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More Ticketing Debate

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My colleague, Joel Carlson, responds to yesterday's post disagreeing with his Christmas Day column about who's really to blame for the Hannah ticketing fiasco. His email follows below.

DeRo, I hope you know I love you as well, and you are the best in the business and the best at filing late reviews, but...this blog item is soooooooooooo much a rebuttal of nothing and is significantly over the top from the usual DeRo I've seen, including at least one of your own stories on Hannah tickets that I read before making my own point.

I am addressing your entry below. I am certainly hoping/expecting I will be allowed to respond on your blog, and I can shorten my response if necessary to fit. [You wrote:]

The REAL Reason Why Those Hannah Montana Tickets Cost So Much On Christmas Day, when many readers may have missed it, the Sun-Times' Commentary section published a guest perspective column by Joel Carlson, the head of our copy desk, entitled "Why those Hannah Montana tickets cost so much." Friendly and reliable colleague or not -- and I have to say that he's never left my participles dangling -- I'm afraid I have to tell you that Joel is a complete and utter bonehead, at least on this issue. The gist of Joel's "all is fair with supply and demand" argument

I never said "all is fair." I said this is the result of supply and demand. This is a misstatement of my point.

-- and I'll link to it a second time here in the interest of fairness so you can read it for yourself -- is summed up in the final paragraph: "Outrage [for the high price of secondary-market/scalped tickets] should be directed at the Hannah creators for making the show so popular that an impossible number of fans want to see it."

The first half of that sentence was made slightly tongue in cheek, I hope most people would recognize. The latter half is absolutely true, no question. There are not enough $66 tickets available for everyone who wants to pay $66 to see the show.

The fact is that for any major live arts event -- from a Hannah concert to the Beatles' "Love" in Las Vegas to a holiday evening showing of the current smash hit on Broadway -- there are always more people seeking to gain admittance than there are seats in the house.

Yes. This is exactly what I conveyed. You're restating one of the nut grafs of my column.

This is what makes live performances so special: They happen in the moment, in front of a crowd limited in number to provide the best experience possible. The viewers' energy stimulates the performers, who in turn give more to the spectators, and this is why a live event is so much better than watching the same spectacle on TV or the Net. If that crowd gets too big, that magic is lost -- seeing the Rolling Stones from the top tier of Soldier Field is still more exciting than watching a concert DVD, but just barely, since at that distance, you're unlikely to be able to distinguish Mick from one of the roadies, much less figure out what the heck he's singing in "Rocks Off."

Yes. I agree. So does everyone else. Live events are popular. How does this sink my "bonehead" point?

So, how is the price of concert tickets set? In the case of the Hannah show, her creators and handlers, the insidious and ever-greedy Disney Empire, and the tour's national concert promoters, AEG Live, studied the market, discerned how many fans in each city would want to see the singer live, balanced that with how many nights the 15-year-old could realistically perform over the course of the tour given all of her other obligations and then determined what the median price should be.

That's a wordy way of putting it. This is the short way: They determine the price based on maximum value to themselves, which can and does include more than just the gross receipts, such as whether they risk charging more and angering parents who will write Congress, which could impede their business, as it has thought about doing regarding the NFL and its NFL Network (which was forced to show the Patriots-Giants game this weekend on free TV for exactly this political reason) and briefly intervened on baseball and steroids. This Hannah show is considered a national treasure. You quote one promoter in a previous article as saying "We knew it was hot." Are you saying the price was set as low as $21 because they believed no one would pay more than that?

Every concert promoter worthy of the name, whether they're booking a punk band at a VFW Hall or the Police at a giant stadium, does business exactly the same way. Sure, the median price means that many people can afford to pay much more, and therefore they're getting a bargain.

You don't explain why they specifically arrived at $21 and $66. You only say they "studied the market"....I don't see an alternative explanation to the one I provided.

But in the case of the Hannah show, with ticket prices set at $21 to $66 plus those egregious Ticketmaster service fees, it also meant that many members of the singer's fan base instantly were shut out.

Yes, I agree. $21 will shut out many low-income people, unfortunately, particularly when tacking on Ticketmaster or other service fees. Are you suggesting they should be lower than $21? You would invite even more profiteers by doing so. Also, I do not address Ticketmaster fees. I know little about that. I don't doubt there are disturbing things there. That is beyond the scope of my column.

