4.02.2009

The Rest of You, Rattle Your Jewelry

Okay, so I'm not done with this topic after all.

If you haven't already, check out Ben Sisario's recent article in the NY Times.

I am today addressing this except of that article:
"Two years after the repeal of New York State’s decades-old anti-scalping laws, the ticket marketplace has become a fiercely competitive game in which major corporations compete over resale prices with the fan next door, scalpers have a Washington lobbyist and thousands of tickets disappear in a fraction of a second.

"... Once bought by telephone or at box office windows, tickets for concerts are now mostly bought online, pitting ordinary consumers against a network of professional scalpers who use ever more sophisticated technology to scoop up large numbers of tickets in a flash....

"After lobbying by ticket brokers to decriminalize reselling in the Craigslist era, many states in addition to New York have lifted restrictions on scalping, and large corporations have embraced what is called the secondary market for tickets, like eBay, which owns StubHub. New York’s scalping laws were softened in 2005 and have been suspended since 2007, allowing tickets for most large events to be resold at any price.

"Connecticut and Minnesota also revised their laws in 2007 to permit reselling, and in June, the New York Legislature will have to formalize its repeal or the old restrictions will return. The lobbying in Albany has already begun.

" 'This is a huge consumer rip-off,' said Russ Haven, legislative counsel for the New York Public Interest Research group. “There is no benefit to consumers in unlimited scalping.' "

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Legislators should ask themselves: Who is benefiting from unlimited ticket resales? The consumers? (no....) The artists? (no....) the venues? (no....) Or the snake-oil salesmen? (ding ding ding, yes!) Frankly, I can see the reasoning behind softening resale laws a bit: While resalers like Stub Hub charge insane fees -- 15% charged to the seller, and another 15% charged to the buyer, for the same tickets -- on the other hand, when I had to sell tickets I couldn't use, I felt safe using Stub Hub, and the buyer on the other end was guaranteed that the tickets were not forged. But isn't there a middle ground between the old scalper laws and no restrictions at all? A cap on a resale ticket price, for instance? A time delay when tickets can be resold? An 80% tax on the price of a ticket over face value? Something?

I am going to assume that Albany is going to cave on this -- because caving is so easy and thinking about a better plan is so hard -- and I am going to offer here some alternate solutions for artists/venues to make the ticket-selling process a little fairer for consumers.

1) Fans could refuse to buy resold tickets. Ha ha ha ha ha ha, I make myself laugh. The reason that doesn't work, and will never, ever work, and the reason why scalpers have existed as long as popular music has been around, is that music and entertainment is an emotional, often irrational, purchase. The thing is, concert tickets aren't like memorabilia, which is another purchase that is often emotion-driven, but it can be argued that it is a type of investment. You don't spend the money on concert tickets and then own something tangible that you can pass down to your grandchildren or later sell to the Rock and Roll Hall of Fame. If your kid has an insatiable crush on Taylor Swift, are you not going to try to buy him tickets for his birthday, even if they might cost more than you care to spend?

2) Lotteries. Before the internet, ticket lotteries were a common anti-scalper tactic. You would send in a post card, and either get a pass or an arm band with a number on it, which would entitle you to go buy a certain number of a certain value ticket. Of course, internet sales are easier to coordinate, since it cuts out the need to have people manning the phones or box offices, but the old-school lotteries, while by no means a perfect solution, greatly curtailed a certain amount of scalping.

3) Act like the airlines. A venue could set aside a certain number of seats that sell for face value. Then blocks of seats after another date would sell for a percentage higher. Then the last block of seats go for the highest prices. People are used to paying a cheaper rate for plane tickets bought 2 weeks in advance, and as those cheaper seats sell out, you pay more. The person next to you on a plane most assuredly did not pay the same price for his seat as you did for yours. Concert venues can just build that into their prices. Basically, this is what a lot of venues/artists are doing anyway, when they save blocks of tickets for "resale." This way, they are just being honest about it.

