Thursday, March 10, 2011

Minnesota Legislation Would Allow Ticket Re-Sales

"The Minnesota Senate commerce committee approved legislation by a vote of 10-4 that prohibits a ticket issuer from restricting for resale or the offering for resale an event ticket held by the lawful possessor.  The bill would allow ticket holders to resell or exchange their tickets without needing to get the approval from the event vendor who sold it. The bill now goes to the Senate judiciary committee.

Opponents to the bill, which includes the Minnesota Vikings and Minnesota Twins, in part argue that ticket scalpers already hold an edge over fans. One concert promoter last week suggested some big name acts, such as rock star Bruce Springsteen, may refuse to play in Minnesota because they will not be able to control the price their fans pay for tickets."

MP: A couple comments.  

1. In a voluntary transaction for a ticket between a willing buyer and a willing seller, how can one party be said to "hold an edge" over the other party?    

2. An artist like Bruce Springsteen does have control over the price his fans pay for tickets, because he ultimately controls the number of tickets offered for sale to his concerts. 

To say Springsteen has no control over the price of his tickets, would be like saying OPEC has no control over the price of oil.  Just like OPEC controls the supply of oil, Springsteen controls the supply of tickets to his concerts. If one Springsteen show sells out and creates a secondary market where tickets sell above face value, then The Boss can add a second, third or fourth show, or however many shows it takes to offer enough tickets to satisfy fan demand in a given area, and limit or eliminate the secondary market.

For artists like Springsteen and promoters to complain about ticket scalping is really to acknowledge their faulty under-estimation of fan demand, and the blame should therefore be directed towards them for under-supplying tickets to their performances, not towards the secondary ticket market. 

8 Comments:

At 3/10/2011 3:01 PM, Blogger Benjamin said...

This is fascinating--are we libertarians, arguing that government regulation should force original ticket sellers to place no restrictions on resale of tickets?

In a private transaction, cannot I place whatever restrictions I want on the resale of the product?

If I sell a piece of furniture, and the sale stipulates the furniture can only be resold back to me at 90 percent of cost, is that not a private contract, and no business of the state?

 
At 3/10/2011 6:26 PM, Blogger Marko said...

That's a good point Benjamin, and I had the same thought, although the question should probably be "are we anarchists?" I agree that the venue should have some control over what happens to their tickets and if they only let in the person that originally bought the ticket that should be up to them.

However, to maintain a free market, controls, regulations and dispute resolution systems are necessary. We would not permit the venue to say that only white people are allowed to attend, or that they will beat up anyone that attends that is not the original ticket holder. I assume that what is really going on here is that the government has been enforcing the 'no scalping rules' and the legislature wants to stop that.

On a purely philosophical level, I never understood what the problem is with scalping - all the arguments against it seem completely nonsensical. Mark, your analogy to Opec is actually too weak - Springsteen has more control over what people pay for the tickets because he not only controls the supply, but also the initial price.

One argument I have heard is that the baseball team or rock star is losing potential revenue because of scalpers, but that makes no sense because the team or star could just charge more per ticket!

Another problem often cited is counterfeit tickets, but caveat emptor! If you don't want to risk counterfeits, take the time and effort to buy the original ticket. If you want to pay someone else a premium to wait in line for you, or go online at the right time (called scalping), then you should be able to do so.

 
At 3/10/2011 6:30 PM, Blogger Marko said...

Oh, and to respond to Mark's first question:

1. In a voluntary transaction for a ticket between a willing buyer and a willing seller, how can one party be said to "hold an edge" over the other party?

Well, the edge the seller has is that he has possession of something the buyer wants. That is why the buyer is willing to pay more than what the seller paid. That is how wealth is created. I agree that "hold an edge" is funny, our collectivist friends always think you are being mean if you are selling something for a profit. That is until they have something they personally want to sell . . .

 
At 3/10/2011 7:18 PM, Blogger Mark J. Perry said...

Marko:

But on the other hand, the buyer has something the seller really, really wants: CASH. And on the secondary market (StubHub, Seat Geek, etc.), there are hundreds and thousands of tickets that are selling BELOW face value. So for the secondary ticket market, it's NOT always a sellers' market, it can often be a buyers' market.

 
At 3/10/2011 11:36 PM, Blogger Gale L. Pooley said...

Springsteen is a monopoly not a carel.

Because OPEC is a cartel that only controls a part of the oil supply it is not the best analogy.

Also why doesn't Springsteen price discriminate like the airlines for ticket sales? Or perhaps he could auction tickets to capture consumer surplus.

Regarding Benjamin's observation on resale, should we require airlines to allow tickets to be transferable?

 
At 3/12/2011 6:36 PM, Blogger Ron H. said...

Marko

"One argument I have heard is that the baseball team or rock star is losing potential revenue because of scalpers, but that makes no sense because the team or star could just charge more per ticket!"

You are correct. They are losing revenue because they have priced the tickets too low. As soon as they charge what fans are willing to pay, there won't be much of a secondary market.

 
At 3/12/2011 6:49 PM, Blogger Ron H. said...

"Springsteen is a monopoly not a carel.

Because OPEC is a cartel that only controls a part of the oil supply it is not the best analogy.
"

Wait. Springsteen only controls a small part of the music supply, just as OPEC controls part of the oil supply. You might say that Springsteen has a monopoly on the production of Springsteen music, but who cares?

 
At 3/12/2011 7:00 PM, Blogger Ron H. said...

Benji

"In a private transaction, cannot I place whatever restrictions I want on the resale of the product?"

Yes, and this is something the buyer agrees to at the time of sale. It is then up to you to enforce the terms of the contract, in court if necessary.

I believe Minnesota has statutes on the books that forbid or limit
resale of tickets. This is not the business of the state, as you point out, and hopefully the proposed legislation repeals those statutes, rather than adding further restrictions on ticket sales by limiting sellers. Ideally Minnesota is giving up all interest in ticket sales. A commendable libertarian goal.

 

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