Ticketmaster charges up to 37.5% of the ticket price per ticket on some shows in fees! Totally outrageous. This is why I haven’t gone to any shows that use ticketmaster in the past 2 years. I wish more bands would have joined Pearl jam when they were trying to fight ticketmaster. Oh well, I’m boycotting ticketmaster.
And on that note; has anyone done research on why ticketmaster has its current position in the market? There a few competitors, but none anywhere as big as it.
There is no such thing as an “outrageous” price. There is no “right” or “fair” or whatever price. There is only the market price, which is always the exchange ratio between a supply of units of money and a supply of a unit of a good.
I’m sure that making ticket scalping illegal has something to do with it, otherwise people would just go to the event to buy the ticket and seriously disrupt TicketMaster’s position.
The law of supply and demand applies for tickets as well no matter who sells them. Ticketmaster is no master of anything. It obeys market forces just as everybody else.
And…ticket scalping relies on the fact that the ask price for the tickets is below the anticipated market price, not above. I’m talking about those in this line of business. Not the fan trying to rid of his ticket because he can’t make it. So very often, ticket Master is actually selling tickets way below their market value, which is why you have sellouts in a matter of minutes or hours.
I agree with DD5 here… you might think the price for the tickets are out of control but others dont, which is why ticketmaster is still in business.
this situation kind of reminds me of the dictator game.
http://en.wikipedia.org/wiki/Dictator_game
in the game, 2 people can divide up a cash prize. one person is the “proposer” (the person who decides the what the split will be) and the other is the responder (the person who says whether or not they will accept the split). if the proposer and responder can agree on the split, they get the cash. if they can’t, they get nothing.
so you would think the responder would always agree to the split, right? otherwise he gets nothing. and even if he only gets $1 he’s better off than before. in fact, we see if that if the proposer chooses a split that is too much in his own favor (too “unfair”) the responder will reject the proposers offer to punish him.
that reminds me of this situation because i would say limitgov and ticketmaster both have the potential to gain from this transaction. but the queastion is how much each party gains. just like in the game. here limitgov obviously thinks ticketmaster is asking for too uneven of a split and he rejects their offer (and goes someplace else i guess).
so I’m really not sure what people mean when they say a “fair price doesn’t exist”.
Maybe it differs by event, but for baseball games, you can get tickets in person, or you can go online. They are the same price, but going online gives you all of those fees. Scalpers would naturally buy tickets in person and sell on game day, thereby undercutting the online business. They wouldn’t be able to charge the fees that they currently do if scalpers were allowed to do their thing. But no doubt, it is different if TicketMaster is the exclusive provider.
There are 1000 tickets for sale and the highest bidders (1000 to be exact) make the exchange and get to see the show.
It is mind boggling of how very intelligent people will complicate the matter to the point of no longer dealing with praxeology or economics ( psychological games like dictator do not for a second alter the fundamental laws of praxeolgoy). And it matters not if you go see Madonna or a Dogers game.
Well, let’s think about it.
Even though ticketmaster isn’t run like an auction,let’s stick with your analogy for one quick thought. When a lot of people go to an auction, they typically have a internal price ceiling. For example, limitgov might say to himself “no matter how much I love Pansy Division, I am not going to spend more than $50 for a ticket!”. If limitgov can get those tickets for $25 bucks, he is getting a real deal, because he’s only having to pay half of what he was willing to pay (so he’s getting $50 worth of psychic enjoyment for only 25 actual dollars).
Now, let’s suppose Ticketmaster is able to obtain and distribute Pansy Division tickets for $10 a piece, but they list them online for $49 (lets assume this translates to a very high rate of return relative to other investments they could have made). Will limitgov buy them? Maybe not. We know he would normally be willing to pay $50 to see Pansy Division, but it may piss him off that the sharholders are going to reap that kind of profit margin. He may be so pissed off that he decides to skip the show all together or maybe risk showing up to the gig the night of hoping to catch door tickets or a scalper (this guy LOVES Pansy Division after all). “Those guys could lower the price and still make a lot of money relative to other investments so that way we could both be big winners! What a bunch of greedy dicks!!!”
You can note that ticket master is still in business and that they probably sold all the tickets they obtained. But those are just observations. limitgov is make a normative judgement about Ticketmaster’s business practices and is in essense claiming they are unfair. Nothing said thus fair leads to me believe these types of normative judgements are invalid (even if I may disagree with them).
