18
Feb
11

Is ticket scalping good for society?

…Haha. Of course not! But a recent Slate article by Annie Lowrey raises an interesting economics question concerning the recent LCD Soundsystem at Madison Square Garden debacle (in which  programmed “bots” jammed Ticketmaster and bought up all the tickets the second they went on sale, immediately punting them to StubHub and other secondary sellers where they reappeared, prices jacked the f- up.). An excerpt:

(Note: This isn’t really Lowrey’s opinion on the matter. Read the full article.)

The economist’s defense of said behavior goes like this. Ticket sales, for popular bands at least, are characterized by inefficient excess demand: Far more fans are willing to pay face value for a ticket than can purchase tickets—thereby making tickets worth more than face value. Scalpers perform a market-making function, letting ticket prices rise until the market clears. If you want to see LCD Soundsystem, an economist might say, tough luck about your failed initial efforts. But you can still get in—at the market-determined price. So, if seeing that last show is worth it to you, head to StubHub and buy away.

An interesting take. However in this case, by deploying “tens of thousands” of bots that deny fans access to the quantity of tickets available at the original price, you’re not exactly nudging the cost of the tickets toward the  “equilibrium price” that perfectly reflects the union of supply and demand – you’re just stealing the tickets and setting a new price. In other words, you’ve put up a barrier to Ticketmaster’s entry as a seller in the LCD Soundsystem at MSG market: a big no-no in free markets.

(Feel the Econ 101 knowledge. Also, note that I just defended Ticketmaster in that illustration. I feel dirty…)

Now for a slight admission: I myself have played the scalper game in recent memory. In early 2008 (and all in one sitting inside a UCSD library) I saw that Vampire Weekend’s first album was getting rave reviews. So I listened to a couple tunes on the band’s myspace, decided it was something my friends and I would like, and promptly bought four tickets for their show at the Casbah, a fantastic little dive of a venue in downtown San Diego that holds just over 200 people. Total cost: $40.

Two months later and Vampire Weekend mania is rising precipitously. The band has just played Saturday Night Live, and less than two weeks later, they’re on their way to SD! So what’d I do? I went onto craigslist and pimped them shits out for all they were worth. My haul: $150 (two of them went for $25/ea, the other two for $50/ea)!

NOW. Let’s take a closer look and deconstruct why what I did might not be quite as evil as what the bastards behind the LCD Soundsystem ticketmaster bots have done. Dig the following details:

  1. I sold the tickets because my friends and I had a lot of school work to do and honestly couldn’t go to the show. (i.e., I didn’t buy the tickets with the original intention of scalping them.)
  2. On craigslist, I merely responded to requests for tickets made by individuals who were looking for them, and went with the prices they offered to pay (which just so happened to be rather high): an interesting example of perfect information exchange regarding quantity demanded, quantity supplied, face value, and well, willingness to pay above face. Personally, my willingness to sell at above face value was boundless. But as I didn’t egg anyone on to bid higher – didn’t lie and say I was talking to x number of other bidders and y was the current highest bid – this willingness went largely untested. (Somebody punch me, I think I’m about to start explaining consumer/producer surplus.)
  3. And finally, I re-sold my Vampire Weekend tickets with the knowledge that the only people ultimately affected by my transactions would be my “customers” and me. It was simply a pair of private exchanges in which the buyer offered to pay a price and I accepted it. (As it turned out, they were a couple of douchey young professionals out on dates. You should’ve seen them looking both ways, discreetly slipping me the cash outside the club, all too eager to impress their girls at how they’d scored tix to the big show!) To my knowledge, there was no revenue lost by the band or the venue through my transaction, since the original face value of $10/per had long since been paid. Now if you read deeper into the Lowrey article and elsewhere about the LCD Soundsystem affair, you’ll find claims bandied about that venues and artists themselves engage in re-selling on Stubhub. Does this mean that by reselling my Vampire Weekend tickets I was taking money out of the pocket of someone along the indie rock value chain more deserving than I? Well, since overcharging fans for tickets to your own show is super shady and no artist or venue would never admit to doing it, I think I’m absolved for not knowing…

Alright, enough on this topic. Kids, buy your tickets early, at the venues if possible to avoid fees, and if you must resell them, never require someone to pay above what you paid. Unless of course there’s someone out there dumb enough to offer to overpay exorbitantly for, oh, I don’t know, these three tickets I have in my wallet for tonight’s sold-out Drive-By Truckers show…

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