Ticketmaster’s latest move warms the hearts of economists everywhere
Most people don’t like Ticketmaster very much. They have monopoly/quasi-monopoly in the market for selling event tickets. And they price accordingly.
But their latest move is one that economists will love. USA Today reports that the best seats for some concerts will start to be auctioned off, rather than sold at below market prices, as has been done in the past. The article argues that this is being done in response to ticket resellers like RazorGator, where good tickets routinely go for more than their face value.
I actually think that is not the real reason. Concert promoters like full venues. Big crowds buy more CDs and t-shirts, and maybe they also make the concert experience more enjoyable. So historically, tickets in general were priced too low to ensure a sell-out crowd, and the best seats were particularly underpriced. Whether or not scalpers got involved, the artist/Ticketmaster got the same amount of revenue. So this isn’t really about the scalpers.
But the economics of the music industry are changing. There is less money to be made in selling CDs, so bands are no longer willing to underprice live shows to support record sales. Rather, the concerts themselves have become the cash cow. Consequently, the artists want to squeeze as much money as possible out of them. Combine that with technological advances that make it possible to carry out online auctions, and you now have a much more efficient market. More efficient in the sense that the people willing to pay the most end up in the expensive seats, and those extra revenues go to the artists (and the promoters and Ticketmaster), rather than scalpers.
The only problem is that losers like me will now be the ones in the front row. It will depress the performers so much they will want to go back to the old system, even though it generates less cash for them.