4) Set aside blocks of the best seats for insane amounts of money, and donate the profits, or a percentage of the profits, to a charity. Someone wants to pay a scalper $10,000 for a front row seat to see the Stones? Beat them to it. Have some premium/select seats available. Maybe have that price include champagne and a lap dance from Mick Jagger. Rich people can still feel special that only they can afford these seats, and the money can go to a good cause, or at very least, can be split between the venue and the artist. But it cuts out the snake oil salesmen.

original post:
Ticketmaster, We Have a Problem

Related posts:
Ticketmaster, We Have a Problem, Update
Bruce Gets the Last Word
People in the Cheaper Seats, Clap Your Hands

6 comments:

Anonymous,  Sat Apr 04, 11:55:00 AM EDT  

ZurichMike says:

I think the airline industry can be instructive: publish prices in advance, make tickets variable in price (cheaper tickets for earlier purchases or less desirable seats); issue tickets to named individuals; limit the number that can be purchased by an individual (for example, 1 person could buy up to 4 tickets for specifically named people); require photo ID with personally issued ticket; have venue control all exchanges or refunds with limits on administrative fees.

There would be no market for scalpers when people decided the cost of a scalped ticket outweighs the benefit of attending the event. Yes, people live beyond their means, but is it up to the government to protect consumers from a decision to pay more for something than it is actually worth or more than they can really afford?

"If your kid has an insatiable crush on Taylor Swift, are you not going to try to buy him tickets for his birthday, even if they might cost more than you care to spend?" A responsible parent would use this as an instructive moment in personal finance: "Gee, honey, I know you want to see Taylor Swift, but mommy and daddy can't afford that luxury.” Of course, in an instant-gratification, entitlement-thinking era, many people think that products and services should be automatic, inexpensive birthrights, not commodities priced on the simple laws of supply and demand.

SMPnyc Sat Apr 04, 06:08:00 PM EDT  

I agree with you, up to a point, that point being that tickets are NOT simply commodities priced for supply and demand. They are not pork bellies or diamonds or wheat or milk, things sold at a market that fluctuates day to day. I don't believe going to a concert should be that much of a luxury -- frankly, for a lot of people, concert tickets at $100+ a pop are already a pricey item, something they will only do for a special occasion. If a price is set by a venue and an artist at a price where they are both covering their costs and making a profit, they shouldn't HAVE to raise their prices because unscrupulous people want to make a lot of money off of a temporary hysteria like Jonas-Brothers-mania or the like. I used as an example a kid with a crush on Taylor Swift, but actually most parents that would pay mega bucks for their kid probably ARE able to afford it, and are the type that think it's perfectly okay to spend all kinds of money on $40 tickets just because they can. I don't think that IS all right. I think when tickets sell out, they sell out. First come, first serve. That's what makes the event special -- for everyone, not just the rich folks who can throw money at the problem. And yes, the government should intervene, because if they don't, there's no control over the situation. A lot of things need government control. Look at the current economic crisis in the States and tell me that a certain amount of decontrol didn't cause it.
This is where you and I can agree to disagree.

Anonymous,  Sat Apr 04, 10:55:00 PM EDT  

ZurichMike says:

Tickets for musical events are absolutely like pork bellies or diamonds. Price is determined by supply and demand, based on perceived value of the services provided.

Musicians can opt to have multiple concerts at large venues (more supply to meed more demand), or give free or low-price concerts (to reduce price). The fact that they generally don't do this or want to take the time to control the sales of tickets themselves (airline industry example from previous post) means they want to optimize profit per concert and get out of town.

Madonna and Barbra Streisand and lots of other musicians look after their own self-interest, not whether the average Schmoe can afford (or should afford) a ticket at any price (stated priced, variable price, or scalped price). But apparently their musical / entertainment value is so rare a commodity to many people that they will shell out lots of money to be in their presence for a couple of hours using whatever means possible. This is not a rational choice I would make, but then again, I buy 25 year-old Scotch thinking that peat-roasted fermented barley that has been in sitting in the dark for years has high value.

Why do the rational decisions of musicians (maximizing profit) and concert goers (maximizing value at "x" price) need government control? Musicians would not be motivated to give multiple concerts for free or at reduced prices just because the government required them to or controlled prices or distributors. And surely fewer would attend if their singing and entertainment value dropped as a result. Heck, has-been musicians perform for free at Mohegan Sun casino in Connecticut.

Same model applies to professional sports, and here's a good example of perceived value and its effect on price. People in Europe will pay a fortune to watch overpaid soccer players kick a ball around; people in America will not. Perhaps as soon as the level of perceived value for watching soccer increases in the US, both prices for tickets (and salaries for better talented soccer players) will also increase.

