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Crime The Almighty Buck Entertainment

Scalpers Earned $25M Gaming Online Ticket Sellers 574

Posted by kdawson
from the flash-crowd-at-the-ticket-queue dept.
SeattleGameboy writes "An indictment has been issued for online ticket brokers known as 'Wiseguy Tickets and Seats of San Francisco.' From 2002 to 2009, they used bots, server farms, and CAPTCHA hacking to buy vast number of premium tickets (Springsteen, Miley Cyrus, NFL, MLB playoffs, etc.) and made $25 million in profits. 'They wrote a script that impersonated users trying to access Facebook, and downloaded hundreds of thousands of possible CAPTCHA challenges from reCAPTCHA. They identified the file ID of each CAPTCHA challenge and created a database of CAPTCHA "answers" to correspond to each ID. The bot would then identify the file ID of a challenge at Ticketmaster and feed back the corresponding answer. The bot also mimicked human behavior by occasionally making mistakes in typing the answer, the authorities said.' I guess you can break any system like CAPTCHA if you want it badly enough."
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Scalpers Earned $25M Gaming Online Ticket Sellers

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  • by Anonymous Coward on Tuesday March 02, 2010 @05:40AM (#31328014)

    Yes, 25 million USD is easy to make legitimately, that's why everyone is doing it!

  • Why is it illegal? (Score:5, Insightful)

    by Taco Cowboy (5327) on Tuesday March 02, 2010 @05:45AM (#31328032) Journal

    They didn't rob the bank.

    They didn't print fake dollar bill.

    Every single dollar that they paid good money for purchasing the tickets are REAL money.

    What's illegal about what they have done??

  • Wiseguy?! (Score:3, Insightful)

    by mrthoughtful (466814) on Tuesday March 02, 2010 @05:47AM (#31328048) Journal

    Any company calling itself "Wiseguy" is surely going to pull some heat. It's like having a prescription signed "Dr A. Fraud."

  • by AmonTheMetalhead (1277044) on Tuesday March 02, 2010 @06:00AM (#31328102)
    Impersonating a person, resale of tickets where (commercial) resale is illegal, fraud, illegal use of computer resources (botnets) and pissed of alot of people who actually wanted to buy tickets but were unable to.
    When AC/DC toured last year these asses their botnets overloaded the official ticketsale sites preventing any real customer to even access them, in Belgium the sites were unreachable 2 days before the sale even started.
    If i had my way, ticket scalpers would be scalped for real.
  • by Canazza (1428553) on Tuesday March 02, 2010 @06:01AM (#31328108)

    That wouldn't stop scalpers. Idiots would still buy them, especially if they claimed that these tickets didn't need ID.

    The buyer wouldn't get into the concert, be out of pocket, and the scammer would have upped and legged it long before.

  • by wheelema (46997) on Tuesday March 02, 2010 @06:04AM (#31328128)

    Between WiseGuy's and Goldman Sachs? Both use computers to game their respective markets.

  • by xtracto (837672) on Tuesday March 02, 2010 @06:06AM (#31328140) Journal

    Yes, 25 million USD is easy to make legitimately, that's why everyone is doing it!

    guess you can break any system like CAPTCHA if you want it badly enough."

    Moreover, this shows that the used security mechanism is worth at least 25 million USD.

    The problem is that the CAPTCHA approach is flawed. Any similar type of challenge-response system can be abused for illegal activity. At the very end, the only thing an attacker has to ensure is that the cost of obtaining enough challenge-responses is less than the outcome of the illegal activity.

    Say, if they pay a group of Chinnese guys USD $0.39 an hour, you can get a fair amount of human identifying challenge-response answers.

  • by chaboud (231590) on Tuesday March 02, 2010 @06:06AM (#31328142) Homepage Journal

    It's not illegal to resell tickets above face value in most states (check out stub hub [stubhub.com] for TicketMaster's very own foray into person-to-person ticket sales), and business can be conducted in alternate states with more lax restrictions on ticket resale.

    Beyond that, smoking a CAPTCHA system with a bit of cleverness is not hacking or unauthorized access in any reasonable way. This is just a ridiculous attempt to criminalize scuzzy, crappy, opportunistic behavior on the part of one party (scalpers) at the expense of another scuzzy, crappy, opportunistic party (TicketMaster). This strikes me as another case of people trying to misuse the law to remedy the unexpected (only by idiots) defeat of a faulty system. If one reads the article, it seems like Wiseguys (seriously? That's your name?) made purchases on behalf of ticket brokers (ticket-broker is to scalper as escort is to hooker) with detection-avoiding measures in place to keep TicketMaster from blocking the regulars.

