Ticket Scalping = Unmet Demand and Can Easily Be Avoided: Raise Prices, Increase Supply of Tickets
LAS VEGAS -- Garth Brooks elicited several lofty promises when the country megastar agreed to unretire for an exclusive gig at Steve Wynn’s eponymous Vegas resort. None, however, was loftier than this: Wynn would wage an unprecedented all-out war to prevent even a single attendee from getting in using a scalped ticket. “I’m gonna break them of the habit of thinking they’re gonna sell Garth Brooks tickets for $700 or $1,000,” Wynn told Portfolio.com. “That ain’t gonna happen, even if it means a lot of people who bought tickets are having trouble getting into the show.”And yet, as the first of a planned 300 Garth Brooks shows over the coming five years parts its curtains tonight, the Vegas and broader show-ticket industry looks on in morbid fascination to see how well Wynn delivers—and what sort of histrionics result. Brooks set the prices at a flat $125 to “make sure the fans can come see me,” he said at an October press conference. That price is uniform regardless of where in the 1,500-seat showroom a guest sits.
The Wynn antiscalping effort has been complex and draconian. Tickets for his first 20 shows—he’ll do four shows 15 weekends a year through 2014—sold out within hours of going on sale on October 24. After that, buyers received calls and letters informing them they were required to inform the Wynn Las Vegas immediately as to who would attend with them. If the tickets were to be a gift, buyers had just a couple of days to tell the box office and fill out a form vouching for that.
Buyers were also warned there would be no refunds, the purchaser would have to bring the credit card used, as well as every attendee to pick them up on the day of the show. Each guest would receive a wristband and hand stamp they could not remove until they entered the venue. All show-goers would have to show photo ID at the door along with their tickets.
MP: If Garth Brooks: a) really wants to be sure his fans can come and see him perform, and b) prevent ticket re-selling, he and Steve Wynn could make several adjustments to the supply of tickets, which they have currently under-supplied relative to the demand. They could either: a) add more concert dates, and/or b) move the shows to a larger venue, both of which would contribute to satisfying the unmet demand, which then creates a market for re-selling. And of course, they could also easily help to reduce or eliminate ticket re-selling by raising the price above $125.
By underpricing and under-supplying the tickets relative to the demand, Brooks and Wynn have themselves created an economic environment that leads directly to a secondary market for tickets priced above face value. They can erect convoluted and costly barriers to combat the natural economic forces that they themselves created, but they are learning an important economic lesson: the laws of supply and demand are not optional.
15 Comments:
Why not set up an auction site and allow people to bid on the tickets. When the bidding closes you start at the highest bid and go down in price until the supply is depleted. The price charged is the last bid needed to deplete the supply. (I would do the same for IPOs). Of course if you have low demand you could have to give the tickets away, although you could add a minimum price to the auction. But of course this would leave a lot of backs unscratched, so that these folks could not profit.
The Wynn antiscalping effort has been complex and draconian. Tickets for his first 20 shows—he’ll do four shows 15 weekends a year through 2014—sold out within hours of going on sale on October 24. After that, buyers received calls and letters informing them they were required to inform the Wynn Las Vegas immediately as to who would attend with them. If the tickets were to be a gift, buyers had just a couple of days to tell the box office and fill out a form vouching for that.
Looks like they chose wisely.
It looks like the scalpers are outclassed. They'll be the ones who'll be responsible for the "histrionics" on display.
“I’m gonna break them of the habit of thinking they’re gonna sell Garth Brooks tickets for $700 or $1,000,” Wynn told Portfolio.com. “That ain’t gonna happen, even if it means a lot of people who bought tickets are having trouble getting into the show.”
I like his kind of thinking on selling those tickets. Perhaps it will serve as a model to throw re-sellers to the curb, where they belong.
Let's apply this to a wider scope and see if it makes sense. If people can't sell what they own for more than they paid for an item, how are stores going to stay in business? If I buy a ticket, isn't it my property just like the store owners' mechandise? Why shouldn't I be able to sell my property like the store owner can?
A Dutch auction sale is another variation of allocating scarce but unknown value items for short term availability.
