It artificially inflates ticket prices by inserting a completely unnecessary middle-man in the purchase process. This is done by people with no intent to actually use the tickets they bought, so it's very much not the same as "oh I can't go would you like to buy my ticket?"
This is similar to a dark pattern I've seen at shopping malls where they offer a valet service, but also rope off all the close parking spaces for valet. This creates an artificial scarcity of close parking spaces which helps to drive the valet business. If they never did this there would be little desire for the valet service.
Tickets that can be scalped were priced at below what you might naively consider "market" prices. The purchasers gain some value from this, and usually the sellers do too — often in the form of hype, perennially useful for promotional purposes. Someone who scored a hard-to-get ticket for a good price is likely quite excited about it.
But the difference means there is a strong incentive to turn the difference into cash, and even with inefficient processes in the middle, that incentive is substantial.
You can of course spend all day saying it's "wrong" and it's a position you are welcome to take; there are interesting questions we could ask about who should rightly "own" abstractions like the hype, and why, but it is not protected by normal property law, and if property rights don't exist or aren't enforced then you know that the necessary conditions for free-market efficiency do not exist.
But again, it's as natural as any other economic effect.
How is the price inflation natural? The supply-demand relationship is unnaturally muddled with when someone restricts supply by purchasing all the tickets at once, especially with automated tools average consumers don't have/use. They then just resell the tickets - not at some supply-demand balanced value, but at their determined value, often 200%+ the original price.
Supply is already fixed on things like tickets anyway, due to venue sizes, so this is just further restriction. It's not natural.
I'm not a particularly big fan of Kid Rock, for a number of reasons. But he and a few artists had started doing things to thwart scalpers.
Namely, he'd announce tours slowly. And basically the strategy was that as scalpers bought out shows, he'd add another show in the same city. And keep doing that until there was no demand, no resale market, so scalpers were forced to sell at face or near face value. "I can keep throwing dates at you, and you're paying for the seats, so it doesn't hurt me, but no-one will buy them from you".
Eventually the scalpers learned to not, or minimally resell his tickets.
I mean, the enabling principle behind scalping is that demand is more than supply but supply does not increase to match. More people want the tickets than there are tickets, scalping means it's based on cost instead of who you know or how much time you're willing to spend or how lucky you get.
This doesn't just solve scalping, this fixes the lack of supply of tickets which allows scalping to exist
edit: I'm not sure I completely stand by this. There are various good reasons to sell tickets for cheaper than the maximum price you could and still sell out. Still, it's a harder problem to solve than it looks
>> Tickets that can be scalped were priced at below what you might naively consider "market" prices.
Maybe. The scalpers are taking a risk buying tickets they may not sell, so it might serve as a mechanism to find the market price for the tickets. OTOH it also creates artificial scarcity which artificially raises the price.
In the end, the scalper is inserting themself into a transaction between two parties that didn't ask for them to do so and were mutually satisfied with the situation prior to that (nothing changed for the seller, and I think most buyers would appreciate the lower price).
> But again, it's as natural as any other economic effect.
Often I hear people supporting scalping as an example of a free market working, and I get that argument.
The problem is the market that actually exists is anything but free, and largely based on deceptive practices and even outright collusion, which is I think what is what a lot of people really object to.
> It artificially inflates ticket prices by inserting a completely unnecessary middle-man in the purchase process. This is done by people with no intent to actually use the tickets they bought, so it's very much not the same as "oh I can't go would you like to buy my ticket?"
Retailers are generally providing a service. Somewhere to go and look at and try out a product, many products conveniently under one roof. Scalpers / touts are not, they are parasites.
Retailers are also have strict liability for the products they sell. When something goes wrong, it is up to them to make customers right and go after the manufacturer to recover those damages.
> Retailers are also have strict liability for the products they sell. When something goes wrong, it is up to them to make customers right and go after the manufacturer to recover those damages.
