instance, the guy sounds a lot like Milton Friedman in an Asian sweatshop in the 1980s with a gleeful smile and a snarling tone, announcing that "this is great!".

Krugman, of course, prefers to talk about his 'mistakes' when it's only a few years back, like when he made some pretty stupid calls during the Bush era when he was still essentially a neoliberal in many aspects.

The time before that, before Bush, apparently doesn't exist. He supported a lot of deregulation that led to the housing boom and eventual explosion. Again, the man who likes to lecture other journalists, pundits and economists on the importance of taking responsibility for your actions doesn't like to talk about it. So why doesn't anyone nail him?

Because most of his opponents were around then too and most were just as neoliberal or even more so, than he was. And his younger fans don't tend to know about this because he understandably never brings it up and the Krugman they know now is the Krugman 2.0, a re-invention which happened very, very recently.

In a few years, when the economic mood changes, look for Krugman to change his stripes yet again. I've noticed that while he used to throw venom at the idea of technological unemployment, now he seems to half-embrace the idea.

Wouldn't be surprised if he argued against stimulus in maybe 6-7 years if there was a recession due to "technological unemployment" and other increasingly popular phrases. The man knows how to build a career!

Anonymous said...

It's quite clear that Steve is guilty of exactly the behavior so many on here blame the Jews for. Personal slights (my vertigo pills don't work/ my buddy wasnt close enough to the boss) are inflated into vast conspiracies. Honestly Steve presents literally no proof and for all the math nerds on here Steve seems strangely uncourious about what percentage of tickets were skimmed then vs. now. Instead he's just gonna compare a single second hand anecdote with the sixty percent statistic and roll with it. How is that any different than when the left cries racist. The can spin a good yarn about American renaissance connections this vdare article that and be more compelling that anything presented here.

And for the record it is a loser mentality to assume that every time some one wins it is because of a conspiracy. I mean honestly Ticketmaster made Pearl Jam uncool. No they were never that cool or that good.

Anonymous said...

Off topic - Breaking News

Thomas Sowell ducks and weaves several good questions on Race and IQ.

http://www.booktv.org/Program/14565/Book+TV+at+the+Hoover+Institution+Thomas+Sowell+Intellectuals+and+Race.aspx

Anonymous said...

I wonder if Beth's dad got his Pearl Jam tickets from Ticketmaster.

gubbler, champion of all things checheny(except criminality, corruption, and bride-stealing) said...

http://www.dailymail.co.uk/news/article-2329556/How-JFK-secretly-ADMIRED-Hitler-Explosive-book-reveals-Presidents-praise-Nazis-travelled-Germany-Second-World-War.html

Kampfelot.

TomV said...

"It's quite clear that Steve is guilty of exactly the behavior so many on here blame the Jews for."

I blame the Jews for this behavior of yours. (Obsessing over The Tribe while accusing others of same.)

Anonymous said...

Kind of suspicious. A lot of things these days require getting past a Captcha to prove you're a human, including entering this comment, but somehow you don't hear anywhere else about services being overrun by bots.

Guy obsessed with German nihilism said...

(The following is a parody. Don't take it too seriously.)

Don't you see, Steve, that this ticket bot problem and the whole Ticketmaster monopoly are all the result of German nihilism? Only a resurgent Israel, shining forth with health, sanity, and virility can redeem America from its long national thralldom to Teutonic high culture and the resulting high ticket prices. Rampant ticket skimming and scalping is the obvious, logical result of America's burning love of German nihilism. And the Jews are its primary victims.

gubbler, champion of all things checheny(except criminality, corruption, and bride-stealing) said...

Mystic Pizza is one of my all-time fav movies.

Was it targeted by IRS for hosting a conservative politician.

http://www.youtube.com/watch?v=09AYV8BCIjk

http://www.youtube.com/watch?v=-h_Pqrm1chg

gubbler, champion of all things checheny(except criminality, corruption, and bride-stealing) said...

http://now.msn.com/trayvon-martin-texts-and-pictures-showing-guns-drugs-released

He liked more than skittles.

Anonymous said...

Boo hoo. Billionaires make money dishonestly concerned others are doing the same? Couldn't care less about this if it happened on Mars. Our country is corrupt from the top down. Bring on the next ice age. Let the glaciers scrape it clean and start over.

