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Louis C.K. sees ticket scalping drop over 96% by selling tickets himself (thenextweb.com)
330 points by andymboyle on July 3, 2012 | hide | past | web | favorite | 209 comments

This is of course interesting and will lead to inevitable comments about disruption being needed in event ticketing.

Let me save you the trouble as this has been rehashed many times already: the problem here is Ticketmaster's exclusives on venues and the entertainment's willingness to let Ticketmaster be the "sacrificial anode" and focus of ire from both audiences and performers.

There was a deal done some years ago--I forget the name--whereby performers would get 90% of ticket sales.

The way around that is not to increase ticket prices but to add "fees". Online transaction fees, mail fees, processing fees, booking fees, you name it. The fees in some cases are approaching the ticket price. Ticketmaster does this, splitting the proceeds with promoters and venues while the artists get a 90% cut of an ever smaller part of the pie.

Ticketmaster has multi-year exclusive deals with venues such that none can really afford the attractive cuts they get to "go it alone".

IMHO this situation has reached the point of requiring government action as this is now an antritrust issue (the ticketing market basically cannot function now).

Until that happens any ticketing disruption is doomed.

Ticketmaster's exclusives on venues

Another problem, especially when a ticketing start up tries to go after a medium or large venue, is that Ticketmaster has the capital to give venues (some) of the money from the ticket sales before their sold (e.g. a few months or a year before). The venue then has money to do stuff before the event.

To compete against that, you need to have a lot of money in the bank (i.e. not a start up).

Well said, good sir, well said. However it still goes to show that there is a disconnect between "popular" and "up and coming". The rules for Louis C.K. and up-and-coming comedians are quite different. He is a gorilla and can use his momentum to do interesting things, others cannot.

Disruption is possible IF the seller company choses to take a multi-year hit while de-throning ticketmaster. If that happens with the backing of big names like Louis it may be a possibility.

This isn't a situation requiring government action. This is an opportunity for entrepreneurship, where venues will have to take the risk of staying with Ticketmaster, or not. Clearly, Louis CK is exemplifying this.

Entrepreneurs have been trying since 1995 to dislodge Ticketmaster. They've never gotten the big venues to sign on, and I do think is is a classic antitrust violation.

On top of that (somewhat to TM's credit), I remember reading an article stating that they were the only company who had proven they could handle the huge load of online sales for top-tier acts (think Gaga and Bieber).

Let's face it, Louis CK's site probably could not handle 100K simultaneous people buying tickets and choosing seats.

EDIT: found the article http://www.wired.com/magazine/2010/11/mf_ticketmaster/all/

That's interesting. The Australian branch of Ticketmaster uses queuing and delays to handle load and still often crashes when "big" events go on sale (annual festivals, Radiohead)

Confirmed. The radiohead ticket release was an abomination. Although somehow, Ticketek manages to be even worse.

Radiohead couldn't even handle Radiohead on their last American tour.

"Ticketmaster's exclusives on venues"

Sorry for the dumb question - does this mean that nobody else can book these venues?

If that is the case, can't CK (and other comedians) find a neutral venue (or a venue that is not already on Ticketmaster's list)? At least in his case, he doesn't need sophisticated venues (like the ones need for an opera, or a circus for example)

Also, for disruption - can't a company buy/build a venue, and pitch it as "just pay the rent, and you take care of ticket sales and everything else" model?

Effectively. You can still book venues, you just can't sell tickets to your event without Ticketmaster being involved.

A company called Livenation went around about 10 years ago and bought all the venues large enough to hold a profitable concert or show, then a few years back merged with Ticketmaster.

Livenation won't sell you one of their venues. Building a new one large enough to be profitable is near impossible. It's not just a building, its massive parking lots, planning and building commissions, working with local police for traffic management, unions for load ins/outs, getting sizable power feeds from your local utility, multi-million dollar sound systems, concessions contracts, medical services, etc., etc., etc.

Does this mean that Ticketmaster runs the risk of overextending itself and collapsing in a heap, the way Clear Channel did after buying up hundreds of radio stations throughout the 90s and early 00s? (ihopeihopeihope)

No, it just means Ticketmaster is the exclusive provider of box office services.

That is a potential disruption model (if you could manager actually buying/building a venue) but there's a reason (commercial) venues almost always require you to use their box office services. Often times, the venue gets rent in terms of a flat fee plus a cut of the net adjusted gross box office revenue. A bigger show puts more strain on the venue and they'll want a slightly larger cut. The venue then wants to oversee the settlement, and, therefor, the box officing.

If that is the case, can't CK (and other comedians) find a neutral venue (or a venue that is not already on Ticketmaster's list)?

Yes, that's what happens if you're still small. Now what happens if you're a mega-rock star and what to have a gig with 10,000+ people? Those venues are locked up.

can't a company buy/build a venue

Where? Which city/country? If you do that (which'll cost a fortune in up front costs), that only helps the artist in that location. What happens to the rest of their tour when they go to other cities? They have to go to Ticketmaster then.

"this situation has reached the point of requiring government action as this is now an antritrust issue "


> Until that happens any ticketing disruption is doomed

, in the US.

There's a very similar reason why Spotify started in Sweden, and took years until jumping the pond.

I'm not saying everything is better in Europe, and in fact I've no clue about the ticket sales situation in most European countries. But I am saying that, much as many would like to forget, innovation and market disruption is not a US monopoly.

Oh I assure you Ticketmaster is the 800 lb gorilla in the room in several European countries.

For his shows, C.K. saw scalping rates as high as 25%, driving up the price of his shows for people who wanted to attend, by those who didn’t.

The only people driving up the price of the shows are people who want to attend. How could it be otherwise? People who don't want to go to the show certainly don't raise prices. If scalpers can profit, it means you aren't charging market price. Policies like the one described in the OP simply shoot the messenger.

If the market price is too high for some fans, have a lottery with an aftermarket. Once they see the market price, low-income lottery winners can decide whether they'd rather attend the show or sell the tickets to pay the rent.

It's not like these issues haven't been studied before. Do a few web searches, or consult an economist. If you don't accept that your naive economic intuition is wrong, you're going to make stupid decisions that often exacerbate the very problems you're trying to solve. (I'm looking at you, Burning Man.)

You're operating on the flawed assumption that the sole endeavor here is to extract as much money from consumers as possible. If $45 a ticket allows Louis C.K. to make a tidy profit while still being affordable for his fans, but a third party buys all the tickets and resells them for $55... sure, some of his fans may shrug and say, "Well, I guess $55 isn't too bad" (price elasticity, etc, etc)... but why would Louis C.K. enable that behavior?

You're operating on the flawed assumption that the sole endeavor hear is to extract as much money from consumers as possible.

No, that's why you have an initial lottery. With a lottery, poorer fans still have a chance to get a ticket.

A lottery doesn't seem to me to do anything but mitigate the benefit of fancy redialers or other automated ways of getting your ticket order in first. With or without a lottery, allowing resale for profit gives people willing to pay more a better shot at seeing the performance. Preventing it means everyone who's willing to pay the set price has an equal shot. I've always assumed that's the goal of anti-scalping schemes.

Louis C.K. is attempting to transfer the benefit from the messenger to people that actually plan on attending the show.

He is apparently happy to suffer the market inefficiency that leads to his fans seeing cheaper ticket prices.

I didn't really understand BMORG's response to a ticket shortage - Lotteries play right into the scalper strength - the ability to file lots and lots of requests with different credit cards. I only had three active credit cards, so I could only enter the lottery three times (I didn't get a ticket this year) - but scalpers have a whole catalogue of credit cards and addresses to purchase tickets with. They must have been chuckling with glee when they saw the system this year.

Explain the Burning Man comment please.

I'm involved in the local Burners scene, but I've never been to the the big one in Black Rock City. My wife is going this year with a friend, but she was gifted a ticket. So I would like to know what stupid decisions and exacerbated problems I will see if I decide to buy a ticket for next year's burn.


Last year Burning Man sold out for the first time. In an attempt to alleviate the shortages, this year they had a lottery where people could request up to four tickets per person. The obvious strategy was to request more than you needed, in order to hedge your risk of losing the lottery (essentially a prisoner's dilemma situation). The utterly predictable outcome was worse shortages. They added an aftermarket to "fix" the problem, but (like Louis C.K.) they capped the price at ticket face value. Since the market price is higher, this guarantees shortages.

It's almost strange that they would implement a system like this just because they sold out for the first time. Other regional burns around the country regularly sell out up to a month before the event, and they never implement alternate strategies for people to buy tickets. Then again i'm not aware of a scalper market for these since they are small and regional, but I have often considered buying four tickets at the lowest introductory price and selling them a week before the event ("Hello, my name is Peter, and i'm a capitalist.")