Many kids simply do not have a mom or a dad who can blow more than $100 on 70 minutes of entertainment, no matter how much they love their kid and regardless of how much their kid loves Hannah.

Yes. Again, how does this debunk the supply-and-demand analysis?

The reason Disney and AEG didn't set the ticket prices higher had nothing to do with their concern that, to quote Joel again, "[They] would appear horribly elitist." Or at least that wasn't enough of a worry to make them write off millions of dollars in potential revenue. They set what they could mathematically prove was a fair price for the tickets -- so long as the tickets were sold in a fair and open way.

Wrong, wrong, wrong. Please tell me what the "fair" price is and why. There is no absolute "fair" price. "Fair" means different things to different people. You can't "mathematically prove" what's "fair" and neither can Disney or whoever owns the concert. You still have yet to explain why they arrived at $21 when your previous articles have basically conceded everyone knew this was a white hot show that certainly would attract scalpers. You are either saying Disney is moronic and sought to find a true "mathematical" price but couldn't figure out what this show was really worth, or that Disney is altruistic and wanted even low-income people to have a chance. By citing "mathematical" proof, you're suggesting they are morons, even though in other places you argue they're trying to do the right thing by underpricing, which is precisely what I said as being part of their motivation. Which is it?>

Unfortunately, they weren't, Many of them were stolen.

This I don't know. I didn't address computer ticketing in my column. There's not enough room. I said at the end the ticket broker debate is for another time. If people want to ban them, fine. I don't care either way. It's sleazy. If they're not there, amateurs will do it and sell it all on eBay. Anyway, back to your point, not being an expert on ticketing myself, this strikes me as rare over-the-top phrasing from Jim DeRogatis. Surely if something was being "stolen" from such a high-profile event, authorities could act.

This is the way it was supposed to work: One parent sitting in front of one phone and/or logged on to one computer had as good a chance to score tickets as any other parent, regardless of whether Parent A was in the trash hauling industry and Parent B was a billionaire, or vice versa. Yes, there's something nice and democratic about that. But it's also unfettered capitalism: A car dealer will cheerfully sell a Rolls Royce Phantom to anyone who wants one, even a trash hauler, so long as the trash hauler has the $333,350 available to purchase said wheels. (I had to look that up, by the way -- I don't drive anything so snazzy.)

Your point looks good on the surface and I agree, but you're missing something. Isn't your model of how it's "supposed" to work (and presumably be "fair") dependent on someone owning a computer? Don't a lot of Hannah fans lack a computer or even a phone? And don't some fans have faster computers than others? How is this process you described truly "fair"?

Here is where that nice, neat transaction fell apart: A split second before Parent A or Parent B could connect via phone or Internet with Ticketmaster to buy those prized Hannah seats, a ticket broker/scalper swooped in thanks to a computer program of dubious legality

You just said they were "stolen." Now you say it's "dubious legality."

that enabled him or her to place thousands of phone calls and/or send thousands of Internet requests per second as a form of virtual bullying, if not metaphorical assault. Think of the trash hauler preparing to give his check to the Rolls Royce dealer when the billionaire barges in, shoves the trash hauler out of the way, breaks his or her knees with a baseball bat and buys the last Phantom in the showroom while the first unlucky customer is rolling around on the floor, screaming in pain. That's certainly unsportsmanlike and, as I said, probably illegal, even without the damaged kneecaps. That's what the secondary brokers/ scalpers did with the Hannah tickets,

This is a funny analogy. But here is what is more relevant that you do not say: The fact the tickets are perceived as being priced SO artificially low is what drives the scalper to participate in the first place. The lower the artificial price, the more motivated the scalper is to devise "beat the Ticketmaster process" computer programs which may or may not be illegal or prosecutable. If those Hannah tickets were put on sale at the market price, there would be no such scalper involvement because there would be zero profit in it and the process would be used strictly by people intending to see the show. Your example would not happen because there is no artificial price disparity (that I'm aware of) involving a Rolls Royce. Enough supply is produced to meet the demand at $333,350. That is not true with Hannah tickets because it would be impossible. No fool billionaire is going to commit a crime just to be first in line to buy a car that he is going to be able to purchase anyway. As to your last line, that is not the same as what happened with Hannah tickets. This analogy is completely invalid.

