@DannybSZN poses next to all of his pairs after the Yeezy 350 v2 “Zebra” release in July 2017

Have you ever tried to buy a ticket to a concert featuring your favorite artist, only to see it sell out in front of your eyes? I know that feeling all too well, but not for tickets. In December 2015, I began reselling sneakers — or, at least, attempting to. One of my friends had told me that a new color of the Yeezy Boost 350 was releasing, and if I were able to get one pair I could sell it for $800, ending up with a $600 profit. Naturally, I had no hesitation, and my brother and I spent a day in our hotel room in the Dominican Republic while my parents enjoyed their vacation on the beach. My brother got a pair, but I ended up without any, and it continued that way for a few more weeks. How were people on Twitter getting dozens of pairs when I couldn’t even get any? It didn’t take long for me to realize that, similar to ticket bots, people had developed sneaker bots that could check out multiple sneakers in a matter of seconds, much faster than a human could possibly check out only one. I paid $300 for a copy of one of the most popular bots being sold, but I was never able to check out a pair. In the past year, I have learned that it’s not as simple as I thought it would be. People spend days researching which websites will be releasing certain shoes, staying up all night on release night and using any skill they have to be able to get a pair. As a programmer, I began coding my own bots that were more successful, because I knew what exactly went wrong if anything, and I could adjust for it. When I posted my pairs for sale on Twitter, I was sometimes met with some mean replies; people were upset that people like me were taking pairs just to resell them, and they had to pay up to 3 or 4 times as much to have them. It wasn’t until recently that I began to consider that what I was doing might be unethical. I had looked into the legality of it time and time again, and, while I was violating every website’s Terms of Service, none of it was illegal. Recently, Congress passed a bill called the BOTS Act of 2016, which made it illegal to use bots to purchase multiple event tickets to resell them. I began to wonder why ticket reselling is considered immoral in the eyes of the law. Can this be applied to other types of reselling, like that of material goods such as sneakers, clothing, and even video game consoles? If I’m working hours on end to be able to get the sneakers, do I deserve them? Are laws against reselling a reasonable restriction on capitalism? Due to the lack of research on sneaker bots and sneaker reselling, throughout this paper I will examine these questions with regards to tickets specifically, and attempt to draw reasonable parallels to sneakers. Specifically, I will focus on the difference between the legality, morality, and ethicality of reselling, and how to apply each to sneakers.

Ticket scalping is a phenomenon that has existed since the early 1800s, and since then, many attempts have been made to legally condemn the practice (Devine 4). The first successful law in New York State was soon followed by the BOTS Act of 2016. Gregory M. Stein argues: “Because tickets to cultural and athletic events are classified as revocable licenses under property law, the licensor may revoke the ticket or may limit the holder’s legal capacity to reassign her ticket to a third party without the consent of the licensor” (Stein 34). If this is true, then these laws may not be a new restriction on reselling, but rather are just reaffirming the rights of primary ticket sellers. However, I’m not sure if this can be applied to sneakers, because material goods aren’t classified as revocable licenses under property law. While Robert J. McFadden agrees, he also states that up until 1965 the Supreme Court believed laws against ticket reselling were unconstitutional, interfering “with an owner’s property rights and a violation of the Due Process Clause of the Fourteenth Amendment. In 1965, the Supreme Court changed direction… From there, modern courts began using a ‘rational basis test’ to uphold laws restricting the resale of tickets when the laws are ‘rationally related to a legitimate public concern’” (McFadden 435). Using this reasoning, perhaps laws against sneaker reselling would be a constitutional restriction on capitalism. However, it raises the question of whether or not sneaker reselling is a legitimate public concern.

It’s likely that Josh Luber, the CEO and Founder of StockX, one of the two most popular sneaker reselling websites, would argue that it is. Lisa Chow writes that “Luber believes… resellers made $240 million [in 2014], all but $10 million of it on Nike products” (Chow). Divine claims that the “current U.S. secondary [ticket] market represents a $4 billion a year industry” (Divine 5). While the sneaker resale market is smaller, it is certainly comparable. These numbers likely suggests that in 2014 at least a million pairs of sneakers were sold at a higher price than their manufacturers intended them to be sold at. However, Chow continues:

That $230 million is equivalent to 8.5 percent of Nike’s earnings in fiscal 2014. Knowing how difficult it is for a large company like Nike to add even 1 percentage point to its bottom line, Luber said, this isn’t a number to ignore. To know whether Nike could capture any of the millions of dollars consumers spend in the secondary market, it helps to understand why people want these sneakers in the first place… By restricting the supply of its popular brands, Luber says, Nike is tapping into another consumer desire: to have something no one else has.

