AILSA CHANG, HOST:
As we continue our series called Cost of Living: The Price We Pay, we're going to look at the high prices for concert tickets. The strange economics of the ticket market has given rise to reseller bots. They're considered a scourge in the industry that makes prices higher. But in the world of economics, they do have a function. Our colleagues Wailin Wong and Darian Woods over at The Indicator explain.
WAILIN WONG, BYLINE: Lauren Wayne can tell when the ticket reselling bots show up.
LAUREN WAYNE: It's easily recognizable, but it causes a lot of pain (laughter) and suffering.
WONG: Lauren runs the State Theatre in Portland, Maine. It's a concert and event venue. And in the last few years, that has meant constant battle with the bots. Lauren has learned to spot their activity.
WAYNE: If we see tickets on the secondary resale sites that they're selling before we go on sale, that's obviously a red flag.
DARIAN WOODS, BYLINE: Those tickets are called spec tickets. They show up on sites like StubHub and SeatGeek, and they don't exist. So that's one telltale sign of bots. And then once ticket sales do get underway, Lauren looks for other signs, like 500 tickets getting bought overnight.
WAYNE: They've been purchased by bots who are not even people. It's just technology just grabbing whatever they can.
WONG: Lauren says when this happens, her staff has to manually void the purchases. They refund the money and then return the seats to the regular inventory.
WOODS: It's time-consuming work, and there is another problem. Resellers sometimes offload those tickets to fans anyway. That fan doesn't know that the ticket that they bought has been voided.
WAYNE: There's nothing sadder than having someone, you know, show up at their favorite artists and thinking that they're going to get in and they don't get in.
WONG: These kinds of horror stories are what makes fans, artists and venue operators super frustrated with ticket reselling.
WOODS: So there's a lot of finger-pointing when it comes to the secondary market. The obvious villain is the resellers who operate the bots. Then there are big online resale platforms like StubHub. It's been criticized for not doing enough to police bot activity on its website while also benefiting from those sales. We reached out to StubHub but didn't hear back. In a recent interview with Axios, though, its CEO says the company has publicly lobbied for stopping bots.
WONG: The Federal Trade Commission and seven states have also accused Ticketmaster of being part of the problem. Ticketmaster controls 80% or more of the major concert venues' primary ticketing market, but it also allows customers to resell tickets on its platform. In September, the FTC sued the company. It said Ticketmaster was coordinating with resellers and profiting from the sale of marked-up tickets.
WOODS: Ticketmaster and its parent company, Live Nation, deny the government's accusations, and the companies say they've invested over a billion dollars on ticket security and anti-bot technology.
WONG: Now, no matter who you want to blame the most, the secondary ticket market does serve an economic purpose. That's according to Alan Sorensen. He's an economist at the University of Wisconsin - Madison who has studied this market.
ALAN SORENSEN: Tickets are so often mispriced in the primary market, especially, I think, for music concerts. Because artists have some control over the pricing, I think many artists imagine that by setting low prices, they're doing their fans a favor. And that leads to sort of, you know, funky things. Among other things, it leads to a really active resale market.
WOODS: Here's what Alan means by mispricing. Think of a perfectly efficient, free market where a good is sold at a price where supply meets demand. If that doesn't happen, though, if, say, an artist prices tickets below that equilibrium level, then the secondary market will correct that mispricing.
SORENSEN: It might feel like the price really shouldn't be $250 for that ticket, but if it sells in an open, free market for $250, then yes, that kind of is the market price, whether you like it or not.
WONG: Darian, you know what you can do at Lauren's theater if you want to avoid dealing with ticketing websites just full stop?
WOODS: What?
WONG: You can go in person to the box office. No fees.
WOODS: (Laughter) I'll get my tent ready.
WONG: Wailin Wong.
WOODS: Darian Woods, NPR News.
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