Scalping is just arbitrage. The core issue is that the retail price of the tickets is lower than the market price, which is probably high because the supply is limited (and probably artificially so by Ticketmaster et al).
Problem with scalpers is they reduce the supply of the tickets endemically, thus driving the market price up. If the scalpers aren't involved at all, the market price is lower than the scalped price.
Scalping always seemed like a mismatch between the ticket price incentives and the venues incentives. Venues like to sell out to increase concession sales / parking etc, but 'talent' is better off picking a price that fills, most but not all seats and maximizes their take. I suspect they also increase their cut by selling tickets early and sitting on a few weeks/months worth of interest.
Scalpers provide liquidity, like most arbitrageurs. If reselling tickets was impossible and the price remained the same, then people who didn't manage to get one would be out of luck; now, they can pay more and still get one. Scalping is only possible when the market value of the ticket is more than the price charged, which means the demand will outstrip the supply.
yeah I'm confused, isn't scalping a necessary side effect of the process? It seems natural if you sell tickets at a constant price over time and don't adjust that for higher demand (as event gets closer in time) or lower supply (as tickets are sold).
Also, is scalping a bad thing? It seems to me that they are making the market more efficient.
Isn't ticket scalping just a symptom of some deeper issue? I'm not a US-resident or a concert goer. But based on the gripes I've read, isn't scalping just a natural consequence of the market dominance of a supply-restricting monopolist (one that engages in borderline abusive consumer practices)?
Exactly. Scalping exists because the ticket prices are lower than the marginal utility to the fan. Raise ticket prices, and there will be less scalping.
What about shows where the number of people who want to buy tickets is about the same as the number of tickets that are available?
Without scalping, the band sells tickets for $X and nearly everyone who wants to go is able to buy a ticket for $X.
With scalping, the band sells tickets for $X, the scalpers buy a large fraction of them or even all of them for $X each, and then sells them for much more than $X each.
This doesn't let people go who otherwise would not have been able to. It just makes them all pay more to do so.
Scalping is also selling tickets at market price - after first making sure the market price is a big multiple of what it was before scalpers got to work.
Better solution is to just price the tickets higher. Scalpers are only taking advantage of arbitrage. This requires a bit of complex demand estimation up front though.
Is there any reason ticket sales happen like this, rather than just selling directly from the venue? Why is scalping a crime, why not just sell at market price to begin with?
Suppose there are 1000 tickets for a show that are $20 each. There are 5000 people in town who would buy a ticket at that price. Without any scalping, the first 1000 people who show up get a ticket and 4000 people go home unhappy.
With scalping, the first 1000 people who show up still get tickets. 900 of them are scalpers. (So if you were in the first 100, you still got to pay face value.) I'm being very generous with this scenario--I've personally never seen a situation where this was a real problem, as I've gone to every ticketed event I've ever wanted to paying face value.
The 900 scalpers all pick different prices. At $40, there are about 2000 people left in town who want to buy a ticket. Some of them get tickets, but the other scalpers get wise and think, why not charge more? So they charge $50. Or $60. Eventually they reach a point where there are exactly n tickets left, and exactly n people left in town who are willing to buy at that price. If the scalpers overprice the ticket, no one will buy, so they'll need to lower the price again. But generally, what's reached is a fair price that sees all the tickets go to people who actually were willing to buy them at the price they bought them at.
So let's look at what's happened. Without scalping, you have 4000 people who missed out on buying tickets because they weren't first in line and 1000 people going to a show. With scalping, you still have 1000 people going to a show, but instead of all of them being picked on the less-than-perfectly-fair basis of who was first in line (which is a disadvantage to people with more work, more responsibilities, inconveniently timed emergencies, and slow internet connections), some of them are picked based on who was first in line, and some of them are picked based on who was willing to pay more (which is a disadvantage to people with less money).
You might think, well, it's better to be unfair to busy people than to be unfair to poor people. But let's change this thought experiment and say the face value of the tickets was $60 to begin with instead of $20, and at $60, there are exactly 1000 people in town who are willing to buy a ticket. Now there are no scalpers (or if any scalpers do show up, they can only resell the ticket for face value anyway). I would argue that this scenario is strictly less fair than the scenario where the face value was $20 and there was some scalping, because at least in the first scenario, it was possible to get a lower price by getting in line first!
Fundamentally, what difference does it make who's setting the price? You might say, well, if the face value was $60, at least the performer (or the venue, or the ticket vendor) is getting the extra money, not just some "scalper". But the scalper is effectively getting in line for you. He's going out of his way to do the leg work for you. You know who else we pay a premium to for doing the leg work? Shopkeepers. Sure, if we really wanted to, we could go to some warehouse and save some money by buying all our stuff off a pallet. (You still can if you want to--it's called Costco.) But maybe I'd rather some other guy does all that legwork for me, and in exchange, I'll pay more. And if you're running around doing legwork for other people, you are benefitting those people.
Honestly I've never seen ticket arbitrage as a bad thing. These venues are selling below market price and then people get upset when the obvious thing happens. Essentially they are trying to operate using some sort of private club model where it's first come first served instead of supply and demand driven bidding. Yet they simultaneously want to sell these tickets on the open market. So what did they (and everyone else) expect would happen?
I see ticket scalping as a natural and good outcome. If you want a private club then start a private club but honestly you will still have to deal with members attempting to scalp since you aren't charging market price and our broader economy uses more or less free markets.
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