For his shows, C.K. saw scalping rates as high as 25%, driving up the price of his shows for people who wanted to attend, by those who didn’t.
The only people driving up the price of the shows are people who want to attend. How could it be otherwise? People who don't want to go to the show certainly don't raise prices. If scalpers can profit, it means you aren't charging market price. Policies like the one described in the OP simply shoot the messenger.
If the market price is too high for some fans, have a lottery with an aftermarket. Once they see the market price, low-income lottery winners can decide whether they'd rather attend the show or sell the tickets to pay the rent.
It's not like these issues haven't been studied before. Do a few web searches, or consult an economist. If you don't accept that your naive economic intuition is wrong, you're going to make stupid decisions that often exacerbate the very problems you're trying to solve. (I'm looking at you, Burning Man.)
You're operating on the flawed assumption that the sole endeavor here is to extract as much money from consumers as possible. If $45 a ticket allows Louis C.K. to make a tidy profit while still being affordable for his fans, but a third party buys all the tickets and resells them for $55... sure, some of his fans may shrug and say, "Well, I guess $55 isn't too bad" (price elasticity, etc, etc)... but why would Louis C.K. enable that behavior?
A lottery doesn't seem to me to do anything but mitigate the benefit of fancy redialers or other automated ways of getting your ticket order in first. With or without a lottery, allowing resale for profit gives people willing to pay more a better shot at seeing the performance. Preventing it means everyone who's willing to pay the set price has an equal shot. I've always assumed that's the goal of anti-scalping schemes.
I didn't really understand BMORG's response to a ticket shortage - Lotteries play right into the scalper strength - the ability to file lots and lots of requests with different credit cards. I only had three active credit cards, so I could only enter the lottery three times (I didn't get a ticket this year) - but scalpers have a whole catalogue of credit cards and addresses to purchase tickets with. They must have been chuckling with glee when they saw the system this year.
I'm involved in the local Burners scene, but I've never been to the the big one in Black Rock City. My wife is going this year with a friend, but she was gifted a ticket. So I would like to know what stupid decisions and exacerbated problems I will see if I decide to buy a ticket for next year's burn.
Last year Burning Man sold out for the first time. In an attempt to alleviate the shortages, this year they had a lottery where people could request up to four tickets per person. The obvious strategy was to request more than you needed, in order to hedge your risk of losing the lottery (essentially a prisoner's dilemma situation). The utterly predictable outcome was worse shortages. They added an aftermarket to "fix" the problem, but (like Louis C.K.) they capped the price at ticket face value. Since the market price is higher, this guarantees shortages.
It's almost strange that they would implement a system like this just because they sold out for the first time. Other regional burns around the country regularly sell out up to a month before the event, and they never implement alternate strategies for people to buy tickets. Then again i'm not aware of a scalper market for these since they are small and regional, but I have often considered buying four tickets at the lowest introductory price and selling them a week before the event ("Hello, my name is Peter, and i'm a capitalist.")
Burning Flipside here in Texas has had a lottery system for the last few years due to not being able to exceed 2500 people on site or be under the TX mass gathering law. They make the lottery a little inconvenient (sign up in early January, mail in a money order during one week later in the month, have the MO returned if you don't get tickets). They also have a no scalping policy and regularly go after sales on Craigslist and other sources for more than face value.
no, it's just that when you exceed 2500 people, a bunch of special provisions come into play, like having to provide water, security, vending, etc. that clash with the self-reliance/gift-economy aspect of a burn.
> Since the market price is higher, this guarantees shortages.
I don't really understand this. There's obviously more people who want to see the event than there's room, so isn't that what guarantees the shortage?
Raising the price just artificially moves the point where you say "welp, can't go" from not being able to find a ticket to not being able to afford one. It doesn't really improve availability?
That's how economists define "surplus" vs. "shortage".
There's a shortage of a good when the price is set lower than what the market is willing to pay. The economist's solution is to set the price higher (this may also encourage means of increasing supply, depending on price elasticity of supply).
There's an excess of a good when the price is set higher than what the market is willing to pay. The economist's solution is to set the price lower (which may also result in some producers exiting the market and/or reducing output).
There are problems in this theory where it intersects with social / political / physical production. Food, for example, is relatively price-inelastic: there's a certain amount of calories people require to survive on a daily basis, and all the price pressure you can apply isn't going to move mere calories by more than a relatively small amount up or down (people will either starve or become obese). Though you can manipulate food quality: meat (more resource-intensive than vegetarian diets), nutritional quality, freshness, organic vs. artificial / technologically intensive agricultural methods.
The bmorg completely disenfranchised large parts of the community with a "ticket lottery".
Earlier this year, we were seeing theme camps with something like 10% "success" rate in the lottery, and a lot of the major camps weren't going to be able to go.
It was only through a last-ditch effort, cancelling a second lottery and giving the tickets to "established" camps that they were able to get some of the major theme camps to go.
The lottery played heavily in the favor of scalpers, who very obviously exploited it to their own gain, and this was something that the community had been screaming up and down about since the lottery was announced last year.
It's not the scalpers who are to blame. It's bmorg (and the broader Burner community) that's at fault for ignoring basic economics and human behavior. Everyone with a rudimentary understanding of game theory saw the whole mess coming a mile away.
Some screamed about the lottery, but capping secondary sales at face value is a deeply entrenched (and, in my view, terribly misguided) part of Burner culture.
This stuff is literally economics 101 supply-demand curve material. When you artificially cap the price too low, you create shortages and a black market.
