The resale of tickets has been around for as long as humans have charged entry to events. Evidence of ticket ‘touting’ goes all the way back to Ancient Rome.
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The resale of tickets has been around for as long as humans have charged entry to events. Evidence of ticket ‘touting‘ goes all the way back to Ancient Rome.
In the 21st century though, it’s becoming an increasingly controversial practice.
Companies like Viagogo, Seatwave and Stubhub now offer tickets to otherwise hard-to-reach events – but, often, at a hefty price.
Today on our podcast, IEA News Editor Kate Andrews interviews Dr Steve Davies, the IEA’s Head of Education and author of new report ‘Digital Resellers: The case for Secondary Ticket Markets’.
Steve believes that ticket resale is simply one aspect of the ‘Sharing Economy’ which enables voluntary transactions to take place between willing buyers and sellers. Those who aim to resell tickets for a profit, Steve argues, are themselves taking on considerable risk.
We examine the economics, and the morality, of ticket resale, and take a look at the way artists like Ed Sheeran, Taylor Swift and Madonna use market mechanisms to sell their products.
Digital Resellers: The Case for Secondary Ticket Markets
Dr Steve Davies is the Head of Education at the IEA. Previously he was program officer at the Institute for Humane Studies (IHS) at George Mason University in Virginia. He joined IHS from the UK where he was Senior Lecturer in the Department of History and Economic History at Manchester Metropolitan University. He has also been a Visiting Scholar at the Social Philosophy and Policy Center at Bowling Green State University, Ohio. A historian, he graduated from St Andrews University in Scotland in 1976 and gained his PhD from the same institution in 1984. He has authored several books, including Empiricism and History (Palgrave Macmillan, 2003) and was co-editor with Nigel Ashford of The Dictionary of Conservative and Libertarian Thought (Routledge, 1991).
This is an autogenerarted, unpunctuated transcript of the audio interview “The Case for Ticket Resale”. There may be errors in spelling.
you're listening to live from Lord North Street a podcaster leads to dub economic affairs I'm Kate Andrews news editor at the iaea the resale of tickets has been around for as long as humans have charged entry to events evidence of ticket toting goes all the way back to ancient Rome in the 21st century though is becoming an increasingly controversial practice companies like via gogo seat wave and StubHub now offer tickets to otherwise hard-to-reach events but sometimes at a hefty price today I'm joined by dr. Steve Davies the IEA's head of education whose new paper digital resellers the case for secondary ticket markets is out this week Steve believes that ticket resale is simply one aspect of the sharing economy which enables voluntary transactions to take place between willing buyers and sellers those who aim to resell tickets for a profit Steve argues are themselves taking on considerable risk we examine the economics and the morality of ticket resale and take a look at the way artists like Ed Sheeran Taylor Swift and Madonna use market mechanisms to sell their products if you like what you hear be sure to subscribe to our podcast channel ie a conversations Steve you have a paper out this week on the secondary ticket market and you argue that it is a benefit to the sharing economy to allow people to buy tickets in this manner and and that it has a lot of consumer benefits a lot of people out there say that it's fundamentally unfair that a ticket that was sold for 70 pounds or 100 pounds could double triple or quadruple in price and in some of these instances in the secondary ticketing market so what do you say to that well I'm afraid that people who say that are assuming that the market for tickets is completely different from any other kind of market you would not expect in any other kind of market for any other kind of product that you would have a fixed price and that initial price would not be exceeded on the upside or for that matter on the downside so for example let's say all hotel rooms are offered at a fixed price what you would inevitably find and what you do find in the real world of course is that the price of a hotel room will fluctuate and vary according to the demand for hotel on a particular night it's the same with tickets the price for some famous stars I'm afraid people like Adele Sam Smith Edie Sheeran is set way too low given the enormous global demand that there is for tickets for their concerts and what that means of course is that people are prepared to pay voluntarily way over the face price in order to get ticket because they know that given the huge excessive demand over supply that's the only way to be sure of getting a ticket and that's like any other really scarce commodity because value is fundamentally subjective a lot of people might pay hundreds of pounds to see Ed Sheeran I'm not sure I'd pay a penny but that's up to me and that's up to them so why are people complaining that value is subjective when it comes to ticketing when they accept that in many other areas when it comes to buying and consuming good well unfortunately I think what this reveals is that a lot of people don't accept the point you made and I'm afraid that the arguments about secondary ticket sales reveal the degree to which a large part of the public or a significant part of it anyway really has no understanding of some basic economics so to take similar case there is every year pretty much a lot of complaints about the fact that if you want to take your children on holiday during the school holidays and