James A. Donald said...


Obviously, the skimmers are the people who have the best information about the market clearing price.

Now who, I wonder, has the best information about the market clearing price?

Of course a big monopoly is going to skim. What do you expect.

They have better information than the bands on the market clearing price, and so of course they will take advantage of that information asymmetry.

jody said...

anything that hurts ticketbastard is a good thing. although the ticket bots hurt everybody, not just ticketmaster. they're like calling down artillery on your own position as you're about to be overrun, hoping more of you survive than them.

any ideas on how stub hub factors in the modern ticket buying experience?

Whiskey said...

Steve, the ability of the internet to overthrow the tyranny of the Ticketmaster/Live Nation monopoly is something big. Just as the electric light killed Standard Oil's kerosene monopoly (Rockefeller still had it, but who used kerosene instead of light bulbs?), bands are using Youtube to break out, independent of record companies. They can also book places independent of Ticketmaster, and that they make most of their money through live performances not recordings gives them incentives to cut out the middleman.

Middle men can get big cuts, but they remain vulnerable to "disintermediation" by new technology.

Steve Sailer said...

James A. Donald said...

"Obviously, the skimmers are the people who have the best information about the market clearing price.

"Now who, I wonder, has the best information about the market clearing price?"

Well said.

I don't doubt that sometimes Nigerian spam geniuses outsmart the combined diligence of Ticketmaster and the bands, but I suspect that their existence serves to rationalize a lot of instances of Ticketmaster outsmarting the bands they are supposed to be in business with.

If you look at the Billboard list of top 25 tours of 2012, it's almost all wily oldtimers like #1 Madonna and #2 Springsteen. I presume they come loaded for bear with lawyers, accountants, computer experts, and statisticians and thus they probably get a reasonably fair shake.

Dave Pinsen said...

"Steve, the ability of the internet to overthrow the tyranny of the Ticketmaster/Live Nation monopoly is something big. Just as the electric light killed Standard Oil's kerosene monopoly (Rockefeller still had it, but who used kerosene instead of light bulbs?), bands are using Youtube to break out, independent of record companies. They can also book places independent of Ticketmaster, and that they make most of their money through live performances not recordings gives them incentives to cut out the middleman.

Middle men can get big cuts, but they remain vulnerable to "disintermediation" by new technology."


Predictions of middlemen getting disintermediated are as old as the Internet, but middlemen often seem to hang in there. Apparently, the higher you get in the food chain, the more value they add. One music example that comes to mind is Jonathan Coulton, the former computer programmer who became something of a geek pop star. When the NYT first wrote about him, he was using some crowd sourced website to book shows: if enough fans in Pittsburgh or wherever committed to seeing him live, he'd book a show there. But once Coulton got traction, he got professional representation.

Similarly, there are websites where you can book nonfamous models for photo shoots. But the top ones are represented by agencies, AFAIK.

Ali said...

I reckon rock fans lost interest in Pearl Jam because the music just wasn't particularly special. First two albums were great, what they released after that not so much.

Anonymous said...

If you're an alt rock nerd, it's much easier to see your favorite bands up close. I still have fond memories of showing up a few hours early and sitting in the front row to see the Pixies when I was a kid.

George said...

Krugman ought to be forced to watch a loop, Clockwork Orange style, of the scene where Rodney Dangerfield educates the 'economics' prof on how business is done.

Phil Minus said...

"“There are sold-out shows in reserved-seat houses in New York City where we will have 20 percent no-show, and that 20 percent will be down in the front of the house,”"

So what if there are? Ticketmaster still got their $ for those seats, even if not a soul shows. The fan could care less if no one attends for those seats- if no one shows up to sit in a choice seat, I can pretty much guarantee you that within a few minutes, someone else from the audience will.

Exploded Turban said...

""The extent of corporate fraud, the financial malfeasance, the sheer viciousness of the political scene—those are all things that, ten years ago, I didn’t see.”"

And yet, we're supposed to trust his crystal ball prognostication about every new financial event on the horizon.

Anonymous said...

You might not have seen this - kid rock is scalping his own tickets:

http://gulfnews.com/arts-entertainment/celebrity/rolling-stones-and-kid-rock-on-scalping-and-summer-tours-1.1188753

pat said...

