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March 12, 2012 | by  | in Opinion | [ssba]

C.R.E.A.M – Scalping

A few weeks ago, three teenagers busted Member of Parliament Trevor Mallard outside his Naenae office. He had committed a horrendous crime. The media were baying for blood. He had ‘scalped’ concert tickets on TradeMe.

The battle began: Trevor took to the airwaves, defending his actions. He had done no wrong: “if they didn’t like it they shouldn’t have bought it”; “it was a private agreement”; hiking ticket-prices was fine because he “knew that they were worth more”.

Unfortunately for Trevor, but hilariously for us, he was the very man who introduced New Zealand’s anti-scalping legislation back in 2007. Then a minister, Mallard had said that scalping “can potentially put attendance at major events further out of the reach of many New Zealanders”. So which Trevor is right? Does the selling of tickets online lead to a better market, or are sell-out scalpers screwing us over?

To answer, we need to look at the basic problem: why are concert tickets so cheap? Trademe has tickets listed for way more than their original cost; and people buy them. So why don’t artists charge more?

It’s about the fans. People might pay $200 to go to a Slipknot concert, but they’d be really pissed off and the bands reputation would suffer. That’s a problem, partially because angry Slipknot fans are fucking scary, but also because entertainers are totally beholden to fan loyalty. Eminem, Avril Lavigne and Joey Jordison are all fantastic musicians, but their chief business isn’t creating a product: it’s creating a culture in which that product has value. Musicians sell love. By the way: leave Britney alone.

Concerts are partly tools designed to encourage that loyalty. For that to work, promoters engineer the market to ensure that it’s the committed who win. When selling any product, demand is driven by the wealth of the customers and the benefits they get. By shifting the currency of concert-tickets away from money and towards commitment, musicians stop wealth from mattering: infatuated fans will get the tickets, those who care less miss out.

As committed but broke students, we support this, so we think expensive concerts are shit; we get grumpy when scalpers re-engineer the system away from passion and back to wealth. When Mallard hiked prices, he ripped off the bands and he ripped off the committed fans. But there is one group he didn’t rip off: the kids who bought the tickets; if it weren’t for him, their laziness would have denied them tickets. That it was them who caused the uproar is indicative of another basic economic truth: there’s no such thing as a free lunch, but there are many people trying to find one.


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