What, exactly, is so bad about ticket-scalping? If someone buys a concert ticket, then that ticket becomes the property of that buyer, to use, give away, or sell as he sees fit. If one buys a ticket for an ultimately sold-out show at a cost of, say, $100, and then finds someone else who would like to see that same show and is willing to pay, say, $110 or $150, or $200, or $10,000 for the privilege, why should the original buyer not have the right to sell? Concert tickets, of course, exemplify what economists refer to as an inelastic good: There is a fixed amount of seats available for any given show; the number of seats will not change, regardless of pricing signals sent by scalpers and their buyers (for simplicity's sake, assume that additional shows cannot be added). The "invisible hand" of the market suggests--nay, requires--that people sell their tickets for whatever price the market will bear.
Indeed, the relaxation of laws against scalping suggests that, in principle, the public is willing to accept this idea of profitable resale. Major (legal) online marketplaces like Stubhub have based their business model on the ability to buy and sell tickets on a secondary market. Now, however, the Fans First Coalition, a non-profit organization supported by such music-industry titans as R.E.M. and the Dixie Chicks, is taking aim at sites like Stubhub in the name of making it easier for music fans to see their favorite artists. This nice story becomes somewhat less inspiring when you find out that Fans First is backed by Ticketmaster, which of course has its own less-than-altruistic motives for wanting Stubhub reined in.
But let's go back to the original question of whether ticket-scalping is wrong. We suspect most people would probably agree to some extent with the right of a ticket-holder to dispose of his tickets--his property--however he sees fit. If someone else wants the ticket more than the original buyer, and is willing to pay the original buyer a premium for it, well, why begrudge the owner the right to make a profit. Most people are upset not with the individual ticket reseller, but with the giant conglomerates--the organizations that buy up huge blocks of tickets with the sole intention of reselling them at exorbitant mark-ups. The proliferation of "bots" that can snatch up entire ticket inventories within seconds of them going on sale has only aggravated the situation. It certainly seems, if not criminal, at least unfair.
But is it? Look, let's say Bruce Springsteen is playing the Meadowlands and tickets cost $100 apiece. When the tickets go on sale, they may be bought up immediately by resellers, who then turn around and sell them to Boss-hungry fans for, say, $150 each, making a hefty profit on the transaction. But here's the thing: People buy the tickets! Bruce will surely not be playing to an empty stadium. The fact that the tickets are resold en masse for $150 (or $200 or $500) each may in fact be unfair. But unfair to whom?
Because the size of the resale market suggests that, if anything, the tickets were underpriced to begin with. If people are willing to pay more than $100 for the seats shouldn't the original price have been more than $100? The fact is that the ticket resellers are not taking advantage of the fans--who, after all, are freely choosing to buy the tickets at whatever price--but of the artists and venues. Not that Bruce Springsteen is hurting financially, but if we spend $150 on a ticket to a Springsteen show, we'd like to think our money was going to the artist--not to people whose only contribution to the artistic experience is to try to corner the market on it.
The basic problem in the ticket-selling industry, then, is one of accurate initial pricing. If artists knew beforehand how high the secondary market prices would go, they could simply sell the tickets for that price. There would be no incentive for the ticketbots to snatch up and resell tickets, as they wouldn't be able to make a profit. Let's say Springsteen knew that the highest price anyone would pay for his show was $5,000. If tickets went on sale at that price, then those willing to spend that money would grab them. If Stubhub and its ilk bought up all the tickets, well, so be it. But why would they? They would only be able to resell them for the same $5,000--since we've established that nobody willspend more than that. And if the concert doesn't sell out at $5,000? Prices would gradually be lowered, and, at each price point, those who wanted to pay that amount would do so, until all the tickets were gone.
Some will argue that this kind of price structure truly excludes the "average fan," who will never be able to afford the initially "overpriced" tickets, and who will find all the tickets gone by the time they reach a "reasonable" price. As someone who would never consider spending more than, say, $29.50 for a concert ticket, we are sympathetic to this position. Nevertheless, the fact is that, as long as there are people willing to pay exorbitant prices, then exorbitant prices will be paid--the "average fan" gets screwed no matter what.
The flaw in this model, of course, is the fact that we don't know what maximum amount people will pay until they pay it--by which point the ticket has long passed out of the control of the artist or the venue and into the hands of the resellers. But we suspect that, with the sophisticated software that exists today, some enterprising economist could put together a model that would allow artists and their reps to devise a way to more accurately predict the demand for--and thus the price of--tickets.
Sounds like a good doctoral project to us.
Solipsistography
"Scalping Battle Putting 'Fans' in the Middle"
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