Ticket scalping has been a tricky issue. Most people don’t have a problem with reselling something bought in the open, legal market. However, start making a lot of profit, and things can get ugly.
The Myth of Unfairly High Prices
We have to remember that the price of any good or service is set by supply and demand and it is in the best interest of both the seller and the buyer for the price to ensure the best distribution. For example, if you Rose Bowl tickets were $5 a pop, they would sell out in a minute and a lot of die-hard fans won’t get to go. However, as the price increases, those people who most desire to go will still pay more for the ticket - this is basic human action.
Do the poor people griping about their basketball season ticket prices really think they would still be able to get tickets if the costs went down, while demand was soaring? Do they not realize that the hordes of people jumping at cheap tickets would mow them over and likely leave them out of watching any games?
In fact, the higher prices are the most fair. But too high, of course, and no one can afford them. So the happy medium is the highest price that still ensures that everyone who really wants to go can go.
What needs to happen is for the venues themselves to charge a higher price (as the scalping profits are an indicator that the prices are too low) so that the extra profits go back to the venue and can be used for seat expansion, etc.. so that more people will be able to watch.
The Nostalgia Myth
I suspect, like most of us, it’s the general increase in the cost of sports that is bothersome - and I agree, it’s sad that it costs $80 a ticket to see a football game anymore - but that’s what we pay for all the marketing, new stadiums, new uniforms, practice facilities and the like. Advocating laws or price controls on scalping is the wrong move, and will be far more destructive. We need to re-examine, as individuals, our own sense of entitlement and realize that maybe we don’t have a God-given right to watch football or a concert for less than $80.
The Monopoly Myth
The second problem that the advocates of intervention into the ticket-selling market have, is not so much with the profit, but the fact that programs have been created that suck the venues dry of tickets within a few minutes. The scalpers then have a “monopoly” on the tickets. But this is ignorant of basic economic law. It’s not like scalpers are putting a gun to someone and making them buy a $500 ticket.
Besides, didn’t the venue originally have the same “monopoly” if not more so? Why didn’t they jack the price up? Heck, doesn’t a monopoly mean you can sell tickets for as much as you want and get away with it? Well no. At some point, people really don’t care to go see Notre Dame play Air Force for $400.
Venues Have the Power to Stop Scalping
Again, if the venues would price the ticket accurately in the first place, there would be no incentive or profit to buying them up en masse. This whole situation exists because there is dissonance between what the public thinks it should pay for tickets and what the ticket are actually worth with respect to economic law and supply and demand. It’s a classic case of the law of unintended consequences.
The scalpers have extra costs in researching and running their programs on top of what the venues already build in the price. Until the venue price chips into that, there will be scalpers using such programs. It’s unfortunate and sad, but it is the nature of the market if venues don’t increase their prices.
Ticket scalping programs will go away overnight if venues just raised their prices enough to cut into the profit margins of the scalpers. Heck, it’s in their best interest to do so.
Just a little editing: by “program,” you mean computer program, don’t you?
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“So the happy medium is the highest price that still ensures that everyone who really wants to go can go.”
This is not true. But this is:
“This whole situation exists because there is dissonance between what the public thinks it should pay for tickets and what the ticket are actually worth with respect to economic law and supply and demand.”
In the first statement you are confusing want with ability to pay. And that is one thing that gripes people about scalpers–the little guy can’t afford to be anybody’s fan. Some stadiums combat this problem by hold a block of tickets to be sold two hours before the event, so the little guy can go stand it line to prove he’s a real fan.
I personally can’t complain too much about scalping. A couple Christmases ago my older son scalped a small number of Sting tickets (to middle-aged ladies like me, except that they were rich) and bought me a new dishwasher with his profits! I hope those ladies enjoyed their concert, because I really like having a new dishwasher.
Does your son do it outside the venue or over the internet? Which makes him more money?
He does it entirely over the internet (he lives overseas), but he gets his little sister to do the leg work of actually receiving the tickets in the mail, printing out the mailing labels and taking the tickets to the PO/FedEx. He uses Ebay and Stubhub. So it is really like a little side business.
I’m astounded at how much money he makes. But then, I like to go to baseball games for $2.50, so maybe my opinion doesn’t count.
I think in order for it to be successful, you have to have a good sense of what will sell and what won’t, and you have to be able to handle the large amount of risk involved. Plus handle the cash flow situation.
You make many good points but I do question your assertion “the fact that programs have been created that suck the venues dry of tickets within a few minutes.” No one knows whether this is reality, of just boogeyman talk. It is not even clear what percentage of the aftermarket supply is being supplied by brokers, through any means, technical or not.
In Missouri the AG just went nuts over “BROKERS and BOTS” in the case of the Hannah Montana tour. After all the brouhaha (probably an election year), he settled with the two largest brokers and they only had 91 tickets. This doesn’t begin to explain the huge amount of tickets in the aftermarket.
In this case, the spokeswoman for the tour promoter noted there were 9,000 tickets available with 4,500 taken right off the top for the Hannah Montana Fan Club. Those went in minutes. The next 4,500 were sold online through TicketMaster, which held some tickets back for VIPs and promotions, leaving 4,200 tickets “available” to the public on Saturday morning. When the clock started, the spokeswoman said 172,000 people logged on (not surprising, since the Disney show has 10 million viewers.)
Why couldn’t all the mommies get tickets? Just like a big shoe sale, they were trampling each other to get the remaining few! When the show sold out immediately, that left 168,000 mommies without. Oh, the outrage! The crying princesses! Who else do you think is bidding up the prices in the aftermarket? Mommies who still need tickets! Someone must be to blame - blame BROKERS and BOTS!
