The BBC reported this week on the live music industry's latest attempts to crush the
saboteurs ticket touting industry (or ticket scalpers to our readers on the other side of the pond).
The artist in question was snooze-fest specialist Ed Sheeran, who has taken several measures to stop the secondary market for his latest tour. Via the BBC:
Ed Sheeran has taken an aggressive stance against touts by cancelling more than 10,000 tickets for his upcoming stadium tour.
After the tour went on sale, the star's team identified purchases by known touts and revoked their tickets.
Tickets being sold via secondary sites, such as a Viagogo, were also cancelled and refunded. All-in-all, the total cost of returning the money came in at “more than £240,000”, or around £24 a ticket.
Yet are ticket touts really immoral parasites, as they are often portrayed?
To examine, let's go back to the classical economic principles of supply and demand. Concert tickets for popular acts such as Ed Sheeran are scarce. Artists only play a handful of shows, in a small number of cities, leading to a situation where demand often overwhelms supply. In other words, there are simply not enough tickets for available for every fan.
Touts exploit this mismatch, profiteering on the gap between the inefficient price -- what the ticket is sold at -- and the price the market is willing to pay.
Arbitrage is an age-old business model which was practiced as early as 600 BC, and exists today in the form of investment strategies like merger or convertible arbitrage. So it is surprising touts receive so much flak for a practice often considered savvy in other business circles.
Arguably, by charging the price a market will bear, touts are in effect weeding out the casual fans, and selling the tickets to only the most ardent Sheerios (as the super fans are styled), who are willing to pay top dollar to worship at the altar of easy listening.
To be clear, we're less enthused about touts utilising dodgy methods get the tickets in the first place. A Guardian feature from 2016 features one tout who uses multiple credit cards to get around limits on ticket sales. Thankfully, in a rare moment of competency, the British government recently cracked down on touts using bots to circumvent these rules, following a recommendation from the FairFan Alliance.
Promoters, such as Live Nation or Kilimanjaro Live, perhaps chastened at watching lost profits slip through their fingers, have come up with several ways of culling the arbitrageurs. Methods include limiting the numbers of tickets than can be purchased, requiring matching ID on the door and channeling fans through official re-sale sites, such as Twickets.
Readers may notice that Twickets business model, somewhat ironically, charges a fee of 10-15 per cent on top of the ticket price. Official channels and touts alike need to take their cut, it seems.
So what else could promoters and artists do to curtail the secondary market?
One option would be to raise prices. Hardly a shocking idea if demand is outstripping supply. Mancunian favourite Simply Red demonstrated the potential recently, charging £675 for two tickets to their reunion gig at the 02 Arena. There has been acute consternation at touts re-selling tickets to charitable events, such as last year's Teenage Cancer Trust show. But isn't it a bigger problem that artists and venues are under-charging for charity concerts?
One idea to address pricing worries is to sell the tickets through a Dutch auction, as opposed to the current mouse-destroying server-crashing method.
For the unfamiliar, a Dutch auction is where the price starts high and falls until there is a bidder. A Dutch auction would clear out the super keen fans, and those with the deepest pockets, and set a price for what most fans would seem acceptable. Seating allocation would have to be thought through, but it would go some way to alleviating worries over scalpers charging multiples of face value.
There is a simple solution for the supply side as well: play more gigs. Ed Sheeran will no doubt point to the fact he is playing 4 nights in London and 3 in Manchester, but it's nothing on the 21 shows that Prince [Editor's Note: RIP] strung together in London in 2007 and Los Angeles in 2011.
Whether artists will be happy playing more shows is another question. They may rail at the touts on behalf of fans, but plastering Sold Out and 'Extra dates added due to demand' all over posters is a pretty good FOMO generator for future gigs.
Ticket touts have long been a welcome source of liquidity for last-minute cancellations or forgetful buyers. Much like banks, they are deeply unpopular apart from those moments when performing a useful service. Unless they are breaking the law, or egregiously rent-seeking through exorbitant pricing, maybe we should accept their market-making role, no matter how annoying it is to pay above face value for a night out.