So, while it’s possible that sneaker reselling is a legitimate public concern — at least in the sneaker world — it’s worth exploring whether it’s the fault of sneaker manufacturers who artificially restrict supply, creating “hype”, or the fault of resellers, who are taking advantage of the basic economic principles of supply and demand.

For tickets, Devine and McFadden offer different approaches to the artist’s role in ticket sales. McFadden argues that promoters “typically set initial ticket prices, or ‘face price,’ lower than consumers would actually be willing to pay. They do this to maximize attendance, which allows for profit recovery through such things as food and beverage sales, merchandise sales, and parking fees. The practice of pricing tickets below market value creates the groundwork for a secondary market” (McFadden 433). In other words, he seems to be stating that whether the general public is content with it or not, there are enough people willing to pay a certain price that that price will be there whether due to a secondary market or not. On the other hand, Devine suggests that many artists and their affiliates take part in the practice known as “ticket withholding” — when “artists, venues, record companies, talent agencies, radio stations, credit card companies (American Express) and sponsoring corporations” will secretly allow some portion of the total tickets to go directly to the secondary market, knowing that they will sell at a higher price, resulting in more profit (Devine 10). He claims that Ticketmaster, one of the largest ticket reselling companies, “routinely offers to list hundreds of the best tickets per concert on one of its two resale Web sites — and dives the extra revenue, which can amount to more than $2 million on a major tour” (Devine 10). Similarly, the world of sneakers has the phenomenon of “backdooring” — resellers making connections with employees of retail stores, who will sell them sneakers (sometimes quite literally through the store’s back door, so people waiting in line out front are unable to see) at a price higher than the retail price but lower than resale, resulting in profit for both parties. Devine argues that, in this case, the artist is at least partly at fault. Similarly, it may be partly the employee’s fault, but if a store is caught doing this it’s likely for them to lose their partnership with major manufacturers like Nike and Adidas, losing thousands of dollars in profit. Although I could not find a source on the topic of backdooring, from personal experience it seems much less prominent than the use of sneaker bots, but, admittedly, I spend much more time online in the sneaker botting community than I do in physical sneaker stores, so I’m not really sure how big of an issue it is.

While ticket-scalping is a discussion that has been around for two hundred years, sneaker reselling is a relatively new concept that began around the time Michael Jordan founded the Jordan Brand under Nike, Inc. in 1985 with the release of the highly-coveted Air Jordan 1 (Footlocker). Not enough time has passed nor does the high-end sneaker market affect enough people for much conclusive research to have been done since then, but it is definitely something I hope to explore further. Unfortunately, the overlap between academics and people who attend sports, concert, and theatre events is likely much larger than that between academics and people who are passionate about sneakers, so much less research is being done on it. There are some clear parallels to be drawn from ticket-scalping, like the idea of making something harder to purchase in order to make a profit. However, unlike tickets, sneakers are not licenses under property law, which is one of the primary arguments for the illegalization of ticket-scalping. Nonetheless, it is clear that sneakers are a massive market, so one of the major debates in this space is something that merits further research and discussion.

Works Cited

Devine, James Anthony. “Ticket Scalping in the Late 1800s and the Early 2000s — Much Has Changed, Much Is the Same.” ERepository @ Seton Hall, 1 May 2014.

Stein, Gregory M. “Will Ticket Scalpers Meet the Same Fate As Spinal Tap Drummers? The Sale and Resale of Concert and Sports Tickets.” Pepperdine Law Review, December 2014.

McFadden, Robert J. “The BOTS Act: A Small Step for Fankind When a Giant Leap is Needed.” Washburn Law Journal, 2016.

Chow, Lisa. “You See Sneakers, These Guys See Hundreds Of Millions In Resale Profit.” FiveThirtyEight, 17 October 2014.

“History of Air Jordan.” Footlocker, accessed 5 October 2017.