    It's an attempt by TicketMaster to wipe the egg off of their face, a face that most of America hates with a passion. Perhaps they should find a better way (reverse auction, anyone?) to find the natural market price instead of using time-release scarcity to spur impulse-buys that inevitably result in person-to-person ticket resale later on stub hub [stubhub.com] where they get to come back for a second skim off the top...

    Oh.. right...

  • by MichaelSmith (789609) on Tuesday March 02, 2010 @06:06AM (#31328144) Homepage Journal

    Belgium the sites were unreachable 2 days before the sale even started.

    And what makes you think that was due to automation? Don't forget we ourselves have taken down a server or two in our times.

  • by Arathrael (742381) on Tuesday March 02, 2010 @06:13AM (#31328176)

    Sellers could cut them out by raising their prices so that demand matches supply.

    And wouldn't that be great? Instead of the venue, artists, promoters, ticketing agencies, etc., all covering their costs and making a healthy profit, they could... make a bigger profit. Woohoo!

    Of course, for the millions of people attending events, they'd be spending a lot more than they were, or able to attend fewer events, especially if they want to sit in anything remotely resembling a good seat. And front row seats would only be affordable by billionaires and the five richest kings of Europe. But hey, people who were already making a healthy profit would make even more! Hurrah!

    Or, maybe, just maybe, in the interests of culture, fixed price ticketing is actually a good thing...

  • by Anonymous Coward on Tuesday March 02, 2010 @06:26AM (#31328230)

    I think having Tom Waits on the ticket was the effective anti scalping method. If there is no demand and plenty of tickets available there is no scalping.

  • by jonbryce (703250) on Tuesday March 02, 2010 @06:37AM (#31328256) Homepage

    That probably works for creating hotmail accounts to send spam from, but not if you need to solve hundreds of thousands of capatchas in the space of a couple of seconds at 7am when the tickets are released for sale.

  • In the United States, state-issued IDs are associated with age-restricted products and services. A minor can't drive, vote, get a job, see an R-rated movie, or buy tobacco, alcohol, lottery tickets, or over-the-counter medication. So a lot of children just don't have a state-issued ID. Requiring every ticket holder to have a valid ID to attend a concert would block such children from attending. That would work for Tom Waits but not for any of several acts that are popular with preteens, such as the Jonas Brothers or Miley Cyrus.
  • by HungryHobo (1314109) on Tuesday March 02, 2010 @06:47AM (#31328302)

    Copyright?
    Where the hell does copyright come into this?
    They're not printing extra tickets.

    So if 20.000 tickets are sold for $50 each, thats $1M, of which half goes to the artist. Simple math. BUT, if 1000 of those tickets are sold for say, $100, by the terms of the contract, the artist is supposed to get half of 19.000x$50 + 1000x$100 and who pays the extra ?

    Nobody.
    and that's how it should be.
    If the artist wanted $50 per ticket rather than $25 per ticket then they should have sold them for more in the first place.

    If I make a game, print 20,000 disks and sell for $50 each, thats $1M and if I've got a particularly lucrative contract as the developer I get half. Simple math.
    BUT, if 1000 of those tickets are bough by someone, I get my 250K cut and then they sell those games second hand to someone else for $100 each and make a profit then that's their buisness.
    I've already got my cut.
    I have no right to a cut of their second hand sales.

    If I wanted more then I should have charged more in the first place.

  • by dtmos (447842) * on Tuesday March 02, 2010 @06:52AM (#31328322)

    The indictment actually states that, ". . .Wiseguys and its owners made more than $20 million in profits. . ." (p. 2 of the indictment [wired.com]), so let's start with the $20 million number.

    Keep in mind that:

    (a) The $20 million was made over an eight-year period, 2002-2009, so the average was $2.5 million/year;

    (b) The profit of the enterprise was split among the two principals (the CFO received $165,000 and the programmer received $150,000, natch...), so that brings it down to an average of $1.25 million/year for the two principals (I think we can agree that the salaried guys did not do well in their risk/reward ratio calculations); and

    (c) The "profit" figure used in indictments is nearly always what a legitimate businessperson would call "gross profit [wikipedia.org]," meaning, to quote Wikipedia, "the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments." As a criminal enterprise, these guys didn't have to worry about taxation (at least, the correct amount of taxation), but they did have to pay the salaries of the other 10-15 people working for Wiseguys Tickets, Inc., and all the other expenses associated with running the enterprise (computers ... ). All of that would have to come out that $1.25 million/year/indictable person. A quick look through the indictment shows the several persons on staff in the US being paid from $55k to $142k/year each, and the ones in Bulgaria being paid from $1 to $1.5k/month each, so you do the math.

