6 ms·

Promoters are well aware that they sell tickets for less than they could get but I think it's unlikely to change. There are essentially 2 ways to distribute th

Promoters are well aware that they sell tickets for less than they could get but I think it's unlikely to change. There are essentially 2 ways to distribute things. A free market model where the highest bidder gets to buy. Or a price control model where only some people get to buy based on some arbitrary selection model, usually first come first serve. And everybody else is SOL. When people think (emotionally) of what is "fair" they typically think of the price control model, which is why we have rent control, price gouging laws, and people get pissed off at Uber surge pricing. So if promoters try a more market based strategy like the one you mention it will probably cause a backlash from fans for charging $500 for a ticket. Unlike the promoters, scalpers have no perceived connection to the artists, so they (or Ticketmaster) can take the public outrage in exchange for profits without risking future ticket sales.

derefr 8y ago
> So if promoters try a more market based strategy like the one you mention it will probably cause a backlash from fans for charging $500 for a ticket. Unlike the promoters, scalpers have no perceived connection to the artists, so they (or Ticketmaster) can take the public outrage in exchange for profits without risking future ticket sales. Yeah, which is why the promoter should just present itself as a scalper, "selling out" 100% of its tickets to a subsidiary, which then does a reverse auction like in the GP's comment. Fans won't care, because nothing has really changed from their perspective; the promoter will make more money (that the artist can demand be passed on to them); actual scalpers, economic parasites that they are, will make less money; the market will clear more efficiently; economists will be satisfied. Everyone wins. Everyone except for—as can be seen in the OP article—non-economically-versed journalists, and those that they manage to incense with their rhetoric.
- kbenson 8y ago
  > actual scalpers, economic parasites that they are Scalpers/brokers aren't economic parasites, they provide a function to artists and promoters by offloading risk, and they also provide liquidity to fans. If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it. Brokers trade use of money over time for risk. Sometimes they make money, sometimes they lose money because it's overbought, they misjudged the market, or more supply was provided (a date added at that location). For example, see here[1], where resale tickets are under the cost of primary market tickets, $36.50 instead of $39.50, and that's before Ticketmaster/Stubhub takes 5-10% of the sale price from the seller. On Stubhub[2], the same tickets are going for $27. 1: https://concerts1.livenation.com/event/000054C6CF1B8160 https://concerts1.livenation.com/event/000054C6CF1B8160 2: https://www.stubhub.com/the-damned-tickets-the-damned-new-york-irving-plaza-10-18-2018/event/103709847/ https://www.stubhub.com/the-damned-tickets-the-damned-new-yo...
  - derefr 8y ago
    > If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it. If you have revenue figures to indicate that it's pretty much guaranteed you'll sell out your stock of something eventually, and you want short-term liquidity, you can just issue commercial-paper securities, and people will buy them.
    - amalcon 8y ago
      Or, more likely in the case of many smaller privately-held venues, get a loan from a bank secured by the future ticket sales.
    - kbenson 8y ago
      Sure, if you don't have people clamoring to buy you tickets immediately anyway that will provide you that money at no interest, that would make sense. In what way is that system advantageous to the current one, given the other incentives that exist to not raise price (public relations, mostly)? Also, given that I suspect brokers are worse at getting this right, since they don't get to see all the data, and you can make quite a lot from brokers on events that undersell...