That's sonewhat misleading about how chain-of-commerce strict liability works. The injured party can sue any/all parties in the chain of commerce directly, its not that the retailer is exclusively directly responsible, and then they have to work up the chain.
>> There is nothing inherently wrong with middlemen asserting themselves into a transaction.
Some middle men serve a function to buyer and seller. Specifically they are motivated to put those two in touch with each other and in some cases act as a sort of mediator for a transaction. The ones who insert themselves between parties that are already in touch and ready to deal offer no value.
Example. When the Wright brothers wanted to sell an airplane to the US army, after much effort they got the army to solicit bids on a flying machine that basically matched the capabilities they had (even that was a big deal because nobody though it could be done and the army didn't want to fund "research"). Strangely they got 3 bids. The Wrights IIRC was $25,000. One of the other two dropped out because the reality was they had no product. The third intended to bid lower than the Wrights - enough that he could buy a plane from them and sell it at a markup to the army. The Wrights told him they would not sell an airplane to him (fuck off dude) and he dropped out. That other guy was what I'd call "trying to insert himself as a middleman" where one was not needed in any way, strictly to enrich himself while adding no value.
Back to scalpers - they do offer one particular thing that might be of value. Some can get their hands on premium seats, and by selling those at very high prices they allow rich people to pay extra for special privilege. What you think about that varies from person to person ;-) It's still something the venue could have done a better job of.
Fans who really want to see their favorite artist/sports teams get extorted, and the money goes to scalpers instead of the artists and venues which are actually providing value. Scalpers provide no value to society.
Planet Money has done an excellent episode on this - https://www.npr.org/sections/money/2013/06/25/195641030/epis.... While I broadly agree with this, I would say that scalpers can actually provide a service of exchanging money for time and convenience. For example, you may have a free or cheap concert that sells out extremely quickly, but with scalpers, those with lots of money can always get a ticket. Much of the economy is built on the similar concept of arbitrage, where someone buys something cheaply and sells it for a markup to those who lack the ability or knowledge to get it from the seller's source.
That said, scalpers in particular seem to cause a whole lot more harm than good in general. As the above podcast addresses, it's a very difficult problem to solve systemically if you are intentionally undervaluing your goods.
> For example, you may have a free or cheap concert that sells out extremely quickly, but with scalpers, those with lots of money can always get a ticket.
But how do you square that with scalpers causing the tickets to sell out so quickly? I mean, they're the ones creating their own market. They're not really providing a service if they're the ones creating the annoying need for the service in the first place.
Remember those guys last year who would drive around buying up all the masks, selling them online for 10x? You don't know why everybody hated them? This is why:
The original seller has a reputation to protect and doesn't want to be seen as taking advantage. Maybe it's a musician who would rather sell to kids who are willing to wait in line than to whoever has the most money. Maybe a pharmacy selling masks in 2020. The arbitrage opportunity is for somebody with no reputation or scruples, who chooses to see themselves as just an Angel of the Free Market. To everyone else, he's a jerk.
I like to call this line of thinking "capitalist determinism". Basically, if there is money to be made, it must be made. Letting any other concern interfere with this extracting of value is silly, or unnatural - even immoral.
People talk about it in these detached terms, call it laws of economics and say that it is something that happens naturally. But of course, when one remembers that these so-called laws of economics describes interactions between people, and that you always can choose what kind of influence you want to have on the world.
You're not the first to think of this I assure you.
Most modern scalper platforms collect your credit card and personal info in advance and use it to buy your ticket with their bot. So even if the venue is matching purchase info to your ID and credit card, it all lines up.
Scalpers aren't hawking tickets on show night 200 feet from the venue on the sidewalk anymore.
You pre-buy through them to guarantee that you'll get the ticket you want since everything sells out super fast (because of scalpers!) and you pay the markup for that service.
People tend to not like scalping of any products, it raises the price of the product while adding little to no value. The hate towards scalping is quite visible in the GPU market due to its limited supply