It’s really not that hard to answer the question who is offering those hundreds of tickets for sale on StubHub and eBay and Craiglist in Missouri (and thousands elsewhere). We have already established the brokers only had 91. It’s the mommies who already have tickets! They get to sell those golden Willy Wonka tickets for a one time show and afford Disney on cable for the next five years! Just like Thainamu, lot of totally rational “fans” decide that they would rather use the proceeds from selling the tickets to a much more motivated fan to buy something else like a dishwasher, or to go on vacation, or to pay their rent. I guess this is all too logical and boring, just a basic supply-and- demand story that only an economist would love. So all we’ll keep hearing about in the newspapers and blogs is “BROKERS and BOTS” in an ongoing “Transformers meets Miley Cyrus” fiction.
This is the only part of the article I didn’t understand. Why is it unfortunately and sad that scalpers add “extra overhead”, and why would you assume it is in the venues best interests to raise prices? Obviously, if it were really in their best interest to raise prices, they would likely do so. So far as I am aware, there is no law PREVENTING them from raising prices. The fact seems to be that they don’t WANT to raise prices.
Obviously selling tickets for a higher price would raise more money (assuming the same number of tickets could be sold). This being the case, the venue MUST think that there is a benefit to selling tickets at a low initial cost. I think the answer is that they are afraid of the bad publicity of selling “high cost tickets”. Regardless of the reality, people might consider venues selling higher price tickets as “spoiling the experience”. In the case of sports, I would imagine that much of the profits is actually in selling television advertisements as opposed to ticket sales at the door. By selling “low price tickets” the home watcher can retain the dream of being able to occasionally attend games. The ticket price would be almost an advertisement to increase the supply of the real product, viewers sold to other advertising firms. Obviously this is just a theory, but it helps explain why profit seeking firms would allow much of their profits to be lost by selling tickets at below market cost (and why they want these tickets to be purchasable by people who cannot or are unwilling to pay market cost).
Nobody is forcing the ticket seller to sell below market cost, and if they choose to do so they should be allowed to do so. The real question should be whether it should be legal to re-sell tickets. Should it be legal for an airline to put my name on a plane ticket, and not allow others to use it? Should it be legal to restrict the use of a gift certificate to the person for whom it was bought? Note that if this is the desired model for event tickets, they should just require a full legal name to be printed on the ticket and that ID be shown when redeeming the ticket. This would allow them to sell below market value (as an advertisement), and restrict usage to the original ticket buyer (to ensure their target market benefits from their advertising dollars).
“Note that if this is the desired model for event tickets, they should just require a full legal name to be printed on the ticket and that ID be shown when redeeming the ticket.”
My son got tickets for himself and his wife and a friend for a World Cup game (whenever that was, in Germany, I think a year or so ago) and those tickets did have names on them and you had to show ID to use them.
“The real question should be whether it should be legal to re-sell tickets.”
Actually, the real question is why are tickets different than any other commodity that you can buy and sell freely? There is no reason for restrictions on ticket resales other than promoter/artist greed. If you sell your house for more than you paid for it, you do not have to share the proceeds with the original builder. Same for your stocks, art, baseball cards, your classic car, beanie babies or any other “asset.” Why again are the artists or promoters getting screwed by resales? Didn’t they set the original ticket prices? Move on, nothing to see here!
Actually the legal question regarding ticket reselling has been answered almost everywhere with a resounding yes. There have never been interstate regulations regarding reselling. After several high profile states (including NY, IL, and FL) eliminated their reselling laws in the past couple of years, we are left with only six states that still have these antiquated laws, and legislation is moving forward in essentially every remaining state.
Also, everyone is missing the other obvious change that will lower market prices while making the artists and promoters more money. Just add supply. Tell the artists to tour more. Maybe Miley has to go back to school or Disneyland, but what is keeping everyone else from hitting the road more? Nothing. Just work harder. That’s what us regular people do when we want more money.
Every state can take scalping off the books. It’s supprising it did not happen sooner. The fact is, Scalpers or Ticket Brokers are making a profit off of secondary tickets and they have been for many years. The venue’s and Bands have been jelous of these bold entraprenuers for years. They don’t want to raise prices because they are affraid of the backlash from disappointed customers. They don’t really care. Let the Scalpers and Brokers answer the questions from customers and fans, “why are these tickets so expensive!” The bands and venues are getting the value thet have asked for the tickets. Some have tried making their shows will call only, but Scalpers and Brokers alike found ways around their efforts. They have tried on sale ticket limits, wristbands, hiring teams of people to search purchaser lists for duplicate information, eventually built in programs to do the same over the web, and for phone sales. They walked to seats with security and police offices in tow, asking for ID and asked various other questions to determine the orginal ticket purchasers. They even created “Black Ball” lists to exclude some purchasers from their ticketing systems and venues, and the list goes on. Scalpers and Brokers found ways around all of these roadblocks, through lagitimate and illigitimate means everytime, and they always will. You can debate the legitimacy of the Scalpers and Brokers forever, and you will. You can feel sorry for the poor fans, and the fans who don’t want to pay so much for live entertainment.
Remember, the customer always has the power. Until the customer stops buying those tickets, the Scalpers and Brokers will continue to profit, and now so will the Bands, Teams, venues, and primary ticketing companies. The easier the internet makes it for a guy at home to buy and sell tickets, the more competition will increase, and Scalpers and Brokers will be every person with access to a computer. You really should care about counterfeiters.
My question is: When did Scalpers and Brokers become two seperate people? A few employees with degrees, some nice office furniture, an address, and a dental plan don’t make you a better group of human beings.