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A scalper who used bots to buy millions of tickets, now wants to stop them

134 points| pmcpinto | 9 years ago |motherboard.vice.com | reply

319 comments

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[+] austenallred|9 years ago|reply
I spent some of my formidable years scalping and brokering event (mostly broadway) tickets in various forms. The company I co-founded made a few million and I learned an expensive lesson in equity at age 18 (I opted instead for the $14/hr salary).

We worked in broadway (meaning the style of show, not just the street), and I met the Wiseguys folks at secondary market trade shows, but I had no idea they were this big, and to be honest didn't care.

We always got tickets long before they ever went on sale, as does almost anyone who has been in the game a while. We would buy tickets up to 18 months in advance, and we're a security blanket of guaranteed sales for the artists and venues. We thought the retail sales were always a losing bet (except for, ironically, the artists and venues that tried to fight scalpers).

When we started figuring out how to circumvent the safeguards (deciding deliberately not to use bots or "spinners" as they used to be called), we realized we didn't need to because most of the venues loved us. Just like the wiseguys, they didn't want to be in the business of scalping and arbitrage, they just wanted to move all of their tickets quickly and efficiently with as little loss as possible. So if we wanted to buy 5,000 of 10,000 seats for a show they were thrilled, and we'd get a discount. When a show was about to go on sale they'd call us. Then thy may turn around and say "sorry tickets are on the secondary market, we don't like scalpers" but usually that was PR-style BS. They wanted someone to absorb that risk.

There are certainly artists and venues (e.g. Metallica) that hate scalpers and try to fight them. But we noticed that really only eliminates the "beer money" scalpers and leaves all of the money to the more sophisticated one. I have never yet seen a system that cannot be beat by scalpers, including paperless ticketing, and I find that most venues and artists want to maximize profits and, more importantly, minimize risk anyway.

[+] TwiztidK|9 years ago|reply
> I have never yet seen a system that cannot be beat by scalpers, including paperless ticketing,

I have seen such a system. A festival near me has a limited number of tickets available each year (due to site and staff restrictions) with surprisingly high demand. Their solution is to do a lottery that gives people an opportunity to buy tickets, requiring the name of each individual ticket recipient at purchase, then they match the names on each ticket to IDs at the gates. The only way to defeat this system is with fake ids.

[+] TorKlingberg|9 years ago|reply
> I spent some of my formidable years scalping

I think you mean formative years.

Did you ever get hit buying lots of tickets for a show and then unable to sell them?

[+] gpawl|9 years ago|reply
> The company I co-founded made a few million and I learned an expensive lesson in equity at age 18 (I opted instead for the $14/hr salary).

Don't feel bad; even if you got equity, your savvier business partner like would have found a way to devalue it. I once got "equity" in the form of 0.0001% of a 6-person non-VC-funded startup.

[+] monksy|9 years ago|reply
> Metallica

That didn't work. Tickets for the Chicago show this morning under fanclub presale sold out within seconds. I tried to get them. (Even with a unique code) There are bundles of tickets being resold for nearly 4x their original cost. (Fan presale codes limit to 2 per person)

Original prices: 85/155:

https://www.stubhub.com/metallica-tickets-metallica-with-ave...

[+] koolba|9 years ago|reply
> I have never yet seen a system that cannot be beat by scalpers, including paperless ticketing, and I find that most venues and artists want to maximize profits anyway.

How would a scalper get around ticketing that requires presenting ID that matches the name of the person on the ticket?

I've been to a few shows that were like that for pickup up tickets at the will call booth. I suppose you could get them there and hand them off to the true purchaser but that would require boots on the ground at each show.

Also, not sure how do deal with ID presented at the door to get into the venue if it has to match the ticket purchaser.

(All of this assumes no resales to rename the ticket owner)

[+] SilasX|9 years ago|reply
>I have never yet seen a system that cannot be beat by scalpers, including paperless ticketing, and I find that most venues and artists want to maximize profits and, more importantly, minimize risk anyway.

