The scalping perplex

Paul Farhi in the Washington Post engrossingly details the evolving mechanics of ticket scalping, which is now irritating music fans of artists from Hannah Montana to Bruce Springsteen. The internet is affecting the market in several ways, some of them at cross-purposes. For one, the pool of potential buyers spans the whole country—not just for potential attendees of the show, but potential ticket-flippers who may want to resell or simply turn the tix over to a scalper. At the same time, the public resale sites must compete with each other; consumers can see who has the best prices, which makes life tougher on the scalpers. Meanwhile, scalpers can create bots that can buy tickets off Ticketmaster’s site faster than humans can.

Fans who strike out on the initial sale of seats to popular shows have found themselves confronting heart-stopping prices on hundreds of reseller sites—often only minutes after promoters have posted “sold out” signs. Markups of as much as 10 times the face value are not uncommon for popular concerts, sporting events and Broadway shows.

The complaints became a collective shriek in recent months when thousands of tween-age fans and their parents were shut out of a sold-out “Hannah Montana” concert tour featuring Miley Cyrus, who plays the title character on the mega-popular Disney Channel show. The complaints have prompted investigations and lawsuits by officials in three states, each alleging some variation on this question:

Is the ticket market stacked against the average consumer?

This question is somewhat off point—all music fans are average, right? But there are some interesting issues here. Tickets to popular shows—and of course close-up seats to any show—exist is an economic netherworld. The realities of the concert business dictate that acts are booked into venues that are more likely to sell out. If demand is unexpectedly strong, it’s difficult to create more of the product—another night must be booked. And consumers can’t buy the product from different vendors, either.

That creates the problem of scalping. Many years ago the head of Ticketmaster said concert tickers were the most underpriced commodity in American life. He was right, too, in that, back then, a front-row Stones or U2 or Springsteen ticket might be on sale for $50, $60 or even $100, but could be resold for many times that to a desperate enough fan.

Since then, canny promoters and acts have sought to capture some of that renegade cash, ushering in the era of “golden circle” pricing and the like, and Ticketmaster, of course, has even started its own resale site, creating the interesting spectacle of a company selling a product and then having to broker the action when it is inevitably resold at a higher price. This has created a thoroughly corrupted process.

As Farhi makes plain, the problem will not go away. There are two solutions. One is for all concert tickets to essentially be sold at auction, with the market, in the end, determining the public value of any particular performance. There would still be opportunities for scalpers, but they would be considerably circumscribed. Particularly in a world in which it will be increasingly difficult to make money from recordings, this would allow touring artists to extract the full commercial value of their performances.

The only problem with this is that it will create a class-stratified concert audience, with the swells up front invited to rattle their jewelry and the plebs in the back left to stand and shove for position.

The other solution, which Hitsville favors, is simply to recriminalize the reselling of performance tickets above face value. Artists should be able to choose the price at which they want their performances to sell, and there’s a public interest in keeping access to an unusual commodity open to all. Tickets confiscated in scalping scams would become the property of the city, which could then resell them, which would pay for the costs of enforcement. What’s wrong with that plan?


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