Let me ask you this. I agree with you that having millions of people logging onto a Web site at the same time or dialing a number is problematic. I also believe forcing people to stand in line is highly imperfect because the scalpers will just pay people to do it and you'll get fights, pandemonium, etc. So what is Jim DeRo's suggestion to make ticket distribution more "fair"?

and that's what they do all the time, because they have powerful lobbies in Springfield and Washington

OK. I agree with you 100 percent on this point. I've never understood why kids can stand at a certain place near the L platform around Sox Park and sell Sox tickets, yet I can't do it anywhere else in the vicinity. We know that politicians love tickets, particularly when they're free, and this must be a devastatingly effective, not to mention disgusting, lobby.

that continually convince politicians to look the other way instead of passing anti-scalping legislation that would limit the amount of profit they could make when they resell tickets.

I didn't get quite this specific. But this is absolutely a terrible idea and pretty much is the point of my column. How can you possibly enforce something like this? How could government even begin to set a scalping limit for every single ticket sold? When would the limit be set? And would you have cops busting into 13-year-old girls' homes when they decide, "My rich friend down the street will give me $125 for my $21 Hannah ticket and I'm taking it"? I can't begin to describe what a bad idea this is. Say someone buys a run-of-the-mill Cubs ticket for a late September game for $27. But then it turns out Derrek Lee is trying to hit homer No. 74 that game and similar tickets are now available underground for ten times that amount. What exactly is the fair price for that game that the government should set? $50? $1,000? And what if I buy the ticket and Derrek Lee gets injured three days before the game. Will the government refund my money?

I agree with your sentiment here. The problem is your suggested execution. Inviting government to set prices for tickets invites soooooooooo many problems, it is a horrible idea.

Mind you, no one is advocating some Communist law prohibiting people from selling tickets they bought fair and square; the legislation would just restrict how much money they could make from pure speculation,

It's not "pure speculation." If it was, scalpers/brokers would be out of business. It is a series of educated guesses (which don't take Fields Medal winners to figure out) that certain tickets are highly likely to be offered artificially low. Brokers commit their capital to this process, not their recreational weekend dollars like you and I. If they're wrong, and they buy Bears tickets at face value and the team ends up stinking, weather sucks, etc., they will have to unload those tickets at a loss. They cannot stay in business that way. Fortunately for them and unfortunately for those who hate them, entities like Disney, NFL, many music acts, etc., freely accommodate them by offering tickets artificially low. The big question I chose not to ask in my column, because I don't want to give people ideas I consider unsavory, is why every human being, not just brokers, was not attempting to buy Hannah tickets because all of them could be sold on the open market for a profit.

setting a reasonable resale price scaled to the face value. They might be limited to reselling that $66 Hannah ticket for $100, which is a nice chunk of change, given the fact that they didn't create the Hannah phenomenon,

And what would the "reasonable" $21 ticket resale limit be, and the $35 ticket, and the $45 ticket, at what venue, what state, and what would the Neil Young limit be, the Arena Football limits be, what would the Ice Capades limit be, what would the AMC River East movie theater limit be, and who would determine these prices? The same politicians who easily got Hannah tickets for $66?....you are advocating government intervention that would undoubtedly bungle an already irritating process to solve a problem you're citing that does not actually exist, which is price "fairness."

they didn't book the tour and they aren't singing the songs.

Right. So why doesn't Disney charge the expected market value for their work/product and eliminate the profiteer?

In fact, they didn't do anything for anybody but themselves, diving in and grabbing up all the tickets, then reselling them at hundreds of dollars above the price that the creators set to score a fair and already sizable profit.

Again, what is a "fair" profit? Please tell me specifically what a "fair" profit is? Does Microsoft make too much money? Apple? Should the government decide what an iPod should cost? You still have not given me an alternative reason for why the creators price it low enough to invite scalpers.

I don't expect to change Joel's mind with this post;

You haven't!

he seems dedicated to the black-and-white Capitalist argument of supply and demand, whereby those are the only two factors to consider when determining price.

I never said those are the "only" factors Disney considers. In fact I said the opposite in regards to the initial pricing. I pointed out they price the tickets low, in part, on elitist concerns, a point which you acknowledged above and tried to argue but now suggest the opposite here. I said supply and demand are the factors that determine the market price of the tickets.