Let's end the persecution and give ticket touts a break - FT
Analysis of the Secondary Sales Market for Tickets for Sporting, Cultural and other Events - Europe Economics
- No deal Brexit is not a hedge fund conspiracy
- Europe’s digital infrastructure issue
- Let’s give a helping hand to Andrew Yang
- Anatomy of a malware scam
- ARK Invest’s Tesla model gathers dust
- A delirious defence of Uber
- WeLiquid: Adam Neumann pockets $700m
- Yesterday, in efficient markets
- The warm fuzzy feeling of indirectly owning Tencent
- The best of Morgan Stanley's Adam Jonas
- Apple/Tesla: M&A and heartbreak
- Did Beyonce make $300m from Uber's IPO?
- Bitcoin is the 10-year Treasury of our time
- High resolution music is a solution looking for a problem
- Amazon is furious about this negative review
- Missing: $500bn of American savings
- Blockchain for Brexit: a wonderfully terrible idea
- The Bank of Hodlers [sic] (sigh)
- Behind the curtain at China Ding Yi Feng
- An answer to Mark Cuban's question
- Crumbs! It's CRYPTO: the movie!
- National Beverage Corp loses its fizz, and its mind
- Amazon won't spin-off Amazon Web Services
- Mensch! Dan McCrum is innocent, ok?
- Europe's $1 trillion tax gap
- Why online propaganda mobs are an investment red flag
- Davos has produced an amazing new guide on precisely how not to think about risk
- When the public relations industry does PR for itself
- Who wants to be crippled by student debt?
- The bitcoin price is wrong
- The warm fuzzy feeling of Goldman debt
- “Cryptoassets” are crashing again. Is it time to start calling them cryptoliabilities instead?
- Puff the tragic cryptowagon smokes out the Mumsnet demographic
- Don't write off the public sector
- Initiative Q: an elementary pyramid scheme with grandiose ideas [Update]
- Moral investments aren't outperforming
- No one is killing it in crypto (not even Woz)
- Too smooth: the red flag at Patisserie Valerie which was missed
- No, the housing crisis will not be solved by building more homes
- Sorry Civil, 'crypto-economics' and 'constitutions' won't save journalism
- 'Short-termism' isn't a thing, say Fed economists
- Coinbase wants to be “too big to fail”, lol
- Regulation and innovation don't have to be enemies
- Retailers get so lonely around the holidays
- Folli Follie: $1bn of fake sales, and what to learn from the debacle
- The new green evangelism
- Tilray, how low can it go?
- The ICO behind the tragic Everest stunt is now “airdropping” tokens from rockets
- Beware the Hindenburg Omen?
- The broken conversation about financial regulation
- The improbably profitable, loss-making Blue Prism
- The EM rout is not made in America
- Wages and growth and honestly we just give up
- Britain's first blockchain-enabled co-working space isn't blockchain-enabled
- There is a FIRE that never goes out
- The WeWork Garden of Eden
- IQE: lumpy 'Apple' sauce at the pricey Cardiff chip shop
- There's only so much a central bank can do alone
- Eight questions every first-time buyer should ask
- MiFID II: not all doom and gloom
- Tesla: getting to Q3 profitability
- Turkey contagion fears are overblown [Update]
- The chance of an inflation shock may be higher than you think
- Sorry Tim, the humanity is not being drained out of music
- Digital crop circles
- What could go wrong here?
- Sirius Minerals: money for a hole in the ground
- The Bank of England has a strange idea of what QE achieved
- One for the ladies...
- 'Of course, many ridiculous papers appeared'
- Is a change goin' to come?
- The capacity's not there yet (and probably never will be)
- Musk and Tesla are not inseparable
- Libraries, from Carnegie to Bezos
- Crypto & government: from anarchy to amity in the USA
- 'I'm sorry Dave, I'm afraid I cannot sanction this Series B round'
- RBC, through the FANG barrier
- Self-help to buy
- CFA: Chartered crypto analysts -- updated
- The Netflix dilemma -- updated
- Fujitsu's new blockchain offering: really cheap or really expensive?