    The point being, the retirement plan associated with these types of schemes is typically poor, as it's usually at a federally-funded establishment. These guys ran a small tech company with overseas offices, and could have done the same legitimately at a salary of probably $150k/year which, once benefits were included, would be equivalent to $250k/year in cash (to make a direct comparison to their criminal enterprise). In a legitimate business, the CEO also would have had significant stock options and other perks given to him by the company's board to motivate him to grow the company. With even moderate growth over that period, the CEO could be very well-off. As I say, it's easier to make money legitimately.

    And you sleep better.

  • by Kaz Kylheku (1484) on Tuesday March 02, 2010 @07:00AM (#31328364) Homepage

    Wow ,,,,

  • Re:Dutch Auction (Score:5, Insightful)

    by Registered Coward v2 (447531) on Tuesday March 02, 2010 @07:01AM (#31328372)

    How about a dutch auction?

    Start the price offensively high, and drop it as the concert date approaches. The organiser gets paid the price the market will bear, the scalpers are out of the loop - because by definition, anyone willing to pay a stupid price for a guaranteed ticket will already have paid it.

    You still get the same effective problem - that rich fans are prioritised over poor fans, but more money goes to the artist and the organiser, so they could throw a few benefit concerts or something to sweeten the deal.

    The problem is promoters and talent want two things - sold out venues and maximum price per ticket. Scalpers act as a hedge against lost sales and inaccurate demand / pricing - they take the risk of getting stuck with tickets or losing money; something promoters don't want to accept themselves. Dutch auctions would probably condition people to wait because they learn prices will fill - which causes prices to fall - and promoters have no idea how much money they make nad when. They hate scalpers because, in their mind, they are taking "their" money; and convenientlyignore the risk mitigation role.

    Laws barring reselling of tickets, IMHO, merely serve to restrict the market and raise ticket prices overall so promoters can make more money. There is no rational reason to bar ticket reselling anymore than to bar reselling of any other good.

  • by jabberw0k (62554) on Tuesday March 02, 2010 @07:09AM (#31328394) Homepage Journal

    Horsefeathers.

    All the parties have already made their money on the tickets.

    The "scalper" only makes money by selling a scarce item at what the market will bear. Had the tickets been priced higher, he could only lose money. Besides, it's a dicey business because if as a "scalper," you set your price too high, you're gonna lose everything.

    Pure supply and demand. "Scalping" is the best proof of free markets anywhere.

  • by Shivetya (243324) on Tuesday March 02, 2010 @07:31AM (#31328482) Homepage Journal

    they donate to politicians?

    Seems to be the difference between acceptable and not acceptable is how in favor you are with the politicians who write the laws.

  • by Moraelin (679338) on Tuesday March 02, 2010 @07:37AM (#31328500) Journal

    Sure, if you've no moral qualms about what you're doing.

    So, when we're talking about people already doing stuff that's immoral and often illegal, if the only barrier the captcha offers is "Sure, if you've no moral qualms about what you're doing"... then it seems to me like the most useless gimmick ever. Does anyone actually think that the kind of people we needed captchas against would go, "man, I only wanted to cheat, scam and pollute with email and link spam, but OMG breaking a captcha would be just morally _wrong_. I just can't do _that_."?

    Plus, that was not the argument made back then for this crap. Everyone was ranting about how it's such a great defense. If you just tried to point out the ways it can be circumvented, everyone would treat you like you're some kind of a crazy conspiracy theorist.

    Well, now it's been officially done, and it's been done for almost a decade, judging by how long these guys operated. Now what?

    I'm not saying this as schadenfreude, but I find it genuinely sad that for so long millions of users have been outright excluded from some services, in the name of a solution which just simply doesn't work.

    Some captchas are getting so obnoxious, that even I have trouble with some two times out of three, and God help you if you have eyesight problems. And most audio versions I never could decode in the first place. I guess the garbled, low signal to noise thing might not be that bad if you're a native English speaker, but God help you if you aren't.

    And for what? For a stupid solution that only works if you have a moral problem with breaking it?

  • by gnasher719 (869701) on Tuesday March 02, 2010 @07:39AM (#31328512)

    In his Glitter and Doom tour, Tom Waits pioneered an effective anti scalpers scheme.

    A different, simple scheme that benefits the artist: Once the venue is sold out (say 90% to scalpers) announce another concert on the next day. If that gets sold out, do another and so on. Result: Lots of money for the artist, who will play in many sold out but mostly empty halls. No money for scalpers.

  • by erroneus (253617) on Tuesday March 02, 2010 @07:44AM (#31328526) Homepage

    Nice work. You forgot one thing when discussing what "easier" means -- entry into market.

