This is of course interesting and will lead to inevitable comments about disruption being needed in event ticketing.
Let me save you the trouble as this has been rehashed many times already: the problem here is Ticketmaster's exclusives on venues and the entertainment's willingness to let Ticketmaster be the "sacrificial anode" and focus of ire from both audiences and performers.
There was a deal done some years ago--I forget the name--whereby performers would get 90% of ticket sales.
The way around that is not to increase ticket prices but to add "fees". Online transaction fees, mail fees, processing fees, booking fees, you name it. The fees in some cases are approaching the ticket price. Ticketmaster does this, splitting the proceeds with promoters and venues while the artists get a 90% cut of an ever smaller part of the pie.
Ticketmaster has multi-year exclusive deals with venues such that none can really afford the attractive cuts they get to "go it alone".
IMHO this situation has reached the point of requiring government action as this is now an antritrust issue (the ticketing market basically cannot function now).
Until that happens any ticketing disruption is doomed.
Another problem, especially when a ticketing start up tries to go after a medium or large venue, is that Ticketmaster has the capital to give venues (some) of the money from the ticket sales before their sold (e.g. a few months or a year before). The venue then has money to do stuff before the event.
To compete against that, you need to have a lot of money in the bank (i.e. not a start up).
Well said, good sir, well said. However it still goes to show that there is a disconnect between "popular" and "up and coming". The rules for Louis C.K. and up-and-coming comedians are quite different. He is a gorilla and can use his momentum to do interesting things, others cannot.
Disruption is possible IF the seller company choses to take a multi-year hit while de-throning ticketmaster. If that happens with the backing of big names like Louis it may be a possibility.
This isn't a situation requiring government action. This is an opportunity for entrepreneurship, where venues will have to take the risk of staying with Ticketmaster, or not. Clearly, Louis CK is exemplifying this.
Entrepreneurs have been trying since 1995 to dislodge Ticketmaster. They've never gotten the big venues to sign on, and I do think is is a classic antitrust violation.
On top of that (somewhat to TM's credit), I remember reading an article stating that they were the only company who had proven they could handle the huge load of online sales for top-tier acts (think Gaga and Bieber).
Let's face it, Louis CK's site probably could not handle 100K simultaneous people buying tickets and choosing seats.
That's interesting. The Australian branch of Ticketmaster uses queuing and delays to handle load and still often crashes when "big" events go on sale (annual festivals, Radiohead)
Sorry for the dumb question - does this mean that nobody else can book these venues?
If that is the case, can't CK (and other comedians) find a neutral venue (or a venue that is not already on Ticketmaster's list)? At least in his case, he doesn't need sophisticated venues (like the ones need for an opera, or a circus for example)
Also, for disruption - can't a company buy/build a venue, and pitch it as "just pay the rent, and you take care of ticket sales and everything else" model?
Effectively. You can still book venues, you just can't sell tickets to your event without Ticketmaster being involved.
A company called Livenation went around about 10 years ago and bought all the venues large enough to hold a profitable concert or show, then a few years back merged with Ticketmaster.
Livenation won't sell you one of their venues. Building a new one large enough to be profitable is near impossible. It's not just a building, its massive parking lots, planning and building commissions, working with local police for traffic management, unions for load ins/outs, getting sizable power feeds from your local utility, multi-million dollar sound systems, concessions contracts, medical services, etc., etc., etc.
Does this mean that Ticketmaster runs the risk of overextending itself and collapsing in a heap, the way Clear Channel did after buying up hundreds of radio stations throughout the 90s and early 00s? (ihopeihopeihope)
If that is the case, can't CK (and other comedians) find a neutral venue (or a venue that is not already on Ticketmaster's list)?
Yes, that's what happens if you're still small. Now what happens if you're a mega-rock star and what to have a gig with 10,000+ people? Those venues are locked up.
can't a company buy/build a venue
Where? Which city/country? If you do that (which'll cost a fortune in up front costs), that only helps the artist in that location. What happens to the rest of their tour when they go to other cities? They have to go to Ticketmaster then.
No, it just means Ticketmaster is the exclusive provider of box office services.
That is a potential disruption model (if you could manager actually buying/building a venue) but there's a reason (commercial) venues almost always require you to use their box office services. Often times, the venue gets rent in terms of a flat fee plus a cut of the net adjusted gross box office revenue. A bigger show puts more strain on the venue and they'll want a slightly larger cut. The venue then wants to oversee the settlement, and, therefor, the box officing.
> Until that happens any ticketing disruption is doomed
, in the US.
There's a very similar reason why Spotify started in Sweden, and took years until jumping the pond.
I'm not saying everything is better in Europe, and in fact I've no clue about the ticket sales situation in most European countries. But I am saying that, much as many would like to forget, innovation and market disruption is not a US monopoly.
For his shows, C.K. saw scalping rates as high as 25%, driving up the price of his shows for people who wanted to attend, by those who didn’t.
The only people driving up the price of the shows are people who want to attend. How could it be otherwise? People who don't want to go to the show certainly don't raise prices. If scalpers can profit, it means you aren't charging market price. Policies like the one described in the OP simply shoot the messenger.
