Front Burner - Ticketmaster’s Taylor Swift trouble

Episode Date: November 22, 2022

Last week, Ticketmaster pre-sales for Taylor Swift's Eras tour quickly devolved into chaos, with site crashes, many people waiting eight hours or more in online queues, and tickets going for upward of $40,000 US on secondary sales sites like Stubhub. This is far from the first incident to prompt widespread outrage against Ticketmaster. Sky-high prices for Blink-182 and Bruce Springsteen concerts have been among the sore spots. But the Swift fiasco is shining a new light on the company's virtual monopoly over wide swathes of the live music industry, prompting many — including several U.S. lawmakers — to call for the company to be investigated and broken up. Today, Jason Koebler — editor-in-chief of Motherboard, VICE's technology site — joins Front Burner to break this all down.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Allie Janes, in for Jamie Poisson. So if you're a Taylor Swift fan and you really wanted to see her upcoming Eros tour, last Tuesday might have gone something like this. First, you managed to get a code for the Eros pre-sale through Ticketmaster's verified fan system,

a system that's supposed to weed out bots and scalpers. Then you would have gone on Ticketmaster's website with your code and then waited in a presale queue, a very long presale queue, sometimes eight hours, sometimes up to 10. And then maybe you were dropped from the queue multiple times because the site kept crashing. Securing your seats and it crashes. We go to checkout, same thing happens. Crash is already sold. Crashes again, except this time, total crash, booted out, can't do anything anymore. And then after all that, maybe you got through and couldn't find any tickets. I had as available on Ticketmaster and in my cart,

and when I hit next to go to checkout, suddenly they were gone. So he went to StubHub to find resales and discovered that the cheapest tickets to the show were going for tens of thousands of dollars. 30,000? We're talking 30, 40,000 USD. Even more by some reports. Like, you could buy a very nice medium-sized sedan for that money.

I'm about to go all look what you made me do on Ticketmaster because this is a shame and a crime, and I need to take out my frustration. And that was just the pre-sale. On Thursday, Ticketmaster announced it was canceling the general public sale of tickets. Oh, look what you made me do. Look what you made me do. sale of tickets. So this is just the latest in a series of pricing scandals for Ticketmaster and its parent company, Live Nation Entertainment.

But the Taylor Swift controversy is shining a whole new level of scrutiny on the company's virtual monopoly over wide swaths of the live music industry, as calls from American lawmakers to break up Ticketmaster Grow. And the company faces an investigation from the U.S. Justice Department. Today, I'm speaking to Jason Kebler about all of this. He's the editor-in-chief of Vice's tech website, Motherboard, and he's here with me now. Hi, Jason. Thanks so much for being here. Hey, thanks for having me. So just break down for me, why was it so hard for people to get Taylor Swift tickets last week? Like what exactly happened?

Ticketmaster's website crashed essentially because millions and millions of people were trying to buy tickets all at the same time. The website couldn't handle the traffic. And it either chugged to crawl or it completely broke depending on who you were and when you were trying to get tickets. In addition to this, getting the tickets were simply very difficult because so many people were trying to get tickets. So even if the website didn't break, you were likely to have sold out tickets, no tickets available when you searched. Or if you were able to get them into your shopping cart when you went to check out, maybe the site crashed then and you lost them. So end result, lots and lots of frustrated

people. Right. And like, to be fair, I mean, genuine demand was really high here, right? Yeah. I mean, Ticketmaster said millions and millions of people were trying to buy tickets all at once. It's like Taylor Swift was playing dozens of shows, but simply there were like way more people who wanted to go see Taylor Swift than there were tickets available. Okay. And to get a ticket on this pre-sale, you had to be what Ticketmaster calls a verified fan. And that system is supposed to stop bots and scalpers from snapping up all these tickets. So what kind of measures has Ticketmaster been putting in place to try to ensure that it is real fans who are getting these tickets?

Right. So they have this verified fan system. And basically, you have to pre-register in order to buy tickets in these pre-sales. It happens a few days before. Basically, the on-sale of any major event now is actually a week-long event where there's multiple sales. And so the verified fan one, it's like you had to register in advance, you get a special code and then you go and try to buy the tickets. The way that it works for Taylor Swift is like do you have a history of buying Taylor Swift tickets? Are you a member of her fan club? Are you signed up to various mailing lists

associated with Taylor Swift? And that's sort of how Ticketmaster did it. Even so, it's like getting a code for the verified fan pre-sales doesn't guarantee the fact that you'd be able to get a ticket. It's like way more people registered for this than were tickets available.

