NOEL KING, HOST:
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KING: All right, today's episode first aired back in 2013. It was reported by Caitlin Kenney and Robert Smith. And we will have an update, some fresh information for you, at the end.
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CAITLIN KENNEY, BYLINE: If you've tried to see a concert in the last few months, you may have had this experience. Sandra Hamm really wanted to see Taylor Swift in Texas, where she lives. So her husband was sitting at the computer, waiting for the tickets the moment they went on sale.
SANDRA HAMM: They went on sale, and he told me he was waiting at his computer. He's not very tech-savvy, but I assumed that he was able to, you know, find the website and get online. But he said as soon as he clicked on it, they were gone. He couldn't do anything. Like, he tried several times to purchase them, and he was unable to. So he got on eBay. He even looked for a while he, told me, trying to find the best price. And the best that he could come up with was $500 for two tickets.
KENNEY: And what was the face value of the tickets? How much were they originally being sold for?
HAMM: They were under $100, and we paid about 250 each.
KENNEY: Now think about this. Sandra Hamm wanted to see Taylor Swift. She loves Taylor Swift. But most of the money she spent on the concert was going to someone who was not Taylor Swift, someone who just happened to buy the tickets first.
HAMM: All I can think of is it's someone who was waiting on the Internet because they knew that they were going to get double the price.
ROBERT SMITH, BYLINE: That person waiting to squeeze money out of true fans - that person has a name, a scalper. But you know, it's hard to get mad at the scalper in this situation because Sandra, she was happy to pay the price that was asked.
HAMM: I didn't even think about the cost because it was so much fun. In fact, I would probably spend that same amount, if not a little bit more, again.
KENNEY: Taylor Swift, if you're listening, you priced your tickets way too low. You left money on the table, and somebody else scooped it up.
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R. SMITH: Scalping happens all the time in the music business, shady guy standing on the street corner in front of the arena and online, places like StubHub and TicketsNow. We live in a society where everyone is obsessed with making sure the price is right, that supply matches demand. And here's the entire industry that routinely gets it wrong.
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R. SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.
KENNEY: And I'm Caitlin Kenney. Today we're going to investigate why so much fan money goes into the pockets of people who can't even play an instrument.
R. SMITH: And we're going to talk to a man who is somewhat of an expert about being scalped.
KID ROCK: You can call me Kid Rock, Bobby, whatever you want.
R. SMITH: Kid Rock is waging a war against the scalpers.
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R. SMITH: Kid Rock first got big back in the late 1990s, when he was known for combining rock and rap. He had this huge hit called "Cowboy."
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KID ROCK: (Singing) Kid Rock and I'm the real McCoy. And I'm headed out West, sucker, because I want to be a cowboy, baby.
R. SMITH: And he was just this big, outsized personality back in the '90s. Now, these days, he's got more of a country rock sound going on. And back in 2013, he'd just released a new album. Let's hear a little bit of that.
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KID ROCK: (Singing) Hey, rebel soul, rebel soul.
R. SMITH: So Kid Rock's on tour for the album, and the scalpers wanted a piece of the action. So we asked him about it.
KENNEY: So I actually looked to see if I could find some tickets on StubHub for your show. OK - 783, 734, 490. Like, people are willing to pay that much to see you play.
KID ROCK: I've been approached by scalpers in the underground who said, we can make you hundreds of thousands of dollars cash. Just give us a few of those front rows for every show. We'll never tell anyone. If you'll do a meet-and-greet with them, you can add 10 grand cash on the top of that. Cash money - this is unreported money to the government. So if they say 10, that's 20 to me because I pay 50 cents on the dollar in taxes, you know what I mean?
KID ROCK: So I mean, they've come to me. And I'd be like, get out of here with that horse crap.
