Re: Re: Scalping

>>Second, you assume that the most committed fans are the ones prepared to 
>>spend the most money on a ticket.   I'd like to hear you explain why this

>>is the case.  
> 
>Do you have any better way of identifying who the most committed fans 
>are? If one had God-like powers of discrimination such crude market 
>measures would not be necessary, but since we all lack them, there is 
>only the measure of willingness to pay. I will agree that it isn't a 
>perfect measure, but it works better than the alternatives I am aware 
>of. 
 
As for other ways of identifying the most committed fans, I could suggest
at least two (though out of sheer humility I must profess that my powers of
discrimination are in no way God-like -- I'm just using common sense).  One
is the willingness to wait in line for an extended period of time.  Back in
the dark ages, long before exclusive phone sales, it used to be that the
people who waited on line the longest at the box office came away with the
best seats (or at least the best seats that were made available to the
public).  Interestingly enough, the ability to wait in line for hours or
even days on end doesn't necessarily correlate with wealth --  people at
high paying jobs may find it just as difficult to take off work to wait in
line than people with low paying jobs (and certainly more difficult than
people without any job at all).  A second way of identifying committed fans
is through membership in fan clubs and subscriptions to fanzines like Naked
Eye or Generations or even internet mailing lists.  This method has been
used by groups like the Grateful Dead, U2, and Pearl Jam.  There are other
methods -- for example, people could be required to answer trivia questions
or identify song and album titles, etc. before being able to buy tickets. 
This might sound silly, but I think it would be the easiest way to identify
scalpers, who often rely on homeless people to purchase tickets.  I've
often felt that artists touring behind a new album should include vouchers
with the album that enable the purchaser to have priority access to
tickets.  To suggest that willingness to pay is the "only" measure is
simply ludicrous, and as for it working better than any alternative, that
depends on what you value the most.  Sure, some of the alternatives I have
identified would entail greater administrative expense, but some artists
have been willing to go the extra mile to ensure that the best seats are
sold directly to fans instead of scalpers.  My basic problem with your
measure is that it, by definition, precludes people of modest means from
being considered the most committed fans.  At the very least, instead of
focusing on the number of dollars a person is prepared to spend, you should
look at the percentage of their disposable income.  
 
>>But the market system is hardly sacred -- market principles are 
>>routinely compromised in order to further other, competing values.  Why 
>>should ticket sales be any different?  
> 
>Fine. I didn't claim that the market system is sacred, merely that it 
>is relatively efficient at getting tickets into the hands of those 
>with the greatest willingness to pay, who are likely to be the most 
>committed fans.  
Once again, your argument rests upon the presumption that the most
committed fans are those willing to pay the most.   
  
>>But even when analyzed from purely a market standpoint, scalping has some

>>serious problems.  First of all, scalping violates free market principles

>>in that scalpers have special access to tickets. 
>If so, where is the problem? Is it with the existence of a secondary 
>market? I rather suspect that the real problem is with the 
>TicketMaster monopoly. It is harded for resellers to get specialaccess 
>whenthereare competing sources of supply. 
If scalpers are getting blocks of tickets directly from the venue or
promoters, I don't see  how the existence of additional ticket services
would effect this special access.  Why should the employees of
"Ticketmaster II" be any less susceptible to bribery than the employees of
Ticketmaster?  The problem with the Ticketmaster monopoly is that it allows
TM to charge unreasonably high service charges -- sometimes as high as 30%
of the face value of the ticket.  But high service charges certainly aren't
responsible for scalping, which depends upon tickets being initially priced
below market value.  
 
>>Second, scalping is  
>>arguably redundant.  The "great public service" that ticket scalpers 
>>provide is one already being provided (purportedly) by Ticketmaster at a 
>>substantial charge. 
>No, it isn't. Ticketmaster does not necessarilyget the tickets to 
>those with the greatest desire for them. Scalpers do this to some 
>extent. This is precisely the public service I mentioned. 
 
