i've been following the lefsetz letter recently. for those of you who don't know what it is, it's a blog run by a prominent music attorney who rants about different aspects of the music industry. lately he's been harping on some shady-ness in the industry with major artists, live nation and ticketmaster. i'll try to make this explanation short and sweet. big artists work with ticketmaster to essentially scalp their own tickets through various tactics. these same artists turn around and blame ticketmaster for screwing over the little guy and selling tickets to ticket brokers. yes, blatant hypocrisy aside, nobody talks about the principle of scalping tickets.
scalping tickets is assumed by everyone to be universally evil. those who scalp are back alley scum who are on par with lechers and fraudsters. it was a college economics teacher who made an offhand remark about scalping as part of an economics lesson that got me thinking about this years ago. so i ask, What Is Wrong With Scalping??
the basis of free market exchange is that a transaction between two individuals is based on mutual decision. when you buy a cheeseburger you are making a choice that the cheeseburger is of enough value that you gladly give up your money. some people are willing to pay less or more for that cheeseburger, but unfortunately, there's no way for mcdonalds to evaluate each customers' valuation of their product. so if you absolutely LOVE cheeseburgers, then paying $1 for one as mcdonalds is probably a great deal to you. let's say you loved them soooooo much that you were willing to pay $100 for each cheeseburger. now i know that nobody is that stupid, but just humor me for a second. if that were true, then mcdonalds is missing out by only charging $1. if mcdonalds did charge $100, would that be price gouging? well, if you were willing to pay that much, isn't it your choice? if mcdonalds were able to to charge based on each customer's valuation, then each transaction would be as efficient as possible.
i've always seen ticket scalping as a free and open exchange that allows the promoters to maximize the efficiency of their transactions. if U2 plays a concert, some people are willing to pay $80 a ticket (or whatever the heck they're charging now). some people are willing to pay a whole lot more. now some people think this is wrong because the big bad promoter is muscling in for a better deal. but what's wrong with that? why is it ok for the consumer to clip coupons, make low-ball offers and buy open box items to save money but it's not ok for someone at the other end to do the same? in the end, all transactions are voluntary. no one is forcing you to buy a ticket to a concert.
now let's imagine that at a venue in addition to the ticket windows they also have staff scalpers who sell last minute tickets all the way up to the show. empty seats to a concert are an inefficiency. let's say a promoter books a show that is a failure. if he were able to scalp the last minute tickets at a bargain price, he's be able to hedge his losses and also make a better show by getting people in the seats. and that's really the end game. when the seats are filled EVERYONE wins.
if a promoter hires a headliner, they frequently have very little room to make a profit. frankly i'm not sure why anyone would want to take such a huge financial risk with such a small promise of a reward. why is it that if a show fails, the artist still gets a guarantee, yet if the show does well, the promoter frequently has to split the backend profit with the act? if a promoter does a good job and stirs up enough demand that fans are willing to pay well beyond the ticket price for a limited amount of seats, shouldn't he be free to reap the rewards of his hard work? if he were able to do this, the act would still get a piece of the backend profit the promoter would get a profit large enough to balance out the huge risk he's taking.
now imagine this. think of a world where last minute scalping was perfectly normal, legal and acceptable. i think there would be a large portion of the population who don't normally go to concerts would start showing up for last minute deals. lesser known bands who need to fill seats would find it easily to build a following. promoters would have an easier time getting people in the seats, and the extra profits made from the big shows would trickle down throughout the whole industry.
for years the venues and promoters have demonized scalping because of one thing - they don't get the money. but now that they've figured out a way to do it, they're all for it. and think about this, if a venue scalped it's own ticket, it would cut out the middle man ticket brokers which would actually decrease the demand for tickets and there give lower scalped prices than we have now. how's an example. let's say that 90 fans legitimately want tickets to a show. because of that demand, there are 10 ticket broker who only buy tickets with the intention to resell at a higher rate. if the venue was able to scalp themselves the day of the show and cut out the middle men, this would cut the demand for tickets by 10 pecent and thus the actual price that those 90 people end up paying is actually LOWER than it would be through ticket brokers.
anyway, it's just a thought. i could be wrong....but i think i'm right.
