Tech scalpers: attacks and defenses

 

     Once upon a time, scalpers were just folks who went to a ticket agency, possibly having waited in line (or paid someone else to wait for them), got as many tickets to the event (sports, concert, ...) as possible and then stood outside the event location trying to sell them for as much as the market would bear. An event that was not sold out would probably only get back the ticket price (or less). But an event that was sold out and very popular -- who knows the price that one could get. It was usually considered to be illegal but very difficult to enforce.

     In current days, although "old-style" scalpers still exist, the tech scalpers have largely taken their place. Online purchases/access means online scalpers. Events for scalping exist in the same venue as brick-and-board. Tickets or products become available for sale at a specific, predetermined, time and place. OR tickets or products will become available at an unspecified time -- "hit and miss".

     For the tech scalper, these events are met by automation -- or "bots". A bot will "hang around" for the appropriate time, or will do frequent snapshots of web pages to compare in order to find out when something is now available, and pounce. A human at a keyboard can do the same thing (or can make use of some of the same apps that tech scalpers use) but not nearly as promptly. And a human must be around when the event occurs -- the bots can be set up to do everything without further intervention by humans.

     In attempts to make purchases, and access, fair -- limits are often imposed. "Only ten tickets per purchaser." Or, "only four widgets per session". For a human, that is successful. For a tech scalper, that just means that they need to clone and multiply. Limits per session? Have massive numbers of multiple sessions. Limits per purchaser? Have multiple accounts.

     The purchaser, or tech scalper, has noticed the event and gotten in-line. The goal now is to determine the item to be purchased and check out as quickly as possible.

     We have reached the point where different types of events have different requirements. In order to purchase a ticket, a choice of seat/ticket must be done. For speed, the "best seat available" option is usually open but not always. For a scarce item now available, there is usually only one choice.

     The amount of time between noticing something is available and choosing it is the first critical amount of time and the tech scalper has the advantage. After choosing the item, there are two ways the seller can handle it. They can take the item out of inventory or they can just keep allowing items to be chosen as long as there are still items available that have not been purchased.

     If the seller takes something out of inventory upon choosing, they run the risk of having it "tied up" and not available for sale to anyone else -- and the first person may choose to not do the final purchase. For sellers who choose this option, there is usually a specific time counter for the purchaser to complete the purchase before the item is released back to inventory. The time limit is not always explicit.

     For sellers who leave it in inventory, the seller has the advantage that it is likely that, for popular items, all the items will be sold. The buyers, however, are in the situation where 500 items may be chosen 5000 times and the first 500 to finish the task of purchasing are the winners.

     In this situation, the tech scalpers are the ultimate winners. Although a few of the humans might get a ticket or item, most of the purchases by the tech scalpers will succeed. Humans have possible opportunities only when there are more items than scalping "units" (number of active scalping programs times number of purchases possible per program). Without automation, humans cannot beat the tech scalpers if the scalping units exceed the number of items available except with the very best of luck.

     Humans can improve their odds by being as ready as possible when the item becomes available by having to ONLY choose and buy. Even there, the human is at a disadvantage because of bandwidth limitations in which the tech scalper is likely to have a high-speed connection.

     In my opinion, for scarce items, sellers should always do the time-out method and pull it out of inventory when chosen. Any other choice gives the "game" to the tech scalpers.

