Oops! Ticketmaster is sold out of tickets for your event!

The New York Times had a very enlightening story this weekend about ticket sales through Ticketmaster. Have you ever tried to order tickets for a concert right after they went on sale, only to find out that event was immediately sold out?

Well there's a very simple explanation for that. Ticket brokers snap up as many tickets as they can, as quickly as possible. Their targets are high-demand events like the Hannah Montana tour.

The brokers then turn around and mark up the tickets and offer them for sale on StubHub, a site owned by eBay. Hannah Montana tickets have a face value of $21 to $66, but are being sold on StubHub for an average of $258 each.

But how do the brokers buy large blocks of tickets so fast? They use special software that makes online purchases of tickets that get around the four ticket limit on regular customers. This process is at the heart of a lawsuit that Ticketmaster has initiated against RMG Technologies, the company that produces the automated ticket purchasing software "PurchaseMaster." It is alleged that the software helps brokers submit automated ticket requests while disguising Internet addresses to make it appear as though the requests were coming from different locations.

On the one hand, I'm a firm believer in the free market. The marketplace will decide how much tickets are worth, and if the demand outpaces the supply, someone has an opportunity to make a profit.

On the other hand, this software seems to be abusing the system set up by Ticketmaster, and is creating an artificially high-priced demand for tickets. By buying out popular shows fast, brokers are almost assured of a much higher price on their tickets. And the performers themselves never see a penny of that extra profit.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.
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