“All hail ticket scalpers.” No, that doesn’t come from a libertarian. It comes from a sportswriter. Jim Caple says:
Scalpers generally are portrayed as a seedy bunch of grifters only a few steps up the food chain from child pornographers, fantasy football participants and Pete Rose’s circle of friends. I don’t see it that way, though. Rather than a bigger blight on society than the Backstreet Boys, the scalper is a humble businessperson and a fan’s best friend, next to $1 Heineken Night.
Is there a more victimless crime than scalping? Of course not. It is capitalism at its purest level. An event is sold out, you need a ticket and the scalper provides you one at a mutually agreed upon price. You don’t need to be Louis Rukeyser to understand the remarkable efficiency of this market.
Jim has a willingness to learn some economics! He notes that sports teams, like baseball’s Mariners and Giants, now have online services wherein season ticket holders can sell their individual tickets in the marketplace, and for more than face value. But government laws always make such things difficult. The Seattle Mariners season ticket holders that live in Seattle face anti-scalping laws, so the online service can only offer the service to non-Seattle resident ticket holders.According to a Cato paper, the “first legislation in the United States that focused specifically on ticket scalping appeared in 1918 in response to limited-access stage shows.” In fact, a whole paper was drawn up, at Cato, for the purpose of suggesting legislative reforms. Another paper, from Craig A. Depken, II suggests – through the use of mathematical models – that cities with anti-scalping laws actually tend toward having higher ticket prices at the window. He notes, of course, that market intervention should pass some efficiency criteria, and thus concludes that he does not see where anti-scalping legislation improves social welfare.
Rolling Stone once ran an article, Can Scalpers Be Stopped? Stones management came up with a “platinum club” membership, and for $100, fans could join and assure themselves of tickets for the tour. Surprise, surprise – the ticket scalpers joined the club, paid the fee, and passed on the cost by raising the ticket price. When Paul McCartney sold tickets to his fan club members first, the ticket scalpers just joined the fan club to get the prime seats!
So why do these rockers try to upend scalping with pre-sales and fan clubs and platinum clubs? Do they perceive it as a benefit to their fans, in the form of lower ticket prices? Not really, because the fans pay the cost in the form of pre-sale fees or joining the club, which can get very pricey. So do they merely want to create the perception that they are “trying to do somethng?” After all, people who pay “scalping” prices are the greatest fans of all. They are the ones that value the service most. So why are the rockers so consumed by the notion that they must give the average Joe “a chance” to get tickets, and then they charge him a $100 membership to get that chance, when the alternative is that a ticket scalper – I call them brokers – would buy it at face value, and sell it to the most willing buyer? The latter scenario produces the most willing buyer while the former is merely a show of faith toward certain participants that aren’t necessarily among the most willing buyers in the marketplace.
But, all models and pandering aside, ticket scalping is simple: Individual sellers have the ownership of a scarce economic good, and they willingly fork over ownership of the good to a willing buyer, at a price agreed upon by both (or all) parties to the transaction. As usual, state intervention in this case means that your property is not your property to do what you want with it.
Jim Caple closes with this:
Better to keep it simple and get rid of the scalping bans entirely. After all, we live in a capitalistic society. We can buy a house, a car, a Monet or an Ichiro bobble-head doll, then turn around and resell it for whatever price we can get. Why not be able to do so with a ticket to a game?
The reason is the use of mathematical modeling within economics to determine the efficiency of a given transaction — which meets with government intervention if the transaction is said to reduce social welfare. Sporting event tickets have a very fixed supply, and an uncertain demand, and thus demands a close look from the social welfare theorists.
{ 17 comments }
If artists were so concerned about the average Joe they would make enough room in their schedules so that they could keep adding shows. That way they will get to the point where the shows stop selling out and the scalpers will not be able to over charge. Of course that may take extra work on the artists part and they may have to stay in less than desirable locales for longer than they had planned but that is the ultimate free market solution. They would be giving everyone who wanted to a chance to see the show
Aren’t they entitled to some leisure, though? Some such artists would be playing nonstop if this rule were in effect.
I don’t think we can describe anything as the “ultimate free market solution” other than what is voluntarily reached by both parties to a transaction.
I think this comes down to a false sense of entitlement. Many enternainers grew wealthy and complacent by working with in the rules that had existed so long in the media industry that they are now seeking to enforce the old paradigm through state power. I think that sports team owners clearly understand this and are actively engaged in maintaining these silly laws that support their incomes. I believe that entertainers (and sports teams owners) feel entitled to a certain lifestyle and are willing to support rules that maintain that lifestyle (therefore, aupporting copyrights for their albums so they do not have to tour as much or scalping laws for marketing purposes.) If an artist was playing non-stop in order to make a living, maybe that artist should reconsider his source of income and turn the artist gig into a hobby.
Regards,
TDL
Dr. Woods,
I think DavidB was trying to say that, given artists’ purported desire to let the “average Joe” see their show, this goal could be achieved in the free market by just playing more shows.
I don’t think he was trying to prescribe any rules/laws/whatever.
Thanks, Brent. I accept that that is an approach that could be used on the free market, but whether it is the “ultimate” free market solution depends on the value scales of the actors and their voluntary expression in exchange. That was my only objection.
I think most scalping arises from the fact that the typical face value of a ticket is somewhat lower than the market clearing price of the ticket.
The Rolling Stones come to mind as an act that actually sets ticket prices near their market value. Does anyone recall much scalping of Rolling Stones tickets?
Scalping is good. State intervention is bad.
Of course, playing multiple shows at every location is probably not the combination most conducive toward achieving the valued ends of the participants. However, the claim was that if the artists REALLY wanted to let all the “average fans” see their show (if this was a top priority on their value scales), then it can be done in a free market simply by playing more shows.
