Scalping

[bolo]

It doesn't affect supply. It just affects price. If a scalper buys 100 tickets to Hamilton, he's not going to burn them to reduce supply, he's going to turn around and sell them to people who want to see Hamilton. The same number of tickets end up going to people who want to see the show. It's just that there's an intermediate step that means some of the audience pay more than if they got the tickets directly.

Same with PS5s or whatever. Scalpers aren't buying them and stashing them in their basements. The scarcity happens before the scalping, or there couldn't be scalping.

[Grumble]

It doesn't affect supply. It just affects price. If a scalper buys 100 tickets to Hamilton, he's not going to burn them to reduce supply, he's going to turn around and sell them to people who want to see Hamilton. The same number of tickets end up going to people who want to see the show. It's just that there's an intermediate step that means some of the audience pay more than if they got the tickets directly.

Same with PS5s or whatever. Scalpers aren't buying them and stashing them in their basements. The scarcity happens before the scalping, or there couldn't be scalping.

It’s not a fair competition though, not when you’re a person competing against an algorithm.

[bolo]

Sure, but there was scalping (at least of tickets) long before there were algorithms to do it with.

[Millennie Al]

It’s not a fair competition though, not when you’re a person competing against an algorithm.

You're a person competing against another person. They may be using an algorithm, but they're stll a person. And you can use an algorithm as well, if you think that makes it fairer.

[nekomatic]

There’s a qualitative difference between concert tickets and PS5’s. If more people want PS5’s Sony can make more PS5’s and sooner or later everyone who wants one can get one for the normal price. Tickets for live concerts are necessarily limited by the nature of the concert as an artistic event: if demand is high you can’t just triple the size of the venue without altering the experience, and the artist can’t just play three times as many nights without it affecting their creativity and/or running out of nights, and while venues and promoters might be delighted to jack up ticket prices to whatever the market will bear, most artists tend to not want to play only to the richest people.

So I don’t see any need to intervene in the PS5 market, but I can see the case for making some legal or regulatory tools for artists and their fans to use, because the tool of the normal market supply and demand process doesn’t fit their needs well.

Football clubs manage demand for oversubscribed events by restricting tickets to supporters club members with a record of attendance, don’t they? I wonder if that’s something that established acts, at least, could try more of.

[Grumble]

There’s a qualitative difference between concert tickets and PS5’s. If more people want PS5’s Sony can make more PS5’s and sooner or later everyone who wants one can get one for the normal price. Tickets for live concerts are necessarily limited by the nature of the concert as an artistic event: if demand is high you can’t just triple the size of the venue without altering the experience, and the artist can’t just play three times as many nights without it affecting their creativity and/or running out of nights, and while venues and promoters might be delighted to jack up ticket prices to whatever the market will bear, most artists tend to not want to play only to the richest people.

So I don’t see any need to intervene in the PS5 market, but I can see the case for making some legal or regulatory tools for artists and their fans to use, because the tool of the normal market supply and demand process doesn’t fit their needs well.

Football clubs manage demand for oversubscribed events by restricting tickets to supporters club members with a record of attendance, don’t they? I wonder if that’s something that established acts, at least, could try more of.

Fan clubs exist partly for this reason don’t they?

[tom p]

There’s a qualitative difference between concert tickets and PS5’s. If more people want PS5’s Sony can make more PS5’s and sooner or later everyone who wants one can get one for the normal price. Tickets for live concerts are necessarily limited by the nature of the concert as an artistic event: if demand is high you can’t just triple the size of the venue without altering the experience, and the artist can’t just play three times as many nights without it affecting their creativity and/or running out of nights, and while venues and promoters might be delighted to jack up ticket prices to whatever the market will bear, most artists tend to not want to play only to the richest people.

So I don’t see any need to intervene in the PS5 market, but I can see the case for making some legal or regulatory tools for artists and their fans to use, because the tool of the normal market supply and demand process doesn’t fit their needs well.

Football clubs manage demand for oversubscribed events by restricting tickets to supporters club members with a record of attendance, don’t they? I wonder if that’s something that established acts, at least, could try more of.

Actually, I would argue that normal market supply and demand do fit their (bands & fans) needs ok. It's the deliberately distorted market created by the touts who use tools not available to the rest of us to bulk-buy (or make multiple individual purchases of) tickets that is not fitting either artist or fans' needs well.
Which is why there should be legislation** to prevent these unnecessary and unwanted interlopers creating artificial scarcity and jacking-up the price.

Bolo - if you can't tell the difference between a ticket tout & a cheese wholesaler, then you have a significant intellectual & moral deficit.

*Although booking fees (other than the actual fee charged to the venue by the card clearing house) should be a crime carrying a punishment of 100% of annual turnover for each event where they are charged - you see a gig advertised for a certain price, that's the amount you should pay if you are paying via the cheapest method (plus up to 30p or so for the max plausible difference between your credit card fee and the cheapest debit card fee).
**In the UK - there already is in the USA

[Bird on a Fire]

I think the key point about supply is that scalpers aren't reducing the overall supply of what exists in the universe, but are reducing the supply that's actually available, as part of a deliberate strategy to drive up the price.

These days most scarcity is 'artificial', in the sense that it's created by economic forces rather than material limits. There's enough food production to avoid hunger, but it's inefficiently distributed. We saw during the pandemic that it's pretty easy to house the homeless, but normally don't bother. Modern capitalism is all about using economic force to insert oneself between suppliers and consumers and extracting as much value as possible - a great chain of middlepeople, increasingly aided by semi-autonomous algorithms (backed by large amounts of capital, so normal people can't just compete with them).