I can't get very exercised over this sort of thing. There is an obvious solution - don't go to the damn show. You'll probably be a better person for having missed it.

I remember about thirty years ago someone I knew called me up and told me about free tickets to hear Gundala Janowitz - who was arguably the best soprano in the world at the time. She was booked into the San Francisco Opera House for a lieder recital. They "papered the house." And still there were many empty seats.

And I see this morning on Drudge that Kayne West has a new rap on the topic of racial injustice. You can watch it for free right now. But I warn you that it is just an incomprehensible chant of whatever his undoubtedly silly ideas are. It is photographed in such a way that he appears to be menacing, ugly and primitive. It speaks to his aspirations to be a thug.

What's the lesson here?

High art goes begging but low alternatives are free. Where is the venue that yields money?

Apparently it is in providing a place and time that people can congregate en masse. The singer or chanter on stage is largely irrelevant.

It is an economic phenomenon like a Longines watch. A Longines watch doesn't tell better time than a $10 Casio but it costs more - and you have to pay for the right to pay more. Maybe I'm dating myself. Maybe I should have said Rolex.

People like to go to parties. The attraction is the crowd. These rock concerts are similar. People want to be in the center of a huge mass of humanity. They want to be a part of mass adulation. Hitler understood this too.

You can't get outraged over everything. If slick operators are gouging the public over concert tickets - so what? That's why it's called disposable income.

Albertosaurus

countenance said...

Until recently, Missouri had an anti-scalping law. Which meant that the secondary ticket market for St. Louis events had to take place on the Illinois side of the river.

Obviously, the purpose of the law was to deter the secondary market so that people who actually work for a living could afford a ballgame or concert ticket every once in awhile.

joe king said...

ticketmaster running skimmer botnets is like anti-virus guys writing viruses.

sat analogy question?

Anonymous said...

The tolerance of ticket scalping in New York(where the practice was technically illegal to the point that ticket scalping services advertising in the NY newspaper Newsday always gave a New Jersy address), struck me as a massive tax avoidance scheme. The tickets have a certain value, and are (officially) sold for that value. If the tickets eventually make their way into a middleman's hands, who sells them for far over face value and kicks back to the primary ticket seller, the paper trail is much more attenuated and harder to follow, giving the IRS a good excuse for not investigating. This may seem cynical, but Hollywood has been getting away with this kind of scam for years with its notorious "Hollywood accounting." The recent revelations about the IRS's treatment of conservative non- profit groups make me even more suspicious of this situation.

Douglas Knight said...

Why is this article in the paper? Is Ticketmaster intentionally trying to look like the underdog? If so, why? I see two potential audiences for this act: the public and the musicians. The public to not look like a monopoly and so avoid antitrust action. The musicians to make it look impossible to do better than ticketmaster, to discourage them from negotiating or leaving.

The Gulf News article linked in the comments quotes Mick Jagger on how it's possible to eliminating scalping in the sentence immediately following one in which they explain how they held a scalping-free show (id everyone).

Incidentally, before Live Nation bought Ticketmaster, Live National already ate all their profit because they had a better monopoly.

Steve Sailer said...

I suspect that Jagger -- who is intelligent, not well-intentioned, and not naturally uncynical -- would be an even more fun person than Springsteen to have a talk with about the theory and practice of the concert industry.

Douglas Knight said...

oops, I meant to say that Jagger claims that it's impossible to eliminate scalping, right after the article explains how he did it.

Anonymous said...

Steve, didn't glean that insight about concert ticket prices at least in part because of a couple of UCLA economics professors? I thought you might have mentioned them in one of your posts about Krugman. Just Curious

Douglas Knight said...

To answer my question, I think that the message that Ticketmaster is trying to send by this article is that if you act like Springsteen, you'll share his fate. It takes effort for Ticketmaster to sell your tickets to the people you want to, rather than the scalpers, so why should they bother? The choice is to let the scalpers do the price discrimination or to let Ticketmaster do it, so just go with flow.

Anonymous said...

Conspiracies eh? To all intents and purposes there are now only three record labels. Sony/BMG, Warners and Universal - all other labels turn out to be subsidiaries of those. The game is sewn up.

