Are ticket brokers scalpers?

The topic of whether ticket brokers should be considered scalpers is a controversial one. Scalping is generally defined as reselling tickets for highly sought after events at significantly inflated prices. Some people view all ticket brokers as unethical scalpers just trying to make a quick profit, while others see them as providing a valuable service to fans who are willing to pay more to guarantee they can attend an event. Let’s take an in-depth look at some of the key considerations around this issue.

The role of ticket brokers

Ticket brokers obtain tickets to popular events in bulk through various methods. This may involve buying up tickets as soon as sales open, maintaining long-term contracts with venues for access to seats, or even purchasing tickets from the general public who have extras. The brokers then resell these tickets, often at substantial markups over face value. The brokers provide a conduit for fans to buy tickets even when events are sold out through the primary sales channels. Those willing and able to pay higher prices can still see the show or game of their choice. This does enable broader access compared to the scenario where only those lucky enough to buy during the limited primary sales period could attend.

Are markups by brokers ethical?

The biggest ethical objection against ticket brokers is that they are profiting unfairly off of people’s enthusiasm for seeing a specific performance or event. It seems inherently unfair that brokers can buy up tickets en masse with the sole intent of reselling to genuine fans at 2, 3, 5 or even 10 times the face value price. Ticket prices on the primary market are ostensibly set based on recouping the costs of staging the event and earning a reasonable profit. Markups by brokers far exceed those reasonable profit levels. It essentially allows them to exploit scarcity and high demand to earn windfall profits. Many view this as unethical profiteering off the passion of true fans.

Counterarguments

Supporters of ticket brokers counter that they are simply operating a business within the parameters of the free market. Event organizers and primary ticket sellers choose how to price and distribute their inventory. If they wanted to curb reselling at higher prices, they could choose to price differently or limit how many tickets each buyer can purchase. Beyond that, brokers are just responding to consumer demand and the willingness to pay of some fans. As long as people buy from them voluntarily, who is to say what a fair profit level is?

Do ticket brokers provide a valuable service?

As mentioned earlier, brokers can expand access by catering to those willing to pay more for a guaranteed ticket. With many high profile concerts, games, festivals etc., sellouts and rampant resales are inevitable. So the broker provides a choice beyond crossing your fingers and hoping to buy during the primary sales window or entering difficult lotteries. Their inventory gives latecomers or less internet-savvy fans a last resort option. And even patient fans who opt not to buy above face value still often benefit from brokers listing large quantities of seats for resale. This increases overall supply and can put downward pressure on secondary market prices compared to more limited black market scalping of old.

Criticisms

Critics counter that brokers aren’t really “expanding” access, they are just catering to those wealthy enough to pay outrageous prices. They are redistributing access towards the affluent and away from regular fans. Events can lose their communal feel and energy when the crowd is skewed towards corporate execs rather than grassroots supporters. Additionally, brokers don’t have to provide significant added value or exceptional service to justify the higher costs. They exploit their access to a captive audience who realistically has little alternative but to pay inflated prices if they want to attend.

Do ticket brokers help or harm primary sellers and event organizers?

Another layer to this issue is the impact brokers have on the entities organizing events and selling the initial batches of tickets. Having a robust secondary market with highly marked up prices can be seen as bad for optics and public relations. Fans get angry seeing third parties profiting well off the work of artists and teams. This frustration often gets directed back at the primary seller or organizer. They may be criticized for not structuring sales in a way that limits reselling. On the other hand, the presence of brokers likely does expand the overall money spent on tickets. Primary sellers get the same revenue from their initial sales. Higher secondary prices just mean more money is spent overall. And that additional money goes towards fans’ enthusiasm for the event itself, even if it is captured by middlemen brokers rather than creators.

