Legislation banning scalper bots will cause more problems than the one it's trying to solve
Scalpers and ticket-buyers will always find a way to exchange tickets at their true market value
In a recent interview with the Toronto Star, Ontario New Democrat MPP Jennifer French articulated the attitude that spawned a new Ontario bill banning ticket bots:
"Ontarians want fair and affordable access to entertainment," she said, "so the government should fix it."
The "it" she's referring to is the process of buying tickets to concerts and other events. The problem is that too often, the would-be ticket buyer rushes to purchase a spot to see his favourite band, only to find that all the seats have already been snapped up.
The culprit? Sinister scalper bots that use menacing software programs to grab up gobs of tickets for their human overlords, who resell the tickets at higher prices… then count their millions of dollars while laughing evilly.
At least that's the story. The reality is less dramatic.
New provincial legislation
Ontario set its sights on ticket bots last year after the Tragically Hip's farewell tour sold out in minutes, leaving fans to resort to online sites for tickets that were going for two or three times the face value. The province's new legislation will both ban scalper bots, as well as cap resale pricing of tickets at 50 per cent of the original value.
But it's not just scalper bots that pluck tickets from the market before the hapless consumer can even refresh his browser. Fan clubs, managers, rewards programs, tour sponsors and an untold number of others (including the artists themselves) get first-dibs on tickets that they can then resell — before the robots even have a chance.
As Anne Hobson and Christopher Koopman noted in a Techdirt op-ed last year, it's hard to find reliable statistics about how many tickets scalper bots really manage to get their figurative hands on. But even if the expansive estimates – usually made by anti-bot politicians and traditional ticket sellers – were correct, we'd still only be talking about bots "hogging" less than five per cent of total tickets.
For big name acts in large markets, it's not unheard of for 70 to 90 per cent of tickets to be earmarked for presale to people who have certain credit cards or belong to certain membership groups. So, the true villain in these ticket tales of woe is often mundane AmEx cardholders and Metallica Club members, rather than the much-maligned bots.
But back to Ontario. French is not wrong that the status quo is frustrating, but the province's new legislation will cause more problems than the one it's trying to solve.
By capping resale ticket prices at 50 per cent of the original price, the legislation is wiping out the positive contribution the secondary ticket market currently makes; namely, getting tickets into the hands of the consumers who value them most (rather than the consumers who are most adept at beating Ticketmaster.ca's seven-and-a-half-minute countdown timer, for example).
Price controls have a long and consistent history of failure precisely because they disrupt this elegant market mechanism. Price ceilings predictably create artificial shortages, leading to queues (which are costly in time if not cash) and/or black markets, where fraud is difficult to police. Which is exactly the difficulty we're trying to fix in the ticket realm.
This should all give us a sense of deja vu, of course: Ontario first tried capping resale ticket prices almost 20 years ago with the Ticket Speculation Act, legislation that put a face-value ceiling on tickets. It promptly led to increased ticket counterfeiting and illegal ticket sales.
The province eventually retreated from its price-cap. But apparently it failed to learn the lesson that scalpers and ticket-buyers will always find a way to exchange tickets at their true market value, regardless of what the government decides is a fair amount of money to pay for a seat at a Justin Bieber show. And now other provinces, including B.C. and Alberta — the latter of which actually ditched its anti-scalping laws in 2009 — are looking to follow Ontario's ill-advised lead.
Ok, so maybe the price cap isn't such a good idea, and maybe the bots aren't as big a problem as we think they are. But at least the new legislation makes things a little more equitable by taking the thousands of tickets that currently get swept up by robots and putting them back in the hands of mere mortal Ontarians. Right?
A symbolic gesture
Except that it's not clear the legislation will do even that — off-shore ticket bot operators are infamous for being almost impossible to hunt down. The law sounds tough, but won't prevent another debacle like the Hip's tour tickets if the responsible parties are seaward.
The goal of legislation should not to be to make symbolic statements that comfort people but do nothing (or worse than nothing) to address problems. The goal of legislation should be to actively (and practically) protect people from force and fraud. In the case of ticket selling, that means keeping transactions transparent and safe. Not simply decreeing fairness and hoping everyone listens.
We were all sad last year when Tragically Hip fans couldn't get reasonably priced tickets to see their beloved band, but that's not a sound reason for introducing a law that restricts all Ontarians' choices about how to get the seats they want.
What concertgoers really need are practical ways to verify the legitimacy of tickets before purchasing them, and tickets with initial face values that reflect their true worth (rather than being under-priced to create sellouts and the accompanying buzz and excitement). But neither of these changes are the government's job.