But even if we set aside the ethical and legal questions I've posed above, do we really want to live in a world where art -- and yes, I know that's a relative term when talking about Miley Cyrus -- is accessible only to the fraction of society that is the most priveleged? What would concerts look like if that was the case? As John Lennon famously cracked at the Royal Command Performance in 1963: "Will the people in the cheaper seats clap their hands? And the rest of you, if you'll just rattle your jewelry."

Let me suggest what I think Jim DeRogatis is really saying in this blog item: "I'm a music guy and deal with ticketing issues all the time, so do my friends and readers of my columns. The ticketing system sucks. We hate it. It is monopolistic and greedy. Scalpers make it worse because they're sleazy and greedy. The Stones, Eagles, Led Zep, should be able to sell tickets low enough to accommodate blue-collar fans without scalpers getting involved. So government should introduce laws that make it less sleazy and greedy." I agree with all of that until the last sentence. That is a horrible remedy for a non-problem. The "problem" is in people regarding face value as what the ticket is "supposed" to be worth. When it comes to government -- and this is way beyond the scope of my column -- I am a moderate. A lot of government programs work; a lot of ideas don't or won't. Getting the government involved in Hannah ticket pricing absolutely will not. I have yet to read a rebuttal from you of anything I wrote. We agree the tickets are worth far more on the open market than they were offered for. We agree that scalpers seize upon this disparity. So either the distributors of obviously hot events, whether it's Disney, Cubs, Bears, Stones, Eagles, will price the tickets at expected fair market value, and the brokers will disappear, but only people of higher income will get the tickets. Or, the producers will continue to do what they do -- which was my observation -- and price the tickets artificially low to draw as wide of an income-level base as possible, and profiteers will inevitably enter the process. You are championing a world where the scalpers DO disappear, but the Hannah tickets will still be priced at $21. I would like this kind of world too. But how can this possibly happen??

I'm looking forward to a blog entry, or an appearance on "Sound Opinions."

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I don't want to belabor this point -- especially because I'm supposed to be on vacation at the moment -- but the ticketing situation is one of the most pressing concerns in the music business today, certainly more troublesome than the copyright issue, and Joel, who I would have thought would know better about all of this, asked some pertinent questions, so I've tried to tackle them. His queries are in bold; my responses in italics.

I never said "all is fair." I said this is the result of supply and demand. This is a misstatement of my point.

Sorry, Joel. I just get riled up by the Darwinian "survival of the richest" nature of the supply and demand argument.

Yes. I agree. So does everyone else. Live events are popular. How does this sink my "bonehead" point?

In part, I was just winding up for the pitch, Joel. But I was also trying to make the point that, if suppliers could actually produce enough tickets to live events to meet all of the demand, they would no longer be any good. Hannah could have filled Soldier Field, as it turned out -- maybe even for two nights. But even setting aside the fact that the venue would have been most unpleasant in December, it would not have been right for her -- she's not ready (if anybody ever is) to play such a vast space for something like 100,000 people. She barely had control of the Allstate Arena, which has about 18,000 seats. It would have been physically impossible for her to play, say, a week at the Allstate -- there's just not enough of the 15-year-old to go around! So I guess what I was trying to say -- and here's where I could have used a good copy editor -- is that we MUST accept limited supply for live events; it's NOT like the Rolls Royce people being able, in theory, to build as many cars as people want to buy.

Are you saying the price was set as low as $21 because they believed no one would pay more than that?... You don't explain why they specifically arrived at $21 and $66. You only say they "studied the market"... I don't see an alternative explanation to the one I provided.

I'm saying they studied the market and saw that the majority of the fans -- let's say 60 percent for argument's sake -- would be ready, eager and willing to pay between $21 and $66 per ticket. Those prices would exclude 20 percent who could not afford even $21, and it would give a nice little present to 20 percent who could pay much, much more than $66 (and ultimately did). In much of the rest of your post, you go on to scoff at the notion of trying to be "fair" in setting ticket prices. But why is that wrong? Why shouldn't everyone, or at least as many people as possible, have a chance to see their favorite performer? Contrary to what the TV ads try to make us believe, not everyone who buys a lottery ticket wins. But anyone of age can buy a ticket! Would it be fair if only certain people could buy tickets, or if only certain people win? I'm talking about forces beyond the control of the consumer or the producer rigging the game so that THEY win. And that, to me, seems fundamentally unfair, even by the ethics of a cold-hearted businessman.