Impact on pricing psychology

There are also psychological impacts of having a disconnect between initial face value prices and higher secondary market prices. People partly judge what a fair or normal price is based on anchors and what’s initially presented to them. When primary prices are £50 but secondary markets quickly jump to £200, that shifts perceptions. It may impact what fans expect to pay and reduce resistance to higher prices. If brokers didn’t exist, the primary sellers may have been able to charge £75 or £100 themselves initially without as much pushback. But since secondary markets exist, they likely left money on the table pricing at just £50. So the brokers’ actions can indirectly impact pricing psychology and normality.

Regulatory interventions around ticket brokers

There have been some efforts to regulate ticket resales to disincentive or prohibit extreme inflation by brokers. Common approaches include:

• Price caps – Limits on how much above face value brokers can resell for. Often a percentage cap like 50% above face value.
• Fee caps – Limits on the total fees that can be charged. Prevents brokers from marking up the ticket 20% but then adding egregious service fees on top.
• Registration requirements – Resellers may have to formally register with a regulator and purchase a license to operate. This cuts down on fully anonymous black market sales.
• Bot prohibitions – Restricts brokers from using software bots to rapidly purchase huge volumes of tickets as soon as sales open.
• Cancellation/Refund rights – Provides consumers enhanced ability to return tickets purchased from brokers if price was misrepresented.

However, enforcement of these types of rules can be challenging. Brokers find creative workarounds and operate across jurisdictions. And too onerous restrictions also risk curbing legitimate resale activity. Finding the right policy balance remains a challenge.

Data on the ticket broker industry

Let’s look at some data on the size and workings of the ticket broker industry:

The data illustrates this is a massive industry built around reselling event tickets at substantial markups. While better regulations may help curb worst excesses, market forces likely mean brokers will remain a significant presence in the ecosystem.

Case study examples

Concert tickets

Concert events for major pop stars like Taylor Swift or legacy acts like the Rolling Stones routinely have tickets immediately resold at twice face value or higher. For example, floor seats to a Swift show priced at £150 may quickly reappear for £400-500. These extreme markups frustrate fans and often see brokers criticized by artists themselves. Yet superfans remain willing to pay the inflated prices.

Sporting events

Tickets to championship games or matches featuring iconic athletes like Lebron James also draw the attention of brokers looking to profit. The NBA Finals, Super Bowl, and World Cup Final frequently have tickets with a face value of a few hundred pounds resold for £2,000-3,000 or more. These can end up being once-in-a-lifetime event memories for superfans willing to dig deep.

Broadway shows

Hit Broadway musicals like Hamilton had huge demand that brokers capitalized on, with resale prices commonly hitting £500-1000 for an average ticket. However, Broadway implemented regulations like ticket caps that aim to limit extreme resale inflation. This provides a case study on whether regulation can strike the right balance.

Perspectives from industry insiders

Those playing various roles within the live event industry have shared diverse views on brokers and scalping issues:

Artists and teams

“It’s impossible for an average fan to get a fair shake. The bots eat up all the tickets and then they’re magically available at four times the price. It’s not right.” – Musician David Byrne

“I don’t think the secondary market is fair for fans. We try to price tickets fairly and I wish brokers wouldn’t profit so much off fans’ loyalty.” – NFL athlete Tom Brady

Promoters

“As promoters, we’d love to capture more of that excess value resellers are getting. But stopping resales altogether risks losing some of the energy and excitement that comes with the hottest shows selling out.” – Michael Rapino, CEO of Live Nation Entertainment

Brokers

“We provide a valuable marketplace and level of access that wouldn’t exist otherwise. If someone is willing to pay well above face value, that’s their prerogative.” – Broker industry advocate

Conclusion

There are good faith arguments on both sides of the ticket broker debate. Brokers do enable broader access to sold out events and a legal secondary market. Without them, desperate fans would likely pay similar premiums to potentially shadier black market scalpers. However, the extent of markup still often feels unfair and disproportionate, leaving a bad taste for many customers and stakeholders. The right regulatory scheme can help limit the worst practices without over-restricting resales. Ultimately, informed consumers need to decide what a fair price looks like to them as individuals. Paying a premium naturally grants better access, but each person’s ethics on what’s an acceptable upcharge will differ.