Burning Flipside here in Texas has had a lottery system for the last few years due to not being able to exceed 2500 people on site or be under the TX mass gathering law. They make the lottery a little inconvenient (sign up in early January, mail in a money order during one week later in the month, have the MO returned if you don't get tickets). They also have a no scalping policy and regularly go after sales on Craigslist and other sources for more than face value.

not being able to exceed 2500 people on site or be under the TX mass gathering law

Sorry, what? have all major sporting events been cancelled too?

No, it doesn't permit gatherings of more than 2500 people to last longer than five hours without a lot of overhead (money and paperwork):


no, it's just that when you exceed 2500 people, a bunch of special provisions come into play, like having to provide water, security, vending, etc. that clash with the self-reliance/gift-economy aspect of a burn.

> Since the market price is higher, this guarantees shortages.

I don't really understand this. There's obviously more people who want to see the event than there's room, so isn't that what guarantees the shortage?

Raising the price just artificially moves the point where you say "welp, can't go" from not being able to find a ticket to not being able to afford one. It doesn't really improve availability?

That's how economists define "surplus" vs. "shortage".

There's a shortage of a good when the price is set lower than what the market is willing to pay. The economist's solution is to set the price higher (this may also encourage means of increasing supply, depending on price elasticity of supply).

There's an excess of a good when the price is set higher than what the market is willing to pay. The economist's solution is to set the price lower (which may also result in some producers exiting the market and/or reducing output).

There are problems in this theory where it intersects with social / political / physical production. Food, for example, is relatively price-inelastic: there's a certain amount of calories people require to survive on a daily basis, and all the price pressure you can apply isn't going to move mere calories by more than a relatively small amount up or down (people will either starve or become obese). Though you can manipulate food quality: meat (more resource-intensive than vegetarian diets), nutritional quality, freshness, organic vs. artificial / technologically intensive agricultural methods.

*Two tickets per person

"Up to four" covers two. There was an early lottery that allowed four. (I got four myself.)

Was that the lottery back in, like, November? The lottery in January only allowed 2 per person.

The bmorg completely disenfranchised large parts of the community with a "ticket lottery".

Earlier this year, we were seeing theme camps with something like 10% "success" rate in the lottery, and a lot of the major camps weren't going to be able to go.

It was only through a last-ditch effort, cancelling a second lottery and giving the tickets to "established" camps that they were able to get some of the major theme camps to go.

The lottery played heavily in the favor of scalpers, who very obviously exploited it to their own gain, and this was something that the community had been screaming up and down about since the lottery was announced last year.

It's not the scalpers who are to blame. It's bmorg (and the broader Burner community) that's at fault for ignoring basic economics and human behavior. Everyone with a rudimentary understanding of game theory saw the whole mess coming a mile away.

The broader burner community (hi!) were the ones screaming at the borg that this was a terrible idea. They didn't care.

Some screamed about the lottery, but capping secondary sales at face value is a deeply entrenched (and, in my view, terribly misguided) part of Burner culture.

Please explain why capping secondary sales is a terribly misguided thing...

See http://en.wikipedia.org/wiki/Price_ceiling for a basic overview.

This stuff is literally economics 101 supply-demand curve material. When you artificially cap the price too low, you create shortages and a black market.

Economic theory says that what you should do is set up an auction where everyone says how many tickets they want to buy and the maximum price you're willing to pay. The bids are sealed so nobody knows what the price will be until the auction is finished. Sort the bids by price (breaking ties by how fast you put your order in). Everyone actually pays the highest price that anyone not getting a ticket was willing to pay.

Economics and game theory says that the stable equilibrium for this type of auction is for everyone to honestly report the maximum price they are willing to pay. If everyone does then everyone who got a ticket is either indifferent or happy about getting the ticket at that price, and everyone who did not want a ticket would indifferent to happy about not buying a ticket at that price.

Theory assumes that people's opinions about how much they would pay don't change as the event comes closer. This assumption is, of course, wrong. But I do not know of a more fair strategy than this one.

Everything you just said assumes that there is never a secondary market.

There is. That is the problem. Nobody cares about spending $400 for a ticket. To burners, that's a very tiny price to pay to get "home" for a week, and is a tiny fraction of the overall cost of the trip.

If we can figure out a way (like, hello, names on tickets) to make the tickets non-transferable, then figuring our a reasonable price isn't an issue at all.


The burning man ticket problem is logistical, not economic.

People who refuse to learn economics keep making the same mistakes. :-(

Nothing that I said makes any assumptions either way about the secondary market. In fact in the real world a secondary market serves a valuable purpose for people who want to go and then are unable due to unexpected circumstances (sickness, loss of income, etc). Or for people who buy an extra ticket to gift a friend, and then find that the friend you had in mind got their own ticket already. There are a lot of reasons other than being an evil speculator to want to sell a ticket on a secondary market.

But even with a secondary market, the mechanism that I describe according theory would vastly reduce scalping. If someone is willing to plan ahead and pay $1000 to be there, they are guaranteed of getting a ticket at the same price as everyone else. Of course there will always be people who fail to plan and buy at the last moment, but theory says that this pool should be much less profitable for scalpers than people who were willing to pay top dollar but got unlucky.

An additional benefit for something like Burning Man is that you get an accurate read of what your actual market is. A non-profit need not use this to maximize profits. If you could, for half again as much, get a space that is 2x as large, can you rent it and still break even? With the rich data set from the auction, you can get a much better read on whether that is feasible than with traditional ways of selling tickets.

The fact that you would make a blanket statement about somebody learning "economics" as if that is one skill demonstrates your level of understanding here, methinks.


I think you don't understand the culture at burning man, which is, or at least triest to be, completely decoupled from the concept of money. In fact, that is one of the 10 core principles.

The fact that you claimed that I had made assumptions that I had not in fact made demonstrates your level of understanding.

Can we dismiss the snide remarks?

I freely admit that I have never gone to burning man, nor could I possibly fit something like that into my life for many years. However that said, a better understanding of money and economics would ironically enable burning man to better set things up to create a space that is free from monetary concerns.

With the strategy that I proposed, they would be in a better position to make the event as big as it could possibly be at exactly the lowest price that breaks even. And to do it in a way that limits the ability of scalpers to take money from people who want to be at burning man, while providing freedom for people who need to change their minds to actually change their minds. (It also provides the ability to buy tickets with the purpose of gifting them to others, without having to worry about who those others might be.)

Think of it as a piece of economic judo, using economics to best produce a non-economic outcome. In some sense it is not entirely dissimilar to how a copyleft license uses copyright law to achieve a purpose that is diametrically opposite to what that law was originally intended for.

I am not sure that your proposal will work for anything with a concert-like structure -- much less, Burning Man.

The problem is precisely the one that anyone faces: irrationality. You're asking people to state their price of indifference several days from now. Many people will systematically under-report that, few will systematically over-report it. Scalpers can exploit this. There is also a systematic problem of forgetfulness; there will be some people who simply aren't part of the initial bid but want the product -- and scalpers can make money selling to them. Scalpers themselves are a sort of free-market force and free markets will not eliminate them.

We've already got a system which the scalpers found a way around: the normal economic voodoo which we use is, "sell tickets at the door, then scalpers can't sell at a profit any more." That works incredibly well for most events. It could perhaps be extended to arbitrary events if overselling were common practise, but I don't know how you'd soak up the hate of the people who Couldn't Get In The Door.

Sure we can dismiss the snide remarks. Start by retracting your implication that I refuse to learn economics.

Burning man is:

A) a nonprofit B) not a concert C) not trying to maximize their intake of money D) Attended by people from every category of the economic spectrum from Sergey and Larry to the guy saving all year for the lowest income tier of ticket.

What you're describing doesn't work for this. I'm sorry.


I think he's spot on - Burning Man seems to me to be an attempt to create an agalmic environment in the same way that open source projects are, and the use of economics/copyright as tools to mediate the agalmia's interaction with the outside world in a manner beneficial to it are the right answer here.

I'm certainly wondering if the approach would be effective for ticket sales for community conferences and similar things, since I'd much rather any extra money that could be captured went into a relevant non-profit rather than into scalpers' pockets.

Just curious: how would the burner community react to being forced to present ID "at the door"?

A large, vocal majority of them have been demanding this since last fall when the lottery was announced.

A very small also vocal minority doesn't like this. Supposedly. Somewhere.

Say the tickets are $400 as you said, then everyone who got one bid > 400 dollars everyone who didn't get one claimed the most they were willing to pay is < 400 dollars. Assuming they weren't lying were is the secondary market? You are unable to sell your ticket for more than you paid for it so the secondary market acts as loss reduction device not a money making endeavor.

Only if you assume peoples situation and desires are static and that their ability for forward planning is perfect and rational. I might not be that interested in going to Burning Man 6 month out, but as the date approaches and I hear about how a whole bunch of people I know will be there then all of a sudden I'm much more willing to pay.

