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Saturday, January 14, 2006

High-Tech Scalping

The St. Petersberg Times does quite a bit more than just list ticket prices for upcoming concerts, it gives a glimpse of the underlying economics:

Internet's golden tickets, Helen Huntley contributed to this Wall Street Journal story, St. Petersberg Times: If you want really good seats to see Bon Jovi at the St. Pete Times Forum next month, be prepared to shell out big bucks. Fifth-row seats were listed for $1,250 a pair Friday afternoon on the ticket exchange Web site StubHub.com. That's about six times their face value. On eBay, the bidding on a similar pair was up to $736 ...

The Internet has forever changed the economics of rock concerts. Legions of high-tech scalpers snap up seats when they go on sale. Then they flip the tickets on Web sites like StubHub, where the markup can reach many multiples of the face value. The result is that buying concert tickets is becoming akin to getting in on a hot initial public offering of stock: Scrappy insiders get them at face value, often with an eye on reselling them at a premium.

Indeed, the number of people buying tickets the old-fashioned way - at a ticket outlet, on the phone or when they first go on sale online - is low. At a U2 concert ... at New York's Madison Square Garden, at least 29 percent of the fans said they bought their seat on the Internet at a source other than Ticketmaster, the authorized ticket agent, according to a survey conducted by Alan Krueger, a Princeton University economics professor.

This isn't just rock concerts. Tickets for everything from Broadway shows to sporting events are increasingly resold online. Super Bowl seats can be bought on StubHub ... the prices start at upwards of $2,000. Classical and opera performances can be found, too, though the offerings usually aren't nearly as numerous...

But reselling has become particularly widespread in the concert business, bringing scalping out from the shadows and into the mainstream. Anyone with a computer and a broadband connection these days can become a ticket scalper. And the ease with which tickets can be flipped creates tremendous incentives for enterprising resellers to snap up tickets before concertgoers can get their hands on them.

From an economic perspective, some argue the markups seen on Web sites are making the market for tickets more efficient by letting prices fluctuate with supply and demand. With eBay and countless other Web sites reselling and auctioning tickets, it's making scalped prices less arbitrary. "It would be very hard to charge something that's far out of line," said Princeton's Krueger, who has studied the rock-concert business.

And while some ... argue that real fans with limited resources are priced out in this new ticket economy, ... StubHub's chief executive, says: "I would argue that the true fans are the ones who are willing to pay the most for the tickets."

But getting seats at face value has become far more difficult. Shows for big-name acts like U2, Paul McCartney and the British band Coldplay sell out in minutes on Ticketmaster.com, while many of the best seats aren't offered to the public. Instead they're held back for highly priced auctions and so-called presales, available through fan clubs, some of which charge membership fees. ...

In a bid to capture some reselling revenue, Ticketmaster ... conducts auctions for premium seats - for Coldplay, Nine Inch Nails, country-music star Martina McBride and others. "The ones putting on the event should be the ones who benefit from this increase in price," said David Goldberg, Ticketmaster's executive vice president for strategy and business development.

For fans intent on getting tickets at face value for sold-out concerts, it is possible, although it can take a lot of effort and some luck. ... Online ticket-buying through unauthorized sources isn't without risk. Many states, including Florida, ban scalping or limit ticket markups, although the laws often are unenforced.

Tickets for these upcoming bay area concerts are a hot commodity. Here's what sellers were asking Friday for a pair of tickets on three popular Web sites. Prices are for two tickets and do not include shipping fees:

BON JOVI, FEB. 17 & 18
ST. PETE TIMES FORUM
StubHub: $162 to $1,250
eBay: $169.99 to $355 "buy it now"*
Ticketmaster: Feb. 17 sold out; $124 for the Feb. 18 (3rd level only)

KEITH URBAN, FEB. 24
ST. PETE TIMES FORUM
StubHub: $198 to $824
eBay: $250 "buy it now"*
Ticketmaster: $100.70 (3rd level only)

COLDPLAY, MARCH 5
FORD AMPHITHEATRE
StubHub: $130 to $590
eBay: $89 to $150 "buy it now"*
Ticketmaster: $83.40 (lawn only)

*Other tickets available on eBay through bidding process. [Last modified January 14, 2006, 01:38:14]

    Posted by on Saturday, January 14, 2006 at 12:21 AM in Economics | Permalink  TrackBack (0)  Comments (0)

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