Please tell me what the "fair" price is and why. There is no absolute "fair" price. "Fair" means different things to different people.

Again, I think this is the heart of our disagreement: I would define "fair" as the price that the majority of fans could pay -- not the price that the 20 percent of the most privileged fans would pay.

By citing "mathematical" proof, you're suggesting they are morons, even though in other places you argue they're trying to do the right thing by underpricing, which is precisely what I said as being part of their motivation. Which is it?>

I'm saying they tried to be decent businessmen, charging the price that the majority of the customers thought fair and/or affordable. Look, during the big marathon when the water ran out, a lot of little stores along the route apparently did a booming business selling any sort of beverage the runners could consume. Now, the unethical businessman might have jacked up the price of a bottle of water to $10. The generous but probably foolish businessman might have given the stuff away, seeing the unusual circumstances and urgent demand. The just plain Capitalist-in-America businessman charged the usual price and cleaned up, and weighing both the pros and cons of Capitalism, well, I guess I have to say, good for him! (I still don't understand why anyone runs 26 miles in the first place, but that's another story.)

Not being an expert on ticketing myself, this strikes me as rare over-the-top phrasing from Jim DeRogatis. Surely if something was being "stolen" from such a high-profile event, authorities could act.

Authorities may well act: The folks at Ticketmaster, far from saints themselves, have launched aggressive legal challenges in several states against scalpers using computer programs to give themselves an unfair advantage (the polite way of saying "steal") concert tickets. The courts may well end up ruling that computer programs allowing scalpers to barrage Ticketmaster with thousands of phone calls or online requests per second are illegal. I also believe they are unethical in the advantage they give scalpers against the consumer with one phone or one computer. It's like a linebacker on steroids going up against a 12-year-old playing touch football.

Your point looks good on the surface and I agree, but you're missing something. Isn't your model of how it's "supposed" to work (and presumably be "fair") dependent on someone owning a computer? Don't a lot of Hannah fans lack a computer or even a phone? And don't some fans have faster computers than others? How is this process you described truly "fair"?

Oh, come on, Joel: You're nitpicking here! If someone can't afford a phone, they probably can't afford a Hannah ticket at any price! Is it not safe to assume that the majority of people in my for-example 60 percent of folks have a phone, a computer or both? Also, the library has computers. And there are still a few pay phones left in town... You're just being surly here, but I did call you a bonehead, so I suppose it's warranted.

You just said they were "stolen." Now you say it's "dubious legality."

Yeah, well, I was backpedaling a bit because the courts will ultimately decide when they hear those Ticketmaster lawsuits. But why equivocate? I think it's stealing, even if some judge ultimately decides it's legal. Just like I DON'T think that downloading music to sample it is stealing, even though our current copyright system -- which, ironically, is still in place because Disney paid a heck of a lot of money to make sure it stays in place -- says this act is illegal. And let's not even talk about the drug laws. But again, that's a whole other topic...

The fact the tickets are perceived as being priced SO artificially low is what drives the scalper to participate in the first place. The lower the artificial price, the more motivated the scalper is to devise "beat the Ticketmaster process" computer programs which may or may not be illegal or prosecutable. If those Hannah tickets were put on sale at the market price, there would be no such scalper involvement because there would be zero profit in it and the process would be used strictly by people intending to see the show.

The scalper is driven to participate because he is a parasite: He does not make or contribute anything, he just makes a profit for himself on the backs of others (the promoters and performers), using unfair and, as we've said, possibly illegal tactics. Disney loves, loves, loves to make money, and they make a lot of it. The hole in your argument is in assuming that they are willing to lose money (and they almost never are) just to make demand seem red hot for one of their acts. Do you really think that it's worth it to them to let a scalper who has no connection to them, their artist or the concert promoter make a thousand-dollar profit on a $66 ticket?

Let me ask you this. I agree with you that having millions of people logging onto a Web site at the same time or dialing a number is problematic. I also believe forcing people to stand in line is highly imperfect because the scalpers will just pay people to do it and you'll get fights, pandemonium, etc. So what is Jim DeRo's suggestion to make ticket distribution more "fair"?

