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Ticket touts are good for spectators Samuel Brittan: Financial Times 29/08/03 An unauthorised person who sells a ticket for a sporting occasion, concert or other public event at above the original price is often called a ticket tout or - in the US - a scalper. The words themselves are highly loaded. I do not think that there are many people who would like to be introduced as scalpers at a New York or even a Las Vegas dinner party. Yet the immediate instinct of a market economist is to regard his or her activity as prima facie beneficial. You have not been able to obtain a ticket for some desired event or you have decided to go at the last minute. You buy the ticket from someone at an agreed price. He would rather have the money; you would rather have the ticket. Both gain. Is there anything wrong other than the dislike of someone appearing to make a fast buck? If the touts did not exist he would have to sulk at home. The dislike of ticket touts is closely allied to the dislike of speculators in security, foreign exchange or property markets. In all these cases they often fulfil a valuable function, although there are of course complications and exceptions. Attitudes vary widely. At the Glyndebourne Opera Festival in southern England there is an absolute prohibition on resale above face value; and anyone who is caught doing so will never be sold a Glyndebourne ticket again. At some continental music festivals on the other hand, it is well known that you can usually obtain a ticket for a sold-out event from certain hotel concierges. Surely these people perform a useful service for late-comers. And if they make a lot that way it will probably be at the expense of the normal wage they are paid by their hotels. There is least objection to the non-professional who sells at the gate at face value. It is what I usually do, although I am far from proud of it. Suppose that there are three applicants for one ticket. You might want to hand it over to the neediest looking or the one who might appreciate the game or concert most. But suppose you have no means of knowing. Why on earth should you not sell the ticket to the buyer who offers most? If you feel you do not deserve the windfall you could always make a donation to the National Society for the Prevention of Cruelty to Children or, less advisedly, to some egalitarian socialist group. All these are however, relatively low key instances. The greatest horror is normally reserved for the professionals who are alleged to buy thousands of tickets as soon as booking opens and subsequently sell them at a profit with no intention of attending the events themselves. The popular belief is that they drive up the price to the normal audience. Only if the official promoters undercharge. If they charge market-clearing prices themselves there will be little over for the touts. Many readers will find it is high time I introduced some qualifications. One example is given by an American economist Pascal Courty in the Journal of Economic Perspectives, Spring 2003. He makes a simple division between die-hard fans and busy professionals. The last group do not like to make up their minds too far in advance. The author maintains that in equilibrium, with all tickets sold, the die-hard enthusiasts will obtain their tickets at face value from the promoters, assuming there is appropriate pricing. On the other hand the touts will pay slightly more for some tickets when booking opens and then re-sell them to busy professionals at above the official price. This model assumes that the promoters cannot or will not change their own prices as time goes on. But why not? In fact it already happens to some extent, but the other way round. Some of us receive from theatre managements or hear on the radio offers of cheap tickets, provided they are bought by an early enough date. It would not require such an extension of existing practice for there to be especially dear offers during the later stages of a popular run as well. But I doubt if such adjustments would eliminate ticket touts completely. It is extremely difficult for promoters to know exactly what the market clearing price is for late buyers. The touts have the advantage of extreme flexibility. They can raise prices very quickly if they see that queues are forming and they can drop them. Booking office clerks would probably not be trusted to behave in this way. Promoters already practice some discrimination. Some will sell at a lower price to those who will buy tickets for a series of events - sometimes linked as in Wagner's Ring Cycle, but not always so. If the managements in question are purely commercial bodies, then if they can take some of the profits from the touts in this way, good luck. But the system is most often used by taxpayer-supported arts bodies. It then becomes more doubtful. The purchaser is in fact being bribed to see something he does much not care for by a lower price for what he really likes. Worst of all is the abonnement system used in both some American and continental concert halls, where almost the only way of buying a ticket from the box office is to purchase a whole series. This can be maddeningly inconvenient, even if you happen to like all the concerts because of inconvenient timings. In such cases a second hand operator, whether or not you call him a tout, can bring together an otherwise unsatisfied music lover with someone holding onto a ticket he does not really want. The biggest conflict with touts arises when there is a policy of deliberate under pricing. The BBC has a conscientious objection to selling tickets for its more popular Promenade Concerts at market-clearing prices. It wants to give preference to younger people who might not be able to afford such prices. They regard providing the tickets to those lucky enough to win a ballot or willing to queue up all night as the lesser evil. To be fair, they have more expensive seats which are not so difficult to obtain. The US National Football League has a similar attitude. It prefers to allocate scarce tickets for the Super Bowl by lottery to maintain "an ongoing relationship with fans" to selling them at astronomical market prices. The NFL is very well aware that the latter could alienate the television viewers who provide 60 per cent of its revenue. Indeed I doubt if it would be desirable in Britain to have the crowd-pulling "last night of the Proms" taken up by puzzled Japanese bankers or Brussels bureaucrats brought in by corporate hospitality, and to whom the presence of Union Jacks and silly slogans would have to be explained. The BBC does vary Prom seat prices seats according to the occasion, but could usefully go further. Lower price could also be used to attract people to avant garde pieces. This would be less insulting to all concerned than sandwiching them between popular items such as Beethoven's Fifth symphony and Tchaikovsky 1st Piano Concerto. But I suspect BBC management would regard even these limited moves as supping with the devil. There are numerous other occasions where prices are kept rigid in the face of shortages and surpluses. Why do not popular restaurants raise prices on busy evenings and lower them when trade is slack? The usual answer is that customers value the certain knowledge of what they will have to pay more than they do the convenience of always getting a table. A colleague has suggested that a restaurant that is known to be "difficult to get into" attracts a certain cachet. There is more choice than appears. The price mechanism is an extremely useful human invention, but one which comes up against the popular attachment to the mediaeval notion of the "just price". The fervor of minority support for the mechanism comes not only from economists wanting to justify their own subject. It also comes from a belief in choice rather than queues, allocation systems and general bossiness in the name of fairness.
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