First day tickets go on sale for $1,000. Then periodically (daily? hourly?) the price is reduced until the tickets are all sold.
If Garth ET AL feel guilty about making "too much," they can commit to a commensurate schedule of sharing part of the ticket price with a favorite charity -- like for instance, paying down the national debt. For example, first day sales, 40% goes to the charity, second day, 38%, etc.
Walt says "If I buy a ticket isn't it my property?" Walt nails it -- ka-ching.
1. I agree with Walt. Why should my right to dispose of my concert ticket (e.g. donate to charity, sell for more or less than I paid, burn it in a bonfire) be any different than any other piece of property I purchase?
2. Rich Rider has a great idea with the Dutch Auction. The Japanese have a similar auction method that works well for selling items which have an unknown value.
DB
I don't disagree with you on the merits of ticket scalping, but Brooks used to put his mouth where his money is.
The last time he scheduled a concert here in Buffalo, the demand was so great that he added a second, then a third and finally a fourth date.
Ticket reselling in New York is now legal, but there's nothing to compare with a performer who tries to meet his customers' demands.
Walt has it right. If I buy a ticket, it is my property, & I should be able to do anything I want with it, including reselling it. Reselling tickets should always be legal.
I'm not sure why Wynn cares that tickets are resold for a higher price. after all, a ticket sold for $1000 means that someone REALLY wants to see Garth. Such a sale is a transaction between a willing seller and a willing buyer. No one is forced to pay more for a ticket than the value they place on it. Reselling rations the scarce tickets so those who want to badly enough can get in.
As suggested, an auction would serve the same functioning. Adding more performances would be great also.
I doubt that Mr. Wynn wanted to do this but it's the price of doing business with Mr. Brooks, a subject I have some experience with in a former life.
Ah. In that case it is as I suspected. One of the prices of fame. Great talent in one area seems to preclude even rudimentary skill in many others. In this case Mr. Brooks seems to lack any sense of basic economics
The oldest business concept going, supply and demand. It's somewhat a shame that tickets are as expensive as they are today but they need to be to keep demand in control.
This is an unusual example of the market working perfectly.
Garth Brooks would rather have the "costs" of seeing his concert be inconvenience and wierd bureaucracy rather than cold hard cash. People who have only $125 cash but are willing to jump through hoops are the people Brooks wants at his concert, and it appears they are largely the people Brooks will get at his concert. The market is working perfectly.
If you buy a ticket it is no more or less your property than the terms under which you bought it. You can't raise pigs in your suburban back yard, you can't duplicate your CDs and sell the copies at the flea market, and you can't drive your car any speed or direction you want. ALL ownership is subject to terms, at least for this concert the terms are well spelled out and publicized up front.
I'm just curious why Mr. Wynn feels it prudent to ensure these $ 125 tickets are not re-sold for a dollar more than their original cost, but yet the last time I was at one of the lounges in Encore, a Corona cost me $ 8, which I am sure is about eight times more than Mr. Wynn's casino paid for it.
In both cases, the beer and the ticket are luxury items, not necessities. As such, the price of them is based not on their cost, but on what their owner feels is their true worth. Like many corporations, Mr. Wynn is a hypocrite who feels it is OK to gauge consumers on one product, but not another. Or maybe it was just because he would not be getting a cut of whatever the resale value of the tickets was.
Michael had it mostly right when he said
"This is an unusual example of the market working perfectly. Garth Brooks would rather have the "costs" of seeing his concert be inconvenience and wierd bureaucracy rather than cold hard cash...."
All performers and venues know the simple economic solution of raising ticket prices. Do you think that you are so much smarter than they are about economics. No, you're just dumber about the music business. If Garth prices his tickets at $1000, he won't sell many because he will lose all his fans. If a scalper prices the tickets at $1000 then you can hate the scalper and still love Garth.
The only thing that Michael left out in his post is here, Garth and Wynn are trying to set up a system where people have to put in the effort to get the tickets, AND use them instead of putting in the effort and then turning that effort into cash by reselling the ticket at a much higher price.
All this still results from basic economics, but you have to consider maximizing (lifetime income for the performer + perception of the performer in the public eye), not maximizing the income from one concert.
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