When Brooklyn-based dance-punk band LCD Soundsystem was formed in 2002, the internet was less than 10 years old, and StubHub had been around for two years. Napster was still in the early stages of turning the music business upside down, and bands still made most of their money from record sales. Now, the money is in touring, and records are little more than fodder for live shows. When LCD Soundsystem opens their five-night run to christen Brooklyn Steel, it will not only showcase New York City’s newest venue, but will serve a the latest reminder of how dysfunctional the ticket market can be.
Brooklyn Steel is located in gritty East Williamsburg, and until five years ago, it had in fact been a working steel factory. The venue is being launched by Bowery Presents, the powerhouse New York City promoter that recently partnered with AEG. Besides the venue’s blue-collar heritage, what may be most interesting is the venues movable stage, which allows for capacities of anywhere from 1,200 to 1,800, based on demand. For a band that sold out Madison Square Garden in 2011, demand for the five LCD shows far exceeded the maximum capacity. As a result, many long-time fans who wanted to get tickets were shut out. The issue is that many of the credit cards that purchased tickets did not belong to people at all, but to bots. Tickets that went on sale for $59.50 are now listed on secondary sites like StubHub and TicketIQ, the company I founded, for more than $300. (TicketIQ pulls listing from other sources and does not source any tickets directly.)
Brooklyn Steel is ticketed by AXS, one of the biggest ticketing companies on the planet, which is owned by AEG. Despite their heft, they were not able to stem the tide of the bots or contain the ire of fans. While LCD Soundsystem fans had no other option but to vent online, there are substantive changes occurring in the industry that may one day make bots as outdated as New York City’s industrial past. To the surprise of some, Ticketmaster, the company most often associated with fan vitriol, is leading the way.
The company recently launched a new platform called “Verified Fan” that is meant to combat the army of bots. The core of the Verified Fan platform is pre-sale registration that allows Ticketmaster to validate that people looking to buy tickets are actually fans, as opposed to brokers, or bots, looking to take advantage of the significant pricing inefficiencies that exist in the ticket market. This did not happen for LCD, and as a result, fans are paying five to six times face price.
In addition to music, Broadway has also been plagued by bots attempting to hoard tickets for top shows like Hamilton and Dear Evan Hansen, and last year, the New York state attorney general helped spearhead the passage of an anti-bot bill. Unfortunately, legislation won’t make much of a dent when economic incentives are as great as they are.
According to David Marcus, the head of music at Ticketmaster, last year Ticketmaster’s platform successfully defended against 5 billion bot calls. For a company that sells 100 million tickets each year, that’s a staggering ratio—and it means that even a 1 percent failure rate would mean half of their tickets are sold to bots. The biggest test so far for Ticketmaster’s Verified Fan platform was for Ed Sheeran’s upcoming tour, where a “majority” of tickets were sold to verified fans, according to Marcus. The other big test to date was this summers Twenty One Pilots Tour De Columbus, where every ticket to the five shows in their native city were sold to verified fans.
According to data from the Record Industry Association of America, roughly $18 billion of albums were sold in 2002, the year LCD Soundsystem was formed. Today, that number is around $8 billion. Over that same period of time, the touring market has exploded. Pollstar estimates that North American ticket sales hit a record $7.3 billion in 2016, up from $2.1 Billion in 2002 (PDF). That’s a lot of economic incentive for bad actors to figure out way to game the system. In 2002, the first and fastest ticket buyers were rewarded with the best tickets. Before the internet, that meant being the first in line at Tower Records.
While not perfect, that was at least a level playing field where anyone could wake up at 5 a.m. to get in line. With billions of dollars on the table, no matter how passionate fans are, they’ll never be able to compete with bots. While Ticketmaster’s Verified Fan program is a step in the right direction, as the LCD on sale showed, there’s still a long way to go.