If the market price is too high for some fans, have a lottery with an aftermarket. Once they see the market price, low-income lottery winners can decide whether they'd rather attend the show or sell the tickets to pay the rent.
It's not like these issues haven't been studied before. Do a few web searches, or consult an economist. If you don't accept that your naive economic intuition is wrong, you're going to make stupid decisions that often exacerbate the very problems you're trying to solve. (I'm looking at you, Burning Man.)
You're operating on the flawed assumption that the sole endeavor here is to extract as much money from consumers as possible. If $45 a ticket allows Louis C.K. to make a tidy profit while still being affordable for his fans, but a third party buys all the tickets and resells them for $55... sure, some of his fans may shrug and say, "Well, I guess $55 isn't too bad" (price elasticity, etc, etc)... but why would Louis C.K. enable that behavior?
A lottery doesn't seem to me to do anything but mitigate the benefit of fancy redialers or other automated ways of getting your ticket order in first. With or without a lottery, allowing resale for profit gives people willing to pay more a better shot at seeing the performance. Preventing it means everyone who's willing to pay the set price has an equal shot. I've always assumed that's the goal of anti-scalping schemes.
I didn't really understand BMORG's response to a ticket shortage - Lotteries play right into the scalper strength - the ability to file lots and lots of requests with different credit cards. I only had three active credit cards, so I could only enter the lottery three times (I didn't get a ticket this year) - but scalpers have a whole catalogue of credit cards and addresses to purchase tickets with. They must have been chuckling with glee when they saw the system this year.
I'm involved in the local Burners scene, but I've never been to the the big one in Black Rock City. My wife is going this year with a friend, but she was gifted a ticket. So I would like to know what stupid decisions and exacerbated problems I will see if I decide to buy a ticket for next year's burn.
Last year Burning Man sold out for the first time. In an attempt to alleviate the shortages, this year they had a lottery where people could request up to four tickets per person. The obvious strategy was to request more than you needed, in order to hedge your risk of losing the lottery (essentially a prisoner's dilemma situation). The utterly predictable outcome was worse shortages. They added an aftermarket to "fix" the problem, but (like Louis C.K.) they capped the price at ticket face value. Since the market price is higher, this guarantees shortages.
It's almost strange that they would implement a system like this just because they sold out for the first time. Other regional burns around the country regularly sell out up to a month before the event, and they never implement alternate strategies for people to buy tickets. Then again i'm not aware of a scalper market for these since they are small and regional, but I have often considered buying four tickets at the lowest introductory price and selling them a week before the event ("Hello, my name is Peter, and i'm a capitalist.")
Burning Flipside here in Texas has had a lottery system for the last few years due to not being able to exceed 2500 people on site or be under the TX mass gathering law. They make the lottery a little inconvenient (sign up in early January, mail in a money order during one week later in the month, have the MO returned if you don't get tickets). They also have a no scalping policy and regularly go after sales on Craigslist and other sources for more than face value.
> Since the market price is higher, this guarantees shortages.
I don't really understand this. There's obviously more people who want to see the event than there's room, so isn't that what guarantees the shortage?
Raising the price just artificially moves the point where you say "welp, can't go" from not being able to find a ticket to not being able to afford one. It doesn't really improve availability?
That's how economists define "surplus" vs. "shortage".
There's a shortage of a good when the price is set lower than what the market is willing to pay. The economist's solution is to set the price higher (this may also encourage means of increasing supply, depending on price elasticity of supply).
There's an excess of a good when the price is set higher than what the market is willing to pay. The economist's solution is to set the price lower (which may also result in some producers exiting the market and/or reducing output).
There are problems in this theory where it intersects with social / political / physical production. Food, for example, is relatively price-inelastic: there's a certain amount of calories people require to survive on a daily basis, and all the price pressure you can apply isn't going to move mere calories by more than a relatively small amount up or down (people will either starve or become obese). Though you can manipulate food quality: meat (more resource-intensive than vegetarian diets), nutritional quality, freshness, organic vs. artificial / technologically intensive agricultural methods.
The bmorg completely disenfranchised large parts of the community with a "ticket lottery".
Earlier this year, we were seeing theme camps with something like 10% "success" rate in the lottery, and a lot of the major camps weren't going to be able to go.
It was only through a last-ditch effort, cancelling a second lottery and giving the tickets to "established" camps that they were able to get some of the major theme camps to go.
The lottery played heavily in the favor of scalpers, who very obviously exploited it to their own gain, and this was something that the community had been screaming up and down about since the lottery was announced last year.
It's not the scalpers who are to blame. It's bmorg (and the broader Burner community) that's at fault for ignoring basic economics and human behavior. Everyone with a rudimentary understanding of game theory saw the whole mess coming a mile away.
Some screamed about the lottery, but capping secondary sales at face value is a deeply entrenched (and, in my view, terribly misguided) part of Burner culture.
It's easy to blame scalpers, but I'm not convinced they're a major component of the shortage.
Lots of large events sold out this year much quicker than usual: the Apple Worldwide Developers Conference, Penny Arcade Expo, and others.
I think that the recession is less of a concern for many of us this year, so there's pent up demand being used. Add a lottery to increase the sense of urgency, and you get a lot more people registering for tickets. Not scalpers, just people who haven't been going every year.