Or at the time of the auction I'm unemployed and worried about paying rent, then I might only be able pay $100. Then three month later I'm offered a job with a great salary, and now I'm all of a sudden willing to pay $500-600.

No matter how you structure things, there will always be people whom are willing to pay more after the fact, and as long as there is a market someone will find a way to sell to the market.

It's easy to blame scalpers, but I'm not convinced they're a major component of the shortage.

Lots of large events sold out this year much quicker than usual: the Apple Worldwide Developers Conference, Penny Arcade Expo, and others.

I think that the recession is less of a concern for many of us this year, so there's pent up demand being used. Add a lottery to increase the sense of urgency, and you get a lot more people registering for tickets. Not scalpers, just people who haven't been going every year.

I had no idea how bad the scalping situation was in the US until I tried to get tickets to a Lollapalooza aftershow (I live in Australia, and am going to Lolla as a part of a holiday).

I waited up late to get tickets, was on at exactly 10am Chicago time, suffered a website crashing hard and, within 15 minutes, the gig had sold out. Defeated, I went to bed (it was pretty late in my time zone).

Next morning, I got up, and there were 400+ tickets for sale on StubHub. For a 1300-person venue. Even if 100% of scalped tickets went on sale, on one website, within 10 hours of the event going on sale, that's still 30% scalping rate. If anyone is wondering, it was Childish Gambino at the Vic Theatre.

Now, I agree that part of the solution is to charge more for tickets (and I'm used to it - a lineup like Lollapalooza's would be impossible in Australia - tickets to a RHCP gig alone go for $150+). However, by allowing scalping to this extreme, Scalpers can buy 10x$30 tickets and sell only 2-3 of them at a ridiculous price to superfans and still turn a profit, leaving the rest unused. Everyone loses except the scalpers.

Big festivals in Australia print your name and date of birth on the ticket, and either only allow you to resell the ticket back to the festival (at cost), who then on sell it under a different name, or charge a fee to change the name on the ticket so that resellers are at a disadvantage. Both have their disadvantages, but both are better than the current situation in the US.

yeah I'm confused, isn't scalping a necessary side effect of the process? It seems natural if you sell tickets at a constant price over time and don't adjust that for higher demand (as event gets closer in time) or lower supply (as tickets are sold).

Also, is scalping a bad thing? It seems to me that they are making the market more efficient.

Scalping confuses demand.

If 1000 people want to see a show in a theatre with 1000 seats, that would be an ideal market. But in reality you get 2000 people trying to buy tickets for that show. 1000 are the fans and 1000 are people trying to buy the tickets to flip them for a profit.

The artificial demand creates a market that benefits nobody except the scalpers. The fan loses by paying higher prices, and the artist loses (sometimes) by leaving money on the table. This is why Madonna and the Eagles are charging $750 for front row seats.

The artificial demand you mention is essentially speculation. The scalpers are betting that the actual price attendees are willing to pay is higher than the initial selling price, which leads them to buy the ticket. This system still requires players who ultimately purchase the tickets for the utility of seeing the show. If $100 tickets ultimately get sold for $2,000 to actual attendees, the original seller significantly underpriced their tickets. There was a full market of people willing to buy the tickets for $2,000 for the show. Scalpers didn't mess with this market or confuse demand. They made the market efficient. The fans who valued the show the most got the enjoyment utility of attending. This system primarily hurts the fans who couldn't afford the more expensive tickets. On the other hand, without a secondary market, the fans who valued the show the most are harmed.

The only way that scalpers can create artificial demand is if there are no attendees willing to pay the price scalpers want to charge. In that scenario, scalpers sell to other scalpers at higher and higher prices, and the last person (scalper) to buy loses. If the last scalper buys the ticket for $4,000 and there is no party willing to buy the ticket for at least that AND see the show, the scalper is left with two options - go to the show (which by definition for the scalper provides less utility than the ticket price warrants), or sell the ticket at a loss (or possibly for $0, if there are no buyers).

I think there is a good analogy to other forms of speculation, particularly in commodities. Speculators "drive up" the price of oil by buying and selling it for more and more, but as long as consumers are willing to pay for that oil, the price is justified, and the original sellers forfeited their potential profit.

Granted, oil and housing speculation can lead to bad things for the economy as a whole. Here I think the analogy fails, since tickets are inherently a temporary market with an expiration date. Without an expiration date you can have bubbles, and bubbles can burst.

I'm definitely not an econ expert (far from it). Scalpers may not be confusing demand. But aren't they're artificially constraining supply? There are a limited number of shows and seats available.

If I'm a scalper and I buy the last 100 seats (or rather, I have the last 100 seats not taken by someone who actually is going), I can now sell the tickets at a premium. If there are only 75 more fans that want to go, they are forced to come to me and the prices go up artificially. I can still profit without selling all the tickets. Without me the scalper, there would have been enough tickets to go around at face value.

Yes, the price is going up because people are willing to pay for it, but without the scalper it wouldn't have happened.

It's not scalpers who are constraining supply.

If a show has 1000 seats, and 900 fans buy the first 900, and never consider reselling at any price, then they are the ones constraining supply relative to an efficient market. (And there's nothing wrong with that, shrug.) The scalpers, by reselling tickets instead of just holding them and ignoring the market price, actually are increasing the amount of tickets available on the market, not lowering it.

Imagine if there were zero scalpers. Then it sells out and price goes to infinity. How can price go to infinity? Because supply is being constrained to zero because people refuse to consider reselling. Scalpers delay that some and keep the market more robust, while also making a profit from underpriced tickets.

And you can never ever sell a ticket to someone for more than the value of the show to them, so the buyers never lose.

All they are "losing" is the ability to get underpriced tickets (tickets for less than they are willing to pay) from the original seller who could have charged more (since he controlled all the tickets) but, for whatever reason, preferred to leave some money on the table for scalpers.

wow... you consider a market to be something which maximises all possible monies rather than something where you obtain something for use. No wonder this 'scalpers are helping the system' theme sounds crazy.

No, xenophanes is simply explaining how markets work. Markets are supposed to maximize utility, whether that be monies or laughter at a concert. If a price is too low for demand, any opening that allows middlemen to creep in, raise the price to demand levels, and take the difference, will be taken. If the resellers price too low, they'll just generate an opening for re-resellers.

The problem, for me, isn't with scalpers, it's with income and wealth distribution (which separates nominal demand from actual benefit to useful people), with over-regulation of commercial performance (limiting the number of venues through regulatory capture), and with the destruction of local community (since there are no local acts anymore, everyone chases the same small number of national and international ones.)

Of course Louie C.K. generates a massive demand - in a country of 300 million people, he's one of the 50 comedians that anybody has heard of because he makes it into the national media. When the average person can name a few comedians that live and work in their neighborhood, going to a Louie C.K. show will be considered a luxury good AND the price will go down.

Part of my response to xenophanes' comment is a visceral response to treating a 'robust market' as a target goal, rather than a journey to an outcome.

The cost of ticket 1001 to a 1000-ticket show is infinity, regardless of whether you have scalpers or not. Increasing the price of the last 100 tickets does not mean you have increased ticket supply, all it means is you have taken 100 tickets from earlier, creating an artificial scarcity, and sold them later. Those hundred buyers that 'don't lose' down the track do so at the expense of a hundred buyers that lost earlier.

xenophanes is making funny with numbers because he's comparing the price of ticket 1001 in the non-scalper system with the price of ticket 901 in the scalper system.

I don't think he/she is. There might be 20,000 people interested in tickets to the show at $55, but only 1000 will get one and 19,000 will be left out in the cold. If 100 of those tickets are purchased by scalpers, 19,000 will be left out in the cold. The difference in the two cases is that 100 of those tickets in the second case will go to the people willing to 'be the most useful' for them - and in an ideal society that seems to me like the fairest way of doing things.

The only problem I have with it is that due to general political market distortions, money is very cheap to a small number of people who do very little and have lots of leisure time, so the dollar commitment for a ticket price has little relation to either subjective or objective (ideal) utility.

As a performer, I'd have an interest in keeping the ticket prices low simply because I wouldn't want an audience filled with the kind of assholes who would pay $500 for a ticket to a two hour comedy show. If I really adored Louie C.K., was one of those assholes, and it took 11 minutes to get to the site to buy a ticket that sold out in 10, I'd hope that scalpers got a significant amount of those tickets.

Hell, even if I wasn't one of those assholes I'd hope for scalpers, because if they overestimated demand and priced too high, they might end up dumping tickets at the last minute and I might end up paying less than face value. Instead of not being able to get a ticket at any price, the tickets are handed out based on how much you're willing to commit to get them. If demand then raises the prices to $1000, I can still get a ticket if I love Louie C.K. more than I love keeping my apartment.