  - TomGullen 8y ago
    > provide liquidity to fans Why is liquidity important to fans?
    - travisoneill1 8y ago
      You can buy a ticket knowing that if something comes up you will get your money back. You can decide to go to an event last minute and tickets will be available.
      - vehementi 8y ago
        But they would be available anyway if the scalpers hadn't bought them all up. And if legitimate fans had bought all the tickets (sold out early), you wouldn't be getting a ticket either way, right?
zandl 8y ago
Wait, what’s wrong with first come first serve? This works for most Symphonies I’ve been to just fine.
- Benjammer 8y ago
  Yes, because first chair violin doesn't make even a fraction of what Justin Bieber makes per show...
  - zandl 8y ago
    That doesn’t explain why tho
    - mamurphy 8y ago
      (Random numbers to illustrate a point:) If the symphony was an auction system, tickets might sell for $110 each. It fills up with a $100 each first-come system, most people who want tickets can get them, tickets are sold at only a $10 discount of auction value, and it "feels fair." The first-come-first-serve system works well for the symphony. If the pop-star concert was an auction system, tickets might sell for $999 each. With first-come-first-serve and a set $100 price, each ticket is sold at a $899 discount of auction value. Moreover, most people who want tickets cannot get them directly as they sell out instantly because of the relatively steep discount (90% discount vs 9% discount). The first-come-first-serve system only works well when prices are set near a market-clearing value, like with the symphony. As stated elsewhere in the thread, people would get super upset at $999 tickets. They would think "those greedy pop-stars price tickets way too high, it's so unfair." So pop-stars are unwilling to set prices at the high market-clearing value, and use the first-come-first-serve with way underpriced tickets (getting some money back by having agreements with scalpers or Ticketmaster). Demand way exceeds supply, tickets sell out instantly (mostly to scalpers). Most fans never get to see the concert at the "fair-seeming" $100 price and are upset at "those nasty scalpers" and pay near $1000 to see the concert anyways. But the scalpers (or Ticketmaster) are the ones whose reputations are harmed, saving the artists' reputations.
Larrikin 8y ago
I'm a big fan of the system that the sneaker companies have slowly adopted. Interested people sign up ahead of time with a registered account. You get a notification right before the release that you have to confirm. Then a raffle takes places where the winner gets charged immediately. It's about a ten mInute investment, which with how sneaker quality has gone down in recent years (especially Nike) is about all the time it is worth it to me anymore. Only issue I can see is that with sneakers there is almost no reason to get more than one pair unless you're reselling. Buying multiple tickets for a concert makes more sense. There could possibly be some increasing fee charged over a certain number, that could suck profit away from scalpers. The fee only occurs if the tickets are all presold.
- Benjammer 8y ago
  What would be the market incentive for _anyone_ in the industry to "suck profit away from scalpers"?
  - hamandcheese 8y ago
    Profit.
- taurath 8y ago
  Non automatable hoops to jump through can definitely be a good way to determine who “deserves” the tickets. There’s technological ways to do that, but it’s a magic sauce that would make a company a lot of money.
- ascorbic 8y ago
  This is effectively the system used by the popular festivals in the UK, particularly Glastonbury. You need to pre-register for tickets, which involves uploading photos. When it goes on sale, only pre-registered users can buy, and the photos are checked on entry. Other festivals do the simpler thing of checking the names on the booking against ID. Many allow a secondary market in tickets, but only at or below face value for those who are unable to go. This shows what can be done if they really do want to stop scalpers.