I had no idea how bad the scalping situation was in the US until I tried to get tickets to a Lollapalooza aftershow (I live in Australia, and am going to Lolla as a part of a holiday).
I waited up late to get tickets, was on at exactly 10am Chicago time, suffered a website crashing hard and, within 15 minutes, the gig had sold out. Defeated, I went to bed (it was pretty late in my time zone).
Next morning, I got up, and there were 400+ tickets for sale on StubHub. For a 1300-person venue. Even if 100% of scalped tickets went on sale, on one website, within 10 hours of the event going on sale, that's still 30% scalping rate. If anyone is wondering, it was Childish Gambino at the Vic Theatre.
Now, I agree that part of the solution is to charge more for tickets (and I'm used to it - a lineup like Lollapalooza's would be impossible in Australia - tickets to a RHCP gig alone go for $150+). However, by allowing scalping to this extreme, Scalpers can buy 10x$30 tickets and sell only 2-3 of them at a ridiculous price to superfans and still turn a profit, leaving the rest unused. Everyone loses except the scalpers.
Big festivals in Australia print your name and date of birth on the ticket, and either only allow you to resell the ticket back to the festival (at cost), who then on sell it under a different name, or charge a fee to change the name on the ticket so that resellers are at a disadvantage. Both have their disadvantages, but both are better than the current situation in the US.
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.
If 1000 people want to see a show in a theatre with 1000 seats, that would be an ideal market. But in reality you get 2000 people trying to buy tickets for that show. 1000 are the fans and 1000 are people trying to buy the tickets to flip them for a profit.
The artificial demand creates a market that benefits nobody except the scalpers. The fan loses by paying higher prices, and the artist loses (sometimes) by leaving money on the table. This is why Madonna and the Eagles are charging $750 for front row seats.
The artificial demand you mention is essentially speculation. The scalpers are betting that the actual price attendees are willing to pay is higher than the initial selling price, which leads them to buy the ticket. This system still requires players who ultimately purchase the tickets for the utility of seeing the show. If $100 tickets ultimately get sold for $2,000 to actual attendees, the original seller significantly underpriced their tickets. There was a full market of people willing to buy the tickets for $2,000 for the show. Scalpers didn't mess with this market or confuse demand. They made the market efficient. The fans who valued the show the most got the enjoyment utility of attending. This system primarily hurts the fans who couldn't afford the more expensive tickets. On the other hand, without a secondary market, the fans who valued the show the most are harmed.
The only way that scalpers can create artificial demand is if there are no attendees willing to pay the price scalpers want to charge. In that scenario, scalpers sell to other scalpers at higher and higher prices, and the last person (scalper) to buy loses. If the last scalper buys the ticket for $4,000 and there is no party willing to buy the ticket for at least that AND see the show, the scalper is left with two options - go to the show (which by definition for the scalper provides less utility than the ticket price warrants), or sell the ticket at a loss (or possibly for $0, if there are no buyers).
I think there is a good analogy to other forms of speculation, particularly in commodities. Speculators "drive up" the price of oil by buying and selling it for more and more, but as long as consumers are willing to pay for that oil, the price is justified, and the original sellers forfeited their potential profit.
Granted, oil and housing speculation can lead to bad things for the economy as a whole. Here I think the analogy fails, since tickets are inherently a temporary market with an expiration date. Without an expiration date you can have bubbles, and bubbles can burst.
I'm definitely not an econ expert (far from it). Scalpers may not be confusing demand. But aren't they're artificially constraining supply? There are a limited number of shows and seats available.
If I'm a scalper and I buy the last 100 seats (or rather, I have the last 100 seats not taken by someone who actually is going), I can now sell the tickets at a premium. If there are only 75 more fans that want to go, they are forced to come to me and the prices go up artificially. I can still profit without selling all the tickets. Without me the scalper, there would have been enough tickets to go around at face value.
Yes, the price is going up because people are willing to pay for it, but without the scalper it wouldn't have happened.
If a show has 1000 seats, and 900 fans buy the first 900, and never consider reselling at any price, then they are the ones constraining supply relative to an efficient market. (And there's nothing wrong with that, shrug.) The scalpers, by reselling tickets instead of just holding them and ignoring the market price, actually are increasing the amount of tickets available on the market, not lowering it.
Imagine if there were zero scalpers. Then it sells out and price goes to infinity. How can price go to infinity? Because supply is being constrained to zero because people refuse to consider reselling. Scalpers delay that some and keep the market more robust, while also making a profit from underpriced tickets.
And you can never ever sell a ticket to someone for more than the value of the show to them, so the buyers never lose.
All they are "losing" is the ability to get underpriced tickets (tickets for less than they are willing to pay) from the original seller who could have charged more (since he controlled all the tickets) but, for whatever reason, preferred to leave some money on the table for scalpers.
In the short term, there are a fixed number of hard drives (and beach balls, and microwave ovens, ...). Why don't we have to worry about hard drive scalpers artificially constraining the supply?
You're right: it's speculation. I should have used that term outright.
The problem I see is that it's speculation with a known outcome. If I buy gas or oil forward contracts, it's a play with non-zero risk. Iran might declare war or we might invent Mr Fusion tomorrow. So far so good.