Because, really:

the number of people who lose = the number of people who would go to the show for free - 1000

Personally, I lose at face value, because the day I pay $50 for a concert is going to be the day a gallon of milk goes for $15. It doesn't mean that I don't like Louie C.K., it just means that I like 3 gallons of milk more. Everybody makes their own call, whether it's when the cost goes over $10, over $1000, or over $55 + F5ing a site for 6 hours.

In the short term, there are a fixed number of hard drives (and beach balls, and microwave ovens, ...). Why don't we have to worry about hard drive scalpers artificially constraining the supply?

Interesting question. It made think of another situation.

How often would CK have to perform to make scalping essentially a non-issue?

More than once a year I would guess. But once a month? Every week?

What factors determine this?

It would be determined mostly by price, and this would just be another version of the supply/demand curve. If he sells the tickets at $20 each, then 100k will want to see his show. At $50 each, 10k people, and so on.

There is a much smaller quantity of seats that need to be acquired to scalp the market and push out competition. The spread is much higher if you know there is a relatively high demand that cannot be justifiably spent elsewhere.

Shows are much more constrained. It's the very specific "skilled labor" involved (only one person can produce a show in only one city, maybe two a night). Imagine if you needed a hard drive factory in each city and only one factory could run at a time.

I can't buy a show for Denver. I might not even be able to buy a show for Friday nights. That severely limits the pool of "supply" I can buy from. Louis might be in my city once a year for a few days if I'm lucky.

You're right: it's speculation. I should have used that term outright.

The problem I see is that it's speculation with a known outcome. If I buy gas or oil forward contracts, it's a play with non-zero risk. Iran might declare war or we might invent Mr Fusion tomorrow. So far so good.

But with a concert, let's be a bit more realistic. If the Rolling Stones decide to tour and play in your town this year you can be 100.00% sure the concert would sell out. If they quadrupled the dates in that town, they would still sell out. For a given set of acts that scalpers target, there is no possible way that there is a risk of scalpers holding expired tickets...unless they get greedy.

I think the terms "no possible way" and "100% sure" are inappropriate for an economic discussion. There's always the possibility of some event occurring.

What you're implying is that there is infinite demand for a Rolling Stones concert at any price. As far as I know, this is a concept on the extreme edge of economic theory. Maybe there could be infinite demand for necessities like oxygen should we be forced to make a decision, but for a concert the notion is absurd. If the tickets were priced at $1,000,000 per seat, I doubt you would sell out.

The bottom line is that there IS an appropriate price which will maximize consumer and producer surplus utility (the positive difference between what you were willing to buy/sell the goods for and what you actually bought/sold the goods for), and scalpers/secondary markets will exist when the principal seller misprices the tickets. Without the secondary markets, that ideal price will probably not be reached, and there will be a shortage or surplus of the goods.

How is there artificial demand? The scalpers aren't buying tickets for fun - there has to be someone to flip them TO. These people are fans and they create the demand, as stated in the grandparent.

Edit: a common "rebuttal" in this thread (see diek, potch, drivingmenuts) seems to be that there is an assumption of correct market price being the aim. That isn't the assumption or the point. The point is that excess demand creates the problem. There are several approaches to this (first come first served, lottery, aftermarket) but getting rid of scalpers doesn't solve the fundamental problem. The only thing they (may) be doing wrong is going against the wishes of the artist (if they prefer to use another method). It's not clear that e.g lottery is better than finding the true price (or vice versa).

Re: Correct Market Pricing

1-This is inherently a class-based argument. It assumes that someone with more money than you isn't a 'real fan' and that his true fans are the squeezed middle class (or whatever class-bracket you happen to be in).

2-The world doesn't owe you anything. Thinking this is unfair because you can't afford tickets to a stand-up comedy show is the epitome of a First-World problem.

edit: this isn't exactly a reply to sambe's comment. I was taking his 'Correct Market Pricing' comment that was addressed at the rebuttals and adding to it.

C'mon, let's have a little reality here.

Anyone that has tried to deal with buying tickets (either in today's system or even back in the old days where you had to stand in line) knows that there are people with large sums of cash willing to pay people to stand in line or bombard ticketmaster.com with requests to land tickets for a show they have no intention of seeing. They resell those tickets immediately for a profit to the people that really wanted to see the show. Go look at StubHub.com 30 minutes after a popular rock concert goes on sale. Did every single one of those sellers have a sick grandmother pop up?

No, the world doesn't owe anyone anything, and this isn't a white whine. It's an example of how people with more time and resources than you can jump ahead of you in line and, as a result either deny you an experience or make you pay more out of pocket for it...all in the name of profit.

"more time and resources than you can jump ahead of you in line and, as a result either deny you an experience or make you pay more out of pocket for it."

Isn't that the way the world works? We aren't talking about access to food, education, or healthcare here. We're talking about entertainment. Is there a particular reason why someone with more time or money shouldn't have an edge and be able to spend their money to do something someone with less money can't do?

If you fly enough you also can get upgraded to first class cabin. Is there something not fair about that as well?

> Is there a particular reason why someone with more time or money shouldn't have an edge and be able to spend their money to do something someone with less money can't do?

Because the performer wants them to be able to?

Scalping is asshole behavior. It is that simple. Don't sugarcoat it in talk of 'smoothing' markets. The scalpers do not add any value to the transaction. They merely inflate the price.

I'm so sick of HN over-intellectualizing topics in order to avoid the difficult discussions of ethics. I'm guessing they're avoided because (gasp) it isn't objective. The horror!

The ability to buy a ticket for a popular show at short notice on (or close to) the day of the show has real value to me, and is a service I'm occasionally willing to pay for.

For example last time I was in London I just happened to see that a band I liked was playing that evening. Having no other plans I wandered up to the venue a couple of hours before opening and a kind gentleman outside was happy to sell me a ticket. Sure I paid roughly double the value printed on the ticket, but to me it was worth it for the service and convenience.

Now I'm not saying that scalping is the best solution to this problem, but there is definitely a market here (for tickets on short notice in my case) and money to be made and value to be added.

If I'm a person who's willing to pay above face value for a ticket but didn't get in line fast enough, the scalpers provide tremendous value to me.

...unless the scalpers were the reason you weren't in line fast enough.

How does being upgraded to the first-class cabin deprive a poorer person of flying?

And no, it's not a blanket statement of the way the world works. There's plenty of things like copyright that prevent a gorilla just coming along and taking your toys for themselves.

Performers now know that they lose good will when a fan has to pay a scalper to see them. Louis C.K. is earning tons of good will by doing this, and the only person who loses out is the scalper. Wealthier fans have always been able to work the system to get extra tickets, back stage access, etc.

"Louis C.K. is earning tons of good will by doing this"

People want to see Louis because he is funny. The minute he stops being funny all that good will won't mean a thing.

Your hyperbole ("the minute") isn't aiding in understanding reality. Lots of artists have enough good will built up in their fan-base that they can produce a few bombs and still retain enough fans to reboot their act back to something that the fans like.

Perhaps "the minute" was a bit much in trying to prove my point.

First, I think comedians are a little different then other types of artists who have a little more latitude in their work. I'm speaking specifically about the buzz that surrounds this particular artist right now who is very funny. And what I'm saying is that if he stops being funny, in general or not as funny, the goodwill that he built up won't matter in terms of bringing a significant number of people to his shows.

And if he becomes funny again people will want to attend his shows regardless of something like what he is doing. I don't believe the fact that (this type of) goodwill would make a big difference in how quickly the audience returns.

And in any case the reason any artists matters at all is because they provide entertainment that people like. That is their product. The "good will" part isn't what got them to where they are today and won't keep them there if they fail to deliver.

The old Howard Stern (haven't listened to him since he was on non satellite was quite the asshole in many cases. Despite that he had a big following even from people who thought he was a dick. Because he provided entertainment that people like they overlooked undesirable things about him.

And people won't purchase a luxury car if the engine doesn't work. Clearly that means there's no difference between a luxury and regular car, right?

How is your second point at all relevant? No one is talking about being owed anything. This situation isn't the consumers pushing against scalpers, it is the performer/artist himself.

You seem to be against Louis C.K. having the freedom to sell his product how and at the price he chooses (for whatever reasons he thinks are of merit). Why?

An odd comment - I didn't say either of these things.

However, other people are saying them and I'm with you - both are fallacies. Particularly on the first, I'd suggest to "real fans" that they consider whether they prefer paying more than face value or not going at all (just in terms of their utility, not as a point of principle). If the latter, then consider the option of refusing the higher price - same result, you don't go! There are no easy solutions.

The perceived issue - I guess - is when a very high percentage of tickets become resold and you don't agree with this method. I'd say your very small chance of getting a face value ticket is still representative of a world without scalpers as they are, as always, acting as a proxy for real demand, which would otherwise be competing with you for face value tickets directly.