Economic theory says that what you should do is set up an auction where everyone says how many tickets they want to buy and the maximum price you're willing to pay. The bids are sealed so nobody knows what the price will be until the auction is finished. Sort the bids by price (breaking ties by how fast you put your order in). Everyone actually pays the highest price that anyone not getting a ticket was willing to pay.
Economics and game theory says that the stable equilibrium for this type of auction is for everyone to honestly report the maximum price they are willing to pay. If everyone does then everyone who got a ticket is either indifferent or happy about getting the ticket at that price, and everyone who did not want a ticket would indifferent to happy about not buying a ticket at that price.
Theory assumes that people's opinions about how much they would pay don't change as the event comes closer. This assumption is, of course, wrong. But I do not know of a more fair strategy than this one.
Everything you just said assumes that there is never a secondary market.
There is. That is the problem. Nobody cares about spending $400 for a ticket. To burners, that's a very tiny price to pay to get "home" for a week, and is a tiny fraction of the overall cost of the trip.
If we can figure out a way (like, hello, names on tickets) to make the tickets non-transferable, then figuring our a reasonable price isn't an issue at all.
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The burning man ticket problem is logistical, not economic.
People who refuse to learn economics keep making the same mistakes. :-(
Nothing that I said makes any assumptions either way about the secondary market. In fact in the real world a secondary market serves a valuable purpose for people who want to go and then are unable due to unexpected circumstances (sickness, loss of income, etc). Or for people who buy an extra ticket to gift a friend, and then find that the friend you had in mind got their own ticket already. There are a lot of reasons other than being an evil speculator to want to sell a ticket on a secondary market.
But even with a secondary market, the mechanism that I describe according theory would vastly reduce scalping. If someone is willing to plan ahead and pay $1000 to be there, they are guaranteed of getting a ticket at the same price as everyone else. Of course there will always be people who fail to plan and buy at the last moment, but theory says that this pool should be much less profitable for scalpers than people who were willing to pay top dollar but got unlucky.
An additional benefit for something like Burning Man is that you get an accurate read of what your actual market is. A non-profit need not use this to maximize profits. If you could, for half again as much, get a space that is 2x as large, can you rent it and still break even? With the rich data set from the auction, you can get a much better read on whether that is feasible than with traditional ways of selling tickets.
The fact that you would make a blanket statement about somebody learning "economics" as if that is one skill demonstrates your level of understanding here, methinks.
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I think you don't understand the culture at burning man, which is, or at least triest to be, completely decoupled from the concept of money. In fact, that is one of the 10 core principles.
The fact that you claimed that I had made assumptions that I had not in fact made demonstrates your level of understanding.
Can we dismiss the snide remarks?
I freely admit that I have never gone to burning man, nor could I possibly fit something like that into my life for many years. However that said, a better understanding of money and economics would ironically enable burning man to better set things up to create a space that is free from monetary concerns.
With the strategy that I proposed, they would be in a better position to make the event as big as it could possibly be at exactly the lowest price that breaks even. And to do it in a way that limits the ability of scalpers to take money from people who want to be at burning man, while providing freedom for people who need to change their minds to actually change their minds. (It also provides the ability to buy tickets with the purpose of gifting them to others, without having to worry about who those others might be.)
Think of it as a piece of economic judo, using economics to best produce a non-economic outcome. In some sense it is not entirely dissimilar to how a copyleft license uses copyright law to achieve a purpose that is diametrically opposite to what that law was originally intended for.
I am not sure that your proposal will work for anything with a concert-like structure -- much less, Burning Man.
The problem is precisely the one that anyone faces: irrationality. You're asking people to state their price of indifference several days from now. Many people will systematically under-report that, few will systematically over-report it. Scalpers can exploit this. There is also a systematic problem of forgetfulness; there will be some people who simply aren't part of the initial bid but want the product -- and scalpers can make money selling to them. Scalpers themselves are a sort of free-market force and free markets will not eliminate them.
We've already got a system which the scalpers found a way around: the normal economic voodoo which we use is, "sell tickets at the door, then scalpers can't sell at a profit any more." That works incredibly well for most events. It could perhaps be extended to arbitrary events if overselling were common practise, but I don't know how you'd soak up the hate of the people who Couldn't Get In The Door.
Sure we can dismiss the snide remarks. Start by retracting your implication that I refuse to learn economics.
Burning man is:
A) a nonprofit
B) not a concert
C) not trying to maximize their intake of money
D) Attended by people from every category of the economic spectrum from Sergey and Larry to the guy saving all year for the lowest income tier of ticket.
What you're describing doesn't work for this. I'm sorry.
I think he's spot on - Burning Man seems to me to be an attempt to create an agalmic environment in the same way that open source projects are, and the use of economics/copyright as tools to mediate the agalmia's interaction with the outside world in a manner beneficial to it are the right answer here.
I'm certainly wondering if the approach would be effective for ticket sales for community conferences and similar things, since I'd much rather any extra money that could be captured went into a relevant non-profit rather than into scalpers' pockets.
Say the tickets are $400 as you said, then everyone who got one bid > 400 dollars everyone who didn't get one claimed the most they were willing to pay is < 400 dollars. Assuming they weren't lying were is the secondary market? You are unable to sell your ticket for more than you paid for it so the secondary market acts as loss reduction device not a money making endeavor.
Only if you assume peoples situation and desires are static and that their ability for forward planning is perfect and rational. I might not be that interested in going to Burning Man 6 month out, but as the date approaches and I hear about how a whole bunch of people I know will be there then all of a sudden I'm much more willing to pay.
Or at the time of the auction I'm unemployed and worried about paying rent, then I might only be able pay $100. Then three month later I'm offered a job with a great salary, and now I'm all of a sudden willing to pay $500-600.