Social Media: Still no such thing as a free lunch

    I recently had a friend, who also uses one of the same Social Media sources that I do, complain about the way their contacts list was being used to send out advertisements to her friends under their name. For them, this was an item that made them consider dropping use of that Social Media source (I am deliberately not naming it because the problem is not really specific to that particular source -- call it YYY.) I responded to their message with a brief note about how all of the Social Media sources had to find ways to fund themselves and that if they chose to drop usage that was certainly their right but to recognize that the source had to be able to fund themselves.
    During the past 50 years, we have had a true technical revolution -- meaning that the ways that things interact have dramatically shifted. All change causes discomfort and the need to adapt new methods to work with them. However, as I have talked about in some earlier blogs, money -- which is the representation of labor and other resources -- still needs to be able to be moved around so that people can pay for their needs to live.
     It may be difficult for many people to remember so far back but, once upon a time, everything was paid for in cash of the local economy -- or, possibly, private representations of cash such as personal checks or money orders/traveller's checks. My younger children have never written a check -- and it is quite possible they never will (they also may not learn cursive handwriting to be able to sign a check or contracts -- but that is a different story). The first credit card (or what we would call a credit card) was invented around 1950. For the first couple of decades, a credit card was used more as a guarantee against payment with the card's numbers (sometimes imprinted from a raised surface) associated with an account which was then printed with the purchase/fee amount and sent to the local bank or credit repository. The money was then authorized to be given to the merchant and a bill was later created for the person using the credit card. It was not until the 1980s that the landline phone system began to be used to connect directly to the credit card issuer's accounting system -- an "electronic" credit card. Of late, it is becoming popular to embed "smart chips" to increase security.
     With use of electronic credit cards, the user, the merchants, and the credit system became part of the "big data" pool of information. Privacy was greatly diminished -- laws were created to help protect privacy but certain information could now be accessed unless directly forbidden. If you buy a specific product at a specific store, you may get (in the mail -- or via email) a coupon for a competing product at a competing store (or the same product but at a different store). They know WHAT you get and WHERE get it -- and the purchase is specifically connected to YOU. The advent of even more abstract methods to transfer money such as Paypal means that all info within the capital stream can be matched against each other.
     So, with that general background, here comes the Internet. Others are better qualified to talk about how it evolved than I am -- but it basically started as a network interconnected by the Defense Department to help its contractors better communicate with each other. That expanded into a general connection of universities, colleges, and scientists which then expanded into connections between businesses as well as all the former connections and then the leap occurred for virtually everyone to connect with everyone else. This global interconnection used to be via voice phone, or physical letters and telegrams, or long personal trips.
    The old, physical, methods had a set of costs to provide services and a set of fees and charges to make sure all the people involved could continue to provide the services. The old pre-Internet was paid for by the Defense Department, and then divided between the Defense Department and the various businesses and then private companies started to be formed which helped with interconnection for a fee -- with transmission fees to the private companies paid directly by the end user. That is the way that the fee structure is largely set up now. People pay for connection (cable, DSL, analog phone, broadband ethernet, whatever) and usually have an Internet Service Provider (ISP) -- many times these are now provided by the same company. In some manner, the full amount of fees/charges must pay for the needs of all the people/resources needed to provide the service.
    We (finally, you say) now get to the Social Media. Social Media is a destination -- just like going online to shop is a destination -- or online to get information is a destination. Each destination has an interest in having you go there. But every destination has its own costs needed to provide the services that are attracting you to go there. Online shopping sites are a straight-forward equivalent of a "brick and mortar" store. Their costs are paid for via the profits on items that they sell. Online information access is usually paid for by the people who want you to have the information -- tourist destinations or government entities (taxpayer funded) or whatever. Private information destinations may be paid for by advertisements which exist to redirect you to businesses which have use an online shop finance model.
     But what about the Social Media? Every destination has to get you to decide to visit. Many of the major Social Media (and major "search" groups) decided that the services would be "free" to the user. In other words, people could work with the destination's services without paying any additional money directly. A "free" site can then entice people to come there by providing the services that they want to use without having to precisely decide on a fee structure for the services (which, if they give many types of services, could end up being very complicated). BUT, the Social Media still has people and other resources that are needed to provide the service -- and these people have their own needs to be able to live. So, every destination -- including Social Media -- must eventually bring in money to pay for those services.
     Once a service is provided as "free" it is very difficult to start charging up-front fees without having a mass departure of people from using the service. So, the fees must be charged in a manner that is "optional" -- you are not required to pay/use them in order to get the general services -- but enough people are expected to want to use them such that the money brought in is enough to pay for costs. The first, easiest, avenue is advertisements -- this has a long-time association with use of services and people expect it (even if the service initially starts with no advertisement). It is even a way to get initially "free" services changed to a fee-service without getting rid of users -- ("free" with advertisements but, if you don't want ads, you can pay a fee to get rid of them). The next step is to provide access to other services which, once again, may be "free" but have added inclusions that do cost money (for example games that allow you to purchase "extras"). A following step is to "sell the client list" to other fee-based advertisers (such as my friend complained about).
     There are various methods used to bring in the revenue needed to provide the services and resources -- some are very ingenious. The goal is to make you WANT to pay -- something that you have been persuaded that you NEED -- without ever making you doubt the reasons for which you initially went to the destination. It is a "tightrope" for some companies and they often sway back and forth between not making enough money to starting to lose people because they are unhappy.
     What other methods of bringing in money do you encounter? How do you feel about them?