Who Needs Tickets? Examining Problems in the Growing Online Ticket Resale Industry

I. INTRODUCTION II. HISTORY: FROM 'SCALPING' TO 'RESALE' A. Pre-Internet Scalping and Anti-Scalping Legislation B. Growth of the Online Resale Industry III. 2007 HANNAH MONTANA TOUR: THE TICKET RESALE MARKET COMES OF AGE IV. TICKETMASTER, LLC V. RMG TECHNOLOGIES, INC. V. THE FUTURE OF TICKET SALES IN THE UNITED STATES VI. CONCLUSION I. INTRODUCTION In December 2007, I received two tickets to see the Detroit Pistons play the Washington Wizards at the Verizon Center in Washington, D.C. on January 2, 2008. The tickets were purchased using Craigslist.org, an online marketplace. The tickets themselves were premium seats, only ten rows behind the visiting bench, and they were purchased at a price below face value. The seller was not a career ticket broker, but merely someone trying to unload tickets to an event he could not attend. While online transactions involving regular people are common, professional ticket brokers are increasingly dominating the online ticket resale market. (1) It is beyond dispute that this secondary market for event tickets based on supply and demand will continue to exist in the United States, at least absent some radical shift in policy by Congress and state legislatures. The online resale market is growing rapidly; estimates of annual sales over Web sites like StubHub, eBay, Craigslist, RazorGator, TicketsNow, (2) Ticket Liquidator, and others totaled about $3 billion in 2006. (3) That number is expected to rise to $4.5 billion by 2012. (4) This market success has compounded the enforcement problems currently experienced by states that wish to crack down on scalping. "Because of the consensual nature of purchasing a ticket ... as well as the anonymity of Internet transactions, enforcing scalping laws across state borders may be too costly." (5) "Legal gray areas" in the personal jurisdiction and choice-of-law contexts also exist when bringing actions against these auction sites or the brokers themselves. (6) Though the primary beneficiaries of this burgeoning market are the resellers--who routinely make profits on tickets that more than double their face value (7)--the substantial utility to the consumer that the market provides should not be lost in the fray. First and foremost, the supply and demand model in this situation works well enough so that, in most cases, those who value attendance at an event the most will be able to attend. (8) Also, particularly for events that have not sold out, the secondary market provided by scalpers increases competition among all ticket sellers. (9) In such cases, if ticket scalpers did not make a business of reselling tickets, it is possible that promoters might take the opportunity to charge a more exorbitant price. Fans can also take advantage of the market forces of supply and demand by waiting until the last minute to purchase a ticket that is about to entirely lose its value to the scalper. (10) Finally, at least for those who can afford it, the secondary market alleviates the need to wait for hours, or even days, in line for highly sought-after tickets. (11) The ticket resale industry has taken on new attributes since transforming into an online business. While the Internet has helped many sectors of the economy grow in ways that were consistent with their pre-Internet model, the proliferation of online ticket resale markets has changed the dynamic of how tickets to events are distributed, especially for the most popular events. It can only be assumed that, if unchecked by public or private actors, the industry will grow to control more and more retail ticket purchases. First, at least one software company, RMG Technologies, has been identified as having designed and distributed software specifically targeting Ticketmaster's (by far the biggest distributor of face-value tickets) Web site in order to procure large quantities of tickets for RMG's broker clients. …