The Guardian reports that next week Professor Michael Waterson will release a UK government commissioned report on the regulation of ticket resale. I’m glad to hear it, because it might shed some light on an issue which the press seems to find simple – touts are ripping off consumers and there ought to be a law! – but which I find very complex.
Here are three questions I hope it answers. I don’t have the answers – these are real questions!
First, what is the presenting problem for public policy? If it is that sometimes resellers use misrepresentation, that’s a problem that can occur in many businesses for many goods, and simple laws could be put in place: if the tout claims the ticket is for centre orchestra, then it ought to actually be there or the tout is prosecuted. But every story I read on this issue hints that fraud is not the only issue in play here. Fine, but let’s treat separately whether there is misrepresentation (for which laws can be drawn up), or violation of terms of sale, and whether the resale price is thought by some to be “too high”, which is another thing entirely.
Second, it is a mystery to me that technology seems so lopsided: resellers are able to develop means to gather quickly loads of tickets for the secondary market, but concert producers do not seem to have adequate technology to prevent this. I can see the challenges. Airlines do not allow resale, by enforcing a policy that the traveling passenger must have her name on the ticket at the gate, and no one else’s. But they deal with small groups of tickets at a time, and can also use the apparatus of airport security to enforce their policy. I am no techie – I truly don’t know the answer to this question. But there does seem to be a lot at stake. For any in-demand performer, there is a big difference between the cost of putting on a show and the amount audiences are willing, en masse, to pay for it, i.e. there are substantial rents. These rents are ultimately shared between the seller, the consumer, and the intermediary ticket resale market. Everybody wants a big share of this (consumers want cheap tickets, promoters want high-priced tickets, touts want a piece of the action). But how has technology evolved so that the touts gain such a significant share from the promoter, who one would think holds all the cards? Hopefully the Waterson report will shed light on this.
Third, what guides the thinking that touts’ prices are wrong? “Exorbitant”, “ripping off”, “profiteering” are all terms from the linked articles above, and I don’t know what these terms mean when a buyer purchases a ticket from a seller. Why, as the stories linked above suggest, is 10% considered a reasonable mark-up but not anything higher? If someone wants to pay a price for a ticket and someone is willing to sell at that price, who is to say whether the price is “fair” or “unfair”. We are not talking about the purchase of a life-saving medicine, we are talking about tickets to see Florence + the Machine. Why should the state be setting limits on the amount of mark-up?
At our blog host artsjournal.com this past week or two there have been a number of stories about very high resale mark-up by touts, er, I mean “collectors”, in the visual art world, people who have made millions on the resale of a single painting (!). These high prices at auction for unique works where the reseller effectively has the entire supply in his hands, lead to fantastic profits, none of which go to the artist or his heirs, and more difficulty for the ordinary art-lover to get to see the works displayed in a museum. Didn’t see any calls for a 10% law…
Footnote: Here’s a low-tech introduction to the economics of ticket resale by Pascal Courty.
In fact, some artists (and their families) have indeed complained about the resale of paintings which benefit only the reseller and not the artist. This doesn’t make the subject less complex, does it?
Here’s the thing though: nobody (that I have ever seen) has complained about the very high profits being made by collectors on resale, even though of course this makes it more expensive to get works into museums where everybody can see them. Not saying there is anything wrong with this set up, but interesting that it is seen by all as ok. The complaints by artists (and/or their heirs) is that they are not getting a cut of the profits – they are not complaining (at all!) about the high resale prices.
One answer to your third question: The government and private organizations often subsidize tickets in order to make the arts accessible to a wider demographic. The point is to circumvent the often destructive limitations of the market. Ticket scalping defeats this purpose.
In much of continental Europe, this sort of scalping is illegal. The thought is that individuals should not rake profit off of publically subsidized institutions. Scalping is also combatted by adding more performances where there is demand.
The goal is deeply humanistic: provide everyone who wants to see an orchestra concert or opera with a reasonably affordable ticket for a decent seat. In the USA, of course, this is viewed as too socialist. That is why the USA ranks 39th for opera performances per capita – behind every European country.
Due to the extreme limitations of our political system, this will not change. Our choice is invariably between Republocrat A or Republicrat B, neither who will align our arts funding system with the rest of the developed world.
If I want to see a performance for which ticket prices are, say, $65 at the box office, I certainly do not appreciate being turned away because all the $65 tickets were sold to some private individual who is now selling them for $85 each. That guy has made himself an illegitimate middle man: why is he entitled to his profit?. Why should I have to pay a premium to a crook?