Sunday, August 30, 2009

They're not Scalpers: They're Ticket Brokers

This Sunday's New York Times had a big article on ticket brokers. Ticket brokers resell tickets at a profit for sporting events, concerts and theatre. When New York state let its scalper law lapse--a law that limited the legal markup over the printed price that a broker could charge--it was only acknowledging that the whole issue of ticket prices has changed.

Ticket brokers work openly on the internet, with names like StubHub, TicketsNow, and Ticketnetwork. As the Times points out, StubHub was bought by eBay two years ago for $310 million and Ticketmaster--the online original seller of tickets to many events--paid $265 million for TicketsNow a year ago. There's a National Association of Ticket Brokers (NATB), of course, and it publishes a code of ethics for the trade.

According to the NATB, their members perform a public service:

We also believe that free market pricing of tickets, (the buying and selling of tickets at their actual market value, and not that of the face value printed on the ticket) is the only way our members may attain hard to get tickets for their clients, . . .

Today I checked the three major internet brokers for Broadway tickets. They all had at least some inventory for most any show: Jersey Boys, The Lion King, Billy Elliot, The Little Mermaid, South Pacific, West Side Story, etc.

The most recent Variety gross listing available online now, the one for June 15-21, shows eight shows selling 100 percent or more of house. Of these, West Side Story, The Lion King, Waiting for Godot, and Hair were grossing more than the theatre's dollar potential at 100 percent capacity. This can only be so if these shows were selling premium seats at the box office.
(See Chapter 5 "Ticket Pricing" in our book Stage Money: The Business of the Professional Theatre for an in-depth discussion of the economics behind variable pricing. The book will be available next March.)

If one can get a ticket at the box office, why buy from brokers? According to the website of the NATB, there are several reasons:
  • Say you don't want to stand in long lines for tickets or you just don't have the time. Many times you don't like the seats you get after waiting in lines or after finally getting through over the phone, or ...
  • You just heard your favorite performer is coming to town and you just have to get those close upfront seats, or ...
  • Your most important clients or family are coming in from out of town, you may need tickets at the last minute, when only a ticket service can help you, or ...
  • That basketball game is sold out or it was impossible to get tickets to the Superbowl, Indy 500, World Series, Kentucky Derby, Final Four, or a variety of other World Class events, or ...
  • You're going out of town on business or vacation and want to surprise or entertain clients with tickets to an out-of-town event, or simple entertain yourself!
Making money by providing convenience to the customer has a long history. Department stores, for example, pay manufacturers much less than list price for their inventory. What they provide their customers in exchange for the price markup is worthwhile, including a considered selection of all the possible merchandise, a chance to see and try on merchandise in a comfortable store close to the customers' homes, and a place to return faulty merchandise that is equally close by.

Broadway producers have long felt that the money ticket brokers make should be flowing into the producers' pockets, hence the introduction of premium tickets. I predict we will see at least one theatre experiment with other variable pricing techniques, perhaps even online auctions for the best seats at SRO shows.

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