Name your price
If tickets are continually priced below market value, many people question why artists and promoters don’t set the prices higher to deter scalpers. Dr O’Brien says finding that sweet spot between maximising profit, discouraging scalpers and ensuring an event sells out can be difficult when tickets are sold months in advance.
“To find the market value we would need both supply and demand information,” he says. “A promoter typically prices tickets well in advance of an event and at this stage they don’t always have perfect information. The promoter may also be under orders from the artist or responsible sporting body in terms of offering a certain number of low price tickets, or family tickets.”
For an event organiser, profits can go beyond ticket sales, so it makes business sense to ensure as many people are in attendance as possible to purchase food, drinks and merchandise.
From an artist’s or sporting team’s point of view, keeping ticket prices low is also understandable. They would much rather perform to a sell-out crowd, grow their fan base and increase loyalty. They also don’t want to be seen as price-gouging their fans.
Complications arise when an artist prices tickets at a level that ensures all their fans have a chance to see them perform, only to see the tickets purchased by scalpers looking to make a profit. Artists feel cheated, as they feel these scalpers aren’t contributing to the event in any positive way, yet they’re making huge profits simply because they have the power and tools to buy tickets in bulk.
Isn’t scalping just good business?
If a business person can legally buy tickets that are in high demand, what’s wrong with selling them for a profit? There is the argument that ticket resellers are simply ensuring the tickets get in the hands of the fans who value them the most.
In a joint response to an Australian government consultation paper on ticket reselling, website StubHub, online retailers eBay and Gumtree argue, “…there is no public policy reason as to why the sale of tickets to commercial events should be treated differently to that of the sale of any other goods and service in this regard”.
Dr O’Brien says the question of whether someone should be allowed to profit from the resale of a ticket goes beyond economic considerations.
“If the scalper is simply extracting a buyer’s maximum willingness to pay, they are not forcing anyone to do anything they don’t want to,” he says. “The real issue is equity, rather than efficiency. By purchasing products at market value and selling at much higher prices, they are pricing groups of people out of the market.”
In other industries, if a product is proving popular, more can be ordered. If a movie is selling out, more session times can be added. Artists often add shows to try and meet demand, but travel schedules can be tight and exhaustion is a factor.
In the case of one-off sporting events like the World Cup football final, the ability to increase supply to meet demand simply isn’t possible. The uniqueness of many events also means that competition – which can help keep prices low in a marketplace – is non-existent.