No matter how you structure things, there will always be people whom are willing to pay more after the fact, and as long as there is a market someone will find a way to sell to the market.
It's easy to blame scalpers, but I'm not convinced they're a major component of the shortage.
Lots of large events sold out this year much quicker than usual: the Apple Worldwide Developers Conference, Penny Arcade Expo, and others.
I think that the recession is less of a concern for many of us this year, so there's pent up demand being used. Add a lottery to increase the sense of urgency, and you get a lot more people registering for tickets. Not scalpers, just people who haven't been going every year.
I had no idea how bad the scalping situation was in the US until I tried to get tickets to a Lollapalooza aftershow (I live in Australia, and am going to Lolla as a part of a holiday).
I waited up late to get tickets, was on at exactly 10am Chicago time, suffered a website crashing hard and, within 15 minutes, the gig had sold out. Defeated, I went to bed (it was pretty late in my time zone).
Next morning, I got up, and there were 400+ tickets for sale on StubHub. For a 1300-person venue. Even if 100% of scalped tickets went on sale, on one website, within 10 hours of the event going on sale, that's still 30% scalping rate. If anyone is wondering, it was Childish Gambino at the Vic Theatre.
Now, I agree that part of the solution is to charge more for tickets (and I'm used to it - a lineup like Lollapalooza's would be impossible in Australia - tickets to a RHCP gig alone go for $150+). However, by allowing scalping to this extreme, Scalpers can buy 10x$30 tickets and sell only 2-3 of them at a ridiculous price to superfans and still turn a profit, leaving the rest unused. Everyone loses except the scalpers.
Big festivals in Australia print your name and date of birth on the ticket, and either only allow you to resell the ticket back to the festival (at cost), who then on sell it under a different name, or charge a fee to change the name on the ticket so that resellers are at a disadvantage. Both have their disadvantages, but both are better than the current situation in the US.
yeah I'm confused, isn't scalping a necessary side effect of the process? It seems natural if you sell tickets at a constant price over time and don't adjust that for higher demand (as event gets closer in time) or lower supply (as tickets are sold).
Also, is scalping a bad thing? It seems to me that they are making the market more efficient.
If 1000 people want to see a show in a theatre with 1000 seats, that would be an ideal market. But in reality you get 2000 people trying to buy tickets for that show. 1000 are the fans and 1000 are people trying to buy the tickets to flip them for a profit.
The artificial demand creates a market that benefits nobody except the scalpers. The fan loses by paying higher prices, and the artist loses (sometimes) by leaving money on the table. This is why Madonna and the Eagles are charging $750 for front row seats.
The artificial demand you mention is essentially speculation. The scalpers are betting that the actual price attendees are willing to pay is higher than the initial selling price, which leads them to buy the ticket. This system still requires players who ultimately purchase the tickets for the utility of seeing the show. If $100 tickets ultimately get sold for $2,000 to actual attendees, the original seller significantly underpriced their tickets. There was a full market of people willing to buy the tickets for $2,000 for the show. Scalpers didn't mess with this market or confuse demand. They made the market efficient. The fans who valued the show the most got the enjoyment utility of attending. This system primarily hurts the fans who couldn't afford the more expensive tickets. On the other hand, without a secondary market, the fans who valued the show the most are harmed.
The only way that scalpers can create artificial demand is if there are no attendees willing to pay the price scalpers want to charge. In that scenario, scalpers sell to other scalpers at higher and higher prices, and the last person (scalper) to buy loses. If the last scalper buys the ticket for $4,000 and there is no party willing to buy the ticket for at least that AND see the show, the scalper is left with two options - go to the show (which by definition for the scalper provides less utility than the ticket price warrants), or sell the ticket at a loss (or possibly for $0, if there are no buyers).
I think there is a good analogy to other forms of speculation, particularly in commodities. Speculators "drive up" the price of oil by buying and selling it for more and more, but as long as consumers are willing to pay for that oil, the price is justified, and the original sellers forfeited their potential profit.
Granted, oil and housing speculation can lead to bad things for the economy as a whole. Here I think the analogy fails, since tickets are inherently a temporary market with an expiration date. Without an expiration date you can have bubbles, and bubbles can burst.
I'm definitely not an econ expert (far from it). Scalpers may not be confusing demand. But aren't they're artificially constraining supply? There are a limited number of shows and seats available.
If I'm a scalper and I buy the last 100 seats (or rather, I have the last 100 seats not taken by someone who actually is going), I can now sell the tickets at a premium. If there are only 75 more fans that want to go, they are forced to come to me and the prices go up artificially. I can still profit without selling all the tickets. Without me the scalper, there would have been enough tickets to go around at face value.
Yes, the price is going up because people are willing to pay for it, but without the scalper it wouldn't have happened.
If a show has 1000 seats, and 900 fans buy the first 900, and never consider reselling at any price, then they are the ones constraining supply relative to an efficient market. (And there's nothing wrong with that, shrug.) The scalpers, by reselling tickets instead of just holding them and ignoring the market price, actually are increasing the amount of tickets available on the market, not lowering it.
Imagine if there were zero scalpers. Then it sells out and price goes to infinity. How can price go to infinity? Because supply is being constrained to zero because people refuse to consider reselling. Scalpers delay that some and keep the market more robust, while also making a profit from underpriced tickets.
And you can never ever sell a ticket to someone for more than the value of the show to them, so the buyers never lose.
All they are "losing" is the ability to get underpriced tickets (tickets for less than they are willing to pay) from the original seller who could have charged more (since he controlled all the tickets) but, for whatever reason, preferred to leave some money on the table for scalpers.
wow... you consider a market to be something which maximises all possible monies rather than something where you obtain something for use. No wonder this 'scalpers are helping the system' theme sounds crazy.