It is absolutely a class-based argument, and not the fault of scalping, but the class-based argument is a reasonable argument. To the extent that an uneven wealth distribution is based on insider networks, regulatory capture, and rent-seeking, nominal demand is pushed higher than actual utility.

Class-based argument? Your prejudice is showing. The 'true fan' part is about following the goings-on of the performer and being aware that there's a show coming up, and trying to get tickets ASAP instead of two days before the event. Please stop trying to make absolutely everything about money.

But if the customers are willing to pay the scalpers price, that means the demand exists.

You say 'flip them for profit' as if thats a bad thing, but as long as people buy those tickets, its just smoothing out the market.

This is the artist himself saying that he'd rather have true fans in the seats at a reasonable price, rather than have the tickets snapped up by the asshole with the biggest wallet (not sorry for editorializing, that's the politest version of my view of scalpers).

The add-on effect he's looking for is fan retention over time. If 500 people bought from a scalper at some much higher price, there's a small chance that they will become disgruntled and stop being fans. In the long term, he could lose that business.

But if he himself levels out the market, the fans have less to lose. Sure, the artist takes a hit, but that's on him. He can always do something different next time if he's dissatisfied with his revenue.

Remember that this is a guy who made so much money the last time, that he was somewhat nervous. I don't think he's thinking about it the same way you are.

As for "not doing anyone any favors": way I see it, he's doing his fans a favor by keeping the ticket prices affordable.

So true fans are poor? What does having a fatter wallet have to do with your taste in comedy?

Also, fans don't work the way you think they do. If I like Louis CK, I like Louis CK. If he chooses to charge $500 for a ticket, I will just watch him on TV. It won't cause me to resent him.

In a perfect market, if enough people feel the same way, the price will drop down into the range that I am comfortable paying. If, on the other hand, he has so many fans that some are willing to pay exorbitant amounts to see him live, I will be forced to watch him on TV.

If he wants to give everyone (rich and poor) the chance to experience his set live, he needs to increase supply by touring more.

> So true fans are poor?

No? True fans are alone, and true fans are not necessarily the earliest at the gate. If scalpers can grab half the tickets before the show's sold out by buying in bulk, they're going to make a lot of money. Because now they control the product.

> he needs to increase supply by touring more.

He's booked 67 dates, he's only one guy, touring more? He'll need to put his million of sales in cloning if he wants to do that.

But he's at least found a way to keep control on prices and scalping and give everybody equal opportunity.

> true fans are not necessarily the earliest at the gate

Without scalpers, "first at the gate" is the only way to get tickets.

> true fans are not necessarily the earliest at the gate.

If we're going no true scotsman, I'd say the true fans ARE the earliest at the gate. They're the ones who camp out for weeks.

So really, you're sticking up for the fair-weather fans who can't be bothered to put in the extra effort to get their tickets at face value.

And you're sticking up for the fair-weather fans who aren't willing to take out a second mortgage on their homes.

Also, "true fans are not necessarily the earliest at the gate" is not an example of No True Scotsman, it's an example of Some True Scotsmen, the exact opposite.

I do say it as a bad thing. In my example, the 1000 fans and the artist would have been perfectly happy with the arrangement. Of course this is never the case.

So the scalpers are profiting from the mismatch in supply and demand and making the show less accessible to the fans. From a scalper POV, that's capitalism. God bless America. From the fans's POV, it just sucks.

And I could swap Louis CK for oil, and scalpers for Goldman Sachs, you know. Same thing IMO.

> From the fans's POV

And the artist's POV as well, his fans are now poorer and there's no value into it: they don't enjoy it more, they don't get more merch, they don't keep their money to see the next show, they don't get to buy a nice dinner for their SO, etc...

That's an interesting angle. Internet piracy of content was supposed to be okay because the artist should be able to profit from concerts and related merchandise. But it seems that isn't entirely possible either.

How is that 'smoothing' the market? CK Louis seems to have smoothed it flat with $45 for all tickets.

If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor. It's not like scalpers make tickets magically appear.

> If the scalpers didn't exist, the eventual ticket-holders would still be able to purchase from the original vendor.

A lot of them wouldn't, though. If the scalpers sell the tickets for, say, $500, then the people willing to pay $500 get tickets pretty reliably. If the scalpers didn't exist, those people would have to take a roll of the dice along with the many, many more people who are willing to pay $45. A lot of them wouldn't be able to see the show.

I didn't mean the same people. The same number of people would see the show, and people generally believe in a first-come-first-served moral system - spend a night in an busy ER department and see how the general public like the idea of 'triage'.

Really, my point is more that those tickets were going to sell anyway, and all the scalpers are doing is reducing the potential audience for those tickets. I don't see how this specific market is 'smoothed' by this practise.

If the only factor in your market's efficiency is price charged, then this is true. The real market has other factors like satisfaction/willingness to repeat a transaction (for both sides of the party), opportunities for disruption of your market (exacerbated by said dissatisfaction), and (gasp!) goodwill of parties in a transaction. If you're optimizing just the ledger numbers in your industry, you might make a buck, but you're setting yourself up for hatred and being toppled by a newcomer who customers actually like.

Higher prices dont necessarily breed hate in your customers. As long as people see that they are getting what they are paying for, they come out happy. It's the situations where they feel like they are getting screwed, or have too many restrictions, etc. Those generally come about because the market is not efficient, eg ticketmaster.

Market efficiency is not necessarily a person's aim.

Leaving money on the table does no one any favors. If people are willing to pay $150 for tickets and hes charging $50 (or whatever it is), he's only doing himself a disservice.

If people are willing to pay that much and he delivers a show that is up to his normal standard, they won't hate him for charging them that much; quite the opposite actually. It's only the price gauging and poor service of monopolies that people tend to hate (and for good reason).

Now, if you are saying 'what about the people who cant afford $150 for tickets?'. If it's not a charity show, the world definitely does not owe you tickets to a stand-up comedy show. On the other hand, charity shows are fine, but he should call it like it is if thats the case. $50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.

> he's only doing himself a disservice.

How precisely is the scalper, by increasing costs and adding _no value_ doing us a service?

Just because he is doing himself a disservice doesn't mean the scalpers are doing us a service.

As worded it is implied that the scalper is doing _somebody_ a service, and I disagree with that.

If they weren't doing anyone a service, they wouldn't make money.

Of course they don't and still do: through speculation, they're artificially taking control of the supply allowing them to re-set its price point without providing value. The tickets would sell all the same through the original provider at the original price, they just inserted themselves between the producer and the consumer (usually through brute-forcing the producer's ordering scheme) in order to extract wealth from the consumer.

That's parasitism.

That's pretty much impossible. If the market clearing rate is face value, scalping tickets for more than that wouldn't be viable.

Do you think running a corner store is "parasitism"?

The value that scalpers add is that you can get tickets at a later time. That's about the only value I can see that they provide, and whether that benefit is moral or not I guess depends on whether you believe in first-come-first-served for that item.

They are doing a service to anyone who buys scalped tickets, who is happy to pay extra rather than not go. Competition at this price is lower. I know many people who have happily paid well over face value on several occasions. Of course everyone would rather pay an artificially low price. Wanting a better deal isn't the same as the premium being extortion.

You may not like scalping but there's no point being blinkered about it.

Except they're only paying extra because, ta-da!, the tickets were scalped. The competition is higher at the lower price because, ta-da!, the tickets were scalped.

The arguments for scalping only work if the effects of the scalping are ignored. Eliminating scalpers benefits everyone.

Scalping benefits people who wouldn't have gotten tickets in a non-scalped sale (e.g. because there were twice the amount of people interested at face price than tickets available) and are willing to pay more to get the tickets. Scalpers are exploiting the rigid pricing and release schedules of the tickets.

I don't support scalping but wish the artists and promoters would step up the fight themselves too.

I don't support scalping but wish the artists and promoters would step up the fight themselves too.

That's exactly what Louis CK is doing.

Yup, and great for him! I wish more would do the same.

It's not so much an argument "for scalping" as an argument against being emotional and extreme. So, once again, - no, not everyone benefits. Without the higher price tickets available from the scalpers, they would not have been able to go. They got what they wanted at a price they could afford. Disliking something is not the same as it being inherently and totally evil.

You're putting words in my mouth.

> Without the higher price tickets available from the scalpers, they would not have been able to go.

Again, this is assuming that the amount of competition for the tickets is not affected by the scalpers. In reality, the scalpers are exactly the ones driving the scarcity.

Scalpers can only make money if there are more people willing to buy tickets at the face value than there are tickets available.

Here, go learn what a demand curve looks like and then think more carefully about this: http://www.khanacademy.org/finance-economics/microeconomics/...