KENNEY: Kid Rock has a name for the scalpers, leeches. He says they're making money off his back. And he's not happy with the system, but the thing is, in some ways, what he's doing is encouraging it. He's pricing his tickets really low. For the current tour, you can get a ticket as cheap as $20. He says he wants to do that so all his fans can attend. But these lower ticket prices, those bring the scalpers in. So I asked him, why not raise your prices? Why not charge more for your tickets? But wouldn't you rather it go to you than to the scalpers? I mean, if people are willing to pay this much to see you, clearly, they love you that much, and it's worth it to them.
KID ROCK: Even though they would - that's a big accolade, and I really appreciate that - but I don't want to break you by coming to see me. And as somebody who sings songs about working-class people and for them, I thought it was important to stand by, you know, by what I sing about, what I preach. In this day and age, when you see so many people who claim they sing about the working man, this, that and the other. And they charge $100, $200 tickets. And we can all figure out who those people are.
I want to make as much money as I can, but I want to - I don't need to drive around in a tinted down Rolls-Royce or a Maybach and hide from people because I felt like I ripped them off - (coughs) Madonna, Rolling Stones. I mean, come on, you know, these - it's ridiculous.
KENNEY: What do you think - yeah - when you see, like, so many people that talk about the Stones? They talk about, you know, that $500, $600 ticket price.
KID ROCK: I think this - why, if you're one of the greatest rock 'n' roll bands in the world, which they are - I truly love the Stones; I love their music. Why, for the life of me, if this may be their last tour, would they not go out the coolest rock 'n' roll band in the world by giving cheap tickets to their fans? Hey, this is going to be our farewell lap. We appreciate that so many of you people have supported us for 40, 50, however many years it's been. We're going to go out and do - we're going to be so cool. We're going to give you cheap tickets.
R. SMITH: Now, that sounds good in theory. But if the Rolling Stones sold a bunch of $10 tickets to their concerts, you know exactly what would happen. The scalpers would come in. The problem is, when you have so many cheap tickets - when you have a fan-friendly ticket price, sometimes it actually makes it harder for fans to get those tickets.
JARED SMITH: It's easy for somebody to buy it at that undervalued price and then resell it at what the market truly dictates.
R. SMITH: Jared Smith is the president of Ticketmaster North America, and he says he sees this a lot. Artists like Bruce Springsteen, Pearl Jam, Kid Rock - you know, they're keeping it real. They want to price tickets low so the fans can go see the show. But Jared at Ticketmaster, he has to remind them. Like, this may not be the best strategy because those fans standing in line or trying to get on their computer to buy tickets, they are up against some very sophisticated scalpers. It's not just people who get up early and spend all night trying to get three or four tickets. These are scalpers who use sophisticated computer programs, bots, that can scoop up as many tickets online as they can.
J. SMITH: Certainly on hot shows, we see a ton of that activity. And we see even a ton of that activity, you know, for the best seats, even on a medium-demand show. So it gives you some indication of how much money there is to be made. Some of these outfits are incredibly sophisticated technologists. And it's a little bit of a cat-and-mouse game for us because, you know, the ability to grab tickets at an undervalued price is a huge incentive. They continue to pour money into the technology to fight the defenses that somebody like Ticketmaster might throw in their way.
KENNEY: There is huge money to be made doing this. A couple years ago, the Feds arrested these guys in California. They had a company, Wiseguys Tickets, Inc. And their whole business was to use complex computer systems to get around Ticketmaster's limits, to try to gobble up as many tickets as they could and then resell them. And these guys, they said they made more than $25 million doing this.
R. SMITH: I feel like this is battle of the titans. So on one side, we have Kid Rock, rock star. On the other side, we have these, like, scalpers, these new, modern hacker scalpers. So Kid Rock, he doesn't want to raise his prices. But he also doesn't want the Wiseguys of the world, the scalpers, to take all his money - I mean, money that he was earning by sweating his butt off on stage. Well, there is a slightly devious way to get around this problem. You know who can get Kid Rock tickets really, really cheap and get a lot of Kid Rock tickets? Kid Rock. Back in the old days - back when, you know, this whole electronic ticketing thing started happening and people started to trade and resell tickets online - back then, artists had sort of a way around scalpers. If they didn't want the scalpers to win, then they could be scalpers themselves.
