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Who Wants Tickets?

ONLINE TICKET SCALPING
I always thought the Internet might curtail conventional ticket-scalping – the for-profit reselling that is restricted or prohibited in 27 states. Efficient online sales would widen the retail bottlenecks that arguably worked to the scalpers’ advantage. Then, honest resellers would meet buyers online. This may be happening, but if a recent experience with StubHub.com, a ticket resale site, is any guide, the Internet is also making scalping efficient and anonymous.

A friend of mine – we’ll call him “Jim” – who lives in Boston used StubHub to clear a $169.40 profit on a pair of extra tickets to a Green Day concert. First, he went online to Ticketmaster and bought eight $36 tickets to the Grammy-winning band’s April 30 show in Amherst, MA, paying $68 in service charges. Then he registered on StubHub for free and priced one pair at $310. A few days later, a fan from a Boston suburb bought them for $304. (Jim had agreed to let StubHub lower the price over time.) After the buyer paid for the tickets, StubHub e-mailed Jim a FedEx shipping label with the buyer’s address and StubHub’s San Francisco address as the return address. Using this label, Jim sent the tickets anonymously to the buyer. When the buyer told StubHub he’d received his tickets, StubHub pocketed 15 percent ($45.60) of the sales price and released the rest to Jim via PayPal, the online payment service. According to its website, StubHub collects an additional 10 percent of the sales price and the shipping fees from the buyer.

The buyer had technical difficulty with the website, and the sale was completed over the phone with a StubHub agent. But no one asked Jim if he had the ticket broker’s license required by the state of Massachusetts or noticed that his price far exceeded the state-mandated cap of $2 above face value, plus a reasonable broker’s service charge. When told of Jim’s transaction, StubHub’s CEO Jeff Fluhr said, “We have a very clear and very strict user agreement that clearly states that you need to obey state and federal laws.” (Jim says that he did not read the user agreement.) StubHub uses a California return address for administrative reasons and hides sellers’ identities to prevent loss of business to side transactions, Fluhr said.

New research suggests that online ticket reselling is common. Dan Elfenbein, a University of California, Berkeley, economist, has looked at online football ticket scalping and found that 1.6 percent of all NFL tickets are resold through Ticketsnow.com alone. Not only has law enforcement been absent online, he says, but prices have been higher in states with antiscalping laws, while the number of transactions has been lower. Fluhr, though condemning the illicit use of his site, conceded that the laws are “great for our business.” What his customers don’t realize, though, is that sometimes it’s better to deal with the hawkers on the street. Jim observed that on the night of the Green Day show, street-corner sellers barely recouped face value.

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