But with a concert, let's be a bit more realistic. If the Rolling Stones decide to tour and play in your town this year you can be 100.00% sure the concert would sell out. If they quadrupled the dates in that town, they would still sell out. For a given set of acts that scalpers target, there is no possible way that there is a risk of scalpers holding expired tickets...unless they get greedy.
I think the terms "no possible way" and "100% sure" are inappropriate for an economic discussion. There's always the possibility of some event occurring.
What you're implying is that there is infinite demand for a Rolling Stones concert at any price. As far as I know, this is a concept on the extreme edge of economic theory. Maybe there could be infinite demand for necessities like oxygen should we be forced to make a decision, but for a concert the notion is absurd. If the tickets were priced at $1,000,000 per seat, I doubt you would sell out.
The bottom line is that there IS an appropriate price which will maximize consumer and producer surplus utility (the positive difference between what you were willing to buy/sell the goods for and what you actually bought/sold the goods for), and scalpers/secondary markets will exist when the principal seller misprices the tickets. Without the secondary markets, that ideal price will probably not be reached, and there will be a shortage or surplus of the goods.
How is there artificial demand? The scalpers aren't buying tickets for fun - there has to be someone to flip them TO. These people are fans and they create the demand, as stated in the grandparent.
Edit: a common "rebuttal" in this thread (see diek, potch, drivingmenuts) seems to be that there is an assumption of correct market price being the aim. That isn't the assumption or the point. The point is that excess demand creates the problem. There are several approaches to this (first come first served, lottery, aftermarket) but getting rid of scalpers doesn't solve the fundamental problem. The only thing they (may) be doing wrong is going against the wishes of the artist (if they prefer to use another method). It's not clear that e.g lottery is better than finding the true price (or vice versa).
1-This is inherently a class-based argument. It assumes that someone with more money than you isn't a 'real fan' and that his true fans are the squeezed middle class (or whatever class-bracket you happen to be in).
2-The world doesn't owe you anything. Thinking this is unfair because you can't afford tickets to a stand-up comedy show is the epitome of a First-World problem.
edit: this isn't exactly a reply to sambe's comment. I was taking his 'Correct Market Pricing' comment that was addressed at the rebuttals and adding to it.
Anyone that has tried to deal with buying tickets (either in today's system or even back in the old days where you had to stand in line) knows that there are people with large sums of cash willing to pay people to stand in line or bombard ticketmaster.com with requests to land tickets for a show they have no intention of seeing. They resell those tickets immediately for a profit to the people that really wanted to see the show. Go look at StubHub.com 30 minutes after a popular rock concert goes on sale. Did every single one of those sellers have a sick grandmother pop up?
No, the world doesn't owe anyone anything, and this isn't a white whine. It's an example of how people with more time and resources than you can jump ahead of you in line and, as a result either deny you an experience or make you pay more out of pocket for it...all in the name of profit.
Performers now know that they lose good will when a fan has to pay a scalper to see them. Louis C.K. is earning tons of good will by doing this, and the only person who loses out is the scalper. Wealthier fans have always been able to work the system to get extra tickets, back stage access, etc.
How is your second point at all relevant? No one is talking about being owed anything. This situation isn't the consumers pushing against scalpers, it is the performer/artist himself.
You seem to be against Louis C.K. having the freedom to sell his product how and at the price he chooses (for whatever reasons he thinks are of merit). Why?
An odd comment - I didn't say either of these things.
However, other people are saying them and I'm with you - both are fallacies. Particularly on the first, I'd suggest to "real fans" that they consider whether they prefer paying more than face value or not going at all (just in terms of their utility, not as a point of principle). If the latter, then consider the option of refusing the higher price - same result, you don't go! There are no easy solutions.
The perceived issue - I guess - is when a very high percentage of tickets become resold and you don't agree with this method. I'd say your very small chance of getting a face value ticket is still representative of a world without scalpers as they are, as always, acting as a proxy for real demand, which would otherwise be competing with you for face value tickets directly.
It is absolutely a class-based argument, and not the fault of scalping, but the class-based argument is a reasonable argument. To the extent that an uneven wealth distribution is based on insider networks, regulatory capture, and rent-seeking, nominal demand is pushed higher than actual utility.
Class-based argument? Your prejudice is showing. The 'true fan' part is about following the goings-on of the performer and being aware that there's a show coming up, and trying to get tickets ASAP instead of two days before the event. Please stop trying to make absolutely everything about money.
This is the artist himself saying that he'd rather have true fans in the seats at a reasonable price, rather than have the tickets snapped up by the asshole with the biggest wallet (not sorry for editorializing, that's the politest version of my view of scalpers).
The add-on effect he's looking for is fan retention over time. If 500 people bought from a scalper at some much higher price, there's a small chance that they will become disgruntled and stop being fans. In the long term, he could lose that business.
But if he himself levels out the market, the fans have less to lose. Sure, the artist takes a hit, but that's on him. He can always do something different next time if he's dissatisfied with his revenue.
Remember that this is a guy who made so much money the last time, that he was somewhat nervous. I don't think he's thinking about it the same way you are.
As for "not doing anyone any favors": way I see it, he's doing his fans a favor by keeping the ticket prices affordable.
