Opponents of ticket resale -- derisively called scalping -- often claim that the practice of reselling a ticket after it's purchased from the box office is just plain wrong. However, as the purchase of tickets at the original sale continues to be a crap-shoot, the average fan has found ticket resale marketplaces to be a great source for greater ticket access and choice, not to mention value. Separating reality from perception is the first step in understanding how ticket resale works today.
Many people I meet think that reselling a ticket is illegal no matter how it happens. They may think that because it is often illegal to resell a ticket on the street within a certain perimeter of an arena, stadium or concert venue, or because there used to be many laws prohibiting ticket resale.
The truth is that it's perfectly legal to sell a ticket at or below the price printed on the ticket in all 50 states. Furthermore, antiquated state laws regulating ticket resale, which were developed well before the democratizing effect of the Internet took hold, have been repealed or reformed, making it legal to resell a ticket above face value in 44 states.
Ticket resale opponents argue that scalpers buy up all of the tickets and keep them from "true fans." They argue that the mere ability to resell a ticket means that most tickets are bought by speculators seeking only to resell them at a profit.
The reality is that a minority of tickets actually ever get resold. My company, StubHub, is the market leader in online ticket resale with the largest inventory of tickets. Many of the tickets listed on our site are also listed on other online ticket resale sites so we feel our site captures the greater market availability. But on StubHub, we usually see less than 10 percent and, in rare occasions, up to 30 percent of tickets to an event available for sale.
As for the notion of a "true fan," that's subjective at best. Proponents describe the person who camps out in front of the box office for three days before tickets go on sale as a "true fan," while the person willing to spend extra money using a convenient Internet site is not. In today's fast paced world, where time is at a premium, a "true fan" might be someone who is willing to pay slightly more, so as not to sacrifice their time waiting hours in line or refreshing their screens every 30 seconds when tickets go on sale at 10 a.m. on a Saturday morning.
Just like any other non-essential product
It's clear that tickets to an event are a non-essential, luxury good. Going to an event is a "nice-to-have," not a "need-to-have." As such, there is no logical reason why a ticket should be treated differently than any other non-essential product. In the US, where we have a market based on capitalism and free trade, supply and demand determine price and those who make a profit reselling services or goods are called capitalists, not scalpers. Buying for one price and selling for a higher price is and has always been the American way.
Ticket resale opponents assert that all ticket resales are at usurious prices, well above face value. These opponents often feel that it is morally reprehensible if someone makes a profit reselling tickets and that they should only be sold at or below face value.
Before buying this argument, one must first understand what "face value" represents. Face value is the price printed on the ticket and the one used in advertisements. It's akin to a manufacturer's suggested retail price (MSRP) on any other product. What most fail to understand is that face value is rarely the same as market value, and is often purposely set below market value to create consumer demand.
Additionally, the initial cost of a ticket is rarely, if ever, equal to the face value. Most ticket buyers get charged a convenience fee and a shipping fee on top of face value. Convencience fees average 15-20 percent1 and can be as much as 50 percent of the face value of a ticket. Therefore, if someone resells a ticket for face value, they are most likely losing money and not breaking even. Compare this to selling shares in the stock market. If someone sells shares at the same price per share as when they bought them, they are losing money because they're not recouping the trading fees they paid when they buy and sell their shares.
Market value is determined by supply and demand; if demand for a concert is greater than the supply at a given price, the tickets sell out. As a result, the prices for those same tickets in the resale market are higher than the initial face value.
This, of course, can go the other way too and often does. When demand for a given event is less than supply, ticket resellers will often sell tickets below face value. In fact, Forrester Research found that 40 percent of tickets bought in the resale market in 2007 were sold for face value or below.2
Helps the Entertainment Industry
Opponents claim that ticket resale hurts the entertainment industry -- namely artists, teams and venues -- that put on an event because the practice takes money out of their pockets.
While ticket resale may capture revenue that the initial seller could have made, it is only doing so because the initial seller decided to price below market value. For example, if an artist sells tickets to an event for $50 and those tickets sell for $75 in the resale market, the artist still makes the $50 they decided to charge. If they wanted to make the full $75, they could have charged that much for it initially. So the ticket resale market is not taking money away from the artist, it is merely capturing revenue that the artist elected not to pursue in the first place.
Further, resale actually increases revenue for these sellers. First, having the ability to resell creates more demand when tickets initially go on sale because buyers know that they can recoup the cost of their tickets if they cannot make the event. This is especially important because tickets are often first sold months in advance and are typically non-returnable and non-refundable. To put this into further perspective, imagine how much less you would pay for a new car if you were told you could never sell the car sometime in the future.
Second, the ticket resale market helps ensure that there are more people at each event. Even when a concert or sporting event is sold out, 5-10 percent of the people don't show up. When a robust ticket resale market exists, it gives other fans the opportunity to attend, meaning more fan energy and higher sales of merchandise, beverages, food and parking at the venue.
Good for Fans
Lastly and perhaps most importantly, allowing ticket resale gives fans more flexibility. In professional sports, the ticket resale market enables fans to afford season tickets. Even the most devout fans can't make it to all 41 NBA or NHL home games or all 81 MLB games. Rather than wasting a ticket, season ticket holders can recoup some of their costs by selling their tickets on the resale market.
The ticket resale market creates opportunities for many more fans to attend an event. For many high-demand events, if you're not lucky enough to know someone, hit the initial ticket sale at the right time, or hold season tickets, you are not going to go to the event; unless, of course, you find a ticket on the resale market.
When I was a kid in Chicago, I could never attend a Bears game because my family didn't know any season ticket holders. Now, I can go whenever I want due to the resale market. Multiply my story millions of times over, and you'll see how those that benefit the most from the ticket resale are the devoted fans.