What about charging more, so there is less (or zero) spread between what scalpers can charge vs. the official price (or whatever they call it)?

[+] Paul-ish|9 years ago|reply
>I have never yet seen a system that cannot be beat by scalpers, including paperless ticketing, and I find that most venues and artists want to maximize profits and, more importantly, minimize risk anyway.

Say that a tickets market value is $500. What if they charged $500, then gave a $400 rebate after you walk in the door? They would of course limit the number of rebates per person.

A more concrete implementation that might work well if people are uncomfortable dealing with money in this way: give away goodies valued at the difference at the door. eg everyone get the album, a T-shirt, 2 free drink tickets, etc...

[+] RangerScience|9 years ago|reply
Do you have a scalper's view on Burning Man tickets?

AFAIK, it's not that no-one scalps them, but that it's a definite minority, due to community standards, slick moves by the Borg, and invalidating tickets that they find out get scalped.

[+] 21|9 years ago|reply
The London New Year Eve fireworks required a ticket for the best areas, with your name on it and with photo ID check.

I think the reason for the photo ID check is for a security background check against that name, so I would assume they would be very serious when checking the ID.

Anyway around that?

[+] notliketherest|9 years ago|reply
"I have never yet seen a system that cannot be beat by scalpers"

easy, ID linked tickets that you pick up after entering the venue and get transacted at that point, and you cannot reenter.

[+] tyingq|9 years ago|reply
"Wiseguy learned that Ticketmaster's CAPTCHA system had only loaded 30,000 unique images into its database, rather than millions. So Lowson's team downloaded every image they could find as a .jpeg file, stayed up all night typing them out, and taught their bot how to match the images."

Wow. I had the impression Ticketmaster had invested a lot of thought into anti bot tech. Apparently not.

[+] whatever_dude|9 years ago|reply
Ticketmaster celebrates scalpers.
[+] laurencei|9 years ago|reply
What is more interesting about that statement is how did he learn that fact? Possibly some help from the inside? Or some other method...?
[+] ryandrake|9 years ago|reply
> "There's an emotional aspect to what artists do, which is to say 'I'm not willing to charge $500 even though clearly the market value is $500. I'm going to charge $100, and at the end of the day someone else is going to make that money,'"

The bots are just a symptom. Seems like this is likely the root of the problem. If the primary market was efficient, then there would be no secondary market, and the whole point of developing these bots and sophisticates scalping systems would be moot.

[+] jstanley|9 years ago|reply
> The scourge of ticket bots and the immorality of the shady ticket scalpers using them is conventional wisdom

I very much disagree.

If I am willing to pay the asking price for tickets, I should be able to buy them. If you're offering them so cheaply that I will happily buy all of the tickets then you're offering them too cheap and you can't really complain if I buy them.

If it weren't for ticket-scalpers, die-hard fans who are willing to pay extra to secure a place would have no option. Thanks to ticket-scalpers, it is possible for die-hard fans to ensure they can get one even if the tickets are "sold out" by just offering more money.

This is a classic case of an inefficient market being made more efficient.

Without ticket scalping: the original seller sells all the tickets. Some fans get to watch the gig, and others don't, and the availability of tickets bears no relation to how much you're willing to pay to get hold of one, only to how quickly you decide to book one.

With ticket scalping: the original seller sells all their tickets more quickly. The fans who want to see the gig the most get to see it, with less chance of tickets being made unavailable by people who don't want to see it as badly (i.e. don't want to pay as much money), and the ticket scalper makes a profit. Everyone's a winner.

[+] degenerate|9 years ago|reply
Louis CK went the extra mile to work with specific venues to circumvent Ticketmaster and eliminate scalping. Some venues have contracts with Ticketmaster and could not be used. It's totally doable if you sell your own tickets, but most artists (band managers) are not up for the challenge.