That's the whole point of scalping, to affect access to tickets. Has more money => has more access to scalped tickets vs normal tickets

Suppose there are 1000 tickets for a show that are $20 each. There are 5000 people in town who would buy a ticket at that price. Without any scalping, the first 1000 people who show up get a ticket and 4000 people go home unhappy.

With scalping, the first 1000 people who show up still get tickets. 900 of them are scalpers. (So if you were in the first 100, you still got to pay face value.) I'm being very generous with this scenario--I've personally never seen a situation where this was a real problem, as I've gone to every ticketed event I've ever wanted to paying face value.

The 900 scalpers all pick different prices. At $40, there are about 2000 people left in town who want to buy a ticket. Some of them get tickets, but the other scalpers get wise and think, why not charge more? So they charge $50. Or $60. Eventually they reach a point where there are exactly n tickets left, and exactly n people left in town who are willing to buy at that price. If the scalpers overprice the ticket, no one will buy, so they'll need to lower the price again. But generally, what's reached is a fair price that sees all the tickets go to people who actually were willing to buy them at the price they bought them at.

So let's look at what's happened. Without scalping, you have 4000 people who missed out on buying tickets because they weren't first in line and 1000 people going to a show. With scalping, you still have 1000 people going to a show, but instead of all of them being picked on the less-than-perfectly-fair basis of who was first in line (which is a disadvantage to people with more work, more responsibilities, inconveniently timed emergencies, and slow internet connections), some of them are picked based on who was first in line, and some of them are picked based on who was willing to pay more (which is a disadvantage to people with less money).

You might think, well, it's better to be unfair to busy people than to be unfair to poor people. But let's change this thought experiment and say the face value of the tickets was $60 to begin with instead of $20, and at $60, there are exactly 1000 people in town who are willing to buy a ticket. Now there are no scalpers (or if any scalpers do show up, they can only resell the ticket for face value anyway). I would argue that this scenario is strictly less fair than the scenario where the face value was $20 and there was some scalping, because at least in the first scenario, it was possible to get a lower price by getting in line first!

Fundamentally, what difference does it make who's setting the price? You might say, well, if the face value was $60, at least the performer (or the venue, or the ticket vendor) is getting the extra money, not just some "scalper". But the scalper is effectively getting in line for you. He's going out of his way to do the leg work for you. You know who else we pay a premium to for doing the leg work? Shopkeepers. Sure, if we really wanted to, we could go to some warehouse and save some money by buying all our stuff off a pallet. (You still can if you want to--it's called Costco.) But maybe I'd rather some other guy does all that legwork for me, and in exchange, I'll pay more. And if you're running around doing legwork for other people, you are benefitting those people.

Another perspective on your thinking here, which I think over simplifies the situation.

On my blog (http://www.ticketeconomist.com/prices-101/), I have a chart that observes internet ticket resale for a couple of sold out concerts in 2005 and 2006. Sticking with your terms, the 900 and the 100 bought and sold out the show in 2 minutes. Now, 900 people who wanted to actually buy tickets and see the show have to go to the secondary market. 900 speculators crowded out 900 fans and now they are clearing prices that are anywhere from $10 to $100 above face. It is relevant to point out that the 900 have a number of methods for essentially cutting the line, so there are instances where the "service" involved some form of cheating the system. Is that good?

In fairness, the scenario you present is also not the norm. More often, 1,000 sophisticated buyers compete with 15,000 average Joe buyers for 10,000 tickets. The 1,000 buy the best 2,000 seats and the 15,000 fight it out for remaining 8,000 tickets, assuming there are no hold backs and that Ticketmaster's website works properly, which it often does not. At that point, some fraction of 11,000 desperate and dedicated fans turn to StubHub, eBay, etc. to find that that the $90 ticket is now $190. On the one hand, there was never enough supply to go around in the first place, on the other, 1,000 buyers were crowded out by speculators. The efficient market is really not so efficient with tickets for a complex series of reasons.

Finally, there are some sophisticated buyers who know that they can wait it out and buy tickets at or near face value close to show time. We are among those few, for now.

Critical to your argument is the idea that standing in line is a service someone can charge for. It makes no sense when tickets are sold online 24/7 rather than out a window at a particular physical location. There is no line and no inconvenience to pay someone else to endure.

24/7, but only until the tickets are sold out. It's inconvenient for me to schedule my life around when tickets are going on sale. But a scalper's entire business is scheduled around when tickets are going on sale.

And if you think that problem is somehow created by the scalpers, go learn what a demand curve looks like. When tickets are underpriced badly enough, obsessive fans with fewer responsibilities are going to buy up all the tickets before I'll have a chance. If the prices are high enough relative to demand that I actually could buy tickets whenever I want, 24/7, then scalpers are irrelevant. Even if they did buy up all the tickets, they'd have to sell them back to me at basically face value. Scalpers aren't a cartel or anything, they can't fix prices, and their inventory goes bad almost instantly when the event actually happens.

The convenience argument isn't actually that critical, though. What's more critical is that by allowing people to get tickets two different ways--either buying them earlier, OR paying more--scalpers also make the ticket distribution more fair, not just more convenient for those willing to pay more.

Believe it or not, it's possible to know what a demand curve looks like _and_ disagree with you.

We all want special treatment, but resent it when other people get it. When a government distributes scarce resources unevenly by providing greater access to people who are wiling to pay more on an unregulated market, we don't call that 'making resource distribution more fair by increasing options,' we call it corruption. It's quite possible to make a seemingly well-reasoned argument that corruption is fine starting from the same basis, but most people will find the idea as repugnant as ticket scalping for basically the same reason. In short, I don't think your definition of "fair" as pertains to scalping is particularly meaningful.

For what it's worth, I bought my tickets about a week after they went on sale and had no trouble.

I usually do too, because most tickets I buy have a face value close enough to the market clearing price to begin with. But by your very own logic, that is still unfair--it would be more fair if tickets cost less but were more difficult to buy because they sold out more quickly.

The entire purpose of prices is to help distribute scarce resources efficiently. Just like Nixon's notorious attempt of putting price controls on gasoline, government messes things up when it tries to dictate a lower-than-market-clearing price. And it's hard to get me worked up with a fundamental justice argument over luxury goods anyway.

By increasing liquidity!!

What Louis CK is essentially saying is that given a large amount of money already in the bank, it is more valuable for him to have affordable tickets than it is for him to maximize revenue. That is a decision that is perfectly rational. Not everyone gets their full utility from making the absolute maximum amount of money possible.

Also, a side effect of this is that below-market value tickets create a shortage, which in turn makes it valuable to be the first to learn about new tickets. This has to be driving signups to his mailing list and twitter feed.

Leaving money on the table does no one any favors.

God bless the US health system!

$50 for tickets means the rich will pay less than theyre willing to pay and the poor won't get in anyways. No one wins in that situation.

Economists are crazy. A full house is a full house. The people who win are the people who attended. How you can possibly say 'no-one wins' from a full house of successful comedy on the cheap is beyond me. Yeah, bummer, the cheap tickets to a very entertaining night left us all feeling crappy...

First of all, just because there are a number of people willing to pay $150, that doesn't necessarily mean there are enough of them to sell out every show. So now he either has to lower prices as the dates approach or play to half full venues. Both of which are obviously sub-optimal.

Secondly you're ignoring the broader message sent by charging $150. Even if he can find enough people willing to pay that to fill a small venue, it risks sending the wrong message and pissing off people who might otherwise have bought his DVDs, watched his TV shows or gone to other shows. So now instead of being seen as broadly popular "man of the people" who "sticks up for his fans" with wide appeal, he's seen as a stuck up rich fucker entertaining other stuck-up rich fuckers. This will have obviously negative effects on his TV ratings, where I suspect is where he makes most of his money.

>Leaving money on the table does no one any favors.

Except fans. Who can now buy his DVDs or other swag. (Or afford both his show, and rent.)

If your goal is to get as much money as quickly as possible, there's another word for that. Short-sightedness.

The SF Giants use a variable ticket pricing scheme that seems to be pretty successful. It adjusts the price of tickets based on projected demand. This probably does a pretty good job at eating into scalpers profits (although not entirely). Of course baseball ticket demand is a lot more predictable due to the fact that their are ~80 home games a season.

It would be interesting to see if there was any way to implement a similar system for concerts and shows.

Trent Reznor had some thoughts on that:

"My guess as to what will eventually happen if / when Live Nation and TicketMaster merges is that they'll move to an auction or market-based pricing scheme - which will simply mean it will cost a lot more to get a good seat for a hot show. They will simply BECOME the scalper, eliminating them from the mix."


I think is partially already in place? Ticketmaster now allows users to resell their tickets via their website: http://www.ticketmaster.com/ticketexchange/

Also, is scalping a bad thing? It seems to me that they are making the market more efficient.

It might make the market more effecient. But it annoys your customers.

