Blog Post – Group 40 – Platform mediated markets – Resale ticket market
TicketSwap, many of you might have heard of it, or even ‘swapped’ your tickets on it. TicketSwap is a classic form of a platform, reshaping the market of ticket selling. We got a user selling his ticket, and a user buying it, the mark-up? You guessed it, goes to TicketSwap. However, this application is just a small part of a way bigger market of platforms in the event industry. We call this market the ticket reselling industry, as it contains both professional companies and individuals.
Ticket reselling has already been present since the 19th century. People known as ‘scalpers’ sold large amount of train tickets, stolen or gotten somewhere else, to unexpected people. This grew into scalpers showing up in lobbies of events selling unsold tickets from the brokers’ offices or even offering fake tickets to unexpected buyers. Nowadays, large events mostly ‘sell’ their tickets using an intermediary that positions itself as a ‘seller, or scalper’ on a platform, which can be their own selling website, too. These companies ask big-markups, driving prices of tickets. However, since 2008, more and more platforms like TicketSwap have emerged. The primary market of live music and sports events generated over 20 billion dollars per year in the United States that year. While the reselling market ‘just’ reached 3 billion (Mulpuru, 2008). Only last year, this number has grown to 8.5 billion dollars For popular concerts, resale market value are now sometimes as high as 37%, with 46% of the resale activity being generated by consumers both psychically and on platforms (Leslie and Sorensen, 2014). This new form of ticket scalping generated controversy and evokes strong reactions from both consumers and the primary sellers. We can take Ticketmaster for example, they tried to prevent the resale of tickets by influencing ticket legislation.
The consumers in this industry are often passionate and driven (Boylea & Chioub, 2012). You just want to get that ticket for that concert you wanna go to so badly. Where you normally would go to a licensed office, the new platforms started connecting consumers with each other. This change takes advance of the intransparency in pricing and has created large online marketplaces where all kinds of tickets are offered. The absence of legislation in this market only accelerated this change. The whole market was on the one hand being disrupted by shoving the intersection between demand and supply back to its natural place (Boylea & Chioub, 2012).. On the other hand we see disruption by start-ups that are offering other solutions such as converting physical tickets into electronic tickets, and platforms that let event organizers create, promote and collect payment for their events. Accepting high fees as an event organizer is no longer the norm, choice in reselling options is bigger than ever, directly benefiting the consumer (Inc, 2015).
So how do we move forward from here? As said, legislation is still a big factor to look at. To fully stop the mass buying of tickets just for the point of reselling them for a higher price, we need legislation to restrict bots for example. On the other hand governments need to directly innovate with the platforms to prevent mass buying (GSMA, 2016). Another benefit of this cooperation would be innovation in better utilize of trusted mobile and financial platforms. This way, identities can be secured for digital ticketing and transaction tracking. Major players will keep trying to defend their market shares and reputation. By investing in digital innovation, governments are also directly closing avenues for exploitation and abuse of fans, creating a healthy secondary ticket sale market.
By: Victor Huysmans, Lars de Rooij, Brend Fianen & Koen van Vreeswijk
References:
Melissa Boylea and Lesley Chioub, The Effect of Ticket Resale Laws on Consumption and Production in Performing Arts Markets, Eastern Economic Journal (2012) 38, 210–222
Leslie and Sorensen, Resale and Rent-Seeking: An Application to Ticket Markets, Review of Economic Studies (2014) 81, 266–300
Mulpuru, The Future of Online Secondary Ticketing. Technical report, Forrester Research, (2008)
TicketNews. (2017). Guest Commentary: The Future of Ticket Scalping Laws. [online] Available at: https://www.ticketnews.com/guest-commentary-the-future-of-ticket-scalping-laws/ [Accessed 6 Oct. 2017].
Inc.com. (2017). The Next Industry Ripe for Disruption: Event Ticketing. [online] Available at: https://www.inc.com/antonio-neves/the-next-industry-ripe-for-disruption-event-ticketing.html [Accessed 6 Oct. 2017].
Digital Commerce. (2017). Secondary Ticketing Industry – an Appetite for Disruption? | Digital Commerce. [online] Available at: https://www.gsma.com/digitalcommerce/secondary-ticketing-industry-appetite-disruption [Accessed 6 Oct. 2017].