He explains:

“Most tickets are $50 or less. There are no ticket fees for any shows. My agent worked hard to accomplish this by negotiating in every city and finding venues that were willing to help us make the shows affordable. In some cases, the venues and I are splitting the ticket charges between us so you don’t have to pay it. In the end it’s worth it to me because I don’t want coming to see me to be a painful choice for anyone and either way I’m making plenty of money on the tour. I sincerely hope that everyone takes advantage of this by simply buying the affordable tickets and coming to the shows. For those of you who plan to take the opportunity of the simple and cheap ticketing on this tour to make a profit at the expense of my fans, please note that we are working hard to prevent scalping and that if you resell your tickets at an unfair price, you are risking having your tickets invalidated. Also if you purchase tickets to my shows from Stubhub or other scalping sites, that ticket may not be valid.

Source: http://consequenceofsound.net/2016/05/louis-c-k-announces-22...

[+] the_watcher|9 years ago|reply
Not directly related, but my dad used to take people to major tennis tournaments through a company he started. Many times, those who'd purchased tickets for the entire tournament didn't want to go to every match, so they'd ask him if they could sell him back individual tickets, happily taking face value. My dad, who speaks several languages, was nearly always able to move the tickets for far more than face value, and has told me many a story about getting to know professional scalpers across Europe. Every time I read a story about scalping it reminds me of him.
[+] kalleboo|9 years ago|reply
Here in Japan it's quite common to have ticket lotteries and ID checks for certain popular/easily oversold artists. Better odds are given to early-bird applicants and fanclub members.

Why is that so hard to implement?

[+] brudgers|9 years ago|reply
When the Rolling Stones did their last tour in 1981 --those were still the days when rock and rollers hoped to die before their geriatric years and The Who would perform their Final Tour just a year later -- the tickets (at least in the US) were by mail and via lottery. Payment was with cashier's check only and only two tickets per order. [1]

It would still work today. For fans with money, it would be less convenient than buying through a scalper. It would be more convenient than TicketMaster since ordinary fans cannot buy tickets through it anyway. It would raise costs for scalping businesses and somewhat level the playing field (it is impossible to completely level a playing field between individuals and well capitalized businesses).

Anyway, TicketMaster's business has changed less than the music industry and get off my lawn.

[1]: The price was an outrageous $16 each. But it was also the days of festival seating and the best seat in the house was a matter of will. Down on the stadium field, over the course of the day we had worked our way to within ten feet of the stage by the time the Stones opened with their new hit single, "Start Me Up." No really, get off my lawn.

[+] rurabe|9 years ago|reply
That may meet your priorities and maybe even the band's but it most definitely does not meet Ticketmaster's in a world where they can offload all the tickets in 15 minutes and charge the maximum palatable fees with basically no variable costs.

And Ticketmaster is in control of this process, so...

[+] M_Grey|9 years ago|reply
Is it cool if I just sit on your lawn and listen to your interesting stories? I'll pluck weeds!
[+] city41|9 years ago|reply
Some bands still do this. For example the Dave Matthews Band Warehouse club is pretty much the modern version of this. When you join the Warehouse, you get access to a pool of tickets only made available to Warehouse members. The pool contains a wide variety of tickets, and the quality of tickets a member can get is based on how long they've been in the club. Members can only buy a small number of tickets, I believe a max of 2.
[+] habosa|9 years ago|reply
My favorite band is Wilco, and they have effectively eliminated scalping of their tickets. Here's how:

When you buy a ticket you can only buy 2 at a time and you must provide your name. To attend the show, you show your ID at the venue and they find you the the ticket(s) that match your name. At this point you and your guest must enter immediately and there are no "ins and outs".

So to scalp a ticket, you'd have to bring the person you sold it to into the show with you. That's a lot of effort!

Are there downsides to this? Sure. The first is that I'd gladly pay more to see Wilco but I can't but my way into the show. The second is if I buy tickets and something comes up I can't easily transfer them to another fan. Is all of this probably worth it to make sure that they can have an intimate connection with their fans and nobody else profits off their shows? Yeah, I think so.

