OFF: Future of music...

[M Holmes]

CWarburton at OAG.COM writes:

>
> Ticketmaster Auction Will Let Highest Bidder Set
> Concert Prices
> By CHRIS NELSON
>
>
> Three years after Ticketmaster introduced ticketFast, its online
> print-at-home ticketing service, consumers have so embraced it that
> the company now sells a half-million home-printed tickets for
> sporting and entertainment events each month in North America.
> Where ticketFast is available, 30 percent of tickets sold are now
> printed at home, said the company, which is by far the nation's
> largest ticket agency.
>
> But consumers, many of whom have complained for years about climbing
> ticket prices and Ticketmaster service charges, may be less eager for
> the next phase of Ticketmaster's Internet evolution.
>
> Late this year the company plans to begin auctioning the best seats
> to concerts through ticketmaster.com.

[...]

Initial thoughts:

1) I don't understand the headline they use. The model doesn't price
tickets at the highest bid. Indeed that would be an economic nonsense
since by definition, the ticket is only worth that price to the highest
bidder.

The models which would generate highest revenue would be individual
ticket pricing with each going to its own highest bidder. The simpler
model, adopted by Singapore when auctioning licenses to use cars in the
city, is to auction N tickets with the price being set for all at the
level of the Nth highest bid. This loses some revenue but gains on the
administrative convenience of tickets being sold at the same price.
Obviously with concerts, some tickets are worth more than others due to
position, but some banding based on that model would be reasonable.

2) This would destroy the scalping business since as the article points
out, the sellers themselves are selling at the free market price and
there's therefore no real consumer surplus for the scalpers to garner.
The only market would be in fans who would have bid higher than the Nth
bid who somehow forgot to enter the bidding, and I suspect that wouldn't
be enough for a scalper to live on, or to take the rsik of effectively
holding the option.

3) This is good in that it garners the consumer surplus previously
available to scalpers to the ticket sellers, and gives it, assuming
some sort of efficient market, to the acts and promoters themselves.
I'm skeptical that the ticket distributors can get much of this since
there's at least some competition in the market.

4) I'm always wary of the "unfair to poor fans" argument since auctions
permit the tickets to be sold to the keenest fans. Sure, they might not
be able to afford the tickets but that's true at any price above
zero anyway. It's down to what the cost is worth in other terms. People
can always sell cars, records, houses, whatever to get the money, and if
they don't, what they're saying is that those things are worth more to
them than the ticket. The job of the auction is to find those people who
want to spend the money on the ticket rather than other things and those
will be the most keen fans. People who'll travel internationally to see
a band won't cavil about paying more for the ticket if it guarantees
they'll get one.

In short, IMHO: Bravo Ticketmaster!


FoFP