- Nothing But the Shirt on Your Back
- Universities of Britain: cosying up to crypto is a bad look
- How to make a living in the cult of meritocracy
- Spotify: Drake-oil salesmen
- Oh, the digital humanity
- Sports are not markets, predictions ain't investment
- Spot the difference, Steinhoff edition
- Larry Robbins, a cautionary tale
- The node to serfdom
- Carney is down with the crypto kids
- Samsonite: inventory, excess baggage, and unresolved questions
- It might be a long wait for “the equivalent alternative to ICOs”
- Don't blame it on the sunshine
- In corporate America, brands develop you
- One in ten dollars of US housing were anonymous
- Should AT&T worry more about its debt?
- Who cares if Elon is incinerating capital?
- Let’s not try make 'crypto chicks' a thing
- Tokens all the way down
- Eight-dimensional chess with Elon Musk
- A lopsided trade is a good trade, Italian inflation edition
- How to buy Italian fire insurance
- Atlas bugged
- Inflating inflation
- Crypto's most devout believers are suffering a crisis of faith
- Plus500: past performance is no guide to the future
- Noble rot in a shrinking Harbour
- Please don't tell individual investors to buy leveraged loans
- RIB Software: the unicorn rainy-day fund
- Retail is not dead
- Did Soros really give Tesla a “vote of confidence”?
- At a crypto conference in New York, it feels like 2017 all over again
- Egregious expectations - Intelsat edition
- Bitcoin cash is expanding into the void
- Stop getting The Flintstones wrong
- Bond investors do not care if Argentina is solvent in 100 years
- Ubiquiti Networks: of cash and borrowed time
- “We're very disappointed in you, Spotify”
- 'Sex redistribution' and the means of reproduction
- Tesla probably needs to raise capital this year
- No entitlement crisis in America
- Free cash flow to whom?
- Hey crypto bros! Journalism ≠ advertising
- Human capital and the jobs guarantee
- This is a tech bubble, when's the crash?
- The magic of adjustments: ebitla-dee-da
- FUD, inglorious FUD
- A complex analysis reaches same conclusion as simple one: hedge funds suck
- The jobs guarantee and human-capital “nationalisation”
- These hedge fund numbers can't be right
- The Vomiting Camel has escaped from Bitcoin zoo
- Lies, damn lies, and charticles
- The world doesn't need more Elon Musks
- No, Facebook should not become a nonprofit
- Sell all crypto and abandon all blockchain
- Immutable ledgers meet European data protection
- Amazon is not a bubble
- Japan's economic miracle
- Have you ever meta crypto joke you didn't like?
- Delaware should change its rules to let the light in
- Who needs the labels anyway?
- Baby Boomers want your family to finance a larger share of their retirement
- No, America would not benefit from authoritarian central planning
- No one needs to buy Tesla
- How to win a debate in the cult of meritocracy
- Steinhoff International and the case of Pepkor Global Sourcing
- Sorry Jack, Bitcoin will not become the global currency
- The “academic’s cryptocurrency” is an elegant waste of time
- Cigarettes are the vice America needs
- Well that’s one reason to buy yen…
- Musicians, don't just blame the labels for your lack of dough
- Giving stock away to staff doesn't absolve share buybacks
- A penny for Macpherson’s thoughts on the nominal anchor
- Monopoly and its discontents
- A State of Mind
- America is not the least protectionist country in the world
- This is nuts, when does Netflix crash?
- No Bloomberg, the world's richest people did not lose $114bn...
- Someone is wrong on the internet, government employee pensions and passive investing edition
- Someone is wrong on the internet, possibly fragile
- Someone is wrong on the internet, consumer financial regulation edition
- Someone is wrong on the internet: tontine tokens [Update]
- Someone is wrong on the internet, road economics edition
- Someone is wrong on the internet, wages and the stock market edition