    Let's use porn as an example. Legitimate media is extremely competitive. Want to start a TV station? A Newspaper? Put out a movie? Music? Those things are dominated by incumbent players who do not like new competition. On the other hand, porn is forced into a low profile, so even though there are big players in the industry, brand names and other matters of high public notice barely even exist. So nearly anyone can make porn.

    And since we are talking about event tickets, we are also talking about a pretty well limited and controlled market. It would be unthinkable for someone to just appear out of thin air and start making that kind of money legitimately. Scalpers, on the other hand, are delivering the premium goods with no need of marketing, reputation or other complications required for legitimate business.

    So when you are talking about "easy" there are other aspects to consider.

  • every sunday a guy shows up with 20 bags of flour. the townspeople line up and buy the flour from the guy, $2/ a bag

    one sunday, this asshole shows up really early, buys all 20 bags for $40, turns around and faces the townsfolk and says "ok, that will be $5 a bag from each of you"

    understand the illegality yet?

    incidentally, this puts the lie to libertarians and free market fundamentalists who believe the market is healthiest when left alone. a healthy market needs to be heavily policed by the government to be healthy, solid fact. because of exactly this sort of market manipulation, of which there are thousand such slimy schemes. there will always be assholes who find natural market imperfections and insert themselves as artificial middle men and gouge the marketplace. they add no value. they parasitically insert themselves in the marketplace and suck it dry

    anyone can appreciate how they hurt our economy and hurt the marketplace and the free flow of goods. its a form of robbery what they do, but its diffuse, not specific, and so some people like you can't appreciate their evil up front. i hope you appreciate it now

  • by pongo000 (97357) on Tuesday March 02, 2010 @08:05AM (#31328674)

    Ticket scalpers and domain squatters: Love 'em or hate 'em!

    Sometimes I believe /.ers are pissed at these types because they didn't think of the idea first.

    It's a free market (after all, don't markets want to be free?)...I say kudos to them for figuring out how to scam the scam.

  • by somersault (912633) on Tuesday March 02, 2010 @08:12AM (#31328716) Homepage Journal

    Then simply don't buy the overpriced tickets, and these guys will go out of business very quickly. If people are stupid enough to pay the hiked up prices, why shouldn't these guys do it? I fail to see anything illegal in what they're doing any more than if a supermarket buys up a whole bunch of coffee or rice and sells it on to their customers at a higher price, or McDonalds and Burger King making insane profits on their drinks.

  • by Comboman (895500) on Tuesday March 02, 2010 @08:13AM (#31328722)

    So then how do you distribute tickets, other than having a mad, random rush to sell them in the first few seconds they are on sale?

    How about an auction? The first tickets released would get bid up to insane levels by superfans/rich a-holes who want to guarantee they get a seat. Once that high demand level is filled, the medium demand audience bids up tickets to medium prices, then whatever is left over purchased at lower prices by the low demand audience. This type of price discrimination [wikipedia.org] allows multiple price points for otherwise identical products without having a middleman (i.e. the scalper) cutting into the profits of the artists/promoters/venues.

  • by somersault (912633) on Tuesday March 02, 2010 @08:16AM (#31328748) Homepage Journal

    understand the illegality yet?

    Nope.. if the townspeople simply refuse to buy the flour at that price (either doing without flour for the week or buying from a different location), the asshole is down $40. If people know that most of what they're paying is pure profit and yet still pay the price, they're simply idiots. This is exactly how a free market is supposed to work.

  • Re:Dutch Auction (Score:1, Insightful)

    by Anonymous Coward on Tuesday March 02, 2010 @08:19AM (#31328770)

    That would never work. Have you never been to a concert? Demand for tickets increases as the event approaches. Most people don't know well in advance whether they'll be able to go or just can't decide but as the date gets closer, an increasing number of people do decide and also, as there's more publicity about the upcoming event, more people become aware of it. And you know what the logical action for any business is when they have a finite supply and increasing demand. That (and the need to have money to cover some costs early) is the reason why tickets are often sold (legitimately) with schemes like price X until two months before the event, Y until one month and then Z, where X<Y<Z. With your proposed system prices would be high when demand is low and low when demand is high.

    Now, since sometimes it should imho be perfectly ok to resell a ticket, such as in case you have one and for some reason simply cannot go. But to solve that (and give organizers more profits), I'd implement a system that if (and only if) an event is sold out, those who still want tickets, can sign up to a queue and then allow people who have tickets but can't go return theirs for a refund. Then the organizers could demand ID that matches the name on the ticket and both allow people who cannot go "resell" theirs (with no profit) and be able to make more profits from the event (if a paid refund is X they can then sell the ticket to someone signed up in the queue for Z or maybe even a little more just to cover the cost of processing the refund).

