Jason and I were PhD students in the economics program at the University of Texas at Austin for five years, and Barry Kahn was a classmate of ours. However, during the last two years of the program while Jason and I were working on dissertations, Barry was spending most of his time on a business idea. Using the tools of game theory, microeconomics, and industrial organization, he was developing a company that would attempt to take back to the original ticket seller some of the profits that scalpers always get on the secondary ticket market. The result is Qcue (pronounced kyoo-kyoo) and the product is called dynamic pricing.
Barry's company, Qcue, has since been referenced in The New York Times and on the Marginal Revolution blog, and has signed such professional sports teams as the San Francisco Giants and the Dallas Stars.
Ticketmaster.com has felt some of the pressure and seems to be taking a different approach. Rather than capture some of the consumer surplus that gets left on the table by charging one price for tickets, Ticketmaster is forcing the surplus remain with the original consumers and not the scalpers.
It is interesting in the CNBC video above that the anchor says he would be frustrated to know that he was sitting next to someone in Yankee Stadium that paid less than he did for his ticket ONLY if they both bought their tickets from the front office. He wouldn't be angry if the person with the lower-priced ticket bought his ticket from a scalper. He seems to care who gets the benefits. My thought is that a true Yankees fan would want the Yankees to get any excess profits so they can buy better players and have a better chance to win the World Series. Why would I want some scalper to get the profits.
The fact is that tickets become a commodity once they are sold. There is an active and liquid secondary market for tickets anywhere they are sold whether it is legal or not. Tickets to entertainment events behave very similarly to a stock. In Utah, where scalping is legal, I sold my BYU vs. Florida State football tickets two weeks ago for $75 each. I bought them at the beginning of the season for about $22 from the BYU ticket office. My brother, who has season tickets with me, described the people who were sitting in my seats, and they were not the people I sold my tickets to. The guy I sold them to probably resold them for an even higher price.
The point is that there is probably a better way for entertainment and sporting events to sell tickets and capture the profits that scalpers have historically scooped up. I don't know if Qcue is the answer, but I think Barry has at least started the ball rolling in the right direction.
Ticketmaster.com has felt some of the pressure and seems to be taking a different approach. Rather than capture some of the consumer surplus that gets left on the table by charging one price for tickets, Ticketmaster is forcing the surplus remain with the original consumers and not the scalpers.
It is interesting in the CNBC video above that the anchor says he would be frustrated to know that he was sitting next to someone in Yankee Stadium that paid less than he did for his ticket ONLY if they both bought their tickets from the front office. He wouldn't be angry if the person with the lower-priced ticket bought his ticket from a scalper. He seems to care who gets the benefits. My thought is that a true Yankees fan would want the Yankees to get any excess profits so they can buy better players and have a better chance to win the World Series. Why would I want some scalper to get the profits.
The fact is that tickets become a commodity once they are sold. There is an active and liquid secondary market for tickets anywhere they are sold whether it is legal or not. Tickets to entertainment events behave very similarly to a stock. In Utah, where scalping is legal, I sold my BYU vs. Florida State football tickets two weeks ago for $75 each. I bought them at the beginning of the season for about $22 from the BYU ticket office. My brother, who has season tickets with me, described the people who were sitting in my seats, and they were not the people I sold my tickets to. The guy I sold them to probably resold them for an even higher price.
The point is that there is probably a better way for entertainment and sporting events to sell tickets and capture the profits that scalpers have historically scooped up. I don't know if Qcue is the answer, but I think Barry has at least started the ball rolling in the right direction.
