The Future of Secondary Ticket Markets

Credited to technodean2000 on Flickr [10/17/2016]

Four gentlemen stepped onto the hotel elevator with paper printouts of tickets that had been photoshopped. I already knew they wouldn’t be able to get into the show they were going to, but I didn’t feel it was my place to say anything.

“You sure these tickets are good?” One person in the group asked.

“Yes, I called the woman and she said we’re good,” said another.

After a bit more back and forth between the four of them, obviously concerned about the legitimacy of their tickets, there was a pause.

“Those tickets won’t work,” I told them.

“How do you know they aren’t going to work?”

I knew they weren’t going to work because I knew the show ticketing was 100% digital and I could see that the printouts were screenshots of our tickets. I was going to the same show they were. In fact, I had just come from it.

At that time, it was the biggest show True Tickets had scanned tickets for — over 1,000 (since then we have scanned over 100,000 tickets and delivered several hundred thousand tickets). It was momentous as it signaled a turning point for us as a company and, to a degree, our industry. I watched as our client trusted us with a mission-critical aspect of their business and the service performed excellently. I had run over to the hotel to drop my bags and run into the four gentlemen on the way back.

Once I explained our role in ticketing for the event, the buyer of the tickets went white. “I paid $3,500 for these tickets,” he said. Tickets, mind you, that had a face value of $150 (that part was not photoshopped out).

Here’s the good news: Because our client leveraged our service, which provides essentially AML (anti-money laundering [i.e. fraud]) and KYC (Know Your Customer [i.e. fan or patron identity]) for ticketing, we were able to resolve the problem in five minutes. At the venue, his tickets scanned “not authorized,” which means the reseller of those tickets didn’t fulfill their obligation in the transaction: getting the patron into the event. He then called his credit card company to obtain a refund of $3,500. I introduced the group to my client, who, after some investigation and confirmation, sold tickets to the group at face value and then promptly blacklisted the reseller because he knew there would be a chargeback coming after the reseller found out their sale was nullified.

The constant theme with COVID and the live events industry over the past 18 months has been change (pick your dimension, there are many you could point to). But as the industry has figured out and committed to new ways of working in this uncertain environment, an old dynamic is reemerging — the conflict between the primary and secondary markets in ticketing. As much as the secondary market would very much like to revert back to the way things were, the changes over the past 18 months have emboldened primary rights issuers to challenge the previous, pre-COVID arrangements.

I’m hard pressed to assess this experience in any other way than the secondary market causing value destruction. The end result was my client sold these tickets to people who attended the show at the face value price. In between, there were multiple unnecessary financial transactions, patron angst, and client FTE time spent sorting this issue . . . all to simply get back to the status quo. New ways of working are coming to fruition regarding the interplay of the primary and secondary markets and it will unfold in three distinct ways:

1. Technical — This is actually the least complex (ironically enough) and least controversial change. Tickets are going to be decidedly digital and as these licenses (yes, tickets are licenses, not assets) become digital, the terms around them such as “Pursuant to s. 817.36, Florida Statutes, this ticket may not be resold for more than $1 over the original admission price” become enforceable in manner and scale never before imaginable. Attempts like Adele’s in the past never appeared to really go anywhere because of technological limitations, those limitations are now greatly reduced.
2. User Experience — This is the change that will require the most exploration. As rights issuers (venues, leagues, teams, etc.) are now able to couple enforceable rules around tickets in a digital environment, how do you educate the various users about them in an intuitive way? The answer is we don’t know. Quite honestly no one knows. Understanding how best to do this will require collaboration from various parties in the industry, but make no mistake about it, these changes will be figured out (much like how music moved from physical to digital mediums 20 years ago).
3. Business Models — This is likely to be the most complex change as the optionality for how deals can be done is greatly increased. Rebates, revenue shares, enterprise SaaS, per ticket, per transaction, per API call, you name it and the model is likely feasible to some varying degree. The key will be how the organizations that construct these agreements align interests and incentives that drive the optimal behavior. This likely lies in constructing an agreement where the value inherent in the deal so vastly outweighs non-compliance that the thought isn’t even entertained.

Doing ticket resale right for the customer, while balancing the revenue streams for both the platform’s developer and the organizations, is a radical concept, but it shouldn’t be. You should be able to log in to choose the tickets you want to share or sell, and the purchaser should be able to see the face value of the ticket, the markup (or markdown), and whether or not there are other tickets available for that same performance directly from the venue. This can and should all be done in a manner that aligns with the terms and conditions set by the original ticket issuer.

That would eliminate so much confusion and — while reducing potential profit for the platform — be the right thing to do for the organization and customer. On the plus side, for sold-out situations, nothing changes, except that the producer or venue would have control over how much a ticket could be resold for, maintaining fairness. For a major act in an arena — that may still be thousands of dollars for a face value ticket that sold for $200. But non-profits or social- or fan-conscious artists, producers, or venues would have better control.

No matter what the future looks like, the dynamic between primary and secondary markets isn’t going back to normal. It’s going to be different and ultimately it will be better.