  • seriously, my example above is not some hypothetical. its going on right now in a thousand markets around the world, always has been, and always will. it adds no value to the economy, its a form of parasitism. you do understand that it is a form of robbery, right? please tell me your neurons can fire on that obvious concept

  • by Mattskimo (1452429) on Tuesday March 02, 2010 @08:22AM (#31328798)
    Breaking a ToS is not necessarily itself illegal. It is grounds for the stadium to refuse you admission but they are allowed to do this regardless, for any reason or often for no reason at all. It would be like buying currency on a MMO, generally against the ToS and once could reasonably expect account suspensions or bans to be dished out but doing so is not a criminal offense.
  • by Mattskimo (1452429) on Tuesday March 02, 2010 @08:33AM (#31328902)
    Socialist libertarian? Isn't that a bit like being a christian athiest?
  • by PopeRatzo (965947) * on Tuesday March 02, 2010 @08:40AM (#31328960) Homepage Journal

    Wouldn't it have been easier just to make the money legitimately?

    I'm still trying to figure out how what these guys did was wrong.

    The real criminals are the monopolists at Live Nation and Ticketmaster, whose merger will create an entity that controls over eighty percent of the live concert promotions business [wordpress.com], and who already demand a $12.50 "service" charge for the privilege of being able to buy a ticket online and another $2.50 just so you can print the ticket out on your own printer. (I guess that last fee is just a penalty they make you pay because you are saving them the cost of having to print and ship a ticket. No good deed goes unpunished, you know.)

    The question now, is "just how high can ticket prices go?".

    There used to be mom-and-pop music promoters in just about every town in America, putting on live music in bars, parks, gymnasiums and VFW halls. They've created musical venues that allow musicians of all types to ply their wares and make a living. That's going to end now that Live Nation/Ticketmaster are going to create a $4.4 billion behemoth [rollingstone.com] that's going to put the small promoters out of business and control nearly every single live venue.

    You know what? These scalpers aren't the problem here. When a system sucks this bad, why shouldn't scalpers game it? You want a "free market" system? Welcome to life.

    Personally, I stopped going to the "big" concerts some years ago specifically because of the Ticketmasters and Live Nations (now one entity), and I go to see music in much smaller venues as often as I can, hoping to support the music and not put money in a monopoly. Now, that's going to be harder because at some level almost every dollar spent on live music will be going to these bastards. Maybe I'll just start putting all my entertainment dollars into the hats and guitar cases of the many excellent buskers that inhabit the streets of my city (at least once winter ends).

  • monopolies, cartels, price gouging, barriers to entry, price fixing, etc...

    these are the enemy of capitalism, not a part of capitalism. capitalism is the refinement of competition to achieve a maximum of efficiency. anticompetitive practices therefore have no place in natural capitalism. anticompetitive practices therefore are a greater threat to capitalism than communism

    its illegal most everywhere robbery is also illegal, because its the same thing as robbery, but diffuse rather than specific

    please educate yourself

    http://en.wikipedia.org/wiki/Anticompetitive [wikipedia.org]

  • by dziban303 (540095) <dziban303@NoSpaM.gmail.com> on Tuesday March 02, 2010 @08:46AM (#31329012) Homepage
    Failing to follow the terms of service of a website is not a criminal act in itself. A website is not Congress or Parliament or El Presidente, and they do not get to create any laws that have any effect outside of their own website. Sure, they can ban you, but they can't arrest you.
  • by somersault (912633) on Tuesday March 02, 2010 @08:56AM (#31329122) Homepage Journal

    It's not a form of robbery, it's what happens in a free market, and if people don't buy the food (seriously, you think they'll starve after a week? I don't know how long flour lasts though). Unless it's happening all over the board then they can get other forms of food. If they all die then the scalpers would lose all their customers anyway, so they'll bring their prices down until most people can actually afford it. Yes, some people will still not be able to afford it, but that's how these things work in non socialist countries. Otherwise by your reasoning anyone that ever makes a profit is simply a robber and a parasite. In this case the scalper doesn't really add any value, but what he is doing is not illegal, and the townsfolk can also go to a different source, unless they guy has some kind of monopoly (which is in fact illegal).

  • by Chris Mattern (191822) on Tuesday March 02, 2010 @08:59AM (#31329160)

    OK, Mr. "libertarian," just who you do you propose stops this scalping? The government?

    Your question presupposes that it is necessary, desirable or even possible to stop it. Attempts to stop tickets from selling at a price people are willing to pay for them is like trying to stop the tide from coming in. The only question is whether the price will be charged by the original ticket seller or a scalper.