The model used by Pearl Jam, the Smashing Pumpkins and other rock bands at that level is a step in the right direction: The tickets must be used by the person who bought them; ID's are checked at the door. Yeah, for some small fraction of people, this will be unfair: Let's say you bought two tickets, but Grandma dies or suddenly plans to get married, and you can't go to the show, so you want to sell your seats. Here, the laws capping the profit that could be made on resale would seem fair, and they could be enforced by you having to return your tickets to the promoters/ticketing agency for THEM to resell. And before you get all "That goes against the fair market ideals of Capitalism" on me, let me ask you if you reviewed the long, long, long list of restrictions on the last airline ticket you bought, or if you ever tried to sell a ticket purchased in your name to someone else?

Again, what is a "fair" profit? Please tell me specifically what a "fair" profit is? Does Microsoft make too much money? Apple? Should the government decide what an iPod should cost? You still have not given me an alternative reason for why the creators price it low enough to invite scalpers.

Heck, yeah, Microsoft makes too much money! And I resent to the core of my being that I am pretty much FORCED to use their products, since they've pretty much driven all competitors out of business. I also deeply resent the Digital Rights Management software that Apple is embedding in music tracks I buy from iTunes; if I buy the song, I should be able to use it on any piece of hardware I own, whether Apple made it or not. And I hate that I have to buy concert tickets from Ticketmaster, or not go to the show, because there isn't any competition in that field. Didn't Teddy Roosevelt (a Republican) fight these sort of monopolistic business practices way back when? Maybe I shouldn't have cut that business class back at N.Y.U....

Anyway, call me a Commie, but to me, a fair price is what the majority of people think is fair and/or are willing to pay -- at least when it comes to entertainment events that are supposed to be accessible to all. But then I also think we ought to have socialized medicine.

Let me suggest what I think Jim DeRogatis is really saying in this blog item: "I'm a music guy and deal with ticketing issues all the time, so do my friends and readers of my columns. The ticketing system sucks. We hate it. It is monopolistic and greedy. Scalpers make it worse because they're sleazy and greedy. The Stones, Eagles, Led Zep, should be able to sell tickets low enough to accommodate blue-collar fans without scalpers getting involved. So government should introduce laws that make it less sleazy and greedy."

Yep, that's pretty much what I'm saying, with the addition that promoters and ticketing agents need to also do their part (and not just keep whining) by spending a little more money to clamp down and make sure the ticket buyer is the one who uses the ticket. A little legislation from our elected officials and a little more effort from promoters and Ticketmaster would mean a lot less speculation and a lot more fans being able to see the artists at the price that those artists set as fair and reasonable.

I'm looking forward to a blog entry, or an appearance on "Sound Opinions."

And here ya go!

I think the issue of "Fair Price" is a difficult mechanism to understand especially when it comes to the "Scarcity" of said product, namely a concert. That being said, "Fair" is something that is going to be disagreed upon by many folks as we are all going to have our own valuation of what a concert is worth.

I do agree with Joel Carlson's article in stating that Supply and Demand are the real reason rather than the issues mentioned here and they are just effects of how a scarce product is dealt with. At the same time I also agree with Dero's assesment of the music industry and can only conclude that maybe he had received a bad dose of Eggnog?

The result of supply and demand will ultimately create a secondary market in this case "Ticket Scalping" where brokers find a way to purchase tickets in bulk rather because they know that they can easily resell those tickets at a higher price.

While I might be cynical I do understand that it is highly unlikely that Ticket Brokers/Scalpers are going away anytime soon, and there are so many loopholes and such that you can get away with. Any legislation will squarely fall on deaf ears and it is up to the acts themselves to create solutions rather than rely on our government to come up with them.

The recent Led Zeppelin performance was a good example of a system designed to prevent scalping. By forcing all ticket buyers to provide identification onsite, this pretty much forces that scalpers cannot resell tickets. I think that bands need to keep this in mind when going on tour because ultimately it is a public relations mess for any band that goes on tour and runs into this problematic issue. For those "Fan-Friendly" bands out there that want to sell tickets at a low price, and have a high-demand product, the real profiteers will be the scalpers who will assume very little risk in the product.