This is an interesting point. However, if you want to make the argument that tickets are being sold below market, the question then becomes, what would you consider “market” price? The highest possible price that attains a sellout, anytime before the concert? I’d be interested to see any data on this, as I’m sure it’s been tested. I think there is a method to the madness. You claim they’re “below market” because they sellout so fast, but I would argue if they didn’t sellout so fast, they might not sell out at all. And if they did, the final batch of tickets would likely had to have been dropped in price significantly, possibly lowering the average ticket price, and overall ticket revenue.
There is a lot to be said for the momentum of a fast sellout, and it creates a lot of buzz, which makes the concert not only better publicized, but gives the impression it is more in-demand, which of course plays into the psychology of potential attendees…much like you may set your supposed high bid on eBay, but in the final moments you’ll break your limit and bid more, just due to being in the moment and wanting to win. If people feel like they can’t have a ticket, they’re more likely to want one even if they didn’t care that much in the first place.
Overall, I’m sure more ticket revenue is generated by a fast sellout than if tickets were “appropriately” priced and sold at a slower pace. So what is the real “market price”? If it is not the highest price that sells out the limited capacity of the event, what is it?
^ ticket buys you the first 5 mins of the show and the rest is free.
The market price is whatever the price was of the last exchange of the immediate past, often termed “current” price. This hold true always and everywhere.
Now, the ticket scalpers are entrapranuers and basically speculators, who seek to profit by buying tickets they think are “undervalued” by the seller, or more accurately, will be valued more in the near future leading up to the event. So if I say below “market value”, what is really meant is that ticketmaster misses the opportunity to hold on to those tickets longer and sell those tickets at a higher price.
All the data you need to see on this is the scalpers on the Internet and at the event selling tickets at higher then face value price. They could not stay in business if they could not sell those tickets at the higher price.
Bingo. And my point is, would those tickets fetch that high of a price (at any time) if the show wasn’t sold out within the first half hour release? I doubt it. And I would be willing to bet overall revenue generated from ticket sales (even not counting the resale revenue going to scalpers) is higher than it would be if the event host priced tickets “at market” right out of the gate. (Which, according to you is simply the last price at which a ticket was sold…so technically by your definition there is no such thing as selling “below market” (especially not if a single ticket has been sold yet).)
This is a baseless assertion regarding an alleged psychological “manipulation” that is apparently unique to ticketmaster that is not subject to any test or verification. It is therefore, pointless and meaningless and bears no consequences on economics. I think btw that it’s a silly argument but you can conspire however you want. Gaga sells in 10 minutes because there are many many more people who are willing to pay the initial ask price. They all crowd around the terminals waiting for the countdown and begin to jam the phones and website. That’s my “conspiracy” theory. But anyhow, at the end, the only proof you have is how actors chose to spend their money on a voluntary basis. What drives them to prefer A over B is a different matter.
“below” or “above” market price relate to hypothetical supply and demand schedules. They are mental constructs and nothing more. The entrepreneurs enter the scene by speculating on such discrepencies and seek to profit on them.
The initial [ask] pricing of the tickets is a business decision that takes into account many factors, but ultimately like every other business decision, it is subject to entrepreneurial gain or loss. The scalpers are not much different from any other form of speculation, e.g. oil speculation, real-estate, etc… They perform a very important function as I believe nobody is denying here. There may be some good reason to hate ticketmaster, I don’t know, but its not for their “unfair” pricing. There’s no such thing. Blame Gaga for doing only 5 shows in NYC and not 20 shows.
I’m sorry, did I say something that disagrees with this?
Oh I see. So there’s like a kind of psychological aspect affecting what people are willing to pay when. Interesting.
Again, I don’t see how any of this disagrees with anything I’ve said.
I don’t know how anyone can read what I have said and conclude that I am involving psychology.
psy·chol·o·gy/saɪˈkɒlədʒi/ Show Spelled[sahy-kol-uh-jee] Show IPA
noun, plural -gies.
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the science of the mind or of mental states and processes.
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mental ploys or strategy
And I don’t know if you’re honestly naive enough to think that the psyche of potential customers isn’t considered in the pricing decisions made by ticket sellers, or if you’re simply pretending so you can continue to have something to argue with.
It is obvious that you misunderstand the argument.
If you say so.