The scale of the problem
Fans are always excited to tell the world that their favourite band sold out Wembley or the O2 in seconds but such apparent success can be costly for both band and fan. Such speedy sell-outs generally reflect the use of software to purchase tickets the moment they are available online which are then resold at vastly inflated prices on secondary ticketing sites. It is estimated that the industry loses $8bn a year to such re-sellers, or 'scalpers' as they are termed.
In an attempt to reduce these losses, Ticketmaster took the step of announcing in August this year, that they are to close down their secondary ticket sites Get Me In and Seatwave. They will still allow resale on their own site but not for more than face value. This news came shortly after the Irish government backed a bill that would ban the resale of tickets at more than face value. Whilst it is a genuine attempt to thwart ticket touts, it is also a move to try and win back business from a number of fan-to-fan ticket exchanges, such as Twickets, that have emerged and that cap resale prices at 10% above face value. However, sites such as Viagogo (currently being investigated by the Competition and Markets Authority) and Ebay owned Stubhub continue to provide an outlet for scalpers.
Smarter selling
It is against this background that certain artists have started to develop smarter ways of selling tickets through fan registration and dynamic pricing. On Taylor Swift’s 2018 US tour, she initially only sold tickets to those who registered weeks ahead of the sale through Verified Fan (Ticketmaster’s new technology). She also introduced other hurdles through a points system based on watching videos posted on her site and merchandise purchases etc. Tickets for such fans would be available earlier and cheaper than general release. She sold about half of her 2.5m tickets to fans through Verified Fan, through a pre-sale and raising prices to “market value” after this stage. The cheapest seats sold during this period were $50, rising to $899 from front row VIP tickets. This compares to $40 to $225 in 2015.
Other events have followed a similar dynamic pricing strategy, with hit musical Hamilton lifting prices up to an eye-watering $849 each. In 2016 Adele enlisted Songkick to assist in distinguishing between scalpers and fans, which blocked more than 50,000 ticket sales through touts. Other artists have started to use the Verified Fan programme such as U2 and Harry Styles and even Michelle Obama for speaking events.
Has this strategy worked?
Whereas every Taylor Swift show for the last few tours has been sold out, none of the shows on her 2018 US tour sold out with Gary Adler, director of the National Association of Ticket brokers calling the tour a ‘total disaster’. However, whilst fewer tickets were sold, she has captured about $1.4m per show that would previously have been lost to re-sellers ($50m for the tour) and by August she had already broken her own record of the highest-grossing tour for a woman in North America. Thirty days before Taylor Swift’s September and October showed only 3% of her tickets were listed for sale on Stubhub, compared to 12% of Bruno Mars and 6% of Ed Sheeran over the same time.
Between 30 and 50% of tickets for popular concerts find their way onto secondary sites. 30% for Taylor Swift’s 2015 tour found their way onto secondary sites whereas this rate shrunk to 5% of her Verified Fan tickets for the 2018 tour.
Not a silver bullet
However, such strategies have their own issues. Firstly, for artists with much less stature that Taylor Swift, there is a concern that these obstacles significantly reduce sales. The number of unsold tickets unnerved other artists – an average of 668 empty seats were available through Ticketmaster an hour before each of her shows. Secondly, artists risk being accused of greed. Technology identifies how much tickets can be sold for (airlines have been using this model for years) but some artists do not wish to take full financial advantage of this for fear of a backlash. Ed Sheeran has deliberately kept his ticket prices much lower than his peers ($36-$119). In contrast Beyoncé and JayZ used dynamic pricing based on demand leading to a front row ticket for their shows costing almost $700.
Ticket touts have been an issue since concerts began and their move online simply reflects changes in methods of ticket sales. Technology has facilitated industrial scale scalping but is now also being employed to detect and reduce such activity. Promoters, artists and governments must continue to use everything available to them to reduce scalping to protect the consumer (the music fan) to avoid them being priced out of watching their favourite band and prevent artists from losing income from the only significant revenue stream derived from music in the current age – live events.
David Stead, Finance Director, Foxtrot Delta and Chair of the Entertainment, Sport & Media Advisory Group.
