At the Beijing Olympics last year, A.J. Daulerio of the Deadspin.com sports Web site decided to try to get into what was supposed to be a sold-out boxing match. Beijing, as some people might remember, was the Empty Seat Olympics, so the idea that Daulerio would be able to get into an Olympic match at the last minute was by no means far-fetched. Daulerio made inquiries and set off to find a scalper, apparently not hard at all. The rub, though, was that Daulerio didn't want to spend a lot of money on the ticket. He didn't just want to get into the match—he wanted his ticket cheap: at face value. The reaction from the scalper to Daulerio's woefully lacking offer? "I'd rather tear them up."
Daulerio's story of the Beijing Olympics perfectly illustrates the conundrum of ticket scalping. At one time, the thinking on ticket scalping was that it was a public nuisance, banned in most places and seen as a small step above theft. Over the past few years, though, the thinking has changed. Some recent economics papers have made the case for scalping. Many people now see anti-scalping rules as a vestige of quaint reliclike laws barring alcohol sales on Sunday. Several states—including, for two years, New York—have experimented with repealing their anti-scalping laws. If people want to pay a fortune for tickets to concerts and sporting events, why shouldn't we let them?
On the other hand, some well-known music stars have been very vocal about keeping tickets out of scalpers' hands. Bruce Springsteen went ballistic over TicketMaster selling tickets to his concert at far, far above the face value. Jon Bon Jovi made an issue of it when he found scalpers selling tickets to his free Central Park concert for hundreds of dollars. Now Miley Cyrus has gone on the offensive with a new electronic ticketing system designed to foil scalpers.
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All this gets even more complicated, though. Because guess what: At the same time that some musicians have complained about scalping, others, such as Neil Diamond, have sold large batches of their own tickets through TicketMaster's "resale" site, TicketExchange, at sky-high prices. Meanwhile, some of those who have complained about scalping have simply issued premium tickets with prices just as high as the scalpers charge—Miley Cyrus might not like scalping, but she's also selling ticket "packages" for $295 herself.
In navigating through all this, Daulerio's story and a bit of basic math turns out to be very useful. We've become more accustomed to the idea that if people want to pay a lot for something, it's often a good idea to let them. The market can do a lot to ensure that tickets go to those who want them most. But the scalping story is also not the simple "let the market sort it out" tale that defenders of scalping would have you believe. And that Beijing scalper's "I'd rather tear 'em up" nails the problem.
Many people assume that a laissez-faire market in which resellers auction off tickets will ensure that all the tickets get distributed, but this is emphatically untrue. All those empty seats at the Beijing Olympics testify to that. Or look at many sold-out Broadway shows, where you'll find that as the lights go dark and the curtain rises, some of the best seats remain empty.