[+] jkoebler|9 years ago|reply
I wrote this story and am happy to answer any questions you guys might have. Lots of information I ended up not using because the article was already incredibly long or I couldn't corroborate it (but believe it to be true from various interviews), etc.
[+] metaphorm|9 years ago|reply
can you explain some more details about the attempt of the prosecutors to argue for "hacking" based on their (apparently wrong) assumption that Wiseguy's system was using OCR to answer a Captcha?

this part just doesn't make any sense to me. you said

> The government argued that OCR-using bots would need to use Ticketmaster's source code to be implemented properly on the site, and would therefore be a "circumvention" of Ticketmaster's software.

I don't understand why they were trying to make this argument. OCR is a sub-domain of computer vision. It involves having a program look at an image and attempt to discern alphabet characters in it. This definitely _does not_ involve accessing the source code of the system. It's interacting only with what is shown publicly to normal users.

So what gives? Why did the prosecutor try to make this argument? It's technically incorrect in a serious way.

[+] cb21|9 years ago|reply
Thanks for the article! I love going to concerts (actually I grabbed pre-sale tickets for Lady Gaga just last week) so I found it all super interesting.
[+] ChuckMcM|9 years ago|reply
I've wondered if you could price tickets with an algorihm where they start out high and then over time or volume get cheaper and cheaper. If a scalper jumped in first they would pay a high price, later buyers could get tickets much more cheaply, if they come in later they won't have the desirable tickets which sold early.
[+] supercanuck|9 years ago|reply
How would this be in the best interest of the venue/artist who want to move tickets quickly and reduce risk? Seems like this would favor only those concerts destined to sell out or be popular.
[+] antisthenes|9 years ago|reply
I'm really surprised to see so many from the HN audience against scalpers, considering how libertarian the site leans.

If there's any market where a completely free market approach is applicable and actually desirable, it's this one.

I've bought maybe 40-50 tickets for various events (gaming, concerts, sports) over the last 5 years, and 99% of the time, the price of the ticket was negligible next to all the other expenses (travel and lodging mostly, but also food). And yes, most of those tickets had scalpers operating on them, pricing 2-3x higher than the nominal sale price. Even at 2-3x price, the price of the ticket is a relatively small portion of the total cost of attending.

People without money get screwed out of entertainment? Boo Hoo. How about Healthcare or housing? You know, actual essential things.

Thinking that being a hardcore fan makes you somehow more deserving to attend is entitled child mentality, plain and simple. It's one of those concepts that make you feel good, but in reality no one cares, and certainly not going to cry over 1 fan attending over another.

If you can't afford the auction price of the ticket, sit at home and watch their live youtube videos. It's arguably not even much worse and you won't have to deal with the smelly crowds.

[+] nradov|9 years ago|reply
You're logically and economically correct, but people have a visceral negative emotional reaction to arbitrageurs since they didn't do anything to "earn" their profits. The only way to eliminate scalping would be for the original sellers to raise prices to match the clearing price (perhaps with auctions) but the optics on that are also bad since artists don't like to seem too greedy.
[+] illvm|9 years ago|reply
Look, if the box office said "we're auctioning off all the tickets, there is no set price" then I would be inclined to agree with you. But that's not what happens here. Scalping with bots is someone profiting off of the work of others. It's borderline theft. Moreover, it's already illegal in many states and further widens the chasm between the rich and the poor. I don't understand why you would defend such practice.
[+] LordKano|9 years ago|reply
All of the convoluted reasons why scalping must be stomped out have never made sense to me.

If people would let the market handle it, things would sort themselves out naturally.

If scalpers have to spend more money buying tickets than they can make by selling them, they'll stop buying so many tickets.

Also, maybe venues should have some method of selling unredeemed tickets at the door. For example, if a ticked hasn't been redeemed by one hour after the start of the show, the venue gets to re-sell that space to someone who is there in person with cash in hand. Scalper spent $50 on the ticket that s/he couldn't sell so an hour after the show, the venue can re-sell that space for $30 cash. I'm sure I have overlooked something here but I'm just brainstorming.

Instead of trying to fight technological battles that you're not going to win, revamp the ecosystem.

[+] ue_|9 years ago|reply
>Even at 2-3x price, the price of the ticket is a relatively small portion of the total cost of attending.