scalping tickets is assumed by everyone to be universally evil. those who scalp are back alley scum who are on par with lechers and fraudsters. it was a college economics teacher who made an offhand remark about scalping as part of an economics lesson that got me thinking about this years ago. so i ask, What Is Wrong With Scalping??
the basis of free market exchange is that a transaction between two individuals is based on mutual decision. when you buy a cheeseburger you are making a choice that the cheeseburger is of enough value that you gladly give up your money. some people are willing to pay less or more for that cheeseburger, but unfortunately, there's no way for mcdonalds to evaluate each customers' valuation of their product. so if you absolutely LOVE cheeseburgers, then paying $1 for one as mcdonalds is probably a great deal to you. let's say you loved them soooooo much that you were willing to pay $100 for each cheeseburger. now i know that nobody is that stupid, but just humor me for a second. if that were true, then mcdonalds is missing out by only charging $1. if mcdonalds did charge $100, would that be price gouging? well, if you were willing to pay that much, isn't it your choice? if mcdonalds were able to to charge based on each customer's valuation, then each transaction would be as efficient as possible.
i've always seen ticket scalping as a free and open exchange that allows the promoters to maximize the efficiency of their transactions. if U2 plays a concert, some people are willing to pay $80 a ticket (or whatever the heck they're charging now). some people are willing to pay a whole lot more. now some people think this is wrong because the big bad promoter is muscling in for a better deal. but what's wrong with that? why is it ok for the consumer to clip coupons, make low-ball offers and buy open box items to save money but it's not ok for someone at the other end to do the same? in the end, all transactions are voluntary. no one is forcing you to buy a ticket to a concert.
now let's imagine that at a venue in addition to the ticket windows they also have staff scalpers who sell last minute tickets all the way up to the show. empty seats to a concert are an inefficiency. let's say a promoter books a show that is a failure. if he were able to scalp the last minute tickets at a bargain price, he's be able to hedge his losses and also make a better show by getting people in the seats. and that's really the end game. when the seats are filled EVERYONE wins.
if a promoter hires a headliner, they frequently have very little room to make a profit. frankly i'm not sure why anyone would want to take such a huge financial risk with such a small promise of a reward. why is it that if a show fails, the artist still gets a guarantee, yet if the show does well, the promoter frequently has to split the backend profit with the act? if a promoter does a good job and stirs up enough demand that fans are willing to pay well beyond the ticket price for a limited amount of seats, shouldn't he be free to reap the rewards of his hard work? if he were able to do this, the act would still get a piece of the backend profit the promoter would get a profit large enough to balance out the huge risk he's taking.
now imagine this. think of a world where last minute scalping was perfectly normal, legal and acceptable. i think there would be a large portion of the population who don't normally go to concerts would start showing up for last minute deals. lesser known bands who need to fill seats would find it easily to build a following. promoters would have an easier time getting people in the seats, and the extra profits made from the big shows would trickle down throughout the whole industry.
for years the venues and promoters have demonized scalping because of one thing - they don't get the money. but now that they've figured out a way to do it, they're all for it. and think about this, if a venue scalped it's own ticket, it would cut out the middle man ticket brokers which would actually decrease the demand for tickets and there give lower scalped prices than we have now. how's an example. let's say that 90 fans legitimately want tickets to a show. because of that demand, there are 10 ticket broker who only buy tickets with the intention to resell at a higher rate. if the venue was able to scalp themselves the day of the show and cut out the middle men, this would cut the demand for tickets by 10 pecent and thus the actual price that those 90 people end up paying is actually LOWER than it would be through ticket brokers.
anyway, it's just a thought. i could be wrong....but i think i'm right.
4 comments:
You have a point, one that in a perfect world would work, but we don't live in a world like that. I'm from the land of mañana and translated that means why do to day what you can do tomorrow or wait until the last possible second to do anything (this includes buying tickets). I think what would happen with scalping tickets is everyone would wait to buy tickets until the price drop and that would hurt the promoter & affect the artists & we'd be back in the same boat.
ahh, so basically a pragmatic approach as opposed to an idealist one. so many issues boil down to that. i think that will be another blog of mine
any truth to the rumor that TFK is headlining this spring? if so, any word on the preceding bands?
Haha, that must mean "yes"....looking forward to it!
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