Once again, you're assuming that the people with the greatest desire for
tickets are the people willing to pay the most for them.  I think it's just
as plausible that the people with the greatest desire for tickets are those
who are prepared to wait in line at an outlet or spend hours on the phone
trying to get through on the telecharge number.  Many -- perhaps even most
- -- people who use scalpers aren't willing to make the effort to get the
tickets themselves.  Perhaps this is a rational economic judgment on their
part, but I don't see why the willingness of people to expend monetary
resources on tickets deserves greater priority in determining commitment
than their willingness to expend nonmonetary resources.  Some people have
more time and energy than they do cash, but apparently these people don't
count.     
 
>A secondary market provides a service, which costs money. The same 
>could be said of Mark Leaman's CD store. I know he is buying CD's at a 
>lower would charge me. I think that is outrageous, 
>adn should be stopped. Let's put Mark out of business to help us 
>consumers. Then I could buy used CD's directly from the seller at a 
>lower cost, and avoid paying for his "additional layer of complexity 
>and administrative expense."  
>Hmmm....How will I find those people who people who have the CD's I 
>want? Maybe Mark is providing avaluable service after all? 
 
Let me get this straight -- you're comparing the scalper's premium to a
finder's fee?  Well, if it weren't for the special access scalpers have, we
would all know exactly where to find the best seats.  They'd all be in the
Ticketmaster computer, where, at least in theory, everyone who could afford
the below market prices would have a shot at them.  Perhaps the real
service -- though hardly a "public" service -- provided by scalpers is that
they ensure that a disproportionate amount of excellent seats go to
wealthier fans (and even some wealthy nonfans). 
 
>*Every* business prefers monopoly pricing, if they can get it. The key 
>is whether they can indeed get a monopoly. For this to happen, there 
>must be some way of preventing entry into the market (see Baumol). The 
>only real barrier to entry, the entire source of monopoly here, 
>appears to be Ticketmaster. In other words, maybe Pearl Jam was 
>right.<g> 
As you have already recognized elsewhere, scalping is a secondary market
activity, so I don't see what effect the Ticketmaster monopoly has on the
entry into this secondary market.  Not that there aren't bariers to entry
- -- there are.  Some of them are legal -- I think it is still technically
illegal to sell a ticket in New York for more than $10 over face value
(which is why so many brokers in this region are located in NJ and
Connecticut).  But even if scalping were entirely legal, the way in which
scalpers acquire the best seats would still be of dubious legality.  As for
other barriers, I'd be willing to bet that the street-level scalpers (at
least in NYC) wouldn't hesitate to use force and intimidation to drive
competitors from the market. 
 
>Is the market perfectly efficient? No, it clearly isn't. But I would 
>suggest to you that preventing a secondary market from existing is 
>certain to reduce efficiency even more, not improve it. As I pointed 
>out in my first post on this topic, we have on this list a large 
>number of committed Who fans, and every one of them who wishes to go 
>and has money will be going to MSG. While this might not be the 
>perfect outcome, how precisely would you improve it? 
 
On an intuitive level, I question the efficiency of a system in which a
large number of tickets are initially sold to people who have absolutely no
interest in going to the show themselves.  I also question the fairness of
a system in which the best seats are effectively available only the
wealthiest fans -- who, at least in my opinion, are not necessarily the
most deserving.  As for improving the current system,  I think there are
ways of substantially diminishing the influence of scalpers.  First of all,
more artists should consider selling a portion of their tickets through fan
clubs.  Second,  I think special procedures should apply to purchases of
the best 5 - 10% of the tickets in a venue ("premium tickets").  For
instance, premium tickets could be sold as singles or pairs only and have
the purchaser's name printed on them, and the holder of a premium ticket
should be required to present some form of identification (or, in the case
of pairs,  be accompanied by the purchaser who has ID) at the venue in
order to take their seat.  This would not only discourage resales, but
would probably make it very difficult for scalpers to acquire large blocks
of premium seats from the venue and the promoters.