This is irrelevant. The fact is that it's 2-3x the cost because someone decided to be greedy and purchase lots of tickets that people would have bought. Imagine if you go to buy a bar of chocolate, and it's $1 as it usually is. Then one day you've found out that the only way to buy it is from the weird guy outside the shop, who has purchased the entire supply of chocolate and is selling them at $3. I would be upset about it. The actual original price it irrelevant, no matter how cheap it is to get it. The fact is that you're making someone pay 3x as much which is frankly horrible behaviour.

>People without money get screwed out of entertainment? Boo Hoo. How about Healthcare or housing? You know, actual essential things.

So you think it's okay for someone to do something bad, so long as it's trivial and not related to one's bare survival?

>Thinking that being a hardcore fan makes you somehow more deserving to attend is entitled child mentality, plain and simple.

I agree. But being so greedy as to purchase thousands of tickets in order to sell them at a significant markup later on is also childishly greedy, moreso in fact than the child who believes he deserves to see something he likes without having to pay 3x the cost beacuse some guy has decided to be greedy.

>If you can't afford the auction price of the ticket, sit at home and watch their live youtube videos.

That's totally fine. But being denied a service because of someone else's greed is extremely ethically and morally questionable in my opinion.

I'm a social anarchist. I don't have any problem if you decide to sell something at whatever price you want. But I maintain that it's abhorrent, greedy, disgusting, horrible, childish and at the least questionable for one to force this practice upon others who would have no problem affording the original product. Whether it's a ticket or a chocolate bar or food or even hospital or housing, it's the same principle, and I fail to see why it does not apply to those but it does apply to tickets.

>It's arguably not even much worse and you won't have to deal with the smelly crowds.

Don't try and undersell something that people would have otherwise wanted in order to make yourself feel better about supporting abhorrent and greedy behaviour please.

[+] rhcom2|9 years ago|reply
> People without money get screwed out of entertainment? Boo Hoo. How about Healthcare or housing? You know, actual essential things.

These things aren't mutually exclusive. I think most people would think it is unfair if only people who can pay 2-4x the ticket price are able to see an event. Hell scalping for more than the original price isn't even legal some places.

[+] criddell|9 years ago|reply
Not everybody that sells tickets has as their goal maximizing revenue. For example, lots of bands work very hard to put on shows that are affordable for their fans. Scalpers taking advantage of the situation is an example of this-is-why-we-can't-have-nice-things.

And I agree that access to affordable shows isn't as important as housing or healthcare, but I think you are very much underestimating the value and importance of the arts in many peoples' lives.

[+] harryh|9 years ago|reply
I think you overestimate the libertarian leanings of the site.
[+] gpawl|9 years ago|reply
Some people are libertarian, some are not. They argue. It's not complicated, it's the free market of ideas.
[+] 1024core|9 years ago|reply
> The government's case hinged mostly on whether Wiseguy had "circumvented" Ticketmaster's system.

While I hate scalpers, I have to ask: why is this illegal? Is using a screen reader "circumventing the system" if I get rid of all font and graphics? Is using an adblocker "circumventing the system" ?

[+] nerdponx|9 years ago|reply
The site might (and hopefully does) have an explicit TOS/EULA prohibiting scraping for the purpose of scalping.
[+] rurabe|9 years ago|reply
Ticketmaster is actually a fairly unusual market in that it discriminates based on speed, which is pretty unusual in our market economy where things are usually discriminated based on price. As long as this structural difference exists there will always be an incentive to arbitrage the market, whether those arbitrageurs are one person or a thousand, bots or Turks or employees. Everyone seems to get morally outraged about this, but I've yet to see anyone suggest an alternative system that solves the underlying issue of incentives. Most bans and limits are ineffective because they are at odds with the incentives of Ticketmaster. Do you make secondary markets illegal? What if someone can't go? Just balancing the incentives is a tricky issue to say nothing of finding the optimal balance of fair.
[+] bogomipz|9 years ago|reply
The article states:

"Tickets are incorrectly priced, which incentivizes scalping If there's a reliably profitable secondary market for tickets, that means tickets are being priced too inexpensively by the artist."