Back in Christmas 2009 a Facebook campaign was launched in the UK to propel rock band Rage Against the Machine to the Christmas No.1 with their track Killing in the Name. This was in direct opposition to Simon Cowell’s X-Factor winner who was in the rrace for the Christmas No. 1. Other winners of X-Factor had been no.1 at Christmas for three/four years previously.

A legion of hipsters, indie types etc were galvanised into action…

The ensuing publicity and ocontroversy worked, RATM were No.1 but its fair to say that the X-Factor winner Joe McElderry also sold a lot more units as a result of the affair.

The X-Factor winners are released on Cowell’s Syco label which is in effect a division of Sony. Cowell is probably the single most important music executive at Sony right now.

Killing in the Name is released via Epic records. Epic is owned by Sony.

Ive pointed this out to anyone who seems interested but they would rather buy into the ‘hipsters defeat Simon Cowell’ meme rather than accept they’ve been played like fiddles.

Im sure Simon Cowell didnt launch the RATM campaign himself but was happy to play along and watch the profits growing. The hipsters felt they had won by their terms, denying him the No.1. He won by the only terms he has ever recognized - making a pile of cash.

Anonymous said...

Pearl Jam were admired for their stance on Ticketmaster but that still made people who regarded them as sub-Nirvana to regard them as sub-Nirvana.

Steve Sailer said...

The 1980 Springsteen in L.A. concerts stand out because before then skimming was mostly casual and minor, so there was a furor in 1980 over the large scale skimming. (Many of the 1980 tickets wound up in the hands of celebrities and entertainment industry insiders, which didn't happen at Springsteen concerts in Pittsburgh or Peoria.)

Now, it's institutionalized.

Chaim Potok said...

Anti-semites should note that it was a Jew (Pearl Jam's Eddie Vedder) fighting for the little guy and a WASP (Ticketmaster's Paul Allen) screwing over the little guy. Not that it will change your prejudices, but there it is.

Anonymous said...

Anti-semites should note that it was a Jew (Pearl Jam's Eddie Vedder) fighting for the little guy...

Eddie Vedder wasn't "a Jew." Not that there would be anything wrong with that.

You are a bigot.

Ben Huirre said...

Pretty sure that comment by "The Chosen" above was a lame attempt at preëmptive iSteve mockery--could he make it any more obvious (certainly a he)? Step up your game, Anon 7:43

boot stamping on human face 4ever said...

Steve, any thoughts on the big Euro-style market trend toward 3-day concerts (on water if necessary)? This actually succeeds in screwing over the performers even more--the only reason to participate as a business proposition is for all the Web 2.0 publicity/hype you *might* be showered with.

Anonymous said...

I work in the music industry, and I think you're seeing this through fan-colored glasses.

A skim exists when cash is illegally taken off the top of gross revenues. The count room skim in the film Casino is a good example, although more interesting skims are detailed in Pileggi's book and in Supercasino by Pete Earley.

A casino skim is illegal because the casino has an obligation to accurately report its gross revenues to the taxing authorities. So pocketing 10% of the drop is against the law.

But the tickets are the concert promoters' property. They can do anything they want with them -- release all seats at once at the same price, release them in blocks at different prices, refuse to sell any so the promoter can sit by himself in a 15,000 seat arena watching Rush.

The issue of holds are more political than economic. There are a lot of stakeholders involved in a concert by a national-level act, and all of them want free tickets. So the promoter holds back tix for the use of the performer, back-up band, manager, agent, accountant (seriously), etc.

That's probably what was going on with Springsteen. There's a scene in Truth or Dare (1991) where Madonna pitches a fit because the first 15 rows of her show (also at the Forum I think) were industry people who sat there with their arms folded.

I can't find it online but there was an article about eight years ago in the L.A. Times (IIRC) about how three rows in the mezzanine of the Pond (IIRC) did not appear on the official seating charts. Those were special seats for the venue or promoter to give out or sell.

And I have no doubt that Ticketmaster holds back blocks of tickets which it then, through various ways, tries to sell for as much money as possible.

So what?

The developer and promoter paid a lot of money to stage the concert, and the tickets and seats are their property. The issue of Ticketmaster is more complicated, since it's a de facto monopoly, but, as you said, the promoters with the most clout can cut better deals.

Some music fans have this strange notion that concert tickets have to be distributed on an egalitarian basis.