So true fans are poor? What does having a fatter wallet have to do with your taste in comedy?
Also, fans don't work the way you think they do. If I like Louis CK, I like Louis CK. If he chooses to charge $500 for a ticket, I will just watch him on TV. It won't cause me to resent him.
In a perfect market, if enough people feel the same way, the price will drop down into the range that I am comfortable paying. If, on the other hand, he has so many fans that some are willing to pay exorbitant amounts to see him live, I will be forced to watch him on TV.
If he wants to give everyone (rich and poor) the chance to experience his set live, he needs to increase supply by touring more.
I do say it as a bad thing. In my example, the 1000 fans and the artist would have been perfectly happy with the arrangement. Of course this is never the case.
So the scalpers are profiting from the mismatch in supply and demand and making the show less accessible to the fans. From a scalper POV, that's capitalism. God bless America. From the fans's POV, it just sucks.
And I could swap Louis CK for oil, and scalpers for Goldman Sachs, you know. Same thing IMO.
And the artist's POV as well, his fans are now poorer and there's no value into it: they don't enjoy it more, they don't get more merch, they don't keep their money to see the next show, they don't get to buy a nice dinner for their SO, etc...
How is that 'smoothing' the market? CK Louis seems to have smoothed it flat with $45 for all tickets.
If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor. It's not like scalpers make tickets magically appear.
> If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor.
A lot of them wouldn't, though. If the scalpers sell the tickets for, say, $500, then the people willing to pay $500 get tickets pretty reliably. If the scalpers didn't exist, those people would have to take a roll of the dice along with the many, many more people who are willing to pay $45. A lot of them wouldn't be able to see the show.
If the only factor in your market's efficiency is price charged, then this is true. The real market has other factors like satisfaction/willingness to repeat a transaction (for both sides of the party), opportunities for disruption of your market (exacerbated by said dissatisfaction), and (gasp!) goodwill of parties in a transaction. If you're optimizing just the ledger numbers in your industry, you might make a buck, but you're setting yourself up for hatred and being toppled by a newcomer who customers actually like.
Higher prices dont necessarily breed hate in your customers. As long as people see that they are getting what they are paying for, they come out happy. It's the situations where they feel like they are getting screwed, or have too many restrictions, etc. Those generally come about because the market is not efficient, eg ticketmaster.
Leaving money on the table does no one any favors. If people are willing to pay $150 for tickets and hes charging $50 (or whatever it is), he's only doing himself a disservice.
If people are willing to pay that much and he delivers a show that is up to his normal standard, they won't hate him for charging them that much; quite the opposite actually. It's only the price gauging and poor service of monopolies that people tend to hate (and for good reason).
Now, if you are saying 'what about the people who cant afford $150 for tickets?'. If it's not a charity show, the world definitely does not owe you tickets to a stand-up comedy show. On the other hand, charity shows are fine, but he should call it like it is if thats the case. $50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.
The value that scalpers add is that you can get tickets at a later time. That's about the only value I can see that they provide, and whether that benefit is moral or not I guess depends on whether you believe in first-come-first-served for that item.
They are doing a service to anyone who buys scalped tickets, who is happy to pay extra rather than not go. Competition at this price is lower. I know many people who have happily paid well over face value on several occasions. Of course everyone would rather pay an artificially low price. Wanting a better deal isn't the same as the premium being extortion.
You may not like scalping but there's no point being blinkered about it.
What Louis CK is essentially saying is that given a large amount of money already in the bank, it is more valuable for him to have affordable tickets than it is for him to maximize revenue. That is a decision that is perfectly rational. Not everyone gets their full utility from making the absolute maximum amount of money possible.
Also, a side effect of this is that below-market value tickets create a shortage, which in turn makes it valuable to be the first to learn about new tickets. This has to be driving signups to his mailing list and twitter feed.
Leaving money on the table does no one any favors.
God bless the US health system!
$50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.
Economists are crazy. A full house is a full house. The people who win are the people who attended. How you can possibly say 'no-one wins' from a full house of successful comedy on the cheap is beyond me. Yeah, bummer, the cheap tickets to a very entertaining night left us all feeling crappy...
First of all, just because there are a number of people willing to pay $150, that doesn't necessarily mean there are enough of them to sell out every show. So now he either has to lower prices as the dates approach or play to half full venues. Both of which are obviously sub-optimal.
Secondly you're ignoring the broader message sent by charging $150. Even if he can find enough people willing to pay that to fill a small venue, it risks sending the wrong message and pissing off people who might otherwise have bought his DVDs, watched his TV shows or gone to other shows. So now instead of being seen as broadly popular "man of the people" who "sticks up for his fans" with wide appeal, he's seen as a stuck up rich fucker entertaining other stuck-up rich fuckers. This will have obviously negative effects on his TV ratings, where I suspect is where he makes most of his money.
The SF Giants use a variable ticket pricing scheme that seems to be pretty successful. It adjusts the price of tickets based on projected demand. This probably does a pretty good job at eating into scalpers profits (although not entirely). Of course baseball ticket demand is a lot more predictable due to the fact that their are ~80 home games a season.
It would be interesting to see if there was any way to implement a similar system for concerts and shows.
