Promoters scalp their own tickets, Lyte collapse reveals

The sudden collapse of ticketing platform Lyte laid bare one of live music’s open secrets: promoters scalp their own tickets with the help of the same secondary ticket platforms they claim to despise.

Two festivals – AEG partnered Lost Lands and Chicago’s North Coast Music Festival have filed separate court actions to recover $330,000 and $350,000 respectively from Lyte. Court documents reveal the funds due both were for unsold tickets they had provided for sale on Lyte’s resale platform.

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Why sell primary tickets on a resale platform?

These festivals are not unique among promoters and venues who increasingly use ticket resale platforms like Lyte, StubHub and SeatGeek to sell tickets. At least one primary ticket platform provides a simple switch that facilitates the secondary sales option.

In addition to making tickets more widely available beyond the primary sales site, promoters use reseller platforms for three reasons:

• tickets listed on resellers can be at higher prices than the original tickets, thus generating more revenue
• the price of tickets listed on resellers can be manipulated based on demand, thus creating a back door promoter controlled for of variable pricing
• when ticket sale are soft promoters can sell them at discounted prices on a reseller, diverting any blame from fans who paid full price

While these practices often happen without the knowledge or consent of the artist, sometime the artist is a willing participant. “It’s the moral equivalent of scalping your own tickets,” an industry insider told Hypebot, “but when its your job to maximize revenue or save a show, sometimes you do it by any means necessary.”

Tens of thousands in additional profit

Of the 3,064 tickets listed on Lyte for the North Coast Music Festival in Chicago only 89 came from fans, according to a Billboard analysis. Lyte then used those fan listings to drive traffic to 2,975 tickets posted directly by the promoter on Lyte with a total face value of approximately $287,750.

“Lyte was able to scalp those tickets on its own marketplace and generate $426,912 in revenue – a price lift of nearly 48%, or approximately $139,162 total – which it would then split 50-50 with the promoters,” writes Billboard’s Dave Brooks. “North Coast Music Festival’s cut of the action was to be $69,581, which represents a 24% increase in revenue over their original allocation.”

Court documents for the $330,00 Lost Land lawsuit were redacted, but did show Lyte gave the promoter a $100,000 advance to use the platform. According to the filing, Lost Lands will now have to “urgently find alternative sources of revenue to pay the vendors and artists who will be working at the festival, to make up for its planned share of the secondary market ticket sales.”

Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a Berklee College Of Music professor.