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Stubhub Revisted

Looks like the stubhub scam is still in force, much to people’s ongoing frustration. This is complemented by a weirdly apologist article that I saw in the Victoria Times Colonist today - Internet Lets Ticket Buyers Jump the Gun.

Typically, the article misses most of the salient points about the questionable dynamics of internet ticket sales, but it does bring to light one interesting development - TickMaster’s response to StubHub has been not to find a way to defeat ticket scalpers and fairly sell tickets at stated prices, but to build their own “secondary market” StubHub clone - TicketsNow. Is it Tickets Now? Or Ticket Snow? Because consumers are getting snowed by the secondary ticket market, and are being sold a story that somehow this is value-added to them:

“It’s totally accepted,” Blasko said of sanctioned scalping, the majority of which exists on Internet sites. “There are a lot of [fans] out there that depend on it and don’t mind paying those premiums.”

In order to meet demand, official sellers are either forced to work with scalpers or run their own secondary websites, at which they legally sell tickets at inflated prices.

Ticketmaster, the world’s largest ticket seller, has re-routed fans wanting AC/DC tickets in Vancouver to the home page for TicketsNow, a secondary market site that Ticketmaster also owns. Tickets there are priced well above the original $99.50 face value. [from VTC]

I don’t get it. If the market will really bear inflated ticket prices, why aren’t tickets just sold at that price to begin with, kneecapping the whole secondary/scalper industry? Or sold in an auction format right from the get go? Re-read the original stubhub post, and then think twice when next you purchase tickets to something.

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The StubHub Scam

A fascinating article in the NYT times today on second-hand event-ticket brokerage StubHub (more) - now owned by eBay. StubHub provides a convenient venue for people to sell tickets that they don’t want or can’t use for whatever reason - for example, a season ticket-holder who can’t make a game can put those tickets up on StubHub and make some money.

Unfortunately, as the NYT times describes, StubHub also provides a convenient venue for nefarious “ticket harvesters.” A ticket harvester is one who uses an automated too to break a ticket-sellers per-person limitations: for example, TicketMaster limits customers to 4 tickets per person, but a harvester with an automated tool can “game” the ticketmaster site into selling them hundreds or thousands of seats, which the harvester can then turn around and re-sell at great profit on StubHub. The NYT cites Ticketmaster’s four worst harvesters, who between them had bought and re-sold 115,000 tickets. The times also found that 40% of the best floor sections of a recent show had been harvested. That’s unreal.

One funny fact that came out in the NYT’s article was the techniques used by harvesting software vendors - hiring groups in India to enter thousands of captcha’s in real-time, for instance.

The upshot of the harvesting industry is that shows sell out instantly, and just as quickly, big blocks of tickets are available for purchase on StubHub at multiples of their original prices - the NYT’s example is “Hannah Montana” (whoever that is), who’s $21-66 tickets resell on StubHub for an average of $258 (see for yourself).

Lack of availability and soaring prices are a growing sources of frustration for would-be concert goers, and StubHub is setting itself up to be public enemy number one, with what the times found to be a “no questions asked” policy:

I wondered whether StubHub noticed when its sellers posted an abundance of tickets for an event shortly after tickets had gone on sale. Sean Pate, a spokesman for StubHub, said it did not ask its sellers about how they got their tickets. “It’s not our business to play judge and jury and ask, ‘Have you been fair?,’ ” he said. “All we care about is that the seller delivers the ticket.” [from the NYT]

So - StubHub doesn’t want to know how you got those 1,500 Hannah Montana tickets your selling, because harvested ticket sales are a huge source of revenue for them. As the times notes, “…isn’t StubHub offering a solution to a problem that its own suppliers help to create?”

The long and short of it is, yes. StubHub and eBay are profiting hugely on what can best be described as gray area behaviour, and in many jurisdictions, what would be outright illegal. The people that bear the brunt of those cost are the fans - the individuals and families who have to spend ridiculous amounts of money to go see a show, while fraudulent harvesters, StubHub, and eBay line their pockets and talk themselves into believing that it’s “whatever the market is willing to bear.”

Given the concentration of harvesters (i.e.: a small number of harvesters are responsible for the majority of sales), it seems like a there’s a simple solution that StubHub could implement: cap monthly transaction volumes for sellers. Run the numbers - the pro harvesters will stand out in relation to the season ticket holders; find the median per-user transaction volume, and throw down a cap. If a user wants to exceed the cap, provide an application process to allow for it that would weed out fraud.

Of course, eBay is looking for bright lights in its acquisitions after the Skype disaster, so anything that eats into StubHub’s bottom line is unlikely. Its a sad situation, however, and expect that StubHub/eBay are doing long-term damage to their business by not pro-actively addressing it. Industries should know by now that self-regulation is in their best interests.

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