And then the other thing is there is another presale for Capital One credit card holders. Plus get access to over 1300 airport lounges. And maybe see the one and only Taylor Swift. Capital One. And that one was more of a free for all where anyone who had this credit card or use this credit card company was able to try to buy tickets during this presale. And I mean, every ticket broker has that credit card. And so it wasn't just fans trying to buy tickets, but also ticket brokers. Right.

So and you actually were briefly a ticket broker, also known as a scalper in college. So just explain to me what kind of tricks scalpers might be using to snag all these tickets, even when they're meant to be for verified fans. Right. So, I mean, there's nothing stopping a ticket scalper from becoming a verified fan. It's like ticket scalpers are huge fans of Taylor Swift because they make a lot of money from Taylor Swift. So they are. Yeah, in a way. And so they go through all the sort of registration processes that fans do. It's like Ticket Scalpers have been waiting for Taylor

Swift to tour again, just the same way that fans are because when she announces a tour, it is a major deal for them. They're going to make thousands of dollars off of this tour. They also have every credit card. It's like they have American Express pre-sales. There's Capital One pre-sales for different artists. It's like any ticket broker who is serious will have these credit cards and will know when the pre-sales go up and will participate in them. And then I think most importantly for Taylor Swift, it's ticket scalpers are very good at getting through the waiting room, which is a thing that Ticketmaster set up for really popular events. That's basically like a lottery system. You log on at 10am when the tickets go on sale and you're put into what's called a virtual waiting room.

10 a.m. when the tickets go on sale and you're put into what's called a virtual waiting room. And you're given a random number. And when your number is called, you get the chance to try to buy tickets. And the average fan can enter this waiting room one or two times. A ticket broker will have a special browser for ticket scalping, essentially, that allows them to enter dozens or hundreds or thousands of times. They're basically limited only by their computer's processing power, more or less. Dang. Okay. So this system that's meant to stop scalpers obviously isn't doing an amazing job of it. I mean, it was also supposed to stop bots, but Ticketmaster said that bots were to blame for a lot of the chaos that happened here. I mean, how much of an issue was that in this case?

It's really hard to say because ticket bots are illegal. They've been illegal since 2016 in the United States. They were banned by the Bots Act, which is pretty funny. And so ticket bots are used. However, scalpers who use ticket bots keep that information really, really secret because they're doing a federal crime. And so Ticketmaster says that they were getting hounded by bots. I think that that's

probably true, but it's really hard to say where those bots are based, who was operating them, were any of them successful. And I think that that is critical information and information that's simply not available. It's one thing if the bots are pounding Ticketmaster's servers, but Ticketmaster is blocking them from actually buying tickets. It's another thing altogether if those bots are able to get through Ticketmaster's system and are buying up all the tickets. It's another thing altogether if those bots are able to get through Ticketmaster's system and are buying up all the tickets. One is like a web server issue. The other is like, well, did any fans get tickets? Who can say? Taylor Swift came out last week with a statement that didn't actually name Ticketmaster, but basically did. She said, quote, I'm not going to make excuses for anyone because we asked them multiple times if they could handle this kind of demand and we were assured that they could.

So how has the company responded to this whole fiasco? The company has basically said that they faced unprecedented demand. They said that they took every step they possibly could to make sure that these pre-sales and the on-sale, which ended up not happening because all of the tickets were sold, was a success and that their servers could handle it. And they basically said, despite our best efforts, the actual demand was so far beyond what we could have possibly imagined. And, you know, we sold two million tickets in a week. All the Live Nation team is sympathetic that the long wait times and fans who couldn't

get what they wanted. Reality is it's a function of the massive demand that Taylor Swift has. The site was supposed to be opened up for 1.5 million verified Taylor Swift fans. We had 14 million people hit the site, including bots, another story, which are not supposed to be there.

