Yglesias

Alternatives to Inefficient Ticket Pricing

As history’s greatest monster, I’ve long been disturbed by good bands’ aversion to efficient demand-based pricing for their shows. Annie Lowrey’s article about LCD Soundsystem’s anti-scalper efforts is confirming my priors:

But LCD fans were not left out in the cold. The debacle attracted the wrath of the band’s charismatic front man, James Murphy. On LCD Soundsystem’s blog, he wrote: “this here is just to say that we were more than taken aback and surprised about the speed of ticket sales for the april 2nd MSG gig, as well as the effectiveness of scalper pieces of fucking shit at getting their hands on said tickets before fans could, and it’s knocked us on our asses.”

The market had failed in his mind. He told fans not to pay thousands of dollars to get into the Madison Square Garden show: “I will try to figure a way out to fuck these fuckers. NO MATTER WHAT WE DO, IT IS NOT WORTH THAT KIND OF MONEY TO SEE US!” Soon enough, he realized he had an ace up his sleeve. He flooded the market, adding shows, upping ticket supply, and hopefully pushing prices down. (Those shows will go on sale this Friday.)

This is my current understanding of the dilemma. Optimal allocation of LCD Soundsystem tickets requires demand-responsive ticket pricing. But good rock bands are not composed of narrow-minded amoral profit-maximizers. Consequently, they’re motivated to price tickets at a lower level than the market will bear leading, in turn, to middlemen getting the rents. What’s needed is a way for bands to price tickets at demand-responsive levels in a way that’s consistent with the norm that the guys in a cool band shouldn’t be narrow-minded profit-maximizers. The best solution here, I think, is charity.

Someone (Bono?) needs to set up a trust fund to which bands will allocate the excess revenues that accumulate when the market price of concert tickets exceeds the “fair” price as determined by the bands’ moral intuitions. In that case, instead of a situation where “[t]ickets with a face value of $49.50 were going for 12 times that” on a secondary market you’d have a scenario where tickets are going for $500 and $450 out of that goes to the trust fund. The fund could take the money and give it to poor people in Africa and India. They need the money a good deal more than LCD Soundsystem fans do. You could say, very legitimately, “it’s too bad that not every fan can see the show, but we need some allocation mechanism, and I’ve tried to pick the one that will do the world the most good.” Hopefully Jeff Sachs would vouch for the plan.