in the summer you have to pay more than if you take them on holiday a winter or on the rest of the year well that's not surprising if more people want to go on holiday the particular time of year then you're gonna have to pay more for it give them as a fixed number of hotel rooms and the like but a lot of people do object that so I'm afraid in many cases it's because people simply don't understand or refuse to accept the way in which we use prices and trading in the market to allocate scarce resources to their most highly valued user now there is another specific reason though with tickets which is perhaps a more fair grounds to complaint and that is the way that not the secondary ticket market but the primary ticket market works what is not widely known is that more than 50% of all the tickets for events in many cases are withheld from sale to the general public they're given out by originators the promoters the producers the theaters and alike to industry insiders now these range from fan clubs and supporters groups to employees of the primary ticket issuer to friends of theirs to accountancy firms or and sometimes to secondary sites or ticket selling sites that have a retail or revenue sharing agreement with the originator now what that means is that for a major event there's an artificial shortage of tickets because only half or less than half of the actual tickets that there are are being made available to the general public in the original sale now what does annoy people is the lack of transparency in which you hear that tickets are gone on sale their marks are sold out within 20 minutes and then almost immediately lots and lots of tickets appear on resale sites at a considerable markup now partly that is because there's an excessive demand over supply but also in many cases it's due to the artificial shortage that's created by a dysfunctional primary market and it's the lack of transparency in that primary market I think which is the genuine problem is this perhaps one of the reasons that we haven't seen the same pushback on platforms like eBay or Amazon is it because of that primary market because when you sell something on eBay or Amazon most people don't feel that the primary market was distorted but when it comes to ticketing they do I think that's true yes now the interesting thing is this what you've seen in other parts of the economy with the growth of the so-called sharing economy platforms of one kind or another is the system where for things increasingly like let's say holiday accommodation most people buy these through the secondary market through platforms like air B&B or eBay for goods and they engage in essentially a transparent bargaining process in which prices are set in the way that people are recognized now ticketing hasn't yet got there what we've seen in the last few years is the appearance and growth of platforms like StubHub via gogo seat wave which offer opportunities for people to resell tickets that they previously bought but they're sitting on top of unattached to as I say a dysfunctional primary market now as they expand it may well be that in fact they will come to replace a lot of the primary market that we have and then maybe I think people will be more accepting of the situation that they have obviously people will always rather if they could get a ticket to see Sam Smith the red chair and for a much lower price you know 50 pounds rather than paying two hundred pounds for it but I'm afraid in the case of major artists like that that's just the name of the game it's worth saying also that some major artists like Madonna for example already use what you're talking about here which is dynamic pricing the kind of software that's used to for example set airline or train ticket prices where the price actually fluctuates in line with the demand at a particular time she's uses for some time as indeed a number of other major stars have done Taylor Swift got a lot of flack when she introduced a new scheme with Ticketmaster where essentially if you were to buy her album or buy certain products like t-shirts and and sweatshirts ahead of the announcement of her tour then you would get a special code and that code would give you earlier access to her tickets so she was in her own way giving fans the ability to get faster access to her tickets and to not have them get sold out from underneath their noses a lot of people said oh you know this is the capitalist agenda at work she's trying to get people to buy lots of stuff that they don't want or need but actually what she was doing was creating a system which got people access to the tickets that they wanted yes indeed also it gives her as opposed to the music company or the major venues more control over the process what there is going on at the moment I think is a bit of a tug of war between the primary ticket sellers companies like Ticketmaster which also owned a lot of the venues and major production companies and the major stars the major acts who if you like would like very often to get tickets into the hands of their fans perhaps as a slight advantage slight discount but at the moment find it hard to do this or have to work with the music companies to do it so Taylor Swift in that case is creating quite an interesting flexible mechanism to you know certainly boost her own income and boost our own merchandising but at the same time give people who are genuinely if you're like committed to her and her music the real fans if you like a slightly better chance of getting a ticket in what is effectively an auction and how much responsibility does fall on the artists because people like ed Sheeran and Sam Smith Madonna and Taylor Swift they are in very influential positions they're