What Joel is missing is that the difference between the scalper's/scarcity price and face value is value do disney in happy fans for the TV property, which is their primary money maker. The short term value they could make by selling everything at the maximum possible price would be offset by losses in fan base and advertising revenue caused by angering fans -- both those who could attend the show and those who couldn't.

That value to Disney is being stolen by scalpers through parents/fans. Remember, the ticket is just an artifact of the way we sell access to the live performance, which is the actual value here. What Joel is saying is that Disney and their fans must be forced to participate in a secondary market rather than engaging in a direct transaction, simply because there exists technical means to create that market (of dubious legality).

Jim, while I feel much the same way that you do over the issue of scalpers, I must disagree with your suggestion that tickets should be required to be used only by the person who bought them. You say that only a "small fraction" of people who buy tickets and later can't use them would be hurt by this; I think you're underestimating that number, especially as it pertains to hardcore fans of a band or artist who may attend several shows in different cities on a tour. I follow Bob Dylan regularly and know many people who don't finalize their touring plans until the last minute; for example, they may buy tickets for a St. Louis show from other fans long after the show has been officially sold out while simultaneously unloading their Chicago tickets to another fan. (Incidentally, among some fan communities it's relatively easy to find good tickets for sale at face value - it's an unwritten rule at a lot of message boards that you don't take a profit from reselling a ticket that you can't use to another fan, even if you could get twice as much on eBay). Furthermore, forcing tickets to be valid only for the original purchaser make it hard for fans of a performer who adds more tour dates at the last minute; I might buy a ticket for a Bloomington show before a Chicago show is even announced, and then decide I'd rather go to the Chicago show and unload my Bloomington ticket.
Plus, as someone who is justifiably disgusted by Ticketmaster's business practices, I question why you think some sort of an official buyback policy for fans who can't use their tickets would work. I can see them charging a $20 "service charge" for returned tickets, or simply imposing a policy that they won't accept returns less than 14 days before the show or something like that. As it stands now, someone who finds out two days before a show that he can't make it has a reasonable chance to recoup the money he paid for his ticket, especially if the show is sold out; a system that requires the original purchaser to use the ticket would likely be worse for these regular fans.
An alternative system for combating scalpers is something of a compromise. Bob Dylan's website recently started pricing seats in the first three rows of many shows as "hot seats" - in the range of $175 a ticket, compared to $70 or so for the rest of the floor seats. As much as I hate to pay more for a ticket regardless of who the money is going to, this seems to have made it easier for fans to get the closest seats. I had no problem buying a 2nd row ticket online several hours after they went on sale, and it seemed like fewer tickets were being scalped, at least on eBay. The professional scalpers pay close attention to profit margins and the chances that they'll have to sell at a loss; a $70 front row ticket can probably go for three times that amount very easily (if not more, depending on the artist), but a $175 ticket is less attractive because the scalpers stand to make a modest profit at best and risks a loss if they misjudge the market.

A little confused here, but I always figured the price was set by the performer's rep (in this case Disney) in consultation with the local promoter. Frankly, I never thought "fair price" entered into it, just a realistic price that would result in a filled hall.

If that's the case, they apparently bet low, and scalpers jumped into the fray by using high-tech means to exclude retail customers and snap up the deals for resale to wealthier clients, which seems less like supply-and-demand and more like cornering the market to me.

I would think the only way to have a true supply-and-demand situation is some kind of real-time price bidding system.

Should add:

I suppose it's possible that Disney is keeping some prices artificially low to gain PR value and goodwill for their television program and related spin-off products.

In which case the scalpers' actions would be analagous to snapping up an entire supply of free samples, then selling them.

I still consider that using unfair means to corner a market and force consumers to deal with them as opposed to simple supply and demand.

Steve: While the promoter and the artist's handlers (record company, manager, in Hannah's case, parents) certainly play a role in setting the ticket price, the decision ultimately is made by the artist. Ever wonder why Green Day can play the United Center for $30 a ticket for every seat, and Sir Paul McCartney charges $350 or more for the best spots? They set the price, depending on what they think is fair to charge their fans. This is why it is so egregious to have a third party swoop in, scoop up those tickets, and set their own price on the secondary market, benefiting no one but themselves!

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This page contains a single entry by Jim DeRogatis published on December 27, 2007 9:48 AM.

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