Since Taylor Swift kicked off her Eras Tour in March, fans are flocking to stadiums around the country to see her perform live for the first time in over five years. However, many fans had difficulties in purchasing their tickets for the long-awaited event. In November of 2022, Ticketmaster reported 3.5 billion requests on their website for access to the Taylor Swift | The Eras Tour presale. Fans, scalpers, bots, and fans without presale codes entered queues at rates four times the normal peak, causing the website to crash and sparking mass chaos. This major event has caused fans to raise significant complaints surrounding their inability to purchase tickets at the time of sale due to scalpers and bots – automated software scalpers use to swiftly buy large numbers of tickets. Fans have been forced onto the secondary market, which is not regulated by the performer, and little by the platform on which the scalped tickets are being resold for substantial markups. The practice of scalping is controversial, and little has been done to stop this practice. That being said, ticket sales platforms, online scalping, and the use of bots must be regulated by the federal government.
The explosion of the digital age has resulted in a greater emphasis on live entertainment ticket sales to be conducted through e-commerce platforms such as Ticketmaster, StubHub, Seat Geek, and others. The relative price of tickets is dependent on the artist’s determinations, ticket servicers’ contracts with venues and arenas, and vertical integration of servicers. Even giants like Taylor Swift are left with no choice when selecting performing venues due to exclusivity contracts with Ticketmaster. This leaves small artists little hope to either have to play by Ticketmaster’s rules, or to find venues not under an exclusivity contract. Attendees face unknowns on the consumer end by not knowing the market-value of the tickets they are purchasing, and may not realize they are paying for a ticket on the secondary market to begin with given vertical integration. Ticketmaster created a natural monopoly after vertically integrating their primary and secondary sales platforms, and restricting where tickets purchased through their website are resold. As the sole servicer of primary tickets due to exclusivity contracts with venues, Ticketmaster is able to charge fees upwards of 31% of the total price of the ticket. By facilitating primary and secondary sales, Ticketmaster is able to charge service fees for each sale of a ticket thereby increasing revenue without increasing the number of tickets being sold. Fees for primary and secondary sale tickets vary, however for tickets to Hamilton, Ticketmaster attached an $82.40 service fee for a secondary sale ticket priced at $515 whereas they charged only $25 for a primary sale ticket sold for $725. By allowing scalping and reselling, artists and venues are able to mitigate risk by transferring the risk onto the scalpers. These factors decrease the desire of promoters and distributors from wanting to make exerted efforts to halt ticket scalping.
Ticket prices to live events have grown by nearly 400% from 1981 to 2012, surpassing the overall Consumer Price Inflation of 150% over the same time period. Live event ticket sales due to their nature are a perfectly inelastic good, meaning there will always have a finite number available for sale. Scalpers take advantage of these factors to buy large quantities of tickets for resale, creating a secondary market which does not benefit the artist and a high resale value leads to a barrier to entry for fans. With bots making up to 80% of total ticket requests, there are just too many scalpers using bots to buy tickets to resell at too high of prices.
To incentivize fans to buy tickets, events typically retail tickets below market-value. Entertainers face a dilemma in setting price levels for their shows, allowing fans of fewer means to attend, and increasing likelihood of selling out the event adding prestige to the artist. Capacity leads to a finite number of seats being available which produces monopoly pricing of tickets in both the primary and secondary sale markets. Scalpers insert themselves into the market which increases both demand for and the price of tickets netting more profit for the artist. This may disincentivize artists from wanting to exclude scalpers from the market entirely. One artist’s attempt to circumvent this was Maggie Rogers who, ahead of her summer 2023 tour, sold physical tickets at select venues for one day only. This was an ingenious way fans could skip the scalpers, the bots, and the fees associated with using online ticket sales platforms.
There is little lawmakers have done at the federal level to protect ticket-purchasers from scalpers, bots, and scams. Lawmakers have a number of options to consider when deciding which approaches to take including breaking up the Ticketmaster/Live Nation Merger, and changing how tickets are able to be transferred and sold.
While fans and artists have incentive to curb bots and scalping, ticket sellers have little incentive to do more than the bare minimum. The BOTS Act is the only piece of federal anti-bot legislation to be signed into law, and is only a reactionary measure. Online event ticketing is not well federally regulated, and even with legislation like the BOTS Act, only three individuals have been prosecuted under this legislation. The BOSS ACT attempted to take this one step further, by preventing tickets from being resold at a value greater than their original purchase price, and would require sellers to clearly state whether they are in possession of the ticket at the time of the sale, and prohibit primary sellers from scalping their own tickets and “reselling” them on sites at a higher price. On the producer end, systems like reCAPTCHA, prior detection, Proof of Work, etc. all provide varying levels of security and usability, but are still used nonetheless. Given the insurmountable gaps in anti-bot and anti-scalper security, enforcing the BOTS Act, and passing The BOSS Act would reduce the use of bots for scalping, prohibit current deceptive scalping practices, and ultimately mitigate the problem at hand.
Legislation in Western Australia, the Ticket Scalping Law 2018 , provides a template for what federal legislation could look like in the U.S. The law drastically undercuts the secondary ticket sales market by capping the resale value at 110% of the original purchase price. In addition to this price ceiling, 5% of the inflated cost is routed back to the primary seller (artist, sports team, etc.), and 1% is routed back to the sales platform to encourage compliance while also outlining steep fines for violation.
Numerous complaints have been brought to the Federal Trade Commission (FTC) regarding violations of the terms of Ticketmaster and Live Nation’s 2009 merger agreement. Since the sale of Taylor Swift | The Era’s Tour tickets on November 15th, three State Attorneys General, Congress, and the Justice Department have opened investigations into whether the company has abused its power and violated the merger’s terms, and 26 fans have since filed an antitrust lawsuit against the company. Standard Oil Co. controlled approximately 90% of the oil market when the Supreme Court judged it a monopoly, and as of 2020, Ticketmaster controls approximately 80% of the ticketing market. Suggesting Congress and the FTC will find culpable evidence for violations under the Sherman Act.
Increasing the level of competition within the ticketing industry suggests Ticketmaster will expand their anti-bot software and anti-scalper policies to prevent the tickets they sell from being resold elsewhere. Breaking up the monopoly and potentially revoking their secondary ticketing market removes their ability to double dip on fees. In moving forward with this solution, great care must be made to not create a power vacuum within the ticketing market. With Ticketmaster controlling so much of the market share due to vertical integration, removing this influence with no additional regulation may do more harm than good. If this option is taken, other regulations must be simultaneously implemented to avoid fully disrupting the ticketing industry.
Conveniently, political feasibility and popularity to pass such legislation, or begin breaking up the Ticketmaster monopoly is at an all-time high. To prioritize such legislation requires a decision to hold attendees over ticket-retailers. While difficult, removing grossly inflated resale values and bots from the ticket-buying process is a necessary step as we move deeper into the digital age.