Ticketmaster stung by undercover journalists, who reveal that the company deliberately enables scalpers and rips off artists

Even in this era, dominated by vertically and horizontally dominant monopolists, few companies are as chronically dirty and corrupt as Ticketmaster (previously), whose parent company, Livenation, is the world's largest concert promoter. Controlling promotion and ticketing is a one-two punch for a monopolist: Livenation's rival promoters still inevitably end up selling tickets through Ticketmaster, enriching their biggest competitor.

Ticketmaster and Livenation have managed to claim an ever-larger slice of the revenue generated by creative artists and the companies that invest in their work, Meanwhile, Ticketmaster's shows are notorious for selling out in seconds to bot-running scalpers who then mark up the tickets and sell them for many multiples of their face-value.

Ticketmaster has always maintained that these scalpers were unfortunate and undesirable parasites that preyed on Ticketmaster, the performers and the audience alike. Ticketmaster says that it uses anti-bot tools to kick scalpers off the system and prevent them from buying tickets, but laments that it sometimes loses the arms-race with the scalpers and their bots.

But a CBC/Toronto Star undercover investigation has revealed that Ticketmaster runs a secret, parallel system called "Tradedesk" that encourages the most prolific scalpers to create multiple accounts to circumvent the company's limits on ticket sales, and then allows them to re-list those tickets for sale in its "brokerage" market, which nominally exists to allow fans who find themselves with a spare ticket or two to sell it other fans. According to Ticketmaster reps who were unaware they were being secretly recorded, the most successful scalpers use this system to make as much as $5 million/year.

Of course, this means fans are getting gouged. With Ticketmaster colluding with scalpers, there's no way for a genuine fan to simply buy a ticket at face-value: not only are the scalpers always going to be better at buying tickets than fans can be (because fans buy a few tickets, every now and again, and scalpers work the system day in and day out), but they have an insider advantage, thanks to their partnership with Ticketmaster, who are supposed to be operating a fair marketplace.

But there's another way in which Ticketmaster is ripping off the world here: Ticketmaster is meant to act as a broker on behalf of performer -- the people whose creative labor is the reason for the sales in the first place.

The performers sell Ticketmaster the tickets to the show, and Ticketmaster takes a commission on the initial sale of the tickets and passes the rest on to the performers, but then, when Ticketmaster sells the ticket again (on behalf of a scalper, for a much higher price), it earns a second commission -- and the artist get nothing.

Ticketmaster issued a non-denial-denial to the Star and CBC, and implied that this was a case of rogue employees doing naughty things. But the misdeeds that the journalists caught on video came from a wide variety of Ticketmaster staffers, acting on behalf of the company at a major trade-show, with no hedging or any sense that they were offering access to something untoward. What's more, the CBC/Star report is backed up by a leaked copy of Ticketmaster's handbook for professional "resellers."

In a separate investigation, the CBC/Star team showed how Ticketmaster manipulates ticket prices in realtime using deceptive tactics (withholding blocks of tickets until mid-sale, then releasing them at above-face-value prices) to bilk fans out of more money. Hilariously, Ticketmaster blamed this on the "promoter" of the concert, which was Livenation -- the company that owns Ticketmaster.

CBC News obtained a copy of Ticketmaster's official reseller handbook, which outlines these fees. It also details Ticketmaster's reward system for scalpers. As scalpers hit milestones such as $500,000 or $1 million in annual sales, Ticketmaster will knock a percentage point off its fees.

The Ticketmaster employee who gave the video conference demonstration in March said 100 scalpers in North America, including a handful in Canada, are using TradeDesk to move between a few thousand and several million tickets per year.

"I think our biggest broker right now has probably grabbed around five million," he said.

Cross, who has spent the past two years researching online ticket sales, suspects some fans will read about this and conclude Ticketmaster is colluding with scalpers.

"On one hand, they say, 'We don't like bots,' but on the other hand, 'We have all these clients who may use bots.'"

'A public relations nightmare': Ticketmaster recruits pros for secret scalper program [Dave Seglins, Rachel Houlihan, Laura Clementson/CBC News]

(via Super Punch)

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