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Wrestling with scalpers in the free market

Nine Inch Nails' Trent Reznor grapples with ticket prices not matching what people are willing to pay. Why should he let a scalper pocket the extra bucks?

A year and a half after I first blogged about ticket brokers and the free market, the rest of the world is finally catching on to the fact that scalping isn't going away.

A lot has happened in the intervening time--Live Nation emerged as a competitor to Ticketmaster, then agreed to merge with Ticketmaster, and The Wall Street Journal has published a couple of articles exposing the fact that artists and managers often team up with ticket sellers (like Ticketmaster) and brokers (like Ticketmaster subsidiary TicketExchange) to sell their own allotments of tickets for several times their face value.

Eventually, concert tickets will be sold through a dynamic pricing model, just like items in a bazaar. Photo by Babak Gholizadeh, via Wikipedia

Nine Inch Nails' Trent Reznor on Sunday posted a fascinating take on the whole practice of scalping. As he points out, Ticketmaster or Live Nation could have stopped the practice of scalping eons ago--all they'd had to do is print the purchaser's name on the ticket and require a photo ID matching the ticket to get in, as they do with airline tickets. (And hey, some concerts--like the Police tour--have seats that cost more than the average airline ticket.) The reason they don't is because Ticketmaster benefits from the scalper's market through its TicketExchange subsidiary.

More fascinating, however, is Trent's account of how he wrestled with the temptation to sell the band's allotment of tickets--10 percent, in NIN's case--for more than face value. As he rightly points out, as long as there are people willing to pay $1,000 for front-row seats, either the band has to charge that amount and be criticized for looking greedy, or a second market is going to thrive.

In the end, NIN decided to charge only face value for its allotment of presale fan club seats and to put antiscalping provisions in place: buyers' names will be printed on the ticket, and buyers will have to go through a special entrance where IDs will be checked. He believes that forgoing short-term gain in the interest of long-term fan relationships is the right thing to do.

I agree with his prediction of the future: eventually, the Ticketmaster-Live Nation merged company will move to dynamic pricing for all tickets, similar to how airlines price tickets today. If it's a hot ticket, prices could skyrocket even higher than scalpers' prices today. Then again, if tickets aren't selling, there might be a last-minute fire sale--good for fans.

If you're sick of paying exorbitant prices for big-concert arena tickets, I promise you that there are plenty of small bands playing in your town tonight that you'd enjoy, that would love to have you there, and that won't charge you more than $30 for the privilege. You might not get to hear your favorite song, but you'll actually see and hear the band up close, and you won't have to deal with that "down in front" guy who always seems to sit behind you.