  • by EastCoastSurfer (310758) on Tuesday March 02, 2010 @09:17AM (#31329368)

    You're assuming there is something wrong with scalping in the first place. These evens are all optional to attend. If someone pays more for a ticket than face value why is that a problem? The scarcity of the ticket drove the price up and the person who paid did their own personal value calculation for the ticket.

    If you're for banning scalping do you also want to ban people who sell tickets below face value? I routinely wait till a couple days before an event and pay less than face value for tickets (if you're willing to go to a weekday sporting even for example). Should that also be stopped?

  • by BetterSense (1398915) on Tuesday March 02, 2010 @09:28AM (#31329486)
    If it's possible to make money by scalping tickets, then clearly the tickets are underpriced. The scalpers in that case are providing a valuable service of holding back inventory for those that are willing to pay a little extra for the opportunity to purchase a ticket closer to the event date.
  • its illegal (Score:3, Insightful)

    by circletimessquare (444983) <<moc.liamg> <ta> <erauqssemitelcric>> on Tuesday March 02, 2010 @09:31AM (#31329532) Homepage Journal

    http://en.wikipedia.org/wiki/Anticompetitive [wikipedia.org]

    It is usually difficult to practise anti-competitive practices unless the parties involved have significant market power or government backing.

    Monopolies and oligopolies are often accused of, and sometimes found guilty of, anti-competitive practices. For this reason, company mergers are often examined closely by government regulators to avoid reducing competition in an industry.

    Although anti-competitive practices often enrich those who practice them, they are generally believed to have a negative effect on the economy as a whole, and to disadvantage competing firms and consumers who are not able to avoid their effects, generating a significant social cost. For these reasons, most countries have competition laws to prevent anti-competitive practices, and government regulators to aid the enforcement of these laws.

    what the hell is wrong with you people?

    this is pretty obvious basic simple economics here. is it really true that a lot people out there believe this anticompetitive bullshit is acceptable, even legal? do you not see the common sense basis for how this sort of practice destroys the marketplace, if you don't readily appreciate the simple illegality of the practice?

    one would think all of this is obvious and simple conceptually

    i find it hard to believe so many of you think this is fair or legal or acceptable on any moral, legal, or philosophical basis

  • by jandrese (485) <kensama@vt.edu> on Tuesday March 02, 2010 @09:41AM (#31329664) Homepage Journal
    You really have no idea how venues work do you? You can't just say "Oh, I need another week worth of shows" once the tickets start to go on sale. The Venues have been booked up for months by that point. You also have appointments in neighboring cities a couple of days later. Artists don't just show up at the Pepsi center and go "I'd like to have a concert on Wednesday."
  • by Maniacal (12626) on Tuesday March 02, 2010 @09:48AM (#31329746)

    I would start up a tire company, make the tires, and sell them for $400. I would undercut the tire "scalpers" and make the other guy feel stupid for selling something for $25 when it was clearly worth $400-$500.

  • by Enry (630) <enryNO@SPAMwayga.net> on Tuesday March 02, 2010 @09:48AM (#31329748) Journal

    I think you missed the point.

    The scalpers are scooping up tickets and skewing the price. MrKaos pointed out that out:

    Before ticket sales via the net I never missed out on tickets, now I'm almost certain I'll never get the tickets I want because the scalpers are so effective.

    With scalpers in action, he's unable to get tickets anymore and is forced to use scalpers. Without them, he's able to get his tickets directly even a few days after they went on sale.

  • by Maniacal (12626) on Tuesday March 02, 2010 @09:57AM (#31329864)

    Sounds like capitalism to me. He's taking a risk by buying up all the flour. If he prices it over what people are willing to pay they won't buy it and he'll lose money. Some other smart business man will call his contact in the town over, buy up a bunch of flour there and sell it in this town for a 200% markup. He'll make a profit, undercut the 400% profit guy and put him out of business if he doesn't lower his prices. Some other smart business man will see the demand for flour booming and will buy up some high quality flour and sell it at an even higher price to folks who can afford, and desire, higher quality.

    The original 2 guys make money, the 3 new guys make money. 4-5 other guys get jobs hauling flour. The other towns that make flour increase their sales. I like it.

  • by MooseMuffin (799896) on Tuesday March 02, 2010 @10:15AM (#31330082)
    "Everything is worth what its purchaser will pay for it."
  • by eln (21727) on Tuesday March 02, 2010 @10:16AM (#31330092) Homepage
    There's no real problem with small-scale scalping. The problem with these large-scale operations is they artificially create scarcity by buying up every available ticket. A ticket that you could normally go up to the window and buy at face value is unavailable to you unless you pay inflated prices because the scalper has bought every ticket. They're inserting themselves as a middleman in a market that needs no middleman, and making things cost more for everyone else.
  • by ottothecow (600101) on Tuesday March 02, 2010 @10:18AM (#31330120) Homepage
    Paying people to solve the captchas won't work as well as building a database of possible captchas... Ticketmaster only gives you something like a 2 minute window to complete the process so you can't just have somebody hammering through captcha's for a few hours every day...you need access to all of them in the few minutes after the tickets go on sale (as opposed to making fake email accounts or something where the timing is not important).

