It’s Supply And Demand, Stupid

The Richmond Federal Reserve, a branch of the U.S. central bank, says everyone is pointing fingers in the wrong direction over the faster-than-lightning Hannah Montana sellouts that have become a catalyst for parents, politicians and the media to turn their eyes to the secondary ticketing market.

An article on the reserve’s Web site says the blame doesn’t belong on secondary ticketing but rather that sellouts and subsequent high markups on broker’s sites are just a product of supply and demand – and even suggests that the promoters (meaning, presumably, AEG Live or Disney) could have added to the problem.

The article, dated October 24th by Doug Campbell, included a quote from Stephen Layson, an economics professor at the University of North Carolina, Greensboro.

"If the promoters are deliberately setting prices low, it seems to me they’re just enriching the scalpers," Layson said. "Parents are objecting to the fact that they have to pay such high prices. But my opinion as an economist is that it’s just supply and demand. When supply is very limited and demand is very great, then the market clearing prices are going to be very high. That may seem outrageous but nobody is forcing you to buy your tickets."

Campbell writes that, "Yes, it may be unfortunate that some little girls won’t be able to see Miley Cyrus in concert. The more fundamental issue is that promoters of the Hannah Montana series apparently haven’t priced tickets commensurate with demand, opening the door to a secondary market with much higher prices."

Campbell asks why the promoters for the Hannah Montana/Miley Cyrus "Best of Both Worlds" tour wouldn’t want to charge higher prices for tickets if the market will allow it. He answers his own question by writing, "It may be a simple matter of PR. It simply wouldn’t look good to charge 8-year-old fans $200."

Senior VP of AEG Live Debra Rathwell previously told Pollstar, "Ticket prices are low pretty much as a policy with Disney. And I think they’re sensitive to the fact that it’s a family market and a family purchase and it needs to be held as such."

The article includes an interesting opinion by Layson – that trying to eliminate the secondary market may not be the best tactic because it does nothing to address the problem of trying to get tickets into the hands of the real fans and instead just raises enforcement costs.

So instead of recommending that more states follow Arkansas Attorney General Dustin McDaniel’s lead and investigate the Hannah ticket sales or launch lawsuits against ticket brokers like the Missouri AG, the article suggests that maybe a sort of auction would be fair.

A certain number of seats could be auctioned off to the highest bidder and the remaining tickets could be sold at a flat price.

A tip from Farhad Manjoo, a tech writer with Salon.com, is offered as another possible solution: Prospective ticket buyers would have to take a quiz about the artist to prove who the true fans are. The article points out that while scalpers could find a way to get around this system, "at least this approach doesn’t meddle with supply and demand."

The article was met with much criticism online.