very powerful very wealthy people surely they can come in and say in this case I don't want people to be able to resell my tickets I only want fans to have access to them I only want the primary buyer to have access to my concert I mean surely they can do this without laws and regulations coming in and making them do it of course they can and indeed quite a lot of stars and indeed major sporting organizations do exactly that actually it's Hamilton Hamilton the musical which has recently open in London brought in a new wave of tickets this week they're a good example they have cracked down and and they're making it really difficult for any secondary buyer to attend the the musical they're perfectly at liberty to do that they want to in a sense they own the tickets they have the right to attach conditions to those tickets that they can't be resold I would say though that from their own point of view they had to be very careful about doing this because it could come back to bite them they are assuming quite realistically in some cases that they're going to sell out and that there's going to be way more demand for the tickets than there actually are tickets are available but sometimes your expectations are dashed a bit and you might then actually wish that people could resell the tickets also in many cases inevitably given that tickets are often put on sale months or even up to a year ahead of the actual tour or event people's plans will change people will buy a ticket and then find that their plans have changed their circumstances have changed and they can no longer go and they would then like to be able to trade the ticket on and to resell it it may well also be that if you do put restrictions of this kind in place what you do create is a kind of unofficial black or at least grey market and that can bring problems of its own so they have every right to do this that they want to if they want to try and ensure that nobody pays more than a certain amount but what they have to be aware I think if they do this is that they might be causing other problems at one of the nice things about having an official secondary ticket platform and and we have several companies that you've already listed that provide that service is that you as the customer have a much better safety net if something does go wrong because you're never going to be able to completely get rid of a secondary ticket market it's just gonna go back to the black market it's going to encourage more scalping and as you say in many of these circumstances it's not just about buying the ticket to sell it on for more money is that circumstances fundamentally change well not there's anything wrong with selling the ticket to get more money I mean let's say I'm an Iron Maiden pan and let's say I buy a ticket to an Iron Maiden concert and then I discovered that the price of these tickets on the secondary market is several times what I paid I might then decide well I'd like to go to concert I'm a fan but I would actually value the money I could get from reselling the ticket more highly than the experience not that I would I might do and you know so both things happen yes the fact is that whenever you have a high demand for product you're going to get a market in that product and if you try and make that illegal or put price capture other controls on it then you're going to get a black market now what you don't want is a black market that is run by quite frankly seriously unpleasant and seriously dodgy people where you are going to get quite a lot of fraud people selling forged tickets or fake tickets or tickets that don't actually give access and so on which is not what you get or what you get to a far lesser degree with the kind of more transparent market provided by the secondary platforms because there is you rightly say you have greater degree of transparency you have protection against being defrauded by being sold for example a fraudulent ticket a fake ticket that's what you want to have not the kind of seriously risky markets that you used to have in the days of the old scalpers or touts who would hang around in the rain outside football matches or theaters and which we would revert back to if there were severe restrictions put on this and it's worth saying finally that this is not new we had scalpers back in ancient Rome the Romans used to give out tickets to chariot races and gladiatorial games for free but you actually had people call the Licari AI the placeholders who would sell their tickets Orton to other people for actual cash and actually what they would often do the Licari I would be to buy up kids from other Romans and then sell them on to people who really fancied going to see Christian thrown to the Lions a different time a different form of entertainment that's for sure there's nothing wrong as you say with choosing to sell on a ticket for more money in the same way that there'd be nothing wrong with choosing to sell on a painting that you had when you found out that it was worth more money but I think it's also important to note that in the paper you've released you've highlighted that a lot of the tickets that are resold aren't resold data at an escalated price we always talk about secondary ticketing as if people are having to shove out more money than they would have had to do in the primary market but sometimes they're shoving out the same amount or less depending on the circumstance yes absolutely there's a great deal of focus upon the kind of top end acts who we mentioned a moment ago or major sporting events like Cup Finals Wimbledon finals and things like that what that does is detract attention from the reality that first of all the overwhelming majority of tickets sold for events