Tuesday, March 6, 2012

Confessions of a Ticket Scalper, Thieves or Equalizers?

How many big shows have you been to whether it be sports, music or any form of entertainment and you see the usual cadre of hustlers working the corners around the venue? Do you think they have a right to make a profit on tickets or does it get you more pissed off about their tactics? Hell, does StubHub have a positive or negative effect on ticket sales or does it become an equalizer and a value added service?

Personally after working at independent music venues for numerous years, these folks drove us nuts with their strong arm tactics and inevitably keeping tickets away from fans that truly wanted to get into the show. Granted the fans could have always paid them for the tickets, but many a time, they were also selling fake tickets. 

Sometimes I would ask a co-worker to play the role of a mark and go up and see how many tickets he could buy. Then knowing how many tickets the scalper had, we would then sell tickets to the fans that were waiting to get in and force the scalper to give up. This definitely took some wind out of their sales, but they never gave up as the street hustlers were being backed by someone with deeper pockets who could absorb the loss.

The article below is quite interesting as its a direct conversation with a scalper or basically a high end gambler. Here is some advice from a former club manager to deal with scalpers. If you really need to buy the ticket for the show from a scalper, wait til the doors open as the prices continue to go down and haggle the shit out of them.

Ticket Scalper photo illustration from Billboard.com

As part of a Billboard special report on the state of the ticketing business, our touring expert Ray Waddell picked the brain of a ticket broker who's been in the game, as he says, "since it was invented." We chose to protext his identity so he'd speak freely. And he did.

So you've been active in the ticket brokering business?
You know how many airline miles guys like me have? I haven't paid for a plane ticket since they came out with frequent-flier miles for using the credit card.

What's it like out there in your business?
It's out of control these days. I've been in this game since it was invented. I made my money, and this business is on the downside for me now. One of these days [brokers] are going to piss off the wrong people in the prosecutor's office and they're going to go after them criminally and make it stick. When the shit hits the fan, I want to be able to go to sleep at night.

What do you mean by "out of control"?
The bots. I met a guy who told me he had 600 modems in his piece of crap strip mall store that generated so much heat the neighbor couldn't get their temperature right.

You're talking about the use of automated bots that hit the ticketing company at on-sale with thousands of requests for tickets. How did brokers used to operate, say, 25 years ago?
Those guys were no angels, but they had actual businesses. There were checks and balances. These guys [today] that sell to StubHub and these other sites are able to lock up the entire inventory on these screens, decide what they want and dump back the rest. Sometimes they hire some computer genius to do their dirty work: "Get me the tickets, I'll make the money, I'll take the risk and put them up on all these [secondary-market] boards." There's another type of guy that says, "I'm going to find me a guy in India to write this program."

There's plenty of guys in my business that are crazy, and doing this at levels where I really don't want to participate. It's not the moral end of it, but I know one day this will turn around. They didn't get the Wise Guys but they're going to get you. [He's referring to the Wise Guys case, where three brokers operating as Wise Guys were given probation last year in New Jersey District Court after being charged with wire fraud, among other charges, for using bots to procure approximately 1.5 million tickets for resale.]

Does paperless ticketing -- which requires the person who bought the ticket to enter the show with the credit card he or she used for purchase -- stop brokers?
It slows people down, definitely. But because these tickets are so valuable, a [broker] will say to his wife, "Let's go up to Jersey for Springsteen. I've got these idiot customers that paid $1,200 apiece. We'll walk in with them, then we'll leave. I'll take you to dinner." It's more trouble, it's more money, but to a certain extent it can't be stopped.

What about asking fans to join a fan club, sometimes for a fee, for a chance to buy tickets?
Fan clubs are old hat. To me that's just Live Nation's way to get some piece of something.

Aldo The Apache is ready to deal with Scalpers. Illustration by Gavin Smith

How much risk is involved in what you do?
I'll make money on Springsteen and then lose on some country act I thought was going to be hot. I throw those tickets in the garbage, but I still helped you, Live Nation. If I made $200,000-$300,000 in gross profit for a good summer, I could lose $100,000 by fucking up. That's the nature of the business-we're gamblers. We can't pick every horse right. And when we picked the wrong horses, the concert industry still got paid.

Why take a risk on tickets that aren't a sure sell?
A [ticket] source might say, "You can't just cherry-pick me and take all the Springsteen. You got to buy some of these other crap shows." So I'll say, "OK, send me the crap shows. I'll get rid of them." But the hot shows don't always mean we make money. When Bon Jovi's charging $175, he takes the money out of the business. The fan doesn't have money to go to the next show, and I don't make any money. What can I get-$210? I end up making $20, where I used to make $60, $70, and out of that I'd lose $20-$30 because you don't pick all winners. It's very difficult to pick the winners and the losers, and you don't make as much on the winners these days. I can't take the marginal shots anymore.

Historically, where did brokers get tickets?
People at the record store, the box office, the promoter's office, the low-paid people. There must be somewhere where there's legit people in those jobs, but why would they be? They don't get paid a lot, and it's there for the taking. If you don't take it, somebody else will.

What's your take on speculative selling, where brokers sell tickets they don't physically have in hand?
It's definitely gotten out of hand. It hurts the guy who actually owns the inventory, but it's just like shorting on the stock market -- as long as they cover, who really cares? You can look at a Broadway show for next week: There's so many guys selling inventory they don't have for a hot show, there could be more seats available than the theater even has. But it's the computers that are out of control.

What do you think when you see $100 tickets going for thousands of dollars on the secondary market?
For the life of me I can't understand how StubHub has gotten away with this. There used to be self-policing in our business. Even if there was a show where stuff was ridiculously priced, you never had those prices where people could see it -- you'd just quote it to the right guy. You always know somebody that is willing to pay.