Problem with scalpers is they reduce the supply of the tickets endemically, thus driving the market price up. If the scalpers aren't involved at all, the market price is lower than the scalped price.

The scalpers are the market-makers. If there were an official market, the scalpers would be out of business overnight.

> The scalpers are the market-makers.

So what? They're not adding any value in the equation, they're just parasitically extracting wealth from all other entities. What's the point of that from a social perspective?

Indeed. And what is the incentive for an artist to allow his/her fans to have their wealth extracted by a third party? None. It only makes the fans less able to buy things from the artist in the future.

Louis C.K. is cultivating/nurturing his fans like a gardener cultivates/nurtures a plant. That clearly includes not letting insects eat the leaves off of a plant one intends to get an ongoing crop from.

The incentive is to allow a specific sect of well-to-do fans access to his show that they didn't get otherwise.

Whether or not you agree with that incentive is entirely separate.

I still don't see how that is an incentive to allow a third party to extract anything from the transaction. He could run an auction for tickets himself to satisfy that desire (if he had it).

You're not going to be able to sell this on HN. The HFT apologists will come invade this thread and go on for paragraphs on end about how market makers provide a valuable service that would otherwise not be provided.

Without scalpers (HFT) apparently absolutely no commerce in the relevant market would ever occur.

Not if people who have no plan to attend buy significant amounts of tickets to corner the market.

It seems as though the important part here wasn't so much that he sold them himself as it was that he added the following clause:

"You’ll see that if you try to sell the ticket anywhere for anything above the original price, we have the right to cancel your ticket (and refund your money). This is something I intend to enforce."

This is something that any middleman could do, too... but the incentives simply aren't there for them to prevent scalping. Especially as Ticketmaster has its own resale site, TicketExchange.

I guess what it really comes down to is: How does he know which ticket is being sold? I imagine if a scalper wants to avoid detection, they just don't give out specific information until the sale is final (banking that Louis CK won't buy their tickets at scalper prices just to find out which tickets to cancel).

If the ticket has some sort of ID, avoid giving that out before the final sale. If the ticket has a seat number, just state the general area of where the seat is rather than the specific seat (until final sale).

Yes, this I agree with. And I think this makes the argument in your top-level comment (that he's too small fry to worry about a different ordering system) much more convincing.

Switch to will call only; require the original CC or photo ID to pick up tickets. He explicitly stated on the ticket purchase page that this was a possibility.

That would be bad for the people that sold their tickets for face value ($45) to recoup costs, though. He has no way to know what the resale price was once someone shows up at the door with the tickets.

StubHub is not owned by Ticketmaster, they are owned by ebay.

Source: http://www.stubhub.com/about-us/

Thanks, already fixed. Chacha got it wrong and confused me until I found more authoritative sources.

> Chacha got it wrong

Chacha? Really? God damn I swear HN is full of internet hipsters. A query for [stubhub] on any major search engine has the following under the Wikipedia search result:

> StubHub (often styled StubHub!) is an online marketplace owned by eBay, which provides services for buyers and sellers of tickets for sports, concerts, theater

StubHub is owned by Ebay

Scalping always seemed like a mismatch between the ticket price incentives and the venues incentives. Venues like to sell out to increase concession sales / parking etc, but 'talent' is better off picking a price that fills, most but not all seats and maximizes their take. I suspect they also increase their cut by selling tickets early and sitting on a few weeks/months worth of interest.

Building hard core, committed fans is probably more valuable in the long term rather than maximizing profits from ticket sales.

Seems like a fair way to do it (while still extracting lots value), would be to a sort of dutch type auction. E.g. theater seats 1000, so you take bids for the max people are willing to pay.

Then, once that closes out, you take enough people to fill, say, the first 5 rows off the top of the list, and charge them whatever the lowest winning bid is of the people in that group. Repeat for each tier going back until the venue is sold out.

This actually tackles the inefficiencies at both ends - people willing to splurge on great seats get them, but if a show is not high in demand, you might still get people who kind of want to go to pay, say, $5 for the nosebleeds.

What happens if someone does sell one of these tickets for over face? Will it get cancelled, the scalper refunded (in addition to the sale value), then the person who bought it gets screwed?

The terms during purchase made it sound like if they discovered a ticket was sold for higher than $45, then they would cancel the ticket without refund. So both buyer and seller get screwed.

This doesn't match the text on the site: "If the ticket is found to be offered for resale above face value we may invalidate the barcode and refund the ticket price."

It's not clear who gets the refund here. If the scalper, then he has no risk, and earns both the money he sold it for AND the refund of the original fee. Win! This is also likely the only refund they can do since they don't have the credit card number of the person who bought the scalped ticket.

If they refund the final purchaser, then the scalper still makes his money and the purchaser loses the amount above the face value.

In both scenarios, the scalper makes his money, or even more than he would have otherwise.

If the final purchaser is aware that their high-price ticket could be nullified at the door, it removes motive to buy in the first place, leaving the scalper with hard-to-move tickets.

He probably eats a charge back from the customer meaning he makes nothing if found out.

Perhaps the refund isn't digital? I.e. you get refunded at the entrance if you have a scalped ticket

That would make the most sense and is how I read the language. You're free to go buy an $80 scalped ticket if you want. But if they can figure out it was scalped, they'll just cancel the ticket and refund your $45 ticket price right at the show.

I don't understand the legal theory here. In the US, scalping laws vary state to state, but I've never heard of "invalidating" a ticket. Seems like I ought to scalp a bunch of tickets and go splitsies with the guy in charge of invalidating.

I love that he's shaking things up. However, he needs to find a better partner to work with on the technology side of things. I tried to purchase tickets for one of the shows listed as available, and it then told me it was actually sold out. Another show let me get further, but then told me my session had already expired (less than 1 min later). Finally, I was able to select ticket options and no 2 adjacent seats were available. It was a lot of effort to discover what they could have told me on the show listing page, and I don't want to spend all the time it would take to check all the other shows.

Contractors not dogfooding their apps is common. I would think that if you sent that exact paragraph to him through some sort of feedback/contact form from his website, he may actually realize that there are some poor UI flows.

Ticketmaster has had most of the issues nailed down for 12 or so years. Nobody ever said disruption wasn't messy :)

Isn't a ban on scalping a violation of the First Sale Doctrine?

No, first sale refers to copyrighted works. Not tickets to go to a show. You can't easily resell airline tickets, or hotel bookings either.

IANAL, but I believe a ticket to attend an event is different from a CD or record. First Sale states that when you buy something like a book or CD, you have full right/control over what happens to it. But I believe that Louis has the right to revoke a ticket, making scalping virtually impossible.

I would like to know what a lawyer says about this, though.

If you ever read the 2pt font on the back of a ticket, you'll find that what you have bought is in fact a ticket license. The physical ticket itself is just for convenience, what you're paying for is the right to attend.

It would probably protect selling the paper, but not the service it represents.


Sounds to me like:

1) Louis CK isn't big enough for scalpers to care about going through a non-traditional method of obtaining tickets.

2) People that would turn to scalping to recoup their expense when they can't go are just going back to Louis CK for a refund.

Personally, it sounds like offering a full refund also comes with the possibility that scalpers will purchase the tickets because they can easily flip them back for a refund (an $0 loss sans time spent) if they can't sell them for a profit. I admit that I know nothing about the 'event ticket scene' so I may be missing something.

Did it actually say you can get a refund at any time? The only place the word "refund" appears is here:

> ...we have the right to cancel your ticket (and refund your money).

So based on the article, we don't know if you can get a refund on-demand. All we know is that if he (his people) decide to cancel your ticket, you get a refund.

Did you read it? #1 is invalidated by the fact they're comparing his shows (sold traditionally) vs. his shows (sold independently), not his shows vs. others'.

EDIT: nevermind, I get it now.

The thing is that his shows sold traditionally are sold exactly the same was as plenty of other tickets, through some big site. So, as a scalper, you just trawl through Ticketmaster (or whatever site in question) and buy tickets that look promising. You have your existing process and it works on tickets for anything sold through the site.

When an individual performer stops using the site, the only scalpers are going to be the ones familiar with the performer. That is, the sort of scalper that just goes through all the shows on Ticketmaster won't even realize that these tickets are an option--only somebody following Louis CK would.

Even if some scalper does realize, a relatively small show (I don't actually know the size of Louis CK's shows, so I'm just assuming they're not too big) will not be worth changing your process for. You would have to spend a significant amount of time figuring out the restrictions of the custom site he is using and how to best profit off them--there is no guarantee that this time would be worth investing.

This is basically like a small site using a custom CAPTCHA as compared to using a very common one. Spammers aren't going to bother with your site in particular, but if you use a common CAPTCHA they know how to deal with, they will spam even tiny sites.