And despite all the challenges and the breakdowns, we did sell over 2 million tickets that day. We could have filled 900 stadiums. Like, they're basically saying, Despite all the challenges and the breakdowns, we did sell over 2 million tickets that day. We could have filled 900 stadiums. They're basically saying Taylor Swift was just too popular, basically. Okay. So obviously, though, it's not just this Taylor Swift fiasco this one time that has people mad at Ticketmaster, right? So there's like, for example, something called dynamic pricing, which was the reason that Bruce Springsteen and Blink-182 tickets were going for outrageous prices just in the last few months here. When tickets went on sale for

Springsteen's highly anticipated tour with the E Street band, fans were shocked to see prices as high as $5,500 US. Blink-182 fans were very excited yesterday when the band confirmed that Tom DeLonge would be returning to the group after a nearly 10 year absence. But that excitement quickly turned to disappointment for some fans who reported Ticketmaster's controversial dynamic pricing system

is sending prices through the roof, making- So can you tell me what dynamic pricing system is sending prices through the roof. So can you tell me what dynamic pricing is? Yeah, dynamic pricing is a system that Ticketmaster came up with four or five years ago that is kind of like Uber's surge pricing, where when there's a lot of demand, the price for a ticket goes up. It uses historical data tied to things like, how has this band performed in the past? How have their tickets sold on the secondary market sites like StubHub? How popular is this band? What are their Spotify plays? And then it tries to basically predict the highest price that people would be willing to pay and it jacks up the price automatically. So for Blink-182... price that people would be willing to pay and it jacks up the price automatically so for blink 182

some of the like floor seats for the the general admission like mosh pit more or less um some of those tickets were going for six hundred600 and people were really really mad about this their punk band it's not very punk to charge $600 for a ticket it's also like a nostalgia act right this is like this band was huge like you know

15-20 years ago it's not like they're like super happening right now yeah I mean speak for no I'm a huge fan I'm very upset i did not get tickets for blink-182 but no they're basically doing a reunion show right which is different i mean what i mean is different from like taylor swift coming out with a new album putting out a new show that kind of course yes yeah no i was just joking which isn't to flag like what are you And I'm so sorry. Yeah, it's like Taylor Swift is the biggest superstar in the United States when it comes to touring.

It's like, I think arguably she's the biggest music act going right now. When she tours, it's always like a scalper's Super Bowl, more or less. It's like people get ready ready clear space on your credit cards we're buying as many of these as we possibly can we're selling them and the heiress tour is that times several because she hasn't toured in four years because of covid i mean you've you've done the albums you've done the re-recordings but also you haven't toured in like four years. We want you to. I think I should do it.

So yeah, it's a huge deal. And I think that it's on a scale that we've never seen before. It's like, I've never seen Ticketmaster cancel a public on sale because all of the tickets were gone. It's unprecedented. Well, I mean, to come back to Blink-182, I mean, people, again, were really angry about this. But worth noting that it's the artists themselves, as I'm understanding it, that opt into the dynamic pricing. And there have been a lot of defenders of the practice, right? Like not just Ticketmaster, also Bruce Springsteen. What is the case for dynamic pricing?

The case for dynamic pricing is it's like one of the only things that has actually made it harder for scalpers to make money on tickets. The reason that scalpers exist is because ticket prices are usually too low, despite what you might think. It's like, even if you pay $100 for a ticket, that's a lot of money. And you might think, wow, these tickets are expensive. But if a scalper can buy a ticket for $100, a ticket, that's a lot of money. And you might think, wow, these tickets are expensive. But if a scalper can buy a ticket for $100, the show sells out, and then they can resell that ticket for $300 on StubHub, it's like the price of that ticket, the value of that ticket is $300, not $100. And so if a scalper is making $200 on a ticket that they have nothing to do with, it's like they didn't record the music. They're not associated with the venue.

They're not helping put on the show in any way. It's like, why should this random person get all of this money? Like that money should be going to the artists. And so that's the problem that dynamic pricing tries to solve. Right. And so that's the problem that dynamic pricing tries to solve. Right. And do we have any sense of how much money Ticketmaster is pocketing from these sales versus the artists?

