It's hard to understand what makes people more mad: Bednar on lack of ticket price markup limit

Key Concepts

• Ticket Resale Market: The market where tickets are bought and sold after their initial sale, often at prices higher than face value.
• Supply and Demand: The fundamental economic principle that dictates prices based on the availability of a product and the desire for it.
• Bots: Automated software programs used to quickly purchase tickets online, often before human buyers can.
• Digital Queue: The virtual waiting line system used by ticketing platforms when demand exceeds supply.
• Season Passholders: Individuals who purchase tickets for an entire season, often with the ability to resell individual game tickets.
• Face Value: The original price of a ticket as set by the event organizer.
• Resale Rate Restriction: Regulations aimed at limiting the markup on resold tickets.
• Commodification: The process of treating something as a commodity to be bought and sold, often leading to increased prices and reduced accessibility.
• FTC Investigation: The Federal Trade Commission's inquiry into Ticketmaster's business practices.

High Ticket Prices in the Resale Market

The discussion centers on the exorbitant prices, often reaching thousands of dollars, for tickets in the resale market, particularly for events like Blue Jays games. Vas Bedner, managing director at the Canadian Shield Institute for Public Policy, argues that while market dynamics of supply and demand explain some of the high prices for desirable events, other factors are at play, leading to a lack of access for everyday people.

Dynamics of the Ticket Market

• Constrained Supply and High Demand: The core reason for high prices is the limited number of tickets available for popular events coupled with immense public demand. This is a basic market 101 principle where desirable items hold significant value.
• Ticketmaster's Role in Formalizing Resale: A key point of contention is Ticketmaster's involvement in formalizing and profiting from the resale market. This allows them to potentially sell a ticket multiple times and use technology to manage and proxy the existing external demand.
• Bots and Digital Queues: The traditional "first come, first served" model is undermined by the use of bots, which can scoop up tickets before human buyers can. The digital queue system, while intended to manage demand, can also accelerate this process, leading to tickets disappearing within minutes.
• Season Passholder Exception: While acknowledging that season passholders have a right to capitalize on the value of their purchased tickets in the secondary market, the broader concern is that major cultural events are becoming accessible only to the highest bidders. This is seen as part of a broader trend mirroring pricing in the airline and hotel industries.

The Inequity and Potential Solutions

The core inequity lies in the diminished access for ordinary individuals to attend desirable events. While capitalism dictates that highly sought-after items command high prices, the current system is perceived as unfair due to the mechanisms that inflate these prices and restrict access.

• Jurisdictional Experiments with Regulation: Some regions are exploring regulatory measures to address the resale market. These include:
  • Resale Rate Restrictions: Capping the rate at which tickets can be resold. This could involve requiring resale at face value or limiting the markup to a certain percentage (e.g., 10% or two times the original price). The argument is that such restrictions would curb the ability of tickets to reach the highest bidder and maintain accessibility.
  • FIFA's Approach: FIFA has announced plans to reserve a subset of seats for everyday fans at acceptable price points for upcoming events. This highlights the potential for sporting events, especially those with community-building significance like the Olympics, to become exclusive to elites.
• Ontario's Policy Shifts: In Ontario, a proposed rule by the Liberal government to limit ticket markups to 50% above the original price was canceled by the current government, despite their stated intentions to curb ticket prices. This illustrates the evolving political landscape and changing attitudes towards such regulations.

Broader Perspectives and Conclusion

The discussion touches upon what angers the public more: Ticketmaster's practices (which are under FTC investigation) or the existence of potential solutions. Bedner emphasizes that these trends are not inevitable and that there are alternatives.

• Commodification and Cost of Living: The increasing commodification of experiences, coupled with the current cost of living crunch, makes it difficult for individuals to afford these events. Even season ticket holders might consider foregoing the opportunity to profit from resale.
• MLB's Revenue Model: It's noted that while Ticketmaster is a significant player, a portion of the ticket revenue goes to leagues and players. Major League Baseball, for instance, derives about 31% of its income from ticket prices.
• Complexity of Solutions: The challenge lies in finding effective solutions. For example, making scalping illegal can lead to the rise of semi-formal resale markets moderated by computer systems, and bots can circumvent individual purchase limits.

In conclusion, the conversation highlights the systemic issues within the ticket resale market that lead to exorbitant prices and limited access for ordinary fans. While market forces are at play, the role of ticketing platforms, technological advancements like bots, and the commodification of cultural events are significant factors. The discussion points to the need for thoughtful regulation and policy interventions to ensure that desirable events remain accessible to a broader segment of the population.