No, xenophanes is simply explaining how markets work. Markets are supposed to maximize utility, whether that be monies or laughter at a concert. If a price is too low for demand, any opening that allows middlemen to creep in, raise the price to demand levels, and take the difference, will be taken. If the resellers price too low, they'll just generate an opening for re-resellers.
The problem, for me, isn't with scalpers, it's with income and wealth distribution (which separates nominal demand from actual benefit to useful people), with over-regulation of commercial performance (limiting the number of venues through regulatory capture), and with the destruction of local community (since there are no local acts anymore, everyone chases the same small number of national and international ones.)
Of course Louie C.K. generates a massive demand - in a country of 300 million people, he's one of the 50 comedians that anybody has heard of because he makes it into the national media. When the average person can name a few comedians that live and work in their neighborhood, going to a Louie C.K. show will be considered a luxury good AND the price will go down.
Part of my response to xenophanes' comment is a visceral response to treating a 'robust market' as a target goal, rather than a journey to an outcome.
The cost of ticket 1001 to a 1000-ticket show is infinity, regardless of whether you have scalpers or not. Increasing the price of the last 100 tickets does not mean you have increased ticket supply, all it means is you have taken 100 tickets from earlier, creating an artificial scarcity, and sold them later. Those hundred buyers that 'don't lose' down the track do so at the expense of a hundred buyers that lost earlier.
xenophanes is making funny with numbers because he's comparing the price of ticket 1001 in the non-scalper system with the price of ticket 901 in the scalper system.
I don't think he/she is. There might be 20,000 people interested in tickets to the show at $55, but only 1000 will get one and 19,000 will be left out in the cold. If 100 of those tickets are purchased by scalpers, 19,000 will be left out in the cold. The difference in the two cases is that 100 of those tickets in the second case will go to the people willing to 'be the most useful' for them - and in an ideal society that seems to me like the fairest way of doing things.
The only problem I have with it is that due to general political market distortions, money is very cheap to a small number of people who do very little and have lots of leisure time, so the dollar commitment for a ticket price has little relation to either subjective or objective (ideal) utility.
As a performer, I'd have an interest in keeping the ticket prices low simply because I wouldn't want an audience filled with the kind of assholes who would pay $500 for a ticket to a two hour comedy show. If I really adored Louie C.K., was one of those assholes, and it took 11 minutes to get to the site to buy a ticket that sold out in 10, I'd hope that scalpers got a significant amount of those tickets.
Hell, even if I wasn't one of those assholes I'd hope for scalpers, because if they overestimated demand and priced too high, they might end up dumping tickets at the last minute and I might end up paying less than face value. Instead of not being able to get a ticket at any price, the tickets are handed out based on how much you're willing to commit to get them. If demand then raises the prices to $1000, I can still get a ticket if I love Louie C.K. more than I love keeping my apartment.
Because, really:
the number of people who lose = the number of people who would go to the show for free - 1000
Personally, I lose at face value, because the day I pay $50 for a concert is going to be the day a gallon of milk goes for $15. It doesn't mean that I don't like Louie C.K., it just means that I like 3 gallons of milk more. Everybody makes their own call, whether it's when the cost goes over $10, over $1000, or over $55 + F5ing a site for 6 hours.
In the short term, there are a fixed number of hard drives (and beach balls, and microwave ovens, ...). Why don't we have to worry about hard drive scalpers artificially constraining the supply?
It would be determined mostly by price, and this would just be another version of the supply/demand curve. If he sells the tickets at $20 each, then 100k will want to see his show. At $50 each, 10k people, and so on.
There is a much smaller quantity of seats that need to be acquired to scalp the market and push out competition. The spread is much higher if you know there is a relatively high demand that cannot be justifiably spent elsewhere.
Shows are much more constrained. It's the very specific "skilled labor" involved (only one person can produce a show in only one city, maybe two a night). Imagine if you needed a hard drive factory in each city and only one factory could run at a time.
I can't buy a show for Denver. I might not even be able to buy a show for Friday nights. That severely limits the pool of "supply" I can buy from. Louis might be in my city once a year for a few days if I'm lucky.
You're right: it's speculation. I should have used that term outright.
The problem I see is that it's speculation with a known outcome. If I buy gas or oil forward contracts, it's a play with non-zero risk. Iran might declare war or we might invent Mr Fusion tomorrow. So far so good.
But with a concert, let's be a bit more realistic. If the Rolling Stones decide to tour and play in your town this year you can be 100.00% sure the concert would sell out. If they quadrupled the dates in that town, they would still sell out. For a given set of acts that scalpers target, there is no possible way that there is a risk of scalpers holding expired tickets...unless they get greedy.
I think the terms "no possible way" and "100% sure" are inappropriate for an economic discussion. There's always the possibility of some event occurring.
What you're implying is that there is infinite demand for a Rolling Stones concert at any price. As far as I know, this is a concept on the extreme edge of economic theory. Maybe there could be infinite demand for necessities like oxygen should we be forced to make a decision, but for a concert the notion is absurd. If the tickets were priced at $1,000,000 per seat, I doubt you would sell out.
The bottom line is that there IS an appropriate price which will maximize consumer and producer surplus utility (the positive difference between what you were willing to buy/sell the goods for and what you actually bought/sold the goods for), and scalpers/secondary markets will exist when the principal seller misprices the tickets. Without the secondary markets, that ideal price will probably not be reached, and there will be a shortage or surplus of the goods.