    The real flaw here is that the captchas were reused and identifiable when reused. It sounds like the file name for the image didn't even change...If no two users of any site ever saw the same captcha, this database technique would not work.

  • by inviolet (797804) <slashdot AT ideasmatter DOT org> on Tuesday March 02, 2010 @10:33AM (#31330310) Journal

    that Stubhub is owned by Ticketmaster? I can't believe this. The last two times I tried to get into concerts at the Rochester Auditorium Theater and the War Memorial (Blue Cross Arena), it was difficult. Somehow all the good seats vanished almost immediately. But no, there are seats that magically appear on Stubhub. All you have to do is pay $300 for a $75 seat. Infuriated, I refused (obviously, I've been out of the loop for a while). So for one concert I bought tickets from someone on eBay (double the face value!) and for the other I just got cheap tickets in a poor location. Apparently this kind of poor service has no effect since the venues are sold out anyway.

    Wow do you ever need a semester of Micro 101. The "face value" of a ticket is just noise -- it has little bearing on the actual value of a ticket. The actual value can only be determined by a market that is allowed to clear.

    Since the auditorium is full despite the 300+% markups, the face value must be incorrect. And now you are bent out of shape because the incorrect face value set your expectations erroneously low.

    Ticketmaster uses artificially low face values in order to give the scalpers, who are its risk-mitigation division, some wiggle room. Scalpers could not perform their service if they had to buy the tickets (and hence risk getting stuck with excess inventory) at their full real value.

  • by Dr. Evil (3501) on Tuesday March 02, 2010 @10:39AM (#31330400)

    Scalpers create the scarcity.

    Venues compete on price, location and other stuff. This brings prices down. When scalpers step in, the venue has already been locked in. There is no more competition.

    If the band or the label were to scalp, it would create a lot of bad blood. If the venue were to scalp, nobody would play there. The practice is so negative, that venues who actively discourage scalping get better acts.

    I'm not a big believer in passing more laws, but it should be easy to create laws saying that advertising a ticket for more than 150% of the list price is "Scalping". Enforcement is hard, but having the laws on the books can at least discourage it from being done openly. Venues often spend a lot on having doormen looking for scalpers, offering tickets at the door and other tricks to stop these guys.

    As for why it shouldn't be illegal to charge less? it's a fictional problem. You don't have people bidding down the prices of tickets before an event.

  • by FatSean (18753) on Tuesday March 02, 2010 @10:40AM (#31330420) Homepage Journal

    That's a long-winded explanation of a remarkably simplistic observation.

    The artifical scarcity produced by the scalpers who make it harder for people to find the tickets is important.

    Isn't this what TicketMaster does in the real world? Buys out the box office and marks up the tickets?

    What's good for the goose...

  • by AmonTheMetalhead (1277044) on Tuesday March 02, 2010 @10:47AM (#31330498)
    The problem with (digital) scalping is that the organized scalper will swamp the servers with thousands of connections at once, thus preventing many honest customers from getting a ticket or even to be able to connect to the servers.

    It's like if you're wanting to goto a venue to buy some food & finding all the entries blocked by a gang, you can eighter buy the food from the gang for insanely inflated prices, or hope the gang leaves before the stock is gone completely.
  • by cayenne8 (626475) on Tuesday March 02, 2010 @10:52AM (#31330598) Homepage Journal
    While I'm not a fan by ANY stretch of the imagination of scalpers...I'm a bit puzzled as to exactly what laws were broken here?

    It did mention they may have hacked into Ticketmasters systems, and if they did break in, ok, I can see that.

    However, using scripts/applications to log into a site and buy tickets, I don't see how that is illegal? They are just using a program to mimic what human could do on a website that only reacts to input and doesn't care itself if a human or a scripts is behind the computer connection being made.

    Is it against the law to study and make a database of captcha's?

    Like I said..I hate scalpers, they grab all the best tickets for places that allow scalping, and even in states where you can't scalp, they grab the tickets and sell to people outside the state keeping locals from getting tix (since they can't by law pay more than face value).

