Ticketmaster shuts out scalpers
LOS ANGELES — Ticketmaster Entertainment Inc. has developed a new way to resell tickets that shuts out the brokers and scalpers it has long scorned, and instead keeps the profits for itself, performers and venue owners.
The system relies on Ticketmaster’s "paperless" ticketing platform, which makes customers prove their purchase by showing a credit card and ID when they arrive at an event. Without paper tickets, there’s nothing for scalpers to resell.
With its new exchange system, Ticketmaster has come up with a way to let buyers resell a paperless ticket, while still cutting out ticket-resale leader StubHub and other brokers. That gives Ticketmaster a chance to capture more of the so-called secondary market, which generates greater fees and profits per ticket.
The resale system debuted this month at Penn State’s college football season opener and is likely headed for other collegiate stadiums.
The system involved 21,000 season tickets that are reserved for full-time Penn State students. The tickets are highly prized because they come at a big discount and Nittany Lions games usually sell out the 108,000 seat stadium.
The system required both the buyer and seller to use their student IDs, so resellers had to use Ticketmaster’s online trading system to transfer or trade. The buyer couldn’t then resell the paperless ticket.
Penn State, in an effort to ensure that the resold tickets would remain affordable, capped the resale price per ticket to $60, about twice the original face value and fees.
Just 965 students chose to resell their tickets for the season opener against Akron on Sept. 5, and the average resale price was just $39.61, said associate athletic director Greg Myford.
"The students seem to be grateful for that," Myford said. "They can get a ticket and they don’t have to worry about really being gouged. We’ve largely eliminated those only interested in scalping from the process."
For Ticketmaster, the new system brought in additional revenue.
For the initial sales run, fees amounted to a little more than $4 per ticket, but on resales the buyer was required to pay $1.95 and a 15 percent transaction fee — up to $10.95 a pop. In the home opener, the total resale fee averaged $7.89 and was shared between Ticketmaster and the university.
Artists or venue owners will determine whether an event with paperless ticketing makes use of the new exchange system, said Dave Scarborough, Ticketmaster’s executive vice president of technology. He said the fees Ticketmaster will collect on the resales are needed to "recoup our investment in the technology."
Paperless tickets still account for fewer than 1 percent of all ticket sales, said analyst Brett Harriss of Gabelli & Co. But that could be changing. Prominent musicians, such as Miley Cyrus and even former Ticketmaster critics Bruce Springsteen and Nine Inch Nails’ Trent Reznor, have taken up Ticketmaster’s paperless tickets. Nine Inch Nails’ website called the move "an effort to keep tickets in the hands of the fans and out of the hands of brokers/scalpers."
But StubHub, a subsidiary of eBay Inc., said the setup limited options for fans.
"We don’t think fans are excited about the lack of choice and the lack of options outside of the Ticketmaster wall," said StubHub spokesman Andy Pray. "It limits the choices for fans if they want to resell or pass them along the chain."