"My guess as to what will eventually happen if / when Live Nation and TicketMaster merges is that they'll move to an auction or market-based pricing scheme - which will simply mean it will cost a lot more to get a good seat for a hot show. They will simply BECOME the scalper, eliminating them from the mix."
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.
So what? They're not adding any value in the equation, they're just parasitically extracting wealth from all other entities. What's the point of that from a social perspective?
Indeed. And what is the incentive for an artist to allow his/her fans to have their wealth extracted by a third party? None. It only makes the fans less able to buy things from the artist in the future.
Louis C.K. is cultivating/nurturing his fans like a gardener cultivates/nurtures a plant. That clearly includes not letting insects eat the leaves off of a plant one intends to get an ongoing crop from.
You're not going to be able to sell this on HN. The HFT apologists will come invade this thread and go on for paragraphs on end about how market makers provide a valuable service that would otherwise not be provided.
Without scalpers (HFT) apparently absolutely no commerce in the relevant market would ever occur.
It seems as though the important part here wasn't so much that he sold them himself as it was that he added the following clause:
"You’ll see that if you try to sell the ticket anywhere for anything above the original price, we have the right to cancel your ticket (and refund your money). This is something I intend to enforce."
This is something that any middleman could do, too... but the incentives simply aren't there for them to prevent scalping. Especially as Ticketmaster has its own resale site, TicketExchange.
I guess what it really comes down to is: How does he know which ticket is being sold? I imagine if a scalper wants to avoid detection, they just don't give out specific information until the sale is final (banking that Louis CK won't buy their tickets at scalper prices just to find out which tickets to cancel).
If the ticket has some sort of ID, avoid giving that out before the final sale. If the ticket has a seat number, just state the general area of where the seat is rather than the specific seat (until final sale).
Yes, this I agree with. And I think this makes the argument in your top-level comment (that he's too small fry to worry about a different ordering system) much more convincing.
Switch to will call only; require the original CC or photo ID to pick up tickets. He explicitly stated on the ticket purchase page that this was a possibility.
That would be bad for the people that sold their tickets for face value ($45) to recoup costs, though. He has no way to know what the resale price was once someone shows up at the door with the tickets.
Chacha? Really? God damn I swear HN is full of internet hipsters. A query for [stubhub] on any major search engine has the following under the Wikipedia search result:
> StubHub (often styled StubHub!) is an online marketplace owned by eBay, which provides services for buyers and sellers of tickets for sports, concerts, theater
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.
Seems like a fair way to do it (while still extracting lots value), would be to a sort of dutch type auction. E.g. theater seats 1000, so you take bids for the max people are willing to pay.
Then, once that closes out, you take enough people to fill, say, the first 5 rows off the top of the list, and charge them whatever the lowest winning bid is of the people in that group. Repeat for each tier going back until the venue is sold out.
This actually tackles the inefficiencies at both ends - people willing to splurge on great seats get them, but if a show is not high in demand, you might still get people who kind of want to go to pay, say, $5 for the nosebleeds.
What happens if someone does sell one of these tickets for over face? Will it get cancelled, the scalper refunded (in addition to the sale value), then the person who bought it gets screwed?
The terms during purchase made it sound like if they discovered a ticket was sold for higher than $45, then they would cancel the ticket without refund. So both buyer and seller get screwed.
This doesn't match the text on the site: "If the ticket is found to be offered for resale above face value we may invalidate the barcode and refund the ticket price."
It's not clear who gets the refund here. If the scalper, then he has no risk, and earns both the money he sold it for AND the refund of the original fee. Win! This is also likely the only refund they can do since they don't have the credit card number of the person who bought the scalped ticket.
If they refund the final purchaser, then the scalper still makes his money and the purchaser loses the amount above the face value.
In both scenarios, the scalper makes his money, or even more than he would have otherwise.
If the final purchaser is aware that their high-price ticket could be nullified at the door, it removes motive to buy in the first place, leaving the scalper with hard-to-move tickets.
That would make the most sense and is how I read the language. You're free to go buy an $80 scalped ticket if you want. But if they can figure out it was scalped, they'll just cancel the ticket and refund your $45 ticket price right at the show.
I don't understand the legal theory here. In the US, scalping laws vary state to state, but I've never heard of "invalidating" a ticket. Seems like I ought to scalp a bunch of tickets and go splitsies with the guy in charge of invalidating.
I love that he's shaking things up. However, he needs to find a better partner to work with on the technology side of things. I tried to purchase tickets for one of the shows listed as available, and it then told me it was actually sold out. Another show let me get further, but then told me my session had already expired (less than 1 min later). Finally, I was able to select ticket options and no 2 adjacent seats were available. It was a lot of effort to discover what they could have told me on the show listing page, and I don't want to spend all the time it would take to check all the other shows.
Contractors not dogfooding their apps is common. I would think that if you sent that exact paragraph to him through some sort of feedback/contact form from his website, he may actually realize that there are some poor UI flows.
IANAL, but I believe a ticket to attend an event is different from a CD or record. First Sale states that when you buy something like a book or CD, you have full right/control over what happens to it. But I believe that Louis has the right to revoke a ticket, making scalping virtually impossible.
I would like to know what a lawyer says about this, though.