How is there artificial demand? The scalpers aren't buying tickets for fun - there has to be someone to flip them TO. These people are fans and they create the demand, as stated in the grandparent.
Edit: a common "rebuttal" in this thread (see diek, potch, drivingmenuts) seems to be that there is an assumption of correct market price being the aim. That isn't the assumption or the point. The point is that excess demand creates the problem. There are several approaches to this (first come first served, lottery, aftermarket) but getting rid of scalpers doesn't solve the fundamental problem. The only thing they (may) be doing wrong is going against the wishes of the artist (if they prefer to use another method). It's not clear that e.g lottery is better than finding the true price (or vice versa).
1-This is inherently a class-based argument. It assumes that someone with more money than you isn't a 'real fan' and that his true fans are the squeezed middle class (or whatever class-bracket you happen to be in).
2-The world doesn't owe you anything. Thinking this is unfair because you can't afford tickets to a stand-up comedy show is the epitome of a First-World problem.
edit: this isn't exactly a reply to sambe's comment. I was taking his 'Correct Market Pricing' comment that was addressed at the rebuttals and adding to it.
Anyone that has tried to deal with buying tickets (either in today's system or even back in the old days where you had to stand in line) knows that there are people with large sums of cash willing to pay people to stand in line or bombard ticketmaster.com with requests to land tickets for a show they have no intention of seeing. They resell those tickets immediately for a profit to the people that really wanted to see the show. Go look at StubHub.com 30 minutes after a popular rock concert goes on sale. Did every single one of those sellers have a sick grandmother pop up?
No, the world doesn't owe anyone anything, and this isn't a white whine. It's an example of how people with more time and resources than you can jump ahead of you in line and, as a result either deny you an experience or make you pay more out of pocket for it...all in the name of profit.
"more time and resources than you can jump ahead of you in line and, as a result either deny you an experience or make you pay more out of pocket for it."
Isn't that the way the world works? We aren't talking about access to food, education, or healthcare here. We're talking about entertainment. Is there a particular reason why someone with more time or money shouldn't have an edge and be able to spend their money to do something someone with less money can't do?
If you fly enough you also can get upgraded to first class cabin. Is there something not fair about that as well?
> Is there a particular reason why someone with more time or money shouldn't have an edge and be able to spend their money to do something someone with less money can't do?
Scalping is asshole behavior. It is that simple. Don't sugarcoat it in talk of 'smoothing' markets. The scalpers do not add any value to the transaction. They merely inflate the price.
I'm so sick of HN over-intellectualizing topics in order to avoid the difficult discussions of ethics. I'm guessing they're avoided because (gasp) it isn't objective. The horror!
The ability to buy a ticket for a popular show at short notice on (or close to) the day of the show has real value to me, and is a service I'm occasionally willing to pay for.
For example last time I was in London I just happened to see that a band I liked was playing that evening. Having no other plans I wandered up to the venue a couple of hours before opening and a kind gentleman outside was happy to sell me a ticket. Sure I paid roughly double the value printed on the ticket, but to me it was worth it for the service and convenience.
Now I'm not saying that scalping is the best solution to this problem, but there is definitely a market here (for tickets on short notice in my case) and money to be made and value to be added.
How does being upgraded to the first-class cabin deprive a poorer person of flying?
And no, it's not a blanket statement of the way the world works. There's plenty of things like copyright that prevent a gorilla just coming along and taking your toys for themselves.
Performers now know that they lose good will when a fan has to pay a scalper to see them. Louis C.K. is earning tons of good will by doing this, and the only person who loses out is the scalper. Wealthier fans have always been able to work the system to get extra tickets, back stage access, etc.
Your hyperbole ("the minute") isn't aiding in understanding reality. Lots of artists have enough good will built up in their fan-base that they can produce a few bombs and still retain enough fans to reboot their act back to something that the fans like.
Perhaps "the minute" was a bit much in trying to prove my point.
First, I think comedians are a little different then other types of artists who have a little more latitude in their work. I'm speaking specifically about the buzz that surrounds this particular artist right now who is very funny. And what I'm saying is that if he stops being funny, in general or not as funny, the goodwill that he built up won't matter in terms of bringing a significant number of people to his shows.
And if he becomes funny again people will want to attend his shows regardless of something like what he is doing. I don't believe the fact that (this type of) goodwill would make a big difference in how quickly the audience returns.
And in any case the reason any artists matters at all is because they provide entertainment that people like. That is their product. The "good will" part isn't what got them to where they are today and won't keep them there if they fail to deliver.
The old Howard Stern (haven't listened to him since he was on non satellite was quite the asshole in many cases. Despite that he had a big following even from people who thought he was a dick. Because he provided entertainment that people like they overlooked undesirable things about him.
How is your second point at all relevant? No one is talking about being owed anything. This situation isn't the consumers pushing against scalpers, it is the performer/artist himself.
You seem to be against Louis C.K. having the freedom to sell his product how and at the price he chooses (for whatever reasons he thinks are of merit). Why?
An odd comment - I didn't say either of these things.
However, other people are saying them and I'm with you - both are fallacies. Particularly on the first, I'd suggest to "real fans" that they consider whether they prefer paying more than face value or not going at all (just in terms of their utility, not as a point of principle). If the latter, then consider the option of refusing the higher price - same result, you don't go! There are no easy solutions.
The perceived issue - I guess - is when a very high percentage of tickets become resold and you don't agree with this method. I'd say your very small chance of getting a face value ticket is still representative of a world without scalpers as they are, as always, acting as a proxy for real demand, which would otherwise be competing with you for face value tickets directly.