KENNEY: There was, you know, an article in The Wall Street Journal and some reporting a couple years ago that people were taking their own tickets and putting on StubHub...
KID ROCK: Yeah.
KENNEY: ...And selling them at a higher price so that they could get that extra money...
KID ROCK: Sure.
KENNEY: ...Without getting the bad, you know...
KID ROCK: I might even have been guilty of that. I'm not sure because I didn't do it consciously, but I might have been - you know, that might have happened. I'm not for sure, so I'm not going to say it didn't. And I would be willing to bet it probably did. It was kind of the thing when it first came out. That's what you did. You know what I mean? Nobody was the wiser, and you just, you know, you scalped those tickets yourself and put that money in your pocket. And if people are willing to pay for it, it's like you're saying - what's it matter?
KENNEY: There's actually kind of a good business reason for doing this, for artists and musicians to be their own scalpers. And it has to do with the complicated psychology of fans and the way fans think about their relationships to musicians. Remember Sandra Hamm, who paid $250 each for her Taylor Swift tickets? She says if Taylor herself wanted to charge that much...
HAMM: If I saw it on her website for 250, I don't think - I would think that was crazy (laughter). I don't think I could do that.
HAMM: It just seems like so much money to go to a concert. And it's - I mean, I know she's so popular. But it's just Taylor Swift (laughter).
KENNEY: (Laughter) But you paid it, so it's clearly worth it.
HAMM: I know (laughter). It was worth it. But I think it was the concept that you buy a scalped ticket for more than it's worth.
KENNEY: So you guys paid, like, $150 over the face value of the ticket. Do you feel bad for Taylor Swift that she didn't get that money?
HAMM: No. She makes tons of money.
HAMM: No, it was a packed house. I'm sure she made tons of money off the originals.
R. SMITH: You know the system is screwed up when a Taylor Swift fan would rather give money to, you know, a shady guy on the corner or someone she doesn't even know on the Internet than give it to sweet, lovable Taylor Swift. I mean, that is the system we have now. And you can see how the artist would be a little frustrated by this. I mean, what did that guy ever do in order to get the money? They want as much money as they possibly can.
KENNEY: Yeah. I mean, you could see where that kind of shady dealing might be appealing. But Kid Rock says, you know, the older he got, the longer he went through his career, the less appealing it seems. He says he didn't want to be a jerk. He wanted to make sure his fans could get his tickets for a fair price. So the interesting thing is, on his latest tour, he told me he's got all these new techniques in the war against scalpers.
R. SMITH: And it's fascinating because Kid Rock, when he talks about this, sounds a little bit like an economist. He's really thinking about the economics of tickets. So one thing - for scalpers to make money, there needs to be more demand for tickets than supply. Now, if Kid Rock doesn't want to change his prices, he has another option. He can up the supply, do more shows. So in places where Kid Rock thinks he might sell out, that there might be more scalpers, he's adding nights.
KID ROCK: We're doing eight shows in Detroit.
KID ROCK: There's 20 - there's going to be 28,000 tickets sold in Chicago, over 20,000 in Indianapolis. St. Louis wants a second show. In the future, you know, we might be blessed enough to look like - hey, God forbid we have to move this into a stadium.
R. SMITH: Kid Rock is flooding the market with himself, driving down prices.
KENNEY: But of course he knows that that alone will not deter the scalpers. In a huge stadium, no matter the size, there are still good seats and bad seats. And no matter how many shows he does, there's always going to be a shortage of those really good seats, of the seats that people really want.
R. SMITH: Yeah. And the larger the venue - if you're in a giant arena, it actually makes the proportion of bad seats to good seats even larger.
