Forget about the scruffy scalper outside the venue, that’s just pennies compared to the money floating online.
And, for a clique of devious hackers, the ultimate ticketing scam produced millions before crashing this week.
How much? The self-named ‘Wiseguy Tickets’ ring ultimately netted $25 million before running afoul of federal investigators. The LA-based group tapped a number of Bulgarian programmers to flood systems like ticketmaster.com, and grab prime tickets under different aliases.
The programmers outsmarted ‘captcha’ systems, ironically designed to keep bots out, and snatched the best selection across a range of music, sports, theater, and other concert categories. “The public thought it had a fair shot at getting tickets to these events, but what the public didn’t know was that the defendants had cheated them out of that opportunity,” US Attorney General Paul Fishman announced, while announcing 43 different charges related to fraud, conspiracy, and computer hacking.
In the music world, the scam included high-profile shows from Bruce Springsteen and Miley Cyrus, both focal-points for a serious aftermarket backlash. Those shows featured huge, high-profile markups on the aftermarket, a problem for the then-proposed merger of Live Nation and Ticketmaster.
The Wiseguy gig is up, though the operation exposed some serious market inefficiencies. Scalpers have earned a bad reputation for marking up prices, though from a purely free-market perspective, these scalpers are merely agents of arbitrage.
Take it a step further, and scalpers are actually assuming risk by betting on actual consumer demand and willingness to pay higher prices. Perhaps gate-crashing secure systems takes the practice to a ridiculous extreme, though throughout, the internet offered a perfectly-lubricated market for reaching willing buyers.