    But, I have a hard time viewing the mere fact that someone devised and used a program to auto-purchase tickets as being something illegal? What if an enterprising person that really loved going to shows did the same type thing to ensure that he could buy the best seats for a show that went on sale for himself and his friends? Same principal? In the old days when you had to call in for tix, would they have arrested people for having speed dial (new at the time) and using it to an advantage over people dialing by hand? Hmmm....

  • by BetterSense (1398915) on Tuesday March 02, 2010 @10:52AM (#31330602)
    One is not free to invent any business model he chooses and then gripe about how his competition is not "allowed under his business model". That's called having a bad business model.
  • Mod parent up (Score:3, Insightful)

    by twoallbeefpatties (615632) on Tuesday March 02, 2010 @01:01PM (#31332590)
    I'm really getting tired of this argument that scalpers don't cause any harm, as if driving up prices simply to create profit for a middleman never had any externalities.

    Excuse me, but a piece of my tax money went to funding the creation of this stadium in our city. The point to building that stadium was to attract large acts and attractions to the city, making it a more enjoyable place to live. Now you're going to tell me that when those acts come to town, only the upper third of the city is going to be able to afford that concert. I guess it's great for them, but it's a raw deal for the rest of us.

    There is a cultural concern for people. Ask an artist how he feels when his concert only goes 60% full because of unsold scalper tickets, and what effect that word of mouth about low-event concerts where the only audience members are the ones with the largest wallets. Does that have an effect on album sales, merchandise sales in the future? Ask your son what kind of cultural connection he has the local sports team - much worse the Yankees, or the Lakers - when he's never seen them play live, and likely never will since the ticket prices are so high. What effect does that have on the future sales of jerseys, on the number of people in the city that ignore the team altogether? No, really, honest question - what is the actual effect of inflated prices that don't go to benefit the team itself? Maybe the team did an economic study that showed that they make more money in the long run if prices are held to a certain level, provided scalping externalities don't come into play.

    I'm gonna say something here that's going to get me modded -1 socialist, but what good does that extra ticket price do? It isn't going to benefit the artist or team directly. It won't provide upkeep for the stadium. It's paying someone else just for the privilege of saying that they'll put the tickets up on eBay for you. What do you think would happen if a city - instead of trying to outlaw scalping - enacted a scalping tax? When you sell a ticket, you owe 50% of your profit over the original resale price of the ticket. For the individual seller, this means that if you have tickets that you just want to get rid of, then you can sell them at original price without penalty. For the big name scalpers, it means that those sales at least go back into helping the city that helped to provide space for the attraction in the first place. Just a thought.
  • by shutdown -p now (807394) on Tuesday March 02, 2010 @01:14PM (#31332824) Journal

    A broker looking to make an arbitrage profit is not the antithesis of the free market. They've found a pricing discrepancy in the supply/demand chain, and it's so far out of whack that they can still profit without moving 100% of their goods. That is precisely the free market.

    The only system being broken is the one where the venue sets a "fair price". That fair price is turning out to be much lower than the price the consumer is considering worthwhile. The venues are doing a terrible job pricing supply/demand for the more popular concerts. That's great for the consumer, so great that a marketplace has grown up around exploiting the arbitrage.

    You know, I find it really sad that the term "fair price", as offered by the seller himself, is denigrated that way. Not just in your post, but in countless posts in this discussion.

    Apparently not jacking up prices as high as you can - even if the markup is 500% and beyond - and screw everyone not able to afford it - is bad because it's a "market inefficiency". And scalpers are the good guys because they "fix" this "inefficiency", and as we all know, the only goal worth pursuing is an "efficient market" - it's a thing by itself, to be reached much like nirvana. If some people just want to be nice to other people - well, too bad, 'cause that's "inefficient".

    Yet, when we look at this while taking the actual utility or harm done to the society, scalpers are clearly harmful. They don't produce any useful product. They don't offer any useful service (to remind, we're talking about the kind that buys 100% of tickets in the first few minutes after they go on sale, not low-scale resale). The only ultimate effect of adding a scalper to the picture is that customers end up paying more for exact same thing.

    All in all, this story, and the comments to it, show a good example of why I consider unconstrained free market worship a form of sociopathy.

  • by EastCoastSurfer (310758) on Tuesday March 02, 2010 @03:36PM (#31335078)

    The artifical scarcity produced by the scalpers who make it harder for people to find the tickets is important.

    Do you think scalpers are buying and burning tickets to provide scarcity? The scarcity is caused by the size of the venue. It's real scarcity and there are only so many seats to go around. So what's the best way to distribute tickets? The click lottery or through a market mechanism? Right now we have both since people can win the click lottery, or if they don't they can buy tickets at true market value.

The reason that every major university maintains a department of mathematics is that it's cheaper than institutionalizing all those people.

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