KENNEY: The scalpers know that. They can take advantage of that. So Kid Rock, working with Ticketmaster, they've got this second idea. Yes, $20 seats for the masses, for the fans. But crank up the prices on those first 20 rows or so. Platinum pricing is what it's called.
KID ROCK: We take a thousand tickets, and we price those whatever that scalping market - whatever that secondary market determines it to be. You know, we have...
KENNEY: So are you literally, like, going on StubHub and seeing, what are people charging...
KID ROCK: Yeah.
KENNEY: ...For my tickets? - and then determine the price that way?
KID ROCK: Not me personally. But we have people that do that, yes.
KID ROCK: They go and see what the market's determining. You know - hey, people are looking for tickets, and this guy's got them for sale for $250. We have tickets near the same spot, $125.
KENNEY: Oh, OK. So you're adjusting the price as you go through the tour.
KID ROCK: Yeah, there's no set price on the platinum tickets. It's whatever the market dictates.
R. SMITH: Now, he is still underpricing the tickets. So the question that I had when I first heard this was, why wouldn't scalpers just buy up all those premium platinum tickets at say, like, $125 and then jack up the price even more?
KENNEY: Well, he's got another trick for that - paperless ticketing. When you show up to the show and you have one of those platinum seats, you have to show driver's license and swipe your credit card. Otherwise, you can't sit down.
R. SMITH: Yeah, it still seems to be a little bit of a conflict because Kid Rock talks all about - oh, it's about the people and about the fans. And then he's got this premium pricing whereby, you know, basically, you're staring out into a sea of rich people in the first thousand seats.
KENNEY: Yeah. He's worried about that. And that's why he has this actually one last tweak to his pricing system. So most of the seats, as we said, in the house, 20 bucks; premium seats near the front, more expensive. But the first two rows, no matter how much money you've got, no matter how rich you are - you can't buy them. Those seats are chosen by lottery, and they're going to go to people who paid for the cheap $20 tickets.
KID ROCK: I'm tired of seeing the old rich guy in the front row with the hot girlfriend and the hot girlfriend, you know, with her boobs hanging out with her beer and just screaming the whole time and the old rich guy standing there like he could care less (laughter). It's a very common theme at Kid Rock concerts, probably at most people's concerts. I bet a lot of artists could attest to that.
KID ROCK: So it'll be nice to see the people be able to have a real - the best shot I could give them at getting, you know, the best tickets.
R. SMITH: Just so I can picture the optimum Kid Rock show, there are crazy fans in Kid Rock T-shirts in the first two rows. And then behind that, there's a thousand seats of people in tuxedos, all the rich folks. And then behind them, filling up the rest of the arena, are bunch of people who paid $20 for the tickets, the $20 seats.
KENNEY: Well, I don't know about the tuxedos part.
R. SMITH: Yeah, OK.
KENNEY: I mean, it's still a Kid Rock show. But yes, that is the general idea.
R. SMITH: And the sweet thing about this is that Kid Rock knows that the people who bought the $20 tickets, they now have more money in their pocket to spend on beer and T-shirts and hot dogs.
KENNEY: And Kid Rock, he gets a cut of that.
KID ROCK: If you give people a fair price, I think they'll be - they'll feel a little better about spending their money. And they might, you know, they might drink some more beer. They might buy two T-shirts. They might spend as much just because they don't feel like someone's trying to get over on them - you know? - that they feel like everything's transparent, out in the open. And I'm going to make money off it. And I'm screaming this at other artists. I'm going to make money, you know what I mean? And I'm happy to discuss it with any of you at any time.
R. SMITH: Mick Jagger, Kid Rock says call him. One last thing, we wanted to see how well Kid Rock's plan, his war against the scalpers, is going. And so luckily, you can check to see how a concert tour is going at any time online. So Caitlin, pull up Ticketmaster here.
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KENNEY: All right, here we go. So this is for a Kid Rock show on Saturday. He's playing in New Jersey with Kool & the Gang and Uncle Kracker.