I think the hypothesis in #1 is that many scalpers just buy up tickets through regular channels for all big shows, going down the list. If you're not selling tickets through regular channels, people using that approach won't even have you on their radar, and may not consider it worth their time to go after the handful of events sold via "weird" means when they can just move on to scalping the next event on ticketmaster.com instead.

I am not sure you understand the argument.

#1 is like saying virus makers don't write virii for the operating system I wrote for myself...it just means I have an obscure operating system not necessarily a virus proof operating system.

If everyone starts going this independent route, you can bet that scalpers will shift their methods over to these new ticket purchasing systems.

And number 2 is invalidated by the fact that the terms allow you to sell your ticket, just not for more than you paid.

Huh? Many sporting event tickets have the same terms (tickets cannot be sold for more than face value), but that doesn't stop scalping.

Scalping here is prevented by the customers knowing that the tickets will be canceled, and so they'll be out of pocket.

"You’ll see that if you try to sell the ticket anywhere for anything above the original price, we have the right to cancel your ticket (and refund your money). This is something I intend to enforce."

How? He doesn't claim that he will check id's for all sold tickets (he says he might) and he may not be on strong legal footing to take a chance and deny entrance to someone who shows up with a ticket that they purchased.

Using stubhub as an example I'm wondering what the connection is legally between a representative from louisck seeing a particular seat is for sale on stubhub and then cancelling the ticket making the assumption of course that the person buying the ticket posted it there (and it's not a typo or other error or even some kind of "denial of seat" attack against the true purchaser).

"Tickets may not be resold for any amount above face value."

How is that going to be enforced? What is the cross check between a particular seat and proof that a ticket was sold for a higher amount?

Edit: Also what happens if you want to buy a ticket as a gift for someone? How can it be proven that a ticket was not a gift and that it was resold at a price higher than face value?

I've read this entire thread with great enthusiasm, and I am about to make a comment that will probably be scoffed at by the majority of you. However, where does ethics and morality factor into the good/bad of ticket scalping? If it was NEVER the artist's intention to have their tickets resold, and the scalper does it anyway, then regardless of who benefits or who doesn't, is it still ethical? And if not, should it be practiced?

Why not just sell the tickets via Dutch multi-item auction with bidding. If auction ends sufficiently close to the event scalpers can't get much profit from rich fans because they don't have much time to find buyers and price at what they bought tickets is closer to the market value. Also scalpers coul only sell for profit only to people who didn't attend the auction or decided to pay more then they declared during auction.

> Dutch multi-item auction with bidding.

Some events fail to sell out because they were priced too high, but others don't sell out because there's not enough interest. So you'd need to set a price floor.

> If auction ends sufficiently close to the event...

People don't know whether they've gotten in until after the auction ends. End it close enough to the event and people are unhappy they can't plan.

You can set minimal price in multi-item auction. You don't have to sell out for auction to end. And you don't have to sell for zero if there are not enough buyers.

As for the second argument, I don't suggest ending it minutes or even hours before the event. Rather days or weeks. The point is that all people who want to go can declare how much they are willing to pay beforehand and if their best offer gets beaten by scalpers, the scalpers won't profit by selling tickets for more money to them just before the show.

My suggestion is not to remove scalpers altogether but limit their opportunities for earning and helping artist extract some of the additional wealth that currently goes to scalpers. Those scalpers that remain would provide legit service of providing tickets to people who couldn't attend an auction.

Even days or weeks is insufficient. If I buy tickets to an event four months from now it is usually incredibly easy to arrange an affordable flight, for example. Or if two mutually exclusive events I am interested in have tickets go on sale at the same time right now I can pick one and purchase a ticket. If they are sold out I can pick the other event instead. With this system if I enter the auction for only one and do not win then I am screwed for the second one as well. If I enter both auctions I run the risk of purchasing both tickets.

I can imagine some other, more subtle planning issues that arise as well. Not that the system couldn't work but I think it would make for a terrible standard model.

As a sort of side-note you talk about helping the artist extract some of the money they are leaving on the table. I don't it's fair to assume that they are leaving the money there because they can't figure out "hey, if people are successfully scalping then I could make more money by charging more!" They have to look beyond a single transaction and keep in mind lower income fans that they still want to please, for example. Such fans would inevitably lose the auction for any show that sells out but some of them actually get to attend the show with the current structure.

> If I enter both auctions I run the risk of purchasing both tickets.

This might be mitigated by allowing people to sell their tickets after auction. They'll be doing that anyway so you could even provide them with platform to do this hassle free.

> Not that the system couldn't work but I think it would make for a terrible standard model.

I think current system is much worse. The only good thing about it is that people can get cheap tickets to really great events fast if they are dedicated enough to stand in line for hours right after they begin to be sold. But that's the loss for artists because is such cases they sell tickets for too low price. Other than that only the fact that you theoretically can get tickets early and you have a lot room for planning. Current system is terrible for people who can afford to buy tickets from scalpers because the scalpers basically freeload on them by snatching tickets and keep them long enough for demand to build up and for price to raise.

You don't have to sell all tickets via the auction. You can gift some to fan associations. Distribute some through lottery. Or even keep some to sell at whatever price serves your purposes just before the show.

What auction would do and what is its greatest value in my opinion is giving the artists (and everybody else) estimate of how high the demand is and adjust price automatically.

The entertainment industry an ticket scalpers have a very healthy symbiotic relationship. Industry gets to sell tickets at fan-friendly prices and rich people get to go to the shows they want to. There is absolutely nothing wrong with that. And I have no problem with this experiment.

Couldn't someone start an alternative ticketing method using this as a model? Proactively squash scalping, select alternative venues, and only sign artists who have big email/twitter/facebook fan bases.

This way, you can avoid the big chicken/egg initial distribution problem.

This all makes me wonder: why don't we have scalpers for popular plane flights?

You mean people that buy blocks of tickets not for personal use and then resell them? We call them travel agencies.

Dynamic pricing.

No such thing as "face value" for a plane ticket.

Ability to schedule more flights in the same day as demand increases.

Did anyone else find the whole "left and right arrow keys to browse articles" on this site really annoying? I accidentally hit them when pressing up and down to read the article itself.

Ticketmaster IS the scalper. Ticketmaster is the party listing the tickets on Stubhub.

The whole system is indeed a mess. Legislation may be the only way to get things unstuck.

Louis must have spent an absolute mint on Paypal fees...

... in order to facilitate the shift away from other ticketing systems that probably cost him 10x?

How are they planning to police scalping?

Sounds like ticketing is ripe for re-invention, how about electronic tickets via smart phone?

Ticketing has long been ripe for re-invention. The big problem is that TicketMaster has anti-competitive contracts with most popular venues.

Louis CK, in trying to do his own thing, is facing largely the same troubles Pearl Jam did in their own effort to end-run Ticketmaster: they're forced to play, in many cases, massively smaller venues. And that winds up excluding more fans than TicketMasters' fees and scalper's artificial price-hikes ever excluded.

As for scalping itself, it can't be "solved". Any feasible system needs to allow tickets to be transferred or gifted in some manner. [1]

And as soon as you do that you've provided the mechanism whereby a secondary sales channel can allow party A to sell party B a promise to transfer the ticket for above-face-value.

[1] To cover people buying X tickets for a giveaway, or one person buying tickets for a group, or people giving tickets as gifts, or people giving tickets away to a show they can no longer attend, etc.

I like the ideas.

Personally, I would set it up as follows:

1. Have a fixed price for non-transferrable tickets, which are identified by ID/CC or sent to a specific mobile device with a QR code or something. These tickets will be refundable.

2. Have a variable price for transferrable tickets, and use an auction type system. These tickets can be transferred but the user must go through the auction and there's a sufficiently long auction period to purchase them. These tickets are not refundable.

I would be really easy to create the same type of scale-able ticket selling system and in-venue verification scanners.

As a Previous Ticketmaster employee I believe the one thing that help prevent competition in this space is that they work with venues and performers. They subsidize Opex cost for the venues, which I think keeps them happy. For the life of me I can't explain why Ticketmaster would go and "merge" with a competitor who had driven themselves (liveNation) to the verge of bankruptcy (publicly stated within 30 days) just to take some venue market share and select artist. LiveNation now runs this combined company - it was less of a merge and more of a bankrupt company convincing a profitably company that they should "merge". IMO this has everything to do with piss poor management at Ticketmaster and the real value of select venues/artists.

You mean like the Pittsburgh startup ShowClix?


There's loads of ticketing startups. (e.g. http://ticketabc.com/ ) It's like trying to sell operating systems though. Microsoft are the big boys.

Seriously,...no body even noticed MogoTix ticketing Facebook's f8 event last year? www.mogotix.com my startup. However, I don't believe MogoTix is the disruption this industry needs.

They're doing that this year at the Just For Laughs 42 event in Toronto, which coincidentally Louis C.K. is headlining.

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