If you ever read the 2pt font on the back of a ticket, you'll find that what you have bought is in fact a ticket license. The physical ticket itself is just for convenience, what you're paying for is the right to attend.
1) Louis CK isn't big enough for scalpers to care about going through a non-traditional method of obtaining tickets.
2) People that would turn to scalping to recoup their expense when they can't go are just going back to Louis CK for a refund.
Personally, it sounds like offering a full refund also comes with the possibility that scalpers will purchase the tickets because they can easily flip them back for a refund (an $0 loss sans time spent) if they can't sell them for a profit. I admit that I know nothing about the 'event ticket scene' so I may be missing something.
Did it actually say you can get a refund at any time? The only place the word "refund" appears is here:
> ...we have the right to cancel your ticket (and refund your money).
So based on the article, we don't know if you can get a refund on-demand. All we know is that if he (his people) decide to cancel your ticket, you get a refund.
Did you read it? #1 is invalidated by the fact they're comparing his shows (sold traditionally) vs. his shows (sold independently), not his shows vs. others'.
The thing is that his shows sold traditionally are sold exactly the same was as plenty of other tickets, through some big site. So, as a scalper, you just trawl through Ticketmaster (or whatever site in question) and buy tickets that look promising. You have your existing process and it works on tickets for anything sold through the site.
When an individual performer stops using the site, the only scalpers are going to be the ones familiar with the performer. That is, the sort of scalper that just goes through all the shows on Ticketmaster won't even realize that these tickets are an option--only somebody following Louis CK would.
Even if some scalper does realize, a relatively small show (I don't actually know the size of Louis CK's shows, so I'm just assuming they're not too big) will not be worth changing your process for. You would have to spend a significant amount of time figuring out the restrictions of the custom site he is using and how to best profit off them--there is no guarantee that this time would be worth investing.
This is basically like a small site using a custom CAPTCHA as compared to using a very common one. Spammers aren't going to bother with your site in particular, but if you use a common CAPTCHA they know how to deal with, they will spam even tiny sites.
I think the hypothesis in #1 is that many scalpers just buy up tickets through regular channels for all big shows, going down the list. If you're not selling tickets through regular channels, people using that approach won't even have you on their radar, and may not consider it worth their time to go after the handful of events sold via "weird" means when they can just move on to scalping the next event on ticketmaster.com instead.
#1 is like saying virus makers don't write virii for the operating system I wrote for myself...it just means I have an obscure operating system not necessarily a virus proof operating system.
If everyone starts going this independent route, you can bet that scalpers will shift their methods over to these new ticket purchasing systems.
"You’ll see that if you try to sell the ticket anywhere for anything above the original price, we have the right to cancel your ticket (and refund your money). This is something I intend to enforce."
How? He doesn't claim that he will check id's for all sold tickets (he says he might) and he may not be on strong legal footing to take a chance and deny entrance to someone who shows up with a ticket that they purchased.
Using stubhub as an example I'm wondering what the connection is legally between a representative from louisck seeing a particular seat is for sale on stubhub and then cancelling the ticket making the assumption of course that the person buying the ticket posted it there (and it's not a typo or other error or even some kind of "denial of seat" attack against the true purchaser).
"Tickets may not be resold for any amount above face value."
How is that going to be enforced? What is the cross check between a particular seat and proof that a ticket was sold for a higher amount?
Edit: Also what happens if you want to buy a ticket as a gift for someone? How can it be proven that a ticket was not a gift and that it was resold at a price higher than face value?
I've read this entire thread with great enthusiasm, and I am about to make a comment that will probably be scoffed at by the majority of you. However, where does ethics and morality factor into the good/bad of ticket scalping? If it was NEVER the artist's intention to have their tickets resold, and the scalper does it anyway, then regardless of who benefits or who doesn't, is it still ethical? And if not, should it be practiced?
Why not just sell the tickets via Dutch multi-item auction with bidding. If auction ends sufficiently close to the event scalpers can't get much profit from rich fans because they don't have much time to find buyers and price at what they bought tickets is closer to the market value. Also scalpers coul only sell for profit only to people who didn't attend the auction or decided to pay more then they declared during auction.
Some events fail to sell out because they were priced too high, but others don't sell out because there's not enough interest. So you'd need to set a price floor.
> If auction ends sufficiently close to the event...
People don't know whether they've gotten in until after the auction ends. End it close enough to the event and people are unhappy they can't plan.
You can set minimal price in multi-item auction. You don't have to sell out for auction to end. And you don't have to sell for zero if there are not enough buyers.
As for the second argument, I don't suggest ending it minutes or even hours before the event. Rather days or weeks. The point is that all people who want to go can declare how much they are willing to pay beforehand and if their best offer gets beaten by scalpers, the scalpers won't profit by selling tickets for more money to them just before the show.
My suggestion is not to remove scalpers altogether but limit their opportunities for earning and helping artist extract some of the additional wealth that currently goes to scalpers. Those scalpers that remain would provide legit service of providing tickets to people who couldn't attend an auction.
