Should surge pricing be regulated for concert tickets?
Imagine waking up early to buy concert tickets for your favourite band, only to wait countless hours in the virtual Ticketmaster queue, and discover that the original ticket prices have doubled. A few won’t even notice it and simply roll with it, others might be frustrated, but many won't even be able to afford the tickets now. While surge pricing has become a common economic tool for pricing strategy in industries such as travel, hotel bookings, or taxi services such as Uber,with consumers having come to terms with it. This pricing strategy is still relatively new to the concert ticket market. High-profile artists such as Harry Styles, Coldplay and Oasis have used surge pricing, but only recently, with the announcement of Oasis’s reunion tour has this issue been propelled into the mainstream media and politics. This may be due to the high demand for these tickets or the fact that Oasis is known to be the band of the working class, which is naturally quite price-sensitive, bringing up the ethical implications of dynamic pricing. This raises a critical debate: should governments intervene in pricing, or do market forces dictate fairness and effectiveness?
Oasis, a British rock band that rose to stardom in the mid-‘90s, has announced its comeback after a 15-year hiatus since their disbandment, making headlines, and exciting fans all around the world. Since 2009, the concert ticket market has drastically changed and Oasis fans, often known to be working-class citizens, have suddenly encountered the harsh reality of surge pricing. Seeing their favourite band perform live after 15 years would undoubtedly be an experience to remember, but with dynamic pricing driving up ticket prices from £135 (€162) to more than roughly £355 (€427) the cost increase puts a burden on many regular wallets. Ticketmaster introduced this controversial pricing strategy fairly recently, just in 2022. With Ticketmaster controlling 80% of the market for live event tickets, such an approach has undoubtedly raised some eyebrows. This has provoked many politicians to suggest market regulation such as a price ceiling on concert tickets when many loyal fans end up empty-handed as they have been priced out.
Sir Keir Starmer, UK’s prime minister, has reacted to this Oasis surge pricing fiasco by stating his government would get a “grip” on the high concert ticket prices. This involvement of politicians displays that the issue has transcended beyond angry Britpop fans crying their hearts out on social media. The system's lack of transparency increases the legitimacy of the ethical considerations since no fan knows what “wave” of the surge pricing they will catch. While some fans might catch the small wave with the original prices, others will encounter double, which raises the issue of accessibility. There is a lack of equity, where only wealthier fans can buy tickets creating a barrier that prices low-income fans out. Some might say that loyal fans are being excluded by this pricing strategy, leaving those who simply know Wonderwall able to afford tickets. Through this pricing strategy, live events are becoming a luxury, widening the gap between socioeconomic classes. Lastly, as ethical concerns become increasingly prevalent among businesses, Ticketmaster provides a textbook example of prioritising profits over people. To an extent, this could be considered “commercialisation of culture,” with no corporate social responsibility in sight.
While the argument mentioned above may suggest a clear distinction between right and wrong, the economic rationale behind using surge pricing is connected to core economic principles. When millions of fans fight for a finite amount of tickets, surge pricing allows for the efficient allocation of resources, the basic definition of economics. When demand increases, to a point where there is a shortage of a good or service, such as Oasis tickets, surge pricing ensures that it is provided to the people who value it the most. For context: it is estimated that, for the concerts in England and Ireland, more than 14 million people tried to get tickets. Moreover, the concerts sold out within 10 hours, which is remarkably quick given that Ticketmaster’s servers tend to be overloaded. So despite the price increase, the demand was fairly price inelastic, supporting the argument and maximising surplus. Using this strategy allowed Ticketmaster to maximise revenue on, arguably, the largest live events of next year. Despite it sounding cruel coming from an economics editor from Amsterdam, who has two Oasis tickets for a Wembley show on his Ticketmaster account, surge pricing allowed for the efficient allocation of concert tickets.
The beauty of economics is that with logical reasoning, one can find “infinite” excuses for the corporate master plan in the form of profit maximisation. While on paper this may please many students, showing the real-world implications of what they study, it is important to note that live event ticket prices have been on the rise. Only partly can this increase be explained by inflation or the cost of energy prices. The demand for these tickets has been rising and since Ticketmaster has a strong market power, closely resembling a monopoly, it can get away with such exploitative practices. Unfortunately, the solutions to this problem aren’t as easy as simply implementing a price ceiling since this could cause unwanted consequences. One of these consequences is high ticket prices on the secondary market, resulting from scalping, which doesn't solve the issue. Companies with bots could buy tickets in bulk and then inflate the price on their own resale websites. A price ceiling might also disincentive organisers from hosting as many events or investing heavily into concert production, potentially reducing the quality of the experience. For what it’s worth, Oasis might put on a show like the world has never seen before, making it worth €427.
An alternative to a price ceiling, suggested by politicians, would be the Japanese model of ticket sales which is a lottery where fans sign up within a certain period of time and then get randomly chosen. This could reduce scalping as bots won’t be able to buy out as many tickets and then resell them for inflated prices; on the other hand, this goes against the economic principle of effectively allocating resources. While this model prioritises fairness, many fans who would willingly pay more for tickets just to see their favourite artist might miss out because of sheer bad luck.
While the previously mentioned ticket lottery model or regulation always involved the middleman, namely TicketMaster, some artists took it upon themselves and used their voices to fight against rising ticket prices. One of them was Yungblud, who, in response, introduced his own music festival, selling tickets only on his official website. The main goal of this event was for it to be affordable with ticket prices fixed at £49.50 (€59.63) which is a fair price considering the lineup consisted of David Bowie, Green Day, and many other artists. While this “Yungblud model” might need some polishing, it can be the start to a new era of cutting out the middleman in this market. Blockchain technology which is being developed could further support this model and reduce many shortcomings of the regulations and systems mentioned above. Blockchain tickets would allow fans to buy unique tickets, straight from the artists and only be able to resell them to other fans for the same price, reducing the opportunity for scalping. This would make tickets a digital asset, make the system more transparent, and reduce transaction costs, which are increased when Ticketmaster is included in the equation.
Whilst surge pricing isn’t a novel concept, it is something completely new in the live event market. The demand for Oasis tickets has exceeded the fictitious roof of Wembley, nevertheless many core working-class fans feel rightfully offended when being offered “in-demand” tickets. Over the course of the Oasis ticket sales, their costs have more than doubled compared to the original amount. If one ignores the ethics surrounding dynamic pricing, the concerts still sold out, proving the efficient allocation of resources. The ethical considerations are quite clear. There should be a debate regarding policy, or new technology such as blockchain tickets which could cut out the middleman, regulate the prices on the ticket market and increase the transparency of the whole system. Ticketmaster needs regulation because, despite any economic concept, fans belong to the heart of music and concerts.
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