Some artists do this very thing. I remember when Garth Brooks came through our city a few years ago. I think he played three shows (near 30,000 filled seats per show) here and our metro at the time was only about 130,000 people. I assume lots of people from smaller cities and rural towns across the region attended, too, but the point is that he actually DEMONSTRATED that he cared about letting his fans see his show.
It’s not just opportunity cost, that the scalper got there first and there are no seats left, it’s also time preference. If I want to camp out for tickets, I can get them at a lower price. If, however, I don’t want to spend my time camping out, I can buy from someone who DID camp out, demonstrating through the higher price paid what my preferences are.
And someone for whom the price of the ticket and the time is just too much can rent the concert DVD afterwords and thereby avoid having their hearing blasted out too.
Brent,
You understood my point.
The scalpers are a consequence of high demand. The way to reduce demand is to satisfy it with increased supply. If the performers truly wanted to satisfy the market’s demands and put the scalpers out of business they could just increase the supply of their product.
I have seen this happen. Quite often multiple concerts will produce stories in the news of how scalpers can’t even sell their tickets for the price they paid because later shows were not sold out
Has anybody thought of this:
1. The intellectual monopoly the State has granted musicians has caused profits from album sales and merchandising to be far higher than they would be in a free, unregulated market.
2. As a result, artists do not feel the need to tour as much. After all, they’re already making a ton of money from album and merchandise sales.
3. Because there are less shows, demand for live concerts is not being met.
4. Prices go up due to a supply shortage (of live shows).
5. Many artists (the Stones may be somewhat of an exception) misprice their goods and a shortage ensues.
6. A black market in tickets develops to meet the unmet demand.
7. to prevent the whole scheme (all stemming from unjust intellectual monopolies granted to artists) from collapsing from the bottom up, The State makes dabbling in the black market illegal.
– Perhaps the disregard for intellectual monopolies granted to artists by the state (I am speaking of P2P file sharing and “illegal downloads” of music) will cause artists to tour more. I wonder if anybody has done a study to see if the number of concert tours has increased since the dawn of file sharing with Napster…
Well I think that this could be solved simply by them rasing their rates. But I don’t think they really want to do that because it would probbaly generate bad will and bad publicity amoung their fans. So they sell tickets a lot cheeper then they could, to ensure a full house. Then the scalpers help by spreading the word more, and by helping people get in on the secondary market.
BTW Somebody else posted this to digg.
http://digg.com/political_opinion/Sellers_of_Scarce_Goods
1. The intellectual monopoly the State has granted musicians has caused profits from album sales and merchandising to be far higher than they would be in a free, unregulated market.
I’ve often wondered why a musician can work for six months writing an album and then get paid for it over and over and over again for the next 20 years and yet a plumber only gets paid for putting in a toilet once.
I notice that this also destroys creativity in artists. How many artists once they’ve hit it big continue to create? When was the last time Shania Twain made an album compared to how many she made before she hit it big? That goes for most other performers. They claim they are in it because they are musicians but curiously very few keep up the creative pace that they had before money filled their bank accounts.
Personally, I think the whole record industry is wrong. Artists should make very little money from recordings and all their money from concerts. That would make them equivalent to the plumber who goes broke if he stops putting in toilets. I think the whole music industry attack on illegal downloading is resistance of the music industry to be like the rest of us
Exactly.
Before the advent of recording Media, musicians, of course, got 100% of their income from live shows. It’s been that way for 5,000 years. However, early recording media, I’m specifically talking about records, spoiled the entire industry on massive profits. Why? Because John Q. Consumer didn’t have the technology to copy it. Even then, artists still did A LOT of shows because of tradition (the “old hats” in the industry were used to doing it that way). However, with the dawn of the cassette tape, then the CD (and CD burner), and now MP3s (and other digital formats), the entertainment industry can no longer reap such massive profits. Before MP3s, however, somebody you knew had to buy the album at least. Now, nobody does; and they’re suing like there’s no tomorrow to protect their monopoly status.
I see another positive side-effect of MP3s: artists will make better music. How many times have you bought a CD with 2 good songs, 3 or 4 so-so songs, and 6 awful songs? Quite a bit I imagine. Now, even if you pay for digital music online (which I believe you shouldn’t have to do because property rights DO NOT APPLY to intellectual creations, only to scarce goods), you only buy the good songs from an album, not the whole lot. As a result, I think we’ll see artists putting out better songs because consumers aren’t forced to buy their bad songs in a package. We may even see the end of “albums” in general. Instead, we may see an artist release a single every few months or so.
I think the same goes for Hollywood too. They’re about 5 or 10 years behind the music industry in digital delivery in music, but the gap is closing. Pretty soon, we’ll see the movie studios break down and revert to “LIVE” showings in theaters and digital delivery. Digital delivery could come in the form of free bitTorrent files floating around the Internet and a 1-800 MPAA hot line number to call to unlock the file. I thought of starting an online venture to provide such a service, but I would NEVER, EVER get the licensing permission from Hollywood to use their products as long as their intellectual monopoly is in place. Instead, Hollywood will see billions of dollars lost to unencrypted movies being freely (and rightfully) copied over the Internet. It’s kind of like a satellite signal: it’s up to the broadcaster to encrypt their technology and provide a box that decrypts the signal to sell their product.
I personally think that the act of scalping has nothing wrong about it, BUT if the original seller of the tickets puts a condition on the ticket saying “you must not resell this ticket”, then I believe it is still wrong to resell the ticket, because in buying the ticket you have agreed to the terms.
So as long as the company doesn’t have this condition on the ticket then there’s nothing wrong with reselling tickets.
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