The sappy headline said it all: “Ticket scalpers jam computers, spoiling hopes and dreams of Springsteen fans.” The Boss is just Born to Lose in his neverending campaign against the inviolable law of supply and demand.
For decades Springsteen has created shortages of tickets to his shows by grossly under pricing his tickets in order to live up to his reputation as folk hero of the working class. The inevitable result is that secondary sellers of tickets have profited handsomely at his expense, while his fans, shrewdly egged on by their hero, have continually misdirected their outrage at the high prices against unscrupulous “ticket scalpers.” For the New Jersey leg of his upcoming tour, tickets that were listed on Ticketmaster for a face value of $98.00 ($114.00 including shipping and handling) wound up within minutes listed on secondary seller websites for prices ranging up to $6,600.00. It appears that ingenious secondary sellers using sophisticated computer programs called “bots” inundated Ticketmaster computers with orders. Ticketmaster alleges that it was “attacked by ticket scalpers” and blamed “highly suspicious sources” for much of the additional traffic, estimated to be two-and-a-half times greater than the traffic of any major act last year. Worse still, this unanticpated traffic caused computers of some individual fans to malfunction and freeze up.
Predictably, New Jersey pols, ever eager to profit from a perceived crisis, immediately began weighing in with legal solutions. Rep. Bill Pascrell (D-8th Dist.) pledged to reintroduce federal legislation to intensify oversight of the ticket industry. And conservative columnist Paul Mulshine reported that Governor Chris Christie warned that the state Attorney General might investigate. However not everyone was blaming the ticklet scalpers. Some were placing blame where it belonged–on the Boss himself. Mulshine interviewed economist Steve Happel of Arizona State University who put it bluntly:
If I ever got to meet Bruce, I’d like to say to him, ‘I know you’re a nice guy, but you’ve got your head up your (expletive that rhymes with “bass” — the fish not the guitar) when it comes to economics,’
Even music insiders are beginning to recognize Springsteen’s posturing as the reason for the debacle. Bob Lefsetz, a music industry observer and former entertainment attorney wrote:
Ultimately, this is Springsteen’s fault. Bruce should take a stand. Bruce should be an agent for change. But he’s afraid of looking greedy. But the end result is all that money goes to scalpers and fans have to buy tickets on the ‘black market.’ All that money should go to Bruce, he deserves it.
{ 29 comments }
What can I say, he was born to run.
I’m a pretty huge Bruce Springsteen fan and dished out about $190 on to go see him with my wife. That’s pretty expensive -especially considering our nosebleed, worse seat in the house tickets.
What’s really stupid here is that “working class” people already can’t afford tickets at those prices. What guy making $7.25 down at the McDonald’s is taking his girlfriend to the Bruce Springsteen concert? No one. if you can afford $98 dollars for a ticket, you’re probably not exactly the “working class” guy that Bruce has in mind……whatever that even means considering that everyone from the poor to the rich work for their money…..
Whoah, an artist who is economically ignorant with a bunch of herdish fans who whine about reality?
So surprising…
Alternatively, Springsteen could go paperless, making the resale of tickets practically impossible, which would help to eliminate scalping.
Simon,
Good point. Springsteen has announced that he would sell paperless tickets for selected seats during this tour, but there has been a big outcry against this. If applied to all seats in a venue it would make it impossible for one person to buy in behalf of a large group of friends. The same would be true of purchasing tickets to give as gifts.
How is there not a way to go paperless for someone else, assuming you have their basic identification? I’d imagine the technology is there. Is it a security issue?
you could go thr route of airlines and require each ticket be assigned a name
If Bruce wants to ahve tickets cheap and not have scalpers reap the benefits he could do something fairly simple. Sell the tickets for what the market will bear and offer rebates for people who take pictures of themselves at the show. Everyone has a camera with them pretty much 24/7 now. So come up with a system where you show ID with a picture that looks like the picture on your phone. So Bruce would need to have kiosks up in every town he played for a few days after the show, so the rebate is a little lower than it would be otherwise.