R. SMITH: Now, we will be able to see all of the individual seats and which ones have been sold. And this is sort of the moment of truth because if Kid Rock underpriced his tickets, if the tickets are too cheap, then the whole place will be sold out, and there'll be scalpers standing outside. And Kid Rock will lose money. But if Kid Rock overpriced the tickets - if he's charging too much, then the place is going to be half empty, and it's going to be a very, very sad show. So what are we looking at?
KENNEY: All right, moment of truth - here we go. OK. So we got some tickets available here in the official Kid Rock platinum seating.
R. SMITH: Yeah, looks like maybe there's 5 percent of the seats still available in the very front. Let's go to the medium-priced seats in the middle.
KENNEY: OK, just zooming out here.
R. SMITH: Sold out.
KENNEY: Section 303 - no seats available.
R. SMITH: Sold out.
KENNEY: Section 402 - no seats available.
R. SMITH: Sold out. Now, are there very cheap tickets? The $20 tickets, any of those left?
KENNEY: Let's see. All the way in the back. Yeah, it looks like there's still a bunch in the very back of the venue.
R. SMITH: So from Kid Rock's perspective, he kind of nailed it. He's got a place that's going to be rocking. It's going to be full. But if you really want to at the last minute, you don't have to go to a scalper. You can actually go to the official site and get it yourself.
KENNEY: And Jared Smith from Ticketmaster, he told me that's what he likes to see, too. You know, if you underprice the tickets, too many go too quickly. A few left means they got pretty close to the right price.
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KING: After the break, Taylor Swift does something that Kid Rock wasn't even willing to try.
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KING: That episode was originally reported in 2013. The next year, Taylor Swift released an album, and then she went on a world tour to promote it. Something like 30 percent of those tickets ended up on reselling websites like StubHub, which means she priced her tickets too low. So Taylor Swift was facing exactly the same sort of problem Kid Rock faced. If she sold her tickets at a reasonable price, scalpers would buy them up and then sell at a profit. But at the same time, not a lot of artists want to make their artists want to make their tickets too expensive because fans don't like that. It's not good for the brand.
Kid Rock had his strategies to solve this, like raffling off front-row tickets. But Taylor Swift did the thing that Kid Rock refused to do. She just raised her ticket prices. Some of the seats cost hundreds of dollars. She raised the prices so high that some of her shows didn't sell out, which, for a pop superstar, seems worrying. But Taylor Swift apparently thinks like an economist - you know, selling just enough that a few seats are left empty. That is a sign that you're pretty close to the true market price. That's how an economist would see it. And this is a thing that more and more artists are doing. They're setting ticket prices closer to what they're going for on reselling websites. That is according to David Marcus.
DAVID MARCUS: I am the executive vice president and head of music at Ticketmaster.
KING: He says, yes, this is a thing that has changed since 2013.
MARCUS: I think there's no question that the sense that fans are exposed to these prices in these other marketplaces and are willing to pay those prices is making artists more comfortable with charging those prices.
KING: Taylor Swift actually had a second part of her strategy. And it worked like this. Before tickets went on sale, she had fans log on to an online portal and register with their email address. Ticketmaster then ran those email addresses through an algorithm. And that algorithm made a judgment on whether, say, email@example.com is an actual fan or is a scalper. And then some of the fans who get through the algorithm get access to reasonably priced tickets. So that was the plan: raise prices on the general, and target actual fans. And Taylor Swift's plan to beat the scalpers seems to have actually worked. The 30 percent of tickets that ended up on reselling websites dropped to just 5 percent.
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KING: Today's show was reported by Robert Smith and Caitlin Kenney. Jess Jiang produced the original, and Shane McKeon produced the update. We're on Twitter, Facebook and Instagram @planetmoney. home. And once again, if you want to support our podcast and all of the work that we do, please go to donate.npr.org/planetmoney. We really appreciate it. I'm Noel King. Thanks for listening.
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