This is a refrain that is put forth time and time again but people who's business is reselling tickets in the secondary market. The blame is somehow shifted to the artists.

Touring and tour routing are incredibly difficult logistical operations. A touring act has so many variables that they have to consider when they put tickets on sale - availability of venues for dates that coincide with their tour routing, release date of an album their supporting, time of year in which their touring, gauging the current demand, possible competing shows the same night with similar a fan base. The local promoters need lead time to promote the show.

If it was a single show in single place then yes they could exploit dynamic pricing and maximize the price of each individual ticket, much like an airline does. This is not the reality though and as such there may end up being some inefficiencies created inadvertently. This however is not same thing as what is stated here - "the artists are the ones that created this by mis-pricing their tickets." Pricing tickets is a compromise between all of those things I mentioned above. I don't think that necessarily means its someone else's for the taking however.

[+] hitgeek|9 years ago|reply
venues need to just formalize the unofficial auction + lottery system that already exists in various secondary markets.

some tickets are sold via auction, others are offered at a set price to those who win a lottery.

The only difference is that venues + artists can benefit rather than middlemen.

I think VR has the potential to help alleviate some of the market pressures by offering an experience with nearly limitless supply.

[+] scraft|9 years ago|reply
Big artists, that have gigs where tickets cost the best part of $100 (I'm UK based and I'm converting what we'd pay for big name artists gigs from GBP to USD) are saying they have 10X the demand of people wanting to see them than the stadiums can take....

...wow that sounds like an awesome problem to solve! Like play 10 dates, or if that is too tiring, maybe they could let a lot of people watch live on VR headsets for a much cheaper rate (like $10 or something) - I am always hearing the global number of Gear VR sales is large and getting larger and larger.

I understand this problem is different to normal computer problems, but I'm used to it being the case that you don't need to worry too much about scalability - because if you are in the position that you do, you should have the resources to be able to find a nice way to solve it!

Maybe some sort of bitcoin/blockchain + verifiable ID, so on the door you can prove:

1. You are the person who paid the ticket 2. The price you paid for the ticket, is the price on the ticket

[+] k-mcgrady|9 years ago|reply
I really don't see the point of a live concert VR. The experience will be completely different. Releasing a well recorded and edited version once per tour makes much more sense to me.

The ticket problem needs to be solved but it won't when you have the biggest ticket sellers (Ticketmaster) owning marketplaces for second-hand tickets. I recently read one of these companies was buying tickets and then putting them on the secondary marketplace themselves at a huge markup.

As for booking extra shows - I don't know why this doesn't happen. Maybe they don't have the data? Much better for an artists brand if they sell out 2 nights than have 3 nights with none of them sold out.

NB: The biggest artists (selling out places like the O2 Arena in London for multiple nights) rarely charge over $60/£50 for general admission. The only people I see charging $100 are well established older acts (Fleetwood Mac, Tom Petty, etc.).

[+] waterside81|9 years ago|reply
As others have pointed out here, a lottery system with ID can help beat this. Pearl Jam's fan club ticket sales require you to choose ahead of time which concerts you want to go to (max 2 tickets per show) and then on lottery day, you're informed if you won or not and your card is charged. Although a bit opaque, it does make it harder to game the system.
[+] durango|9 years ago|reply
two ticket max is a bummer.. are there specific seats for PJ's concerts? Would suck if you and 4 other friends wanted to go, just curious
[+] iamjdg|9 years ago|reply
Couldn't ticketmaster put a minimum time limit on each ticket sale? So a bot tries to buy a ticket and ticketmaster says sorry you completed the transaction too fast, you are probably a bot. Pick a min time consistent with how long it typically takes a person. This would level the playing field between bots and humans.
[+] intrasight|9 years ago|reply
I find it hard to believe that in the age of ubiquitous and relatively secure smartphones that we can't write a ticket auction app. So I have assume that there are powerful stakeholders whose interests would not be served.