Even days or weeks is insufficient. If I buy tickets to an event four months from now it is usually incredibly easy to arrange an affordable flight, for example. Or if two mutually exclusive events I am interested in have tickets go on sale at the same time right now I can pick one and purchase a ticket. If they are sold out I can pick the other event instead. With this system if I enter the auction for only one and do not win then I am screwed for the second one as well. If I enter both auctions I run the risk of purchasing both tickets.
I can imagine some other, more subtle planning issues that arise as well. Not that the system couldn't work but I think it would make for a terrible standard model.
As a sort of side-note you talk about helping the artist extract some of the money they are leaving on the table. I don't it's fair to assume that they are leaving the money there because they can't figure out "hey, if people are successfully scalping then I could make more money by charging more!" They have to look beyond a single transaction and keep in mind lower income fans that they still want to please, for example. Such fans would inevitably lose the auction for any show that sells out but some of them actually get to attend the show with the current structure.
> If I enter both auctions I run the risk of purchasing both tickets.
This might be mitigated by allowing people to sell their tickets after auction. They'll be doing that anyway so you could even provide them with platform to do this hassle free.
> Not that the system couldn't work but I think it would make for a terrible standard model.
I think current system is much worse. The only good thing about it is that people can get cheap tickets to really great events fast if they are dedicated enough to stand in line for hours right after they begin to be sold. But that's the loss for artists because is such cases they sell tickets for too low price. Other than that only the fact that you theoretically can get tickets early and you have a lot room for planning. Current system is terrible for people who can afford to buy tickets from scalpers because the scalpers basically freeload on them by snatching tickets and keep them long enough for demand to build up and for price to raise.
You don't have to sell all tickets via the auction. You can gift some to fan associations. Distribute some through lottery. Or even keep some to sell at whatever price serves your purposes just before the show.
What auction would do and what is its greatest value in my opinion is giving the artists (and everybody else) estimate of how high the demand is and adjust price automatically.
The entertainment industry an ticket scalpers have a very healthy symbiotic relationship. Industry gets to sell tickets at fan-friendly prices and rich people get to go to the shows they want to. There is absolutely nothing wrong with that. And I have no problem with this experiment.
Couldn't someone start an alternative ticketing method using this as a model? Proactively squash scalping, select alternative venues, and only sign artists who have big email/twitter/facebook fan bases.
This way, you can avoid the big chicken/egg initial distribution problem.
Did anyone else find the whole "left and right arrow keys to browse articles" on this site really annoying? I accidentally hit them when pressing up and down to read the article itself.
Ticketing has long been ripe for re-invention. The big problem is that TicketMaster has anti-competitive contracts with most popular venues.
Louis CK, in trying to do his own thing, is facing largely the same troubles Pearl Jam did in their own effort to end-run Ticketmaster: they're forced to play, in many cases, massively smaller venues. And that winds up excluding more fans than TicketMasters' fees and scalper's artificial price-hikes ever excluded.
As for scalping itself, it can't be "solved". Any feasible system needs to allow tickets to be transferred or gifted in some manner. [1]
And as soon as you do that you've provided the mechanism whereby a secondary sales channel can allow party A to sell party B a promise to transfer the ticket for above-face-value.
[1] To cover people buying X tickets for a giveaway, or one person buying tickets for a group, or people giving tickets as gifts, or people giving tickets away to a show they can no longer attend, etc.
1. Have a fixed price for non-transferrable tickets, which are identified by ID/CC or sent to a specific mobile device with a QR code or something. These tickets will be refundable.
2. Have a variable price for transferrable tickets, and use an auction type system. These tickets can be transferred but the user must go through the auction and there's a sufficiently long auction period to purchase them. These tickets are not refundable.
I would be really easy to create the same type of scale-able ticket selling system and in-venue verification scanners.
As a Previous Ticketmaster employee I believe the one thing that help prevent competition in this space is that they work with venues and performers. They subsidize Opex cost for the venues, which I think keeps them happy. For the life of me I can't explain why Ticketmaster would go and "merge" with a competitor who had driven themselves (liveNation) to the verge of bankruptcy (publicly stated within 30 days) just to take some venue market share and select artist. LiveNation now runs this combined company - it was less of a merge and more of a bankrupt company convincing a profitably company that they should "merge". IMO this has everything to do with piss poor management at Ticketmaster and the real value of select venues/artists.
Seriously,...no body even noticed MogoTix ticketing Facebook's f8 event last year? www.mogotix.com my startup. However, I don't believe MogoTix is the disruption this industry needs.
Let me save you the trouble as this has been rehashed many times already: the problem here is Ticketmaster's exclusives on venues and the entertainment's willingness to let Ticketmaster be the "sacrificial anode" and focus of ire from both audiences and performers.
There was a deal done some years ago--I forget the name--whereby performers would get 90% of ticket sales.
The way around that is not to increase ticket prices but to add "fees". Online transaction fees, mail fees, processing fees, booking fees, you name it. The fees in some cases are approaching the ticket price. Ticketmaster does this, splitting the proceeds with promoters and venues while the artists get a 90% cut of an ever smaller part of the pie.
Ticketmaster has multi-year exclusive deals with venues such that none can really afford the attractive cuts they get to "go it alone".
IMHO this situation has reached the point of requiring government action as this is now an antritrust issue (the ticketing market basically cannot function now).
Until that happens any ticketing disruption is doomed.