How does a ticket priced at $75 to a live theater performance end up costing $1400 on the street? The answer is scarcity.
Being a miser, I think $75 for 1 to 2 hours of entertainment is pricy enough. I don’t pay that much to the woman who cleans my apartment and her service benefits me more than a seat at a performance of Hamilton. Worse, no dancer, singer, wardrobe assistant, usher, artistic director sees a dime of that street money. The hucksters take it all.
Like Wall Street day traders, these mercenaries are people who insert themselves between the seller and the buyer without contributing a dime to value. Using bots to scoop up tickets by the thousands, they resell them on the secondary market and profit from demand. (“Hot Tickets and Wall Street Marks,” Bloomberg Businessweek, October 2, 2017, pg. 33.) When an item is scarce, buyers can lose perspective and a good deal of money.
Gouging fans with outrageous ticket prices is illegal, of course. In New York, six companies have paid fines of 44.2 million for violating state law. But given the huge potential for profit, the fines aren’t much of a deterrent. Worse, some of these sellers don’t have tickets. They dangle promises to an unwitting public, take the money and leave the consumer with air.
Some artists have tried to protect their fans. “Bruce Springsteen and Taylor Swift are working with Ticketmaster on a Verified Fan program, which limits ticket sales to fans who’ve been vetted to confirm they’re real people,” not bots. (Ibid pg. 33.)
Still, like drug trafficking, consumers create the market. If we stopped paying fraudsters outrageous prices to see Hamilton, the prices would come down fast. In the world of commerce, it’s the law of supply and demand.