It is absolutely a class-based argument, and not the fault of scalping, but the class-based argument is a reasonable argument. To the extent that an uneven wealth distribution is based on insider networks, regulatory capture, and rent-seeking, nominal demand is pushed higher than actual utility.
Class-based argument? Your prejudice is showing. The 'true fan' part is about following the goings-on of the performer and being aware that there's a show coming up, and trying to get tickets ASAP instead of two days before the event. Please stop trying to make absolutely everything about money.
This is the artist himself saying that he'd rather have true fans in the seats at a reasonable price, rather than have the tickets snapped up by the asshole with the biggest wallet (not sorry for editorializing, that's the politest version of my view of scalpers).
The add-on effect he's looking for is fan retention over time. If 500 people bought from a scalper at some much higher price, there's a small chance that they will become disgruntled and stop being fans. In the long term, he could lose that business.
But if he himself levels out the market, the fans have less to lose. Sure, the artist takes a hit, but that's on him. He can always do something different next time if he's dissatisfied with his revenue.
Remember that this is a guy who made so much money the last time, that he was somewhat nervous. I don't think he's thinking about it the same way you are.
As for "not doing anyone any favors": way I see it, he's doing his fans a favor by keeping the ticket prices affordable.
So true fans are poor? What does having a fatter wallet have to do with your taste in comedy?
Also, fans don't work the way you think they do. If I like Louis CK, I like Louis CK. If he chooses to charge $500 for a ticket, I will just watch him on TV. It won't cause me to resent him.
In a perfect market, if enough people feel the same way, the price will drop down into the range that I am comfortable paying. If, on the other hand, he has so many fans that some are willing to pay exorbitant amounts to see him live, I will be forced to watch him on TV.
If he wants to give everyone (rich and poor) the chance to experience his set live, he needs to increase supply by touring more.
No? True fans are alone, and true fans are not necessarily the earliest at the gate. If scalpers can grab half the tickets before the show's sold out by buying in bulk, they're going to make a lot of money. Because now they control the product.
> he needs to increase supply by touring more.
He's booked 67 dates, he's only one guy, touring more? He'll need to put his million of sales in cloning if he wants to do that.
But he's at least found a way to keep control on prices and scalping and give everybody equal opportunity.
And you're sticking up for the fair-weather fans who aren't willing to take out a second mortgage on their homes.
Also, "true fans are not necessarily the earliest at the gate" is not an example of No True Scotsman, it's an example of Some True Scotsmen, the exact opposite.
I do say it as a bad thing. In my example, the 1000 fans and the artist would have been perfectly happy with the arrangement. Of course this is never the case.
So the scalpers are profiting from the mismatch in supply and demand and making the show less accessible to the fans. From a scalper POV, that's capitalism. God bless America. From the fans's POV, it just sucks.
And I could swap Louis CK for oil, and scalpers for Goldman Sachs, you know. Same thing IMO.
And the artist's POV as well, his fans are now poorer and there's no value into it: they don't enjoy it more, they don't get more merch, they don't keep their money to see the next show, they don't get to buy a nice dinner for their SO, etc...
That's an interesting angle. Internet piracy of content was supposed to be okay because the artist should be able to profit from concerts and related merchandise. But it seems that isn't entirely possible either.
How is that 'smoothing' the market? CK Louis seems to have smoothed it flat with $45 for all tickets.
If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor. It's not like scalpers make tickets magically appear.
> If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor.
A lot of them wouldn't, though. If the scalpers sell the tickets for, say, $500, then the people willing to pay $500 get tickets pretty reliably. If the scalpers didn't exist, those people would have to take a roll of the dice along with the many, many more people who are willing to pay $45. A lot of them wouldn't be able to see the show.
I didn't mean the same people. The same number of people would see the show, and people generally believe in a first-come-first-served moral system - spend a night in an busy ER department and see how the general public like the idea of 'triage'.
Really, my point is more that those tickets were going to sell anyway, and all the scalpers are doing is reducing the potential audience for those tickets. I don't see how this specific market is 'smoothed' by this practise.
If the only factor in your market's efficiency is price charged, then this is true. The real market has other factors like satisfaction/willingness to repeat a transaction (for both sides of the party), opportunities for disruption of your market (exacerbated by said dissatisfaction), and (gasp!) goodwill of parties in a transaction. If you're optimizing just the ledger numbers in your industry, you might make a buck, but you're setting yourself up for hatred and being toppled by a newcomer who customers actually like.
Higher prices dont necessarily breed hate in your customers. As long as people see that they are getting what they are paying for, they come out happy. It's the situations where they feel like they are getting screwed, or have too many restrictions, etc. Those generally come about because the market is not efficient, eg ticketmaster.
Leaving money on the table does no one any favors. If people are willing to pay $150 for tickets and hes charging $50 (or whatever it is), he's only doing himself a disservice.
If people are willing to pay that much and he delivers a show that is up to his normal standard, they won't hate him for charging them that much; quite the opposite actually. It's only the price gauging and poor service of monopolies that people tend to hate (and for good reason).
Now, if you are saying 'what about the people who cant afford $150 for tickets?'. If it's not a charity show, the world definitely does not owe you tickets to a stand-up comedy show. On the other hand, charity shows are fine, but he should call it like it is if thats the case. $50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.
Of course they don't and still do: through speculation, they're artificially taking control of the supply allowing them to re-set its price point without providing value. The tickets would sell all the same through the original provider at the original price, they just inserted themselves between the producer and the consumer (usually through brute-forcing the producer's ordering scheme) in order to extract wealth from the consumer.
The value that scalpers add is that you can get tickets at a later time. That's about the only value I can see that they provide, and whether that benefit is moral or not I guess depends on whether you believe in first-come-first-served for that item.