Same model can be applied to opera. A production at La Scala in Milan is more expensive for lots of reasons than an opera in Austin, Texas.

Or Hollywood films. Julia Roberts, a horrid actress, charged $20 million per film because her films always raked in lots of money from those who perceived her as a talented actress in an entertaining film. You go, girl! Meanwhile, a classy actress like Emma Thompson gets a fraction of that amount for better acting in films that, unfortunately, do not have popular appeal. Supply and demand, and perceived value.

If Bruce Springsteen wants to control ticket prices then he should become a distributor of tickets as well, and not hand off that responsbility to a ticket agency that also operates on the profit motive alone or with others. Ditto for releasing CD's through Wal-Mart to reach the common man, and then getting all indignant about non-union stores. And until people stop buying his CDs, or attending his concerts at any price (even without his involvement), he has absolutely no motivation to change his way of donig business -- er, I mean making music.

By the way, it was too much of the wrong kind of government control, not deregulation, that caused the recent mortgage debacle. In the 1990's, banks were forced by the government to issue mortgages for home purchases to people who were high risk, resulting in people who basically lived in expensive homes (no down payments) but would not be able to afford the mortgage under normal circumstances, and who, as their high risk profile justified, defaulted on the loans. Since the government forced taxpayers (through Fannie Mae and Freddie Mac) to hold the risk, we are stuck with the bill. And what does our brilliant administration do now? Print one-trillion dollars to guarantee the same mess AGAIN.

Lovely chatting with you online. Maybe I should start my own blog. Or maybe I should get over my insomnia (it's 4 am here). LOL!

SMPnyc Sun Apr 05, 04:47:00 AM EDT  

Getting back to tickets, your argument is arrogant, elitist, and bitterly cynical. Yes, any commodity will respond to supply/demand. The fact is, when the ticket market was regulated, a larger percentage of average consumers could get face value tickets to even the most popular events. Without regulations, it's a free for all which makes that virtually impossible. It doesn't benefit anyone except scalpers. You writing a thousand words about supply and demand and about how that's how things are in Europe does not change that.

Anonymous,  Sun Apr 05, 10:18:00 AM EDT  

ZurichMike says.

Bitter? Cynical? Elitist? In what respects? I don't mind engaging in a debate, but not in responding to conclusory "arguments" that do not address my premises, facts, logic, or analysis.

SMPnyc Sun Apr 05, 12:38:00 PM EDT  

I can give you examples of statements of yours that are all of those things -- and that's not to say that there is anything wrong with arrogance and cynicism, especially in the heat of an argument. But, seriously, let me address one more point here without the name-calling.

Tickets being a commodity that is subject to the laws of supply and demand is exactly the reason they need to be regulated. Say there’s a draught, and suddenly there are hardly any tomatoes. Well, the price goes up. But there’s no emotional hysteria attached to tomatoes, so people will not be paying $1000 for a tomato, and besides, farmers will eventually grow more tomatoes.

Let’s choose an item that is closer in character to a commodity like a concert ticket: Cabbage Patch Dolls. There was hysteria, there was a crazy amount of resales for insane amounts of money, and there were black-market knock-off dolls. Eventually, the manufacturers produced more dolls to meet the demand.

Then we have the Harry Potter books. More than one of the series’ titles sold out faster than they could print them, so on the second and third printings they printed in higher volume. First edition books are now collectors’ items, but everyone that wanted to could buy a copy of the book, at list price, or even cheaper.

This brings us to tickets. This is the reason that event tickets are different than other commodities: For certain event tickets, only the demand increases, and there can never be enough tickets printed to meet that demand. You mentioned Bruce Springsteen, saying he should play more shows? He has in the past added several shows to his tour dates, especially in the Tri-State area. He can’t, however, play several million shows. It’s even worse with sports, and you brought up soccer as an example. People do get crazy, but less crazy if they think the system is at least somewhat fair. For example, World Series ticket sales are limited to Season Ticket holders. After they get their shot at the tickets, there is a secondary lottery that gives other fans the opportunity to purchase what’s left. Yes, there is certainly a lot of reselling and price gauging when it comes to the World Series, but that’s after a good percentage of the people who actually want to go get first dibs.

And governments – not just the US – do regulate certain commodities. That is because sometimes the laws of supply and demand are woefully inadequate.

This is not about protecting people from spending beyond their means. This is about ensuring the fair trade of an highly desirable product.

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