Except that doing so would just drive the price up even further. If someone is willing to pay $200 on a ticket, and suddenly it’s announced that a $150 rebate will be available, that person will then be willing to spend $350 on the ticket.
Yeah, it’s not surprising that Springsteen doesn’t understand the economics of the situation. What’s far more troubling is the vast number of other people who don’t understand the value that ticket scalping provides. Ticket scalping really shows that it is the consumers who are in charge of the price, not the sellers. The only way to get rid of the ticket scalpers is to beat them at their game and legitimize what they are doing, say through a ticket clearing house or something. Laws against scalping are actually just more attacks on the consumers.
If “the Boss” was so concerned about giving shows to enthusiastic but relatively poor fans, he wouldn’t play mega-stadiums that need ~$100 per ticket to cover venue costs. He would play large parks for multiple nights, with free admission and make his money from merchandise. He would have open taping of all his shows for free distribution among his fans (a la the Grateful Dead or Umphrees McGee for a more recent example).
Since he continues along in his mega-corporate model, we can only assume that he approves of the model and agrees with enriching everyone from ticket “scalpers” to the leviathan record companies at the expense of his “blue collar American” fans. Maybe this hypocritical course of action is why I’ve never been a fan of his; he doesn’t practice what he preaches, and boy does he preach.
How is this in any way Bruce’s fault? He is not an economic illiterate, at least if we look at this sole case. But to get this straight, $98 is quite average for a ticket to a concert that big. I just looked at Ticketmaster prices on a few other artists and they are around $80-$100 (not including shipping and handling).
But, nevertheless, Bruce has every right to determine what price he wants his tickets to be. There is no optimum price to which he is ‘supposed’ to sell his tickets for. And if Bruce’s tickets are sold through Ticketmaster, then it is Ticketmaster’s responsibility to provide security of sale. Since it is common for ‘ticket scalpers’ to be active when Bruce’s tickets are open to buy, this phenomena should be expected. Thus, it is up to Ticketmaster to come out and say to Bruce, “Given the experiences of ‘ticket scalpers’ and your tickets, you need to raise your prices, or else we won’t sell them for you.” But they did not say that to Bruce, they gladly sold the tickets. Thus, given these experiences with ‘ticket scalpers’, Ticketmaster should have been prepared for it, if they do not have the security to combat these ‘ticket scalpers’ then they shouldn’t accept the responsibility for selling the tickets in the first place.
Sir, I am afraid you are assuming too much of Ticketmaster, I think they might be as dull as Bruce concerning economics.
Mitch,
I beg to differ. I not assuming too much of anything, this is basic business. Is not fair to say that (1) as the ticket distributor, they have the responsibility to maintain security of sale and (2) a potential ticket distributor should make analysis the situation in a cost/benefit way? Granted, they would not know all the untended consequences (it it quite impossible to know all, or in some cases most, consequences). But nevertheless, if this phenomenon is common (that is Bruce selling tickets for less attracts ‘ticket scalpers’), then this should be a pretty obvious ‘cost’ to analysis and to take into consideration.
Also, again, I must stress there is nothing in these articles that gives support to the claim that Bruce is an economic illiterate. I find it hard to believe I have to stress this in a libertarian website: A person selling his services has a right to sell at any price he chooses.
But then again, this is assuming that Bruce is actually selling his tickets for some low price. I actually see no evidence of this. His tickets were $98, that is pretty average for a concert that big. As I said, I went to Ticketmaster and looked at a few tickets from other big artists and the tickets were around $80-100. Thus, I am not quite sure where the initial premise of ‘Bruce selling his tickets for low prices’ comes in to play.
Ticket scalpers couldn’t operate unless the tickets were, in fact, underpriced. A scalper who tries to resell the tickets at too high a price would be stuck with the tickets, and if they can’t sell them for more than they pay for them, they wouldn’t be out there reselling tickets.
Sure, a person selling his services has the right to price his services at any price he wants, but the consumers are the ones who decide how much they are willing to pay. A person who consistently underprices his services will find it as difficult to stay in business as the person who consistently overprices his services. That may not matter to Springsteen, who has other income from album sales and such, but it does make it hard on his fans, who may not be able to take off from work and spend hours or even days waiting in line for the sale of his tickets to start.
