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Ticket reselling a matter of market forces

Ticket reselling a matter of market forces
April 29, 2013

When tickets for popular events are unavailable or sell out quickly, ticket scalping becomes a hot issue.

As a result, Queensland and Victoria have 'anti-scalping' legislation while the NSW Government is looking to introduce legislation to curb the resale of tickets to sport/entertainment events.

However, as Australasian Leisure Management Publisher Nigel Benton argues in a feature in the March/April 2013 issue of the magazine, any type of resale is surely just a matter of market forces.

Benton highlights how, traditionally, ticket scalpers made their sales outside major venues on event days, aiming to sell their ticket stock to hopeful patrons turning up without a ticket. However, in recent years internet auction websites such as eBay and Gumtree have eased the process for both buyer and seller.

A Commonwealth Consumer Affairs Advisory Council (CAAC) report from 2010, 'Consumers and the ticket market: Ticket onselling in the Australian market' market', published by the Attorney General's Department, defined scalping as tickets being bought with the intention of reselling them for profit.

The CAAC report also found that although technology has made it easier for members of the public to acquire multiple tickets at the same time, an increase in ticket scalping had not followed - although there was a widely held public perception that it had. In addition, the report found that ticket scalping is a relatively small market in Australia compared to the rest of the world due to the small number of events that actually sell out here.

The CAAC report also found that although technology has made it easier for the acquisition of multiple tickets for the same event, an increase in ticket scalping had not followed – inspite of widely held public perceptions that it had. In addition, the CAAC found that ticket resales (both scalping and on-selling) does not cause significant consumer detriment, and that it has benefits for promoters, sport administrators and venues including increased revenue and attendance, while also reducing the risks for suppliers associated with staging an event by aiding the quick sale of tickets.

Key to the whole debate is the mix of pricing, the role of promoters and all types of reselling – including 'premium' ticket resales.

Domestically, there is an often expressed view that tickets for major events in Australia are underpriced.

However, with the current value of the Australian dollar drawing a large program of international entertainment acts to our shores, as well as major sporting events such as the recent Rugby World Cup in New Zealand and this year's Lions tour, the event calendar is both crowded and competitive.

In this competitive marketplace, those staging events are very mindful of pricing – price too low and events will sell out and reselling will follow, price too high and promoters, sport administrators and even scalpers will experience slow sales and may subsequently have to sell their tickets for less than they might first have been worth.

Of course, different bands of tickets sell at different prices. Promoters, sports and venue already ramp up prices for tickets through premium and membership packages giving patrons and fans enhanced live entertainment and sporting experiences.

Unsurprisingly though, if there are premium prices to be charged, promoters and sport administrators, who take the risk in delivering the entertainment and sporting product, want the benefits, rather than on-sellers and scalpers.

Although there is cultural resistance to it in entertainment and sport, variable pricing is frequently used in many other parts of the leisure industry, particularly by airlines and hotels, where pricing changes daily, even hourly, in anticipation of demand and other economic factors.

Such pricing is just an extension of the laws of supply and demand, and when those staging an event can't meet those economic realities, third parties are more than happy to step in and meet patrons' needs. And variable pricing is gaining acceptance in sport, with the AFL recently announcing that it will trial variable ticket prices for games during its 2013 Premiership – where it is likely to be introduced for games late in the home and away season.

When, in 2011, many New Zealanders were concerned about the scalping of tickets for the Rugby World Cup final, Dr Eric Crampton, Senior Lecturer in Economics and Finance at the University of Canterbury explained his belief that ticket scalping is a market response to under-priced tickets.

Dr Crampton stated "one way or another, markets … let prices adjust to set demand equal to supply. Goods flow to the users who value them the most as measured by prices.

"When we put in place a price ceiling below the market clearing price, the market clears instead by queuing: would-be attendees have to spend time and effort rather than money to get their tickets.”

Dr Crampton also highlighted the widespread belief that those staging events could easily prevent scalping by simple security measures such as printing the name or a photograph of the buyer on the ticket and by checking identities at the gates.

Other deterrents to scalping would include firmer enforcement of ticketing agency's conditions of sale, where they may be voided if they are resold for a profit and/or banning people without tickets from event precinct to prevent traditional event scalping.

Such moves would certainly deter buyers – whose scalping ticket purchases may be counterfeits or invalid or, even if they are not frauds, risk not getting any type of refund if an event is cancelled by not being linked to the original seller. Conversely, some online sites do offer buyer protection for fraudulent transactions.

In spite of these market forces and with underutilised current security protection, there are fears that new and expanded anti-scalping legislation in Australian states will be introduced and, rather than protecting the consumer, will transfer risk from the promoter to the fan by driving scalpers into non-transparent locations, by reducing choice and with greater risk of fraud with no recourse to legal protection.

Nigel Benton's feature, 'Sell Out', is published in the March/April 2013 issue of Australasian Leisure Management.

Image used for illustrative purposes only.

27th September 2012 - BEWARE OF UNAUTHORISED TICKET SELLERS TO THE AFL GRAND FINAL 

10th September 2010 - U2 CONCERT TICKETS WARNING


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