Ticketmaster and the secondary market for tickets, by Budish and Bhave

 Here's a still-timely paper that was a work in progress for quite a while.

Primary-Market Auctions for Event Tickets: Eliminating the Rents of “Bob the Broker”? By Eric Budish and Aditya Bhave, American Economic Journal: Microeconomics 2023, 15(1): 142–170 https://doi.org/10.1257/mic.20180230 

Abstract: "Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions into this market by Ticketmaster in the mid-2000s. By combining primary-market auction data from Ticketmaster with secondary-market resale value data from eBay, we show that Ticketmaster’s auctions “worked”: they substantially improved price discovery, roughly doubled performer revenues, and, on average, nearly eliminated the potential arbitrage profits associated with underpriced tickets. We conclude by discussing why, nevertheless, the auctions failed to take off."

From the conclusions:

"over the decade that has passed since the time of the data, rather than coming into more widespread use, primary-market auctions for event tickets instead disappeared. LexisNexis searches suggest that TM auctions were in use from their introduction in 2003 through around 2011, with a peak in around 2005–2008 but that with limited exceptions, they have not been used since.33

"We conclude by speculating as to why the auctions failed to take off. As discussed in the introduction, economic theory suggests that there are two basic choices for how to eliminate the rents of and rent-seeking by Bob the Broker: ban resale or set a market-clearing price. While auctions are no longer in use, what has at least partly taken off is using available data, including historical resale values, to set fixed prices in the primary market that more accurately approximate market clearing.

...

"We conjecture that the popularity of this practice relative to auctions partly reflects the simplicity and convenience for fans of posted prices relative to auctions, as has been documented more widely by Einav et al. (2018) and partly reflects a harder-to-model “repugnance” cost of ticket auctions (Roth 2007). 

...

"Setting market-clearing prices and banning resale are two ways to modify the primary market to eliminate Bob the Broker’s rents. TM has also aggressively expanded into the secondary market, acquiring TicketsNow for $265 million in 2008 (as well as UK-based Get Me In! for an undisclosed amount); entering into secondary-market partnerships with the National Basketball Association, National Hockey League, and National Football League (Major League Baseball has a partnership with StubHub); and most recently launching a secondary market within ticketmaster.com called Fan-to-Fan Resale that lists available primary-market tickets alongside secondary-market tickets.38 This business exploits TM’s unique ability, for events where it manages the primary market, to verify the authenticity of tickets in the secondary market. With transaction fees of about 30–40 percent in the largest secondary-market venues (Budish 2019)—of the full resale value, not of just the markup versus the fixed price—perhaps eliminating the rents of Bob the Broker is less profitable than taking a cut."