sporting music and others are sold at face value through mainstream markets and that's in many cases where people speculators do buy up large amounts of tickets for resale they find that actually they've misjudged the market and they have to sell them at face value they're paid or even take a hit and sell at a discount those things happen as well and in fact every bit as frequently as tickets being marked up but of course they don't get attention because nobody's going to complain if they discovered that through the secondary market you can buy a ticket to a concert for actually less than the face value but that's almost as its that's almost like suggesting that the only way that you can buy a dress is to go to Dior Gucci it's like pretending that the prime marks of the world don't exist it's very misleading well absolutely and of course I mean that's very good analogy because the major brands like Dior Gucci and others would dearly like to prevent discount markets and a few years ago there was a notorious case where Levi's jeans in fact prevented stores in the UK from reselling genuine Levi's products which they'd bought in Romania for a discounted price and Levi's argument was that this would destroy the value of their brand as a luxury good and shamefully the court actually found in their favor luxury brands would daily love to keep a floor as well as a cap on the price that they sell to prove then secondary markets secondary markets are where you find out how much people are actually willing to pay for goods in a voluntary trade that's why I don't understand the pushback because we see this across the sharing economy right now hotels would love to cap the ability of Airbnb a city or a country's official taxi industry would love to cap things like uber and to limit the extent to which they can expand and of course it's the same with the ticketing markets really when you go against things in the sharing economy it's not to say they're perfect or that you know we can't tweak it here and there but really what you're doing is propping up big business well absolutely unfortunately I think a lot of the public do accept the argument that you're making here unfortunately there's a significant minority who seem to simply object to the way that supply and demand work in a free market so you mentioned uber a moment ago uber has a policy which is perfectly reasonable of surging their price raising their price at times of very very high demand now what that means is that the people who really need and could for a taxi are the ones who get it now people object to that and the argument appears to be that you should pay the same price for taxi no matter what the demand is now what that would actually mean is lots of taxis cruising around with no customers at some times of the day and enormous queues and waits for taxi at times of peak demand when maybe a tube line has gone down for some reason or other that's you know flying in the whole face of the entire principle of markets which is that voluntary transactions which generate prices are the best way of allocating scarce resources and the demand for those resources and the supply side as well will tend to fluctuate so you can't possibly have some kind of fixed normal price but it appears there's a lot of people I'm afraid don't think we should live in the world of the just price where there's a kind of fixed traditional price that should never vary the last thing I want to briefly touch on is that we spoke about how value is subjective in terms of a ticket but of course value is also subjective in terms of time obviously there's a concern that bots are buying up these tickets and then that would lead to increased ticket prices in the secondary ticket market but actually a lot of times it's young people students who see that they can make a buck or two here by being the ones to sit in front of the computer queue online get the tickets and resell them because a lot of professionals and then people who just don't put that as their top priority don't want to value their time in that way and that's okay too that's a very important point actually I think the role of bots although it undoubtedly exists is probably exaggerated what you do get with professional resellers is people who use multiple credit cards and buy up tickets in not only their own own name but the name of their friends and neighbors their family and the rest of it now the point is they're taking a risk they will only be able to sell on those tickets at a profit if there are enough people out there who were willing and able to pay a higher price in the face price in a voluntary transaction as I've already said that doesn't always happen that's a risk and the point is that the people who then buy these tickets on the secondary platform they have to ask themselves well what would the alternative be the Assumption very often the lazy assumption is that if they didn't have to buy the tickets through the secondary market they would automatically get them at the asking price not so the alternatives would either be that the tickets relegated by a lottery in which case it would be a matter of pure luck and it's not clear to me why we should favor the lucky or the fortunate more than the unfortunate or there would be a queuing system where you would actually literally physically queue up which I can remember doing in the past and there it would be people who value their time very lowly who would get the tickets and that's assuming the day and then indeed don't do what these students you described do which is to resell the ticket that they've got for queuing for a lot of time thank you Steve from our blogs podcasts films and reports visit our website at IAO our Guk