For things like event tickets, where what's being sold is a personal experience, it's somewhat easier to restrict these practices than in the case of material commodities.

I'd assume PlayStation are quite keen to also be selling games and stuff, which is presumably where they make more money, so I'd have thought they'd want to restrict this practice as much as possible, for example one-sale-per-customer linked to previously-existing accounts from the PS4. What, if anything, have they said/done?

[Grumble]

Logically, what is to prevent scalpers from taking up 100% of the supply of “item” and creating their own supply shortage thus keeping the price high? Is this just “free market”? I would argue that the model of manufacturer - wholesaler - retailer - consumer model, with or without the wholesaler is fairly good and has functioned well throughout the history of civilisation. Adding scalper/tout in between the retailer and consumer has probably happened since time immemorial, but it’s unnecessary and inefficient, and to be opposed on those grounds if nothing else.

I realise I haven’t necessarily added much to the two posts above, just wanted to better articulate my feelings.

[Bird on a Fire]

Part of the answer is that 'scalper'/'tout' are value-laden terms that are only applied to middlepeople whose actions cause price fluctuations, whereas the mainstream economist's answer AIUI is that generally the middlepeople are smoothing long-term fluctuations by buying during gluts, storing and selling during scarcity.

Of course, as with things like the property market, or the people hunting bluefin tuna to extinction, the process ceases to be an efficient way of smoothing things out once the middlepeople are powerful enough to cause those fluctuations rather than respond to them.

As often seems to be the case, the efficiency of markets seems to depend on having lots of small players rather than a few big ones (which is also true of other self-organising complex systems, like ecosystems). But suggesting processes to limit player-size is deeply unfashionable and often ridiculed.

[bolo]

I think the key point about supply is that scalpers aren't reducing the overall supply of what exists in the universe, but are reducing the supply that's actually available, as part of a deliberate strategy to drive up the price.

No. They are not reducing the supply that's actually available. They are buying part of the supply from regular retailers and immediately selling those same items on eBay or wherever. This doesn't even slightly reduce the number of PS5s actually available to end-users . The change is that (a) fewer PS5s are available to end-users from regular retailers and (b) the remaining PS5s, now for sale through other channels, are available only at a higher price than the regular retail price.

I'd assume PlayStation are quite keen to also be selling games and stuff, which is presumably where they make more money, so I'd have thought they'd want to restrict this practice as much as possible, for example one-sale-per-customer linked to previously-existing accounts from the PS4. What, if anything, have they said/done?

They create scalping (or at least, enable it) by setting the retail price artificially below what the market will bear. Since this loses them potential profits, I presume that they do it intentionally to generate marketing buzz (oh look! we're talking about PS5s on the internet!) in order to sell more games in the long run or create user loyalty or I don't really know what because I'm not a marketing person. Otherwise, as you say, they could easily limit sales to existing accounts or one per customer or whatever. Maybe they say some words about "scalpers bad" but if they do, you shouldn't believe them.

[Bird on a Fire]

I think the key point about supply is that scalpers aren't reducing the overall supply of what exists in the universe, but are reducing the supply that's actually available, as part of a deliberate strategy to drive up the price.

No. They are not reducing the supply that's actually available. They are buying part of the supply from regular retailers and immediately selling those same items on eBay or wherever. This doesn't even slightly reduce the number of PS5s actually available to end-users . The change is that (a) fewer PS5s are available to end-users from regular retailers and (b) the remaining PS5s, now for sale through other channels, are available only at a higher price than the regular retail price.

Surely they at least wait for the regular retailers to be sold out before they re-list at a higher price?

I'd assume PlayStation are quite keen to also be selling games and stuff, which is presumably where they make more money, so I'd have thought they'd want to restrict this practice as much as possible, for example one-sale-per-customer linked to previously-existing accounts from the PS4. What, if anything, have they said/done?

They create scalping (or at least, enable it) by setting the retail price artificially below what the market will bear. Since this loses them potential profits, I presume that they do it intentionally to generate marketing buzz (oh look! we're talking about PS5s on the internet!) in order to sell more games in the long run or create user loyalty or I don't really know what because I'm not a marketing person. Otherwise, as you say, they could easily limit sales to existing accounts or one per customer or whatever. Maybe they say some words about "scalpers bad" but if they do, you shouldn't believe them.

Yes, that's my suspicion too.

[bolo]

Surely they at least wait for the regular retailers to be sold out before they re-list at a higher price?

They don't need to. The regular retailers are perpetually sold out, because they are selling a scarce product at below the market-clearing price. When there are rumors of a delivery to a retail shop, customers queue outside in the dark to be the first inside in the morning after the shelves have been restocked.

[Bird on a Fire]

Yikes. Sounds like somebody using a bot to buy loads of consoles would absolutely be reducing availability, in that case.

[bolo]

Actually, I would argue that normal market supply and demand do fit their (bands & fans) needs ok. It's the deliberately distorted market created by the touts who use tools not available to the rest of us to bulk-buy (or make multiple individual purchases of) tickets that is not fitting either artist or fans' needs well.
Which is why there should be legislation** to prevent these unnecessary and unwanted interlopers creating artificial scarcity and jacking-up the price.

Bolo - if you can't tell the difference between a ticket tout & a cheese wholesaler, then you have a significant intellectual & moral deficit.

*Although booking fees (