John Mansfield said...

There was an excerpt from the Rolling Stone's banker's book:

"Scalping tickets – the reselling of concert tickets – was another area of great concern.

"Everyone I spoke to about it said: 'There’s nothing you can do about that. That’s the promoter's business. Do you want the Stones' children to be kidnapped? You should be aware that you are dealing with difficult and potentially dangerous people.'

"Scalping was endemic, all-pervasive. I had to come to terms with the fact that there was an irreducible core of approximately ten per cent that would never come our way, and that we should concentrate on securing and accounting for the remaining 90 per cent. I had to learn to accept some of the realities of the music business."

Dahinda said...

"When I pointed out to Krugman in (I believe) 1999 this long history of corruption within the concert ticket business, he was offended. There was no place in economic theory for this kind of insinuation, so why was I bringing it up? We went back and forth for awhile, but Krugman became increasingly acrimonious at the very idea that the music industry wasn't completely on the up and up." Reminds me of this:
http://www.youtube.com/watch?v=YlVDGmjz7eM

FWG said...

Take it for what it's worth, but "Eddie Vedder satanic" and "Eddie Vedder atheist" garners more attention from google than "Eddie Vedder Jewish".

And "Psalms" is part of my captcha.

Douglas Knight said...

Here's an anti-scalping story: Apple has an annual conference. This year, tickets sold out in 2 minutes. Given the trajectory over previous years, this was not surprising, so they have anti-scalping measures. They already had name tags for re-admittance, so it's not much to add a serious id at check-in.

It's a little mysterious to me that if Apple wants a lottery, they don't just hold an explicit lottery, rather than this internet congestion lottery.

Anonymous said...

Every band needs a Peter Grant. Led Zeppelin got almost every dollar due them, under threat of death.

Evil Sandmich said...

Pearl Jam had to be uncool losers to defy a billionaire.

Well...
I believe they still can be even without doing that.

As far as the monopoly goes, I'm given to think that it has more of an effect on the musicians than the fans. Music concerts are at least in nominal competition with other forms of entertainment, but musicians who do not like the way Ticketmaster does business are just screwed (and thus maybe the reason behind the apathy towards Perl Jam's stand).

Power Child said...

As a grunge rock aficionado, I agree with other commenters who've pointed out that Pearl Jam wasn't ever really that cool. Even back in the 90s they seemed like more of the pretty-boy chick band of their time (as depicted by the TV show "Blossom). I never went to any of their shows, but I'd guess the female:male ratio was probably higher at Pearl Jam concerts than at those of any other popular band from the "Seattle scene"--even Nirvana.

When it comes to rock music, the presence of girls make it particularly uncool. The coolest rock music, in my opinion, is about aggression, existentialism, and destruction. Girls tend to find it boring, pointless, and weird.

Unknown said...

"Sure, why not let two monopolies merge into a super-monopoly? What are you, some kind of conspiracy theorist"?

A former girlfriend is a Tickemaster executive and worked her way up from an entry level job (about 15+ years of corporate indoctrination at that point) when that merger went through, and she refused to admit that the deal was monopolistic. She also claimed Ticketmaster was completely at the mercy of the promoters with all of the service charges and fees that rub people raw. She said it was unfair that Ticketmaster always got blamed for the nickel & diming.

They also run something called pre-sale for AmEx card holders and other VIP's for a first crack at the tickets, and they also hold a large number of desirable seats for the venue promoters, so it's not just the scalping bots who are to blame for shortages.

I won't pay more than $50 bucks per ticket for a concert, and luckily for me, my favorite bands usually play clubs or small concert halls. Most big concerts aren't nearly as fun as they were in the 1970's and 80's, so I don't feel like I am missing out on anything other than being gouged and an exacerbation of my tinnitus.

Anonymous said...

I gotta agree with the ex paraphrased above: the club owners and promoters actually make Ticketmaster look honest by comparison.

Steve, did you happen to catch the story 2 years ago about the White Stripes guy cutting out the middlemen, i.e. collector skum

p.s. said...

The manager of White's record imprint had written a pretty funny provocateur-editorial for the old red Guardian, which sums it up quite succinctly

Anonymous said...

In last year's "Billboard Power 100" you'll never guess who grabbed the crown.