It's really hard to say because Ticketmaster, as I'm sure we'll get into, is a monopoly and they control sort of every aspect of it. It's like Ticketmaster is more or less the only game in town. Live Nation is a promoter of a lot of the events and they also control or own a lot of the venues. And so it's like you have to just do business with this one company more or less and they take a cut. But it's not readily available information, which is pretty surprising because this has been

going on for decades. It's like Ticketmaster has been a problem for decades. It's like Ticketmaster takes the fees. When you look, there is a convenience fee. There's sometimes special taxes. There's sometimes a fee to send the tickets. There's sometimes a fee to print the tickets. It's like fee to print the tickets it's like that money goes to ticket master i'm pretty confident in saying i think it's a big cut but i don't have a specific number unfortunately I'll see you next time. entrepreneurs through angel investment and industry connections. household income. That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. In 2010, the Obama administration's

Justice Department approved this, even at the time, very controversial merger between Ticketmaster and this other company, Live Nation. So can you just give me a sense of what that merger created? Like how much of this industry does Ticketmaster and Live Nation together control? Yeah, so it created a vertically integrated monopoly. And by vertically integrated, I mean they control every aspect of the live events business in the United States, more or less. There are other companies, but Ticketmaster and Live Nation do something like 80% of all ticketed events in the US or have their hands in it in some way, shape, or form. It's like if you're a really small band, maybe you're going with an independent small ticketing solution. But for the

most part, it's like Ticketmaster. The way that this works is Live Nation owns many of the venues in the United States. They own most of the nightclubs. They own most of the pavilions, like the outdoor sort of, you know, 20 to 30,000 people pavilions. And in some cities, they own basically all of the venues. So if you want to play in a specific city, you have to go with Live Nation. Live Nation also has an artist management arm. And that means if you're an artist that's relatively popular and you want to plan a tour, you might have to sign with Live Nation in going to plan that tour to go through Live Nation venues, and the tickets are going to be sold by Ticketmaster. And so essentially every sort of part of putting on a concert is owned and controlled by this single company. And that gives them an incredible amount of power. The grunge band Pearl Jam in the 90s tried to avoid Ticketmaster.

The grunge band Pearl Jam in the 90s tried to avoid Ticketmaster. Two members of Pearl Jam appeared before a congressional subcommittee after filing a complaint with the Justice Department over Ticketmaster. Ticketmaster is a nationwide computerized ticket distribution service that has a virtual monopoly on the distribution of tickets to concerts in this country. It is today almost impossible for a band to do a tour of large arenas in major cities and not deal with Ticketmaster. They basically said, you know, we don't like the fees that Ticketmaster is charging our fans. They're making the tickets too expensive.

Pearl Jam wanted to charge $18 a ticket for its summer tour and sought to limit Ticketmaster's additional service fee to 10%, $1.80. Ticketmaster agreed to come down on its price, but not low enough for Pearl Jam. And Pearl Jam didn't have any venues that they could play at. Like, they were testifying in front of Congress saying, you know, this is unjust. And it's like, there were not venues that were not affiliated with Ticketmaster that they could, that were appropriate for the popularity of that band. Pearl Jam had been attempting to work through a new ticket vending company called ETM using a somewhat complicated phone and mail system.

And three of the dates booked through that company in Boise, Idaho and San Diego, California have already been cancelled for various contract and security reasons. The band will begin playing the rest of those non-Ticketmaster dates this Friday in Casper, Wyoming. I actually read them talking about how, like this interview where they were talking about how they had to end up dealing, like they spent a huge amount of time on the phone with like port-a-potty companies because that was the level of logistics that they had to deal with when they decided to opt out of dealing with Ticketmaster. Like when they tried to boycott it, they basically had to deal with like all of the logistics for their concerts down to like arranging the porta potties yeah and i mean ticket master and live nation which i say and because both of them are sort of household names but it's it's the same company they're the same company um it's sort of like a one-stop shop and in some ways i guess this is very easy as in you you know, you're not having to call

port-a-potty companies to determine where they need to go. No one wants to call the port-a-potty companies when you're trying to arrange a tour. Right, right. And on the other hand, it's like, well, that means Ticketmaster and Live Nation have a huge amount of control over all of these things. so i mean coming back to what we're seeing happening right now you know in the wake of what happened with taylor swift this past week we've seen a huge amount of outrage, like not just from fans, but also from U.S. lawmakers. So Congresswoman Alexandria Ocasio-Cortez tweeted a call to break up Ticketmaster. She wrote on Twitter, Ticketmaster is a monopoly.

