By Jason OConnor
In the ongoing debate between those for the secondary ticket market and those against it, a recent Boston Globe article fueled the fire. Karl E. Case, a professor of economics at Wellesley College, described in his article ‘The Value of Scalping’ why the fundamental economic laws of supply and demand legitimize the buying and reselling of event tickets. Case argues that the secondary ticket market is a natural and logical free market system at work.
In short, reselling tickets benefits everyone involved. If a concert or ball game is sold out and you still want to go, what do you do? If there was no secondary market, you couldn’t do a thing, and you would not get to attend. However, if you had the money, you could buy a ticket on the secondary market. The buyer gets to go the event, the seller unloads his inventory, and the reseller makes a commission for putting the buyer and seller together.
Case argues, “History is littered with failed efforts to avoid allocating things by consumers’ willingness and ability to pay. State stores in the former Soviet Union that sold bread and meat and at “fair prices” had shortages and long lines — and were undermined by a powerful black market.”
The street corner scalper is being challenged by much more legitimate full-fledged organizations that are using the Internet as leverage today. Now a person who wants to attend a sold out show no longer has to take the risk of exchanging cash on the street or buying a fake ticket. Instead, he can go online and buy the same ticket from a reputable secondary ticket seller company who has a built-in incentive to please its customers; return business. Many of these companies offer guarantees as well.
Case’s article made it to Boston.com where website visitors could discuss the op-ed piece. There were some who expressed their agreement, and others who argued against it. Those in the latter camp included a man named Jeremy Bayard from TicketLife.com. Bayard’s thinks the resale of tickets is not taxed. Wrong. If a person buys a ticket online from a secondary ticket company, the ticket sale is taxed, end of story. Uncle Sam gets his share each and every time. In fact, the ticket is taxed on the original sale and on the secondary sale.
Bayard also asks us to imagine if people bought up all the gasoline and then resold it at artificially high prices. Where would that leave the average Joe? First, what is an “artificially high” price? Who determines this? If my son wants an Xbox 360 for Christmas, but they are all sold out, I may be willing to pay a lot more than the retail price to please my son. Everyone’s price is different depending on their own situation.
Second, comparing a virtual necessity like gasoline to wanting to see David Ortiz hit a home run in person is asinine. Many people depend on gas to get to work to earn a living. No one’s life depends on seeing Madonna gyrate on stage.
After digging a little deeper, I discovered that Jeremy Bayard is connected with software called TicketVERIFY™ from TICKETsage, Inc. This software detects the unauthorized resale or transfer of live event tickets at the point of entry.
Bayard gushes over this new technology in an article on TicketLife.com. He calls it “bulletproof”. However, what happens when you buy three tickets to the Rolling Stones for you and your two friends, but one backs out at the last minute? You can’t give the third ticket to another friend, or sell it to him for a profit? How would the software discern this? I envisage long lines full of irritated fans waiting for each and every ticket and scenario to be scrutinized for “legitimacy”.
In the very same article Bayard says, “StubHub was a beautiful business model. But they killed the golden goose! Greed has done it. And hey, maybe I am saying this partly because I am jealous I was never smart enough to get in on the game while the going was good, but the party is over! (I also missed the whole dot com thing).”
Finally, where does this end? Should eBay be shut down next? People on eBay are buying and reselling things for a profit continuously. In fact, there are many people who have created entire businesses and companies around this. Should we artificially stop automobiles from being resold too? Should only the three big Detroit automakers be allowed to resell cars? The concept is exactly the same whether it’s tickets or widgets. The free market encourages the law of supply and demand to be obeyed.
Karl E. Case says it best, “If the system allocates a good (tickets or bread, say) to one group when there are others who are willing and able to pay more, potential buyers will be in touch. With today’s technology, there is virtually no way to prevent them from communicating with potential sellers. There will always be scalpers.”
About the Author
Jason OConnor owns and Operates Oak Web Works, LLC http://www.oakwebworks.com