They are doing a service to anyone who buys scalped tickets, who is happy to pay extra rather than not go. Competition at this price is lower. I know many people who have happily paid well over face value on several occasions. Of course everyone would rather pay an artificially low price. Wanting a better deal isn't the same as the premium being extortion.
You may not like scalping but there's no point being blinkered about it.
Except they're only paying extra because, ta-da!, the tickets were scalped. The competition is higher at the lower price because, ta-da!, the tickets were scalped.
The arguments for scalping only work if the effects of the scalping are ignored. Eliminating scalpers benefits everyone.
Scalping benefits people who wouldn't have gotten tickets in a non-scalped sale (e.g. because there were twice the amount of people interested at face price than tickets available) and are willing to pay more to get the tickets. Scalpers are exploiting the rigid pricing and release schedules of the tickets.
I don't support scalping but wish the artists and promoters would step up the fight themselves too.
It's not so much an argument "for scalping" as an argument against being emotional and extreme. So, once again, - no, not everyone benefits. Without the higher price tickets available from the scalpers, they would not have been able to go. They got what they wanted at a price they could afford. Disliking something is not the same as it being inherently and totally evil.
> Without the higher price tickets available from the scalpers, they would not have been able to go.
Again, this is assuming that the amount of competition for the tickets is not affected by the scalpers. In reality, the scalpers are exactly the ones driving the scarcity.
Suppose there are 1000 tickets for a show that are $20 each. There are 5000 people in town who would buy a ticket at that price. Without any scalping, the first 1000 people who show up get a ticket and 4000 people go home unhappy.
With scalping, the first 1000 people who show up still get tickets. 900 of them are scalpers. (So if you were in the first 100, you still got to pay face value.) I'm being very generous with this scenario--I've personally never seen a situation where this was a real problem, as I've gone to every ticketed event I've ever wanted to paying face value.
The 900 scalpers all pick different prices. At $40, there are about 2000 people left in town who want to buy a ticket. Some of them get tickets, but the other scalpers get wise and think, why not charge more? So they charge $50. Or $60. Eventually they reach a point where there are exactly n tickets left, and exactly n people left in town who are willing to buy at that price. If the scalpers overprice the ticket, no one will buy, so they'll need to lower the price again. But generally, what's reached is a fair price that sees all the tickets go to people who actually were willing to buy them at the price they bought them at.
So let's look at what's happened. Without scalping, you have 4000 people who missed out on buying tickets because they weren't first in line and 1000 people going to a show. With scalping, you still have 1000 people going to a show, but instead of all of them being picked on the less-than-perfectly-fair basis of who was first in line (which is a disadvantage to people with more work, more responsibilities, inconveniently timed emergencies, and slow internet connections), some of them are picked based on who was first in line, and some of them are picked based on who was willing to pay more (which is a disadvantage to people with less money).
You might think, well, it's better to be unfair to busy people than to be unfair to poor people. But let's change this thought experiment and say the face value of the tickets was $60 to begin with instead of $20, and at $60, there are exactly 1000 people in town who are willing to buy a ticket. Now there are no scalpers (or if any scalpers do show up, they can only resell the ticket for face value anyway). I would argue that this scenario is strictly less fair than the scenario where the face value was $20 and there was some scalping, because at least in the first scenario, it was possible to get a lower price by getting in line first!
Fundamentally, what difference does it make who's setting the price? You might say, well, if the face value was $60, at least the performer (or the venue, or the ticket vendor) is getting the extra money, not just some "scalper". But the scalper is effectively getting in line for you. He's going out of his way to do the leg work for you. You know who else we pay a premium to for doing the leg work? Shopkeepers. Sure, if we really wanted to, we could go to some warehouse and save some money by buying all our stuff off a pallet. (You still can if you want to--it's called Costco.) But maybe I'd rather some other guy does all that legwork for me, and in exchange, I'll pay more. And if you're running around doing legwork for other people, you are benefitting those people.
Another perspective on your thinking here, which I think over simplifies the situation.
On my blog (http://www.ticketeconomist.com/prices-101/), I have a chart that observes internet ticket resale for a couple of sold out concerts in 2005 and 2006. Sticking with your terms, the 900 and the 100 bought and sold out the show in 2 minutes. Now, 900 people who wanted to actually buy tickets and see the show have to go to the secondary market. 900 speculators crowded out 900 fans and now they are clearing prices that are anywhere from $10 to $100 above face. It is relevant to point out that the 900 have a number of methods for essentially cutting the line, so there are instances where the "service" involved some form of cheating the system. Is that good?
In fairness, the scenario you present is also not the norm. More often, 1,000 sophisticated buyers compete with 15,000 average Joe buyers for 10,000 tickets. The 1,000 buy the best 2,000 seats and the 15,000 fight it out for remaining 8,000 tickets, assuming there are no hold backs and that Ticketmaster's website works properly, which it often does not. At that point, some fraction of 11,000 desperate and dedicated fans turn to StubHub, eBay, etc. to find that that the $90 ticket is now $190. On the one hand, there was never enough supply to go around in the first place, on the other, 1,000 buyers were crowded out by speculators. The efficient market is really not so efficient with tickets for a complex series of reasons.
Finally, there are some sophisticated buyers who know that they can wait it out and buy tickets at or near face value close to show time. We are among those few, for now.
Critical to your argument is the idea that standing in line is a service someone can charge for. It makes no sense when tickets are sold online 24/7 rather than out a window at a particular physical location. There is no line and no inconvenience to pay someone else to endure.
24/7, but only until the tickets are sold out. It's inconvenient for me to schedule my life around when tickets are going on sale. But a scalper's entire business is scheduled around when tickets are going on sale.
And if you think that problem is somehow created by the scalpers, go learn what a demand curve looks like. When tickets are underpriced badly enough, obsessive fans with fewer responsibilities are going to buy up all the tickets before I'll have a chance. If the prices are high enough relative to demand that I actually could buy tickets whenever I want, 24/7, then scalpers are irrelevant. Even if they did buy up all the tickets, they'd have to sell them back to me at basically face value. Scalpers aren't a cartel or anything, they can't fix prices, and their inventory goes bad almost instantly when the event actually happens.
The convenience argument isn't actually that critical, though. What's more critical is that by allowing people to get tickets two different ways--either buying them earlier, OR paying more--scalpers also make the ticket distribution more fair, not just more convenient for those willing to pay more.
Believe it or not, it's possible to know what a demand curve looks like _and_ disagree with you.
We all want special treatment, but resent it when other people get it. When a government distributes scarce resources unevenly by providing greater access to people who are wiling to pay more on an unregulated market, we don't call that 'making resource distribution more fair by increasing options,' we call it corruption. It's quite possible to make a seemingly well-reasoned argument that corruption is fine starting from the same basis, but most people will find the idea as repugnant as ticket scalping for basically the same reason. In short, I don't think your definition of "fair" as pertains to scalping is particularly meaningful.
For what it's worth, I bought my tickets about a week after they went on sale and had no trouble.
I usually do too, because most tickets I buy have a face value close enough to the market clearing price to begin with. But by your very own logic, that is still unfair--it would be more fair if tickets cost less but were more difficult to buy because they sold out more quickly.
The entire purpose of prices is to help distribute scarce resources efficiently. Just like Nixon's notorious attempt of putting price controls on gasoline, government messes things up when it tries to dictate a lower-than-market-clearing price. And it's hard to get me worked up with a fundamental justice argument over luxury goods anyway.
What Louis CK is essentially saying is that given a large amount of money already in the bank, it is more valuable for him to have affordable tickets than it is for him to maximize revenue. That is a decision that is perfectly rational. Not everyone gets their full utility from making the absolute maximum amount of money possible.
Also, a side effect of this is that below-market value tickets create a shortage, which in turn makes it valuable to be the first to learn about new tickets. This has to be driving signups to his mailing list and twitter feed.
Leaving money on the table does no one any favors.
God bless the US health system!
$50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.
Economists are crazy. A full house is a full house. The people who win are the people who attended. How you can possibly say 'no-one wins' from a full house of successful comedy on the cheap is beyond me. Yeah, bummer, the cheap tickets to a very entertaining night left us all feeling crappy...
First of all, just because there are a number of people willing to pay $150, that doesn't necessarily mean there are enough of them to sell out every show. So now he either has to lower prices as the dates approach or play to half full venues. Both of which are obviously sub-optimal.
Secondly you're ignoring the broader message sent by charging $150. Even if he can find enough people willing to pay that to fill a small venue, it risks sending the wrong message and pissing off people who might otherwise have bought his DVDs, watched his TV shows or gone to other shows. So now instead of being seen as broadly popular "man of the people" who "sticks up for his fans" with wide appeal, he's seen as a stuck up rich fucker entertaining other stuck-up rich fuckers. This will have obviously negative effects on his TV ratings, where I suspect is where he makes most of his money.
The SF Giants use a variable ticket pricing scheme that seems to be pretty successful. It adjusts the price of tickets based on projected demand. This probably does a pretty good job at eating into scalpers profits (although not entirely). Of course baseball ticket demand is a lot more predictable due to the fact that their are ~80 home games a season.
It would be interesting to see if there was any way to implement a similar system for concerts and shows.
"My guess as to what will eventually happen if / when Live Nation and TicketMaster merges is that they'll move to an auction or market-based pricing scheme - which will simply mean it will cost a lot more to get a good seat for a hot show. They will simply BECOME the scalper, eliminating them from the mix."
Problem with scalpers is they reduce the supply of the tickets endemically, thus driving the market price up. If the scalpers aren't involved at all, the market price is lower than the scalped price.
So what? They're not adding any value in the equation, they're just parasitically extracting wealth from all other entities. What's the point of that from a social perspective?
Indeed. And what is the incentive for an artist to allow his/her fans to have their wealth extracted by a third party? None. It only makes the fans less able to buy things from the artist in the future.
Louis C.K. is cultivating/nurturing his fans like a gardener cultivates/nurtures a plant. That clearly includes not letting insects eat the leaves off of a plant one intends to get an ongoing crop from.
I still don't see how that is an incentive to allow a third party to extract anything from the transaction. He could run an auction for tickets himself to satisfy that desire (if he had it).
You're not going to be able to sell this on HN. The HFT apologists will come invade this thread and go on for paragraphs on end about how market makers provide a valuable service that would otherwise not be provided.
Without scalpers (HFT) apparently absolutely no commerce in the relevant market would ever occur.
The only people driving up the price of the shows are people who want to attend. How could it be otherwise? People who don't want to go to the show certainly don't raise prices. If scalpers can profit, it means you aren't charging market price. Policies like the one described in the OP simply shoot the messenger.
If the market price is too high for some fans, have a lottery with an aftermarket. Once they see the market price, low-income lottery winners can decide whether they'd rather attend the show or sell the tickets to pay the rent.
It's not like these issues haven't been studied before. Do a few web searches, or consult an economist. If you don't accept that your naive economic intuition is wrong, you're going to make stupid decisions that often exacerbate the very problems you're trying to solve. (I'm looking at you, Burning Man.)