Its merger with Live Nation should never have been approved. Break them up. Senator Amy Klobuchar, who's the chair of the Senate's antitrust committee, said that this committee would hold a hearing on Ticketmaster by the end of the year. Combined Company now has 70 percent of ticket sales. So in truth, there's no other choice. And that's what's going on. There is a monopoly. They also have quickly and quietly bought so many venues and arenas. So it is a vertical integration. I talked to Senator Mike Lee last night. We chair the committee on antitrust. We are going to go ahead with a hearing on Ticketmaster this year.

There have been three state attorneys general who've also said that they're investigating the company. So like how serious could this be for Ticketmaster Live Nation? Could we see it end up being broken up? I think that it could and probably should be broken up because when they merged, there were all of these people in the music industry saying, this is going to be bad for fans. It's going to make tickets more expensive. It's going to give Live Nation and Ticketmaster monopoly power over all of these things we've been talking about. And all of that has come to pass.

All of it has happened. Everyone was warning about this. The reason that I'm skeptical that anything will happen is because Pearl Jam was saying the same thing in the 90s. Bruce Springsteen was saying it in the 2000s. We all know the basic story. Many fans were told the shows were sold out when in fact they were not. The fans were then provided links to Ticketmaster's own ticket reselling site, TicketsNow.com,

where they were charged many times the face value of the tickets. Bruce Springsteen says Ticketmaster abused his fans, and I agree with the boss. Taylor Swift fans and, you know, various artists are still speaking out against them now. And it's just like, it's been the same story for decades. And given that history, I'm not super optimistic that something will come of this. That said, it's like it is a problem. And it seems like the Justice Department or the FTC should step in and consider whether we want this single company to have so much power. Well, speaking of the U.S. Justice Department,

it's just come to light that they are investigating Ticketmaster, according to the New York Times. Just to be clear, insiders told the New York Times that this investigation predates the whole Taylor Swift fiasco. But in a statement on its website on Friday night, Ticketmaster's parent company, Live Nation Entertainment, said that it, quote, takes its responsibilities under the antitrust laws seriously and does not engage in behaviors that could justify antitrust litigation. But just say any of this, whether it's the DOJ

investigation, whether it's any of these pushes from members of Congress, like say any of this did somehow eventually lead to Ticketmaster and Live Nation being broken up. Even then, how much of the problems that we've been talking about do you think would be solved? I don't think there's an easy solve here. And it's like, I'm the last sort of Ticketmaster or Live Nation apologist. It's like, I think there's major problems with

the system. But I think it's like when you have an artist like Taylor Swift, she's so popular. And I think taking the ticketing experience out of the hands of Ticketmaster, it's like, well, what would you replace it with? You would probably replace it with a variety of different ticket sellers, whether they're regional or you would have various competitors to Ticketmaster. It's like scalpers are not going away. Scalpers have existed ever since live events have existed, more or less. it's one of those things where there's a fundamentally limited resource, which is space in a venue for an event that takes place at a specific time and place. It's a hard solution. And there's been a lot of people who are like, maybe we can use NFTs or maybe we can do this and that.

And it's like, well, no, I don't think those are going to work either. So it's a problem. But I think Ticket ticket masters exacerbated the problem but there's not like an overnight solution where you can just flip a switch and be like okay now all zealot swift fans get to see the concert for a reasonable price right um but i mean if if this company's system as it stands continues unchecked who is actually going to be able to attend concerts in the future i mean right now it's people it's rich people more or less it's like people who can afford to see taylor swift or people who are willing to put 600 tickets on their credit card it's like if

you look at stubhub right now, the secondary market, the cheapest Taylor Swift tickets in many cities are like $600 for nosebleed seats. It's like the face value of those tickets is like $80 or $90. So the people selling those are making a 600% return. And it's like, if you want to go see taylor swift you can go see taylor swift it's going to cost you six hundred dollars and there are not too many people who have that kind of money just like floating around no kidding uh thank you so much for this conversation jason just for the record i listened to like uh loads and loads of like one of these two growing up like on repeat. So I was not trying to slag them. Oh, I was totally kidding. No, I'm kidding.

Sorry if that didn't like come across. I have never seen them. So I am going to go. Well, I hope you get to one of these days. Yeah, thank you. I didn't try to buy tickets yet, but I will probably pay way too much and go see them. Thank you so much. Yeah, thank you. All right, that is all for today. I'm Allie Janes, in for Jamie Poisson. Thank you for listening to FrontBurner, and we'll talk to you tomorrow.