derefr 8y ago

> So if promoters try a more market based strategy like the one you mention it will probably cause a backlash from fans for charging $500 for a ticket. Unlike the promoters, scalpers have no perceived connection to the artists, so they (or Ticketmaster) can take the public outrage in exchange for profits without risking future ticket sales. Yeah, which is why the promoter should just present itself as a scalper, "selling out" 100% of its tickets to a subsidiary, which then does a reverse auction like in the GP's comment. Fans won't care, because nothing has really changed from their perspective; the promoter will make more money (that the artist can demand be passed on to them); actual scalpers, economic parasites that they are, will make less money; the market will clear more efficiently; economists will be satisfied. Everyone wins. Everyone except for—as can be seen in the OP article—non-economically-versed journalists, and those that they manage to incense with their rhetoric.

kbenson 8y ago
> actual scalpers, economic parasites that they are Scalpers/brokers aren't economic parasites, they provide a function to artists and promoters by offloading risk, and they also provide liquidity to fans. If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it. Brokers trade use of money over time for risk. Sometimes they make money, sometimes they lose money because it's overbought, they misjudged the market, or more supply was provided (a date added at that location). For example, see here[1], where resale tickets are under the cost of primary market tickets, $36.50 instead of $39.50, and that's before Ticketmaster/Stubhub takes 5-10% of the sale price from the seller. On Stubhub[2], the same tickets are going for $27. 1: https://concerts1.livenation.com/event/000054C6CF1B8160 https://concerts1.livenation.com/event/000054C6CF1B8160 2: https://www.stubhub.com/the-damned-tickets-the-damned-new-york-irving-plaza-10-18-2018/event/103709847/ https://www.stubhub.com/the-damned-tickets-the-damned-new-yo...
- derefr 8y ago
  > If if it comes down to selling out 50% of a venue immediately and the other 50% over the next 2-3 months, or selling out 100% of a venue in one day, I imagine most promoters and artists would like that money now so they can utilize it. If you have revenue figures to indicate that it's pretty much guaranteed you'll sell out your stock of something eventually, and you want short-term liquidity, you can just issue commercial-paper securities, and people will buy them.
  - amalcon 8y ago
    Or, more likely in the case of many smaller privately-held venues, get a loan from a bank secured by the future ticket sales.
  - kbenson 8y ago
    Sure, if you don't have people clamoring to buy you tickets immediately anyway that will provide you that money at no interest, that would make sense. In what way is that system advantageous to the current one, given the other incentives that exist to not raise price (public relations, mostly)? Also, given that I suspect brokers are worse at getting this right, since they don't get to see all the data, and you can make quite a lot from brokers on events that undersell...
- TomGullen 8y ago
  > provide liquidity to fans Why is liquidity important to fans?
  - travisoneill1 8y ago
    You can buy a ticket knowing that if something comes up you will get your money back. You can decide to go to an event last minute and tickets will be available.
    - vehementi 8y ago
      But they would be available anyway if the scalpers hadn't bought them all up. And if legitimate fans had bought all the tickets (sold out early), you wouldn't be getting a ticket either way, right?

zandl 8y ago

Wait, what’s wrong with first come first serve? This works for most Symphonies I’ve been to just fine.

Benjammer 8y ago
Yes, because first chair violin doesn't make even a fraction of what Justin Bieber makes per show...
- zandl 8y ago
  That doesn’t explain why tho
  - mamurphy 8y ago
    (Random numbers to illustrate a point:) If the symphony was an auction system, tickets might sell for $110 each. It fills up with a $100 each first-come system, most people who want tickets can get them, tickets are sold at only a $10 discount of auction value, and it "feels fair." The first-come-first-serve system works well for the symphony. If the pop-star concert was an auction system, tickets might sell for $999 each. With first-come-first-serve and a set $100 price, each ticket is sold at a $899 discount of auction value. Moreover, most people who want tickets cannot get them directly as they sell out instantly because of the relatively steep discount (90% discount vs 9% discount). The first-come-first-serve system only works well when prices are set near a market-clearing value, like with the symphony. As stated elsewhere in the thread, people would get super upset at $999 tickets. They would think "those greedy pop-stars price tickets way too high, it's so unfair." So pop-stars are unwilling to set prices at the high market-clearing value, and use the first-come-first-serve with way underpriced tickets (getting some money back by having agreements with scalpers or Ticketmaster). Demand way exceeds supply, tickets sell out instantly (mostly to scalpers). Most fans never get to see the concert at the "fair-seeming" $100 price and are upset at "those nasty scalpers" and pay near $1000 to see the concert anyways. But the scalpers (or Ticketmaster) are the ones whose reputations are harmed, saving the artists' reputations.

Larrikin 8y ago

I'm a big fan of the system that the sneaker companies have slowly adopted. Interested people sign up ahead of time with a registered account. You get a notification right before the release that you have to confirm. Then a raffle takes places where the winner gets charged immediately. It's about a ten mInute investment, which with how sneaker quality has gone down in recent years (especially Nike) is about all the time it is worth it to me anymore. Only issue I can see is that with sneakers there is almost no reason to get more than one pair unless you're reselling. Buying multiple tickets for a concert makes more sense. There could possibly be some increasing fee charged over a certain number, that could suck profit away from scalpers. The fee only occurs if the tickets are all presold.

Benjammer 8y ago
What would be the market incentive for _anyone_ in the industry to "suck profit away from scalpers"?
- hamandcheese 8y ago
  Profit.
taurath 8y ago
Non automatable hoops to jump through can definitely be a good way to determine who “deserves” the tickets. There’s technological ways to do that, but it’s a magic sauce that would make a company a lot of money.
ascorbic 8y ago
This is effectively the system used by the popular festivals in the UK, particularly Glastonbury. You need to pre-register for tickets, which involves uploading photos. When it goes on sale, only pre-registered users can buy, and the photos are checked on entry. Other festivals do the simpler thing of checking the names on the booking against ID. Many allow a secondary market in tickets, but only at or below face value for those who are unable to go. This shows what can be done if they really do want to stop scalpers.