The dirty little secret of the world's live music economy

THERE are few more misleading terms in the entertainment industry than “sold-out show”. Sure, maybe all the regular tickets for particularly popular gigs sell out within five minutes of going on sale, but there are always some tickets held back for the controversial secondary ticketing market.

Ticket pricing is a mysterious art, but in a nutshell what occurs all over the developed world is a scenario something like this. The promoter wants to shift all the available tickets – say 20,000 of them at €50 a pop. Enter the broker – a legal operator who calculates the demand for any given show.

If it’s decided that 100,000 people will be looking for 20,000 of those €50 tickets, they will pounce. Brokers buy as many tickets as they can at face value and then let the laws of supply and demand do their thing. Depending on interest, the broker then resells (that’s the secondary part) the ticket closer to the date of the concert at anywhere upwards of €75.

These brokers could be individuals like you or me, or could be a company or website. It’s touting, and it’s legal – but it sounds better when you call it secondary selling.

But there’s another aspect to this secondary market, which has recently been discussed in the US media. It’s one of the dirty little secrets of the international live music economy that when a hopeful concertgoer pays over the odds for a ticket, the seller may well be the artist themselves rather than the despised “ticket touts”.

A band playing a major US show or international tour can demand a number of tickets for themselves (some free; others paid for at face value), often for the best seats available. They then release these tickets to secondary sellers – such as Ticketmaster’s TicketExchange company (which is owned by Ticketmaster’s US parent company and does not have an Irish operation).

The Wall Street Journalrecently named and shamed a few of these artists. The first paragraph of the article reads: "Less than a minute after tickets for last August's Neil Diamond concerts at New York's Madison Square Garden went on sale, more than 100 seats were available for hundreds of dollars more than their normal face value on premium-ticket site TicketExchange.com. The seller? Neil Diamond."

The article also mentioned acts such as Bon Jovi, Celine Dion, Billy Joel and Elton John, who also sell on their tickets.

In the US, these re-sale tickets usually appear on TicketExchange – which says it is for “fan-to-fan” transactions – as in, for people who have tickets but can’t make the show, so want to recoup their initial outlay or to make a small profit.

The allegation here is that Ticketmaster/TicketExchange and the artists are working together – a major artist can generate more than €3 million a tour from these re-sold tickets.

It’s all quite curious, especially as the chief executive of Ticketmaster’s US parent company, Irving Azoff, is on the record as saying that the resale of tickets only serves to “drive up prices to fans – without putting any money in the pockets of artists or right-holders”.

But isn’t ticket reselling just what TicketExchange does? Not so, says Ticketmaster: “The goal [of TicketExchange] is to give the most passionate fans fair and safe access to the best tickets”. So is it just a freaky coincidence that all of any band’s most passionate fans are also the ones who can afford to pay a multiple of the original face value of a ticket to get into a show?

With Ticketmaster operating two major secondary ticketing sites – TicketExchange and TicketsNow – an aura of respectability has been put on legal touting. And bands who may, in the past, have baulked at reselling tickets for higher prices, now seem anxious for a piece of the action.

As the president of Ticketmaster’s US parent company Sean Moriarty said in an interview: “Clients who five years ago were not willing to allow a ticket to be resold now want a piece of it.” Informed estimates put the value of the secondary ticketing market at around $5 billion a year in the US alone.

These revelations will hardly help the proposed merger between Ticketmaster and Live Nation. The merger is already being examined by the US Justice Department to see if it is in breach of competition laws. Last week Ticketmaster said that it had received demands from the Justice Department and other government agencies investigating their activities in reselling concert tickets.