Search

The Failure of the Primary Ticketing Industry

The primary ticketing industry is in tatters. Whenever concert or sport onsales (sales on primary sites) happen, fans are disappointed, almost without exception. There can be little argument over this. Social media pages, blogs, chatrooms are awash with disgruntled members of the public bemoaning the fact they failed to get tickets to see their favourite artist on tour, or their football team play in the cup, or whatever it may be. Just this week tickets went on pre-sale for Harry Styles’ upcoming Europe and North America tour, and #ticketmaster was trending on Twitter for this exact reason.

























The existence of the secondary market is purely down to the failures of the first. If the primary market worked, there would be no secondary one. It’s that simple. So why has the primary market failed, and why has the secondary market flourished in its place? These are complex questions that do not warrant oversimplified answers.

One of the main criticisms levied at the secondary market is that tickets sell for huge markups, ten times their face value, they say. But the very fact that people buy tickets at these prices means there is demand for them. Primary sites are failing to match the value of tickets with supply, which supresses demand. Undervalued tickets sell far quicker than those properly priced because they’re cheaper. Events that sell out are, by definition, undervalued.


Artists and primary sellers get annoyed by people selling their tickets at a profit, and that is completely understandable. They are missing out on potential profits that are instead going to the reseller. If a ticket is listed at onsale for £100, and then resold for £300, the secondary seller has made more money off that ticket than the primary. Taylor Swift appears to be the only artist that has tackled this issue head on. The onsale for her 2015 tour in support of her fourth studio album, 1989, sold out almost instantly. Around 30 per cent of the tickets would later be sold on the secondary market. The Financial Times estimated that Swift lost out on about $150 million of revenue by selling tickets at below their market value. In response, Swift massively hiked prices for her next album tour in 2018, with some tickets going for as much as $700 at face value. The prices were so high that the tour didn’t sell out. Critics quickly derided this “disaster”, but another Financial Times analysis later that year estimated Swift made an additional $1.4 million per show. By marketing tickets at their actual value – often what tickets on secondary platforms sell for – Swift disincentivised resellers, and essentially cut out the secondary market. Just 5 per cent of her tickets appeared on secondary sites that year.


These failures within the primary market have been further compounded by a serious lack of innovation. Primary sellers seem resistant to change their intrenched ways, and so proffer ridiculous solutions that only impede the very demographic they saying they are trying to protect, fans.


Gerry Cinnamon is an up-and-coming singer-songwriter from Scotland. He’s about to embark on a UK-wide tour, and tickets for his shows have recently gone on sale. On his website, he’s released a statement saying “We want to ensure our tickets go to real fans, please read the below to make sure that you can definitely get into the show”. Scroll down and you are greeted with a series of bullet points explaining “the attendee must bring a valid photo ID matching the customer surname on the booking confirmation”, and that “Guests must all enter the venue at the same time as the lead attendee, as you can only gain access with ID matching the name on the printed ticket”. Finally, the page signs off with the now customary “don’t buy from any secondary ticket sellers such as Viagogo or StubHub, as those tickets will not be valid and you won’t get into the show”. Only permitting entry to those that can provide photo ID is an oversimplified solution that will no doubt cause many that have bought tickets with their own money to miss out. I’m sure there will even be those that bought tickets off his website that will be refused entry for this exact reason.


Although it’s not a disruptive innovation in the strict definitional sense, the secondary market has, at least figuratively, disrupted the primary ticketing market. The internet has transformed it from weird men standing on street corners with overpowering aftershave to an established multi-billion-dollar industry. Throughout history incumbent businesses have been challenged by the new kids on the block. Cars disrupted the rail network, computers the typewriter, digital photography the film camera. Companies either evolved or died. The internet has merely given greater opportunity for other industries to be disrupted. Video streaming services put Blockbuster out of business. Music streaming has made CDs redundant, just as they had to vinyl. Mobile ride-hailing apps like Uber have decimated the traditional taxi model.


The same will happen to the primary industry unless they fail to react, rather than act like children and just ban people that bought tickets from someone other than themselves. There are ways they can do this. Dynamic pricing, for instance, uses algorithms to fluctuate prices based on demand, much like airline tickets. Big data is the way forward. Primary sellers need to use the internet to their advantage, not just complain when others are doing it at their expense.


Those that see disruption as an opportunity, rather than a threat, will thrive. When EasyJet and Ryanair emerged as challengers to the well-established airline industry by offering a budget option, British Airways (BA) adapted. They abandoned their business model that had brought them so much success up to that point and looked at what these other airlines were doing. BA launched its own no-frills service, Go, in 1998. It sold just three years later for £100 million. More recently challenger banks such as Monzo and Starling have upset the financial industry, forcing the big players to adapt. In response, Goldman Sachs, arguably the embodiment of the old school banking system, has just launched its own online only savings account, Marcus, offering better rates than the rest of the market.


The threat the primary market feels from secondary sellers is a natural consequence of the free market. It is providing a service – i.e. offering customers the chance to buy tickets whenever they like, rather than within a 2-minute window with the rest of the world – that the primary one simply is not. This is both natural and avoidable. It is picking up where the primary is falling down. In order to survive, the primary market has to evolve, not shun innovation and change. At the end of the day, these will make them better companies that provide a more complete service. Maybe their servers won’t crash after half a million people flood to their website, despite being the ones that set the time that increased traffic will arrive. As Darwin said, “It is not the strongest species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”.



0 views

© 2019 by UK Fans Trust

Cookie Notice

Privacy Policy