Everyone’s a scalper: secondary ticket market as strong as ever

Recent news about artists and promoters cashing in on faux secondary ticket market sales shouldn’t come as a surprise to anyone. Neil Diamond apparently saw what everyone else knew as well: secondary market ticket sales are booming and there’s probably no turning back.

The mechanics of the secondary market have been evolving for more than a decade, and it’s astonishing how much trust there is among buyers and sellers. I have no clue when the first eBay ticket transaction took place, but I do know that I auctioned off my pair of 1999 Ryder Cup tickets for $3,000 to a ticket broker who was then going to resell them to someone else. I had never sold anything at all on eBay before then, and yet the buyer overnighted a cashier’s check to me without fear.

My son was 11 in 1999 and remembers that transaction mostly because he didn’t get to go to the Ryder Cup. But he also learned two important lessons that day that artists like Neil Diamond have been learning as well:

1. The Internet is very, very efficient at putting buyers and sellers together, increasing the chances that prices will reach their true value
2. You can profit off ticket market information if you act earlier than others and accept some risk

So it seemed perfectly natural to me to watch this scenario unfold:

1. A Portland man purchased two ticket strips for the NCAA regional basketball tournament for $340 back when they went on sale in March 2008. There are 3 tickets in each strip: two first round games on Thursday and a second round session on Saturday.
2. My son, a UW student, purchased those tickets from him a week ago on eBay for $425 before the UW Huskies had even been formally selected for a slot in Portland. The seller had zero eBay feedback and my son sent him the money by PayPal with the expectation that they would arrive by mail, which they did 2 days later.
3. As soon as the brackets were announced and game times decided, he listed the tickets for the other first round session (that includes Gonzaga) on Craigslist. Within 30 minutes he had a guy in Portland willing to PayPal him $300 for those tickets, plus $17 to overnight them back to Portland. So he gets to see the Huskies play in the other Thursday round, plus the second round, for less than the original face value.

Did you follow that? The NCAA (via Ticketmaster), eBay, craigslist, Paypal. The U.S. postal service in the middle three different times, first sending the tickets to Oregon, then to Washington, then back to Oregon. What’s remarkable about it all is the ease at which all this commerce happened, the online systems that enabled it, and the trust between strangers required to complete it. And yet similar scenarios happen thousands of times a day, with billions of dollars at stake.

So should it be a surprise to us when big-name artists like Neil Diamond, Bon Jovi and Elton John get caught up in the game? Proabably not. Supply and demand is a force that’s difficult to contain.