Michael,
1) Again, as I keep stressing. The tickets were $98… pretty average for a concert that big.
2) What determines an ‘underprice’? To think of a price as underpriced is implying that there is some level price where you use as a guideline, so you can say either the price is under it or over it. Obviously you don’t use ‘averages’ (or range I should say) as this level of price since you consider Bruce’s price ‘underpriced’ but Ticketmaster is showing prices for concerts that big to be around that price. So I ask, what is your guideline price level to determine a price is overpriced or underpriced?
3) “Ticket scalpers couldn’t operate unless the tickets were, in fact, underpriced.”
This is false. As the case is shown that Bruce’s tickets are about the same prices as concerts that big. Scalpers are always going to be around trying to sell tickets that are more than what they bought them for.
4) “A person who consistently underprices his services will find it as difficult to stay in business as the person who consistently overprices his services. That may not matter to Springsteen, who has other income from album sales and such, but it does make it hard on his fans, who may not be able to take off from work and spend hours or even days waiting in line for the sale of his tickets to start.”
I can see your point if it was Bruce’s job to sell and distribute the tickets, but he does not. Ticketmaster takes over that service for Bruce. Thus in accepting the job, they are responsible for the security on sale too, since they are the ones selling the tickets. If Ticketmaster feels that they aren’t fit to be responsible for such task, they shouldn’t accept the job in the first place.
The people who want to buy the tickets. The existence of arbitrageurs (scalpers) tells you they’re underpriced.
What does the price of “other concerts” have to do with anything? Maybe they’re all underpriced. Maybe Bruce’s tickets are worth more.
And they would fail if the tickets weren’t underpriced to begin with.
Peter,
(1)”The people who want to buy the tickets. The existence of arbitrageurs (scalpers) tells you they’re underpriced…What does the price of “other concerts” have to do with anything? Maybe they’re all underpriced. Maybe Bruce’s tickets are worth more.”
First time I have ever heard of the existence of scalpers as a determinate for underprice, but for the sake of argument lets accept that then. Lets assume then that all these prices are underpriced. Why then is Bruce the only one that constantly gets the scalpers? There are concerts that are just as big as Bruce’s and are cheaper, yet they do not have scalpers as a constant problem. And why is Bruce the only one that is making the headlines for underpricing his tickets and not the other artists?
(2) Secondly though, the economist mentioned is a neoclassical economist, so when he claims that Bruce is ‘underpricing’ his tickets, he is using the general definition, which deals with a given price level. In which it follows that if it is above the price level, it is ‘overpriced’ and below the price level is ‘underpriced’.
(3) Lastly, even if you argument is sound and valid, this still does not make it Bruce’s fault, for Ticketmaster is the ticket distributor and seller, thus responsible for the security of sale of these tickets.
Last I heard, scalpers were busy selling tickets for lots of concerts, not just Bruce. It’s just that Bruce got the media attention in this case.
And I don’t know who sets the price of the tickets, but the article certainly indicates that Bruce had a say in it.
That’s what “underpriced” means! Any given person will buy a ticket at some particular price (if you really hate Springsteen, you might require a negative price–i.e., you get paid to take the ticket; but we can ignore this case). If there are X tickets available, the goal (well, one goal) is to have X people willing to buy tickets, with the (X+1)th person unwilling to pay the price — you want to set the price so that there are X people who are willing to pay that much or more, but not X+1 people. If you set the price higher, fewer than X people will be willing to pay that price, and you’ll have unsold tickets. This also applies to the scalper: he can’t sell his tickets, either, and will lose money if he keeps this up. So if tickets are correctly priced or overpriced, there is no business for scalpers. If you set a lower price, there will be X+N people willing to pay that much or more, for some N, meaning there are N people who would have been willing to pay the price, but who can’t get a seat (because there aren’t enough tickets). Then the scalper can buy up some tickets and resell at a higher price to those people who are willing to pay more, but not to the N who are unwilling, eliminating the undersupply of seats. Scalping is just arbitrage between the ticket-vendor price and the actual market value — you can’t make money if the market value is less than or equal to the vendor price; thus the existence of (successful) scalpers indicates underpricing.
“Last I heard, scalpers were busy selling tickets for lots of concerts, not just Bruce. It’s just that Bruce got the media attention in this case.”
Well, I just looked at other concerts that were similar price was the of Bruce’s that are sold via Ticketmaster on Google search and I found no other recent scalper ‘pandemic’. I’ve look at Willie Nelson, Tom Petty and the Heartbreakers, and Great White… It seems like the scalpers wanted to go after Bruce’s tickets this recent time, so I think there is more reason to believe the existence of scalpers than just ‘underpricing’.
“And I don’t know who sets the price of the tickets, but the article certainly indicates that Bruce had a say in it.”
That is not my point. Of course Bruce has a say what the prices are, that is not what I am saying. You claim that the price is ‘underpriced’ but my question is underpriced relative to what (to put it in different terms)?
I question the validity of comparing the Springsteen concert to other concerts of similar price–price is what is under contention here. But if there isn’t scalper activity for the other concerts, perhaps that simply means that they aren’t underpriced, and scalpers know that the market will not bear a higher price. Also, while similar-sized concerts may have some similarities to Springsteen’s concerts, they are also dis-similar, as they are different artists.
In any case, you keep asking who determines if the tickets are underpriced. It’s the consumers, of course. If they sell out all the tickets and there are still more people who want to buy at that price, you have a shortage of supply. Some people will not be able to get tickets at any price, or they wouldn’t if the scalpers were not active. Assuming the scalpers are not using force or fraud (counterfeit tickets, for example), then they are simply reselling the tickets at whatever price the market will bear–that is, what the consumers are willing to pay for them. Surely, no libertarian can object to that.
As others have pointed out, there are ways of dealing with this. Putting up the tickets for auction (or some other kind of clearing house) would let the market clear more easily. Or Bruce can put on more concerts so that there are more tickets to sell. Cracking down on ticket scalpers instead, though, merely ensures that some Bruce Springteen fans will not be able to buy tickets at any price, and will not get to go to the concert.
“a potential ticket distributor should make analysis the situation… ”
should read
a potential ticket distributor should make analysis OF the situation …
In a capitalist system, consumers are the dictators. They determine prices according to their will. Neither Bruce Springsteen, nor ticketmaster, have the authority to unilaterally determine how highly consumers subjectively value their product (concert tickets). In a free (non-coercive) society, the only thing Bruce has control of is himself. If he wants free people to place a lower subjective value on his tickets, then he should put on a lower quality show, put on more shows, or play at larger, lower cost venues such as parks.
I love how words associated with coercive, violent acts, like ‘scalpers’ and ‘pirates’ are used to describe people who are engaging in 100% voluntary market activity and depriving no one of their property.
I used to be a Springsteen fan and bought a scalped ticket through a friend of a friend back in ’99.
It was a good show, but worth seeing only once–even @ half the 100 bucks I spent.
I’m curious: how many times did you think the ticket would let you watch the show??
It’s really quite funny that anyone still uses set prices for tickets.
If the seats were put up for auction (like on EBay) then a true market price would emerge for each seat. If the bidding were held until a few days before the concert, than scalping would be greatly diminished if not impossible.
The artist would not have to worry about his public image (which is most likely why Springsteen underbids his tickets) because the prices would be set by his fans.
Note:
I have been amazed for years that stadium events (especially sports) have not used this pricing model.
An auction has disadvantages, too, e.g. it’s more complicated and you don’t know how much you’ll pay and whether you get the ticket at all, until it ends.
It’s only justified if there’s a big uncertainty about the price. A simpler protocol is to adjust prices between similar events: raise prices if it sold out quickly, and lower them if it didn’t completely sell out.
This doesn’t solve the public image problem, of course, and I’m not sure an auction would help much in this regard, if the resulting prices are still considered “too high”.
If Bruce wanted to lower the market price for his concerts, he could simply play the same venue for multiple days in a row. Increase the local supply of Bruce to meet the local demand at a price that Bruce is comfortable charging.
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