14 votes

How to fix the market for event tickets - slides from Federal Deposit Insurance Corporation keynote talk

Posted by skybrian
Tags: economics, markets, scalping, ticketing, federal deposit insurance corporation, talks.keynote, author.eric budish, source.ericbudish
https://ericbudish.org/publication/online-event-tickets-workshop-thats-the-ticket-an-ftc-workshop-about-online-ticket-sales-starting-at-1730/

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Title
FTC Keynote Talk, How to Fix the Market for Event Tickets
Authors
Academic Web Pages
Published
Jun 11 2019
Word count
46 words

2 comments

  1. [2]
    skybrian
    Link
    (I used the PDF with speaker notes.) ... ... How to fix? About Choice 3: He makes two proposals: That is, all mandatory fees should be included in the ticket price.

    (I used the PDF with speaker notes.)

    • Here are some headlines from the 2007 Miley Cyrus tour. This is the one where she toured as both herself and her alter‐ego, Hannah Montana, in what of course was called “The Best of Both Worlds Tour”

    • There’s a NYTimes article from the time, where it describes a “distressingly consistent pattern: At 10am on a Saturday, tickets go on sale, and by 10:05am, all tickets are sold. Yet by 10:05, StubHub and other ticket exchanges already have a plenitude of tickets listed for the sold‐out event – only now they cost much more."

    ...

    When I say “the internet broke the old equilibrium”, here’s what I mean in a graph.

    • Before, we had supply and demand, the market clearing price, the “too low” price, and
      the rectangle depicted the “Money Left on the Table” by the artist or sports team.
    • But with a frictionless resale market, this “Money Left on the Table” becomes what, to a
      ticket broker, or a college kid, etc. sees as FREE MONEY!
    • And what happens when you give away free money? What economists call RENT
      SEEKING. Going to extreme lengths, often at extreme cost, to get your piece of the free
      money

    ...

    • The market has a whole has been estimated to be on the order of $15bn
    • Ticketmaster said publicly in 2011 that 20% of all tickets purchased in the primary market are resold, and that figure has surely gone up since 2011.
    • They told me that in extreme cases, bots and other speculators could amass as many as 90% of the tickets for a particular event
    • So basically, the FREE MONEY has been scooped up by brokers and the secondary market, and we’re now in a situation where “The secondary market is now the market”.

    How to fix?

    • Choice 1, the most standard economics choice, is to SET A MARKET‐CLEARING PRICE in the primary market.

    • Choice 2, is to set a below‐market price in the primary market, but then have most of the “real” allocation happen in the secondary market. Brokers will scoop up a lot of the under‐priced tickets in the primary market for resale on the secondary market.

    • Choice 3 is to set a below‐market price in the primary market, and BAN RESALE.

    • The key point I want to emphasize is that what’s NOT A CHOICE is to set a below‐market
      price, and then just hope and pray that fans will get the mispriced tickets, and there
      won’t be a fervent secondary market.

    About Choice 3:

    • It relies on “names on tickets” with some sort of customer identifier, like an ID, a credit card, or their phone. By analogy, like how plane tickets work
    • Ideally, there would be some scope for refund for customers whose plans change, and can cancel far enough in advance that someone else can purchase and then utilize the ticket

    He makes two proposals:

    • Allow artists and teams the choice to restrict resale for some or all of their tickets.
    • Fee Transparency. In both the primary and secondary market.

    That is, all mandatory fees should be included in the ticket price.

    9 votes
    1. redwall_hp
      Link Parent
      Don't forget about the split between General and Artist/Venue Presale waves. That's something you have to understand and play the game with, or you're probably not getting tickets. Someone who...

      Don't forget about the split between General and Artist/Venue Presale waves. That's something you have to understand and play the game with, or you're probably not getting tickets. Someone who hasn't gone to a few shows probably naïvely assumes that they can show up at 10 AM for the General sales...but they're a week too late and the tickets have largely already sold.

      Most shows have a presale phase, where either the individual venues or the artists themselves publish a code that lets you into TicketMaster/AXS/whatever several days early. That code is simultaneously a pain to find for fans, because the individual venues on the tour might just dump it onto their Facebook pages, and also circulated widely outside of that audience (it'll be on Reddit, for sure). So if you want tickets, spend the half hour before the sale opens scouring social media for the presale code.

      I'm in favor of the ticketing practices I see out of Japan. Firstly, resale of concert tickets is illegal. Tickets will usually have your name printed on them, if physical, much like digital tickets from TM/AXS. The venue may check your ID with the ticket, to ensure they match.

      It's also common for big events to have lotteries instead of free-for-alls. You register your interest, and you'll get an email if you were selected for a window to buy a certain number of tickets. This is common for concerts, such as the big Hatsune Miku ones that happen each year, and I've also seen Square Enix do it for their convention.

      In the case of Square Enix's FanFest, they used the same practice in the US: a lottery, open only to people who have an active subscription to Final Fantasy XIV.

      9 votes