Ticket Scalpers Are A Threat To Live Music

As you all know, ACDC is currently touring. Many see this as the last chance to see this legendary band live, since it’s likely that they’re approaching their retirement. As a result of this, most (if not all) of their upcoming European tour is sold out. The demand for tickets was so great that, for example, their concert in Dessel sold out in under 2 hours, even though there were about 50,000 tickets on sale.

You probably think that the fact that most shows sold out are just the result of the huge demand that exists for a band like ACDC, known for great live shows, and excellent music. Well, you’re not completely right on that.

You see, there is this thing called the “secondary ticket market”,  a euphemism used to refer to the companies devoted to ticket scalping, and which is actually responsible for your inability to see ACDC, or attend Wacken or Hellfest.

Since I believe in small governments, I’m often against regulations; I think that bureaucrats are not very good at solving problems, and that they’re often inefficient in their goals, as laudable as these goals may be. At the same time, however, and as much as this might surprise my liberal readers, I believe in justice; I think that people should live by the golden rule of not hurting others (be it physically or economically) and that behaviors that cause harm to others should be prevented, or downright banned. I see ticket scalping as a prime example of a behavior that, under the guise of “free market economics”, is aimed at making a profit out of hurting others.

In The Economic Approach to Law, Thomas Miceli argues that ticket scalping is nothing more than an example of the free market at work, and that laws that make it illegal actually outlaw “mutually beneficial transactions that apparently involve no third party effects”. He bases his contention on the idea that ticket sellers (let’s call it “promoters”) set prices too low, and that therefore ticket scalpers, by reselling them at a markup are just charging the “real” price of the tickets, and allocating them to “those consumers that value them the most.”

The flaw in Miceli’s analysis is that it is based on the understanding that the original price set by the promoter is too low. The problem is that this is not the case. In economics, we see that when prices are set too low (e.g. because of a regulation establishing a price cap) the seller will not be able to satisfy the demand, because there will not be enough supply. So, for example, if the state sets a maximum price for bread, and which is under the price that sellers consider optimum, then there will be more people demanding bread, than bread being offered. Sellers will not be able to profit from the sale, and will eventually go out of business, and people will go without bread.

The case of tickets is different. The price set by the promoters is not limited by an artificial cap, and is highly profitable for them. Bands (and other acts) tour more each year, and newer and larger venues continue to be built to accommodate the ever increasing amount of shows being offered. Companies like Rock the Nation, Mojo Concerts and Live Nation are not exactly going out of business. So, it is not accurate to say that the original price is too low.

The reason why ticket scalpers are able to charge such high prices for tickets is not because that is their “real” price, and thus allows for the ideal allocation of the product. They are able to do it because they artificially reduce the supply of tickets, and become a de-facto monopolist, and charge whatever the hell they feel like. So, it’s not that the ACDC tickets are actually worth €180 (as opposed to their original price of €80); it’s just that people have no other option but to buy them from these companies, because the promoter has no more tickets to offer at the real price.

This is a problem that goes beyond shady characters standing outside of venues offering tickets to people who are trying to get in. It actually deals with companies, like TicketsNow, WorldTicketShop and StubHub, which buy tickets in bulk directly from the promoter, create scarcity, and then charge whatever inflated price they want for it. Musicians like Trent Reznor, of Nine Inch Nails, have even suggested that promoters are in bed with these scalpers, and actually profit from the secondary market, and there is plenty of evidence pointing in that direction, with sometimes even the bands themselves taking part.

As a way to combat scalping, Nine Inch Nails’ presales limit the amount of tickets that every costumer can buy, issue tickets under the name of the purchaser, and require an ID in order to enter the venue. Wacken Open Air did something similar for a while, but when the tickets for the 2015 edition went on sale they went back to their previous practices (and so, now you can find tickets for the sold-out festival at 2 or 3 times the price, plus shipping and handling, in any of the scalping websites).

Having attended concerts in which an ID is required, I understand that it’s a pain in the ass to have to do it. It’s not nice to be delayed at the entrance (maybe missing a good spot) because they need to check your ID, or to know that you can’t just give the ticket to a friend if you can’t make it. But, at the same time, I also know that the ticket scalping market really needs to be stopped, since it’s only getting bigger, with more and more companies trying to join this “market”.

We will never find a solution that satisfies everyone, and I’m sure that whatever we come up with will have its own problems. But anything is better than the anarchic system that the scalpers demand. If artists and promoters consider tickets prices too low, then they should set them at an appropriate price, and not engage in their own backhanded version of scalping. The only people that they are hurting are the fans.

Don’t be fooled by those opportunist who cry about the “free market” as a way to justify these practices; they are the same kind of people that during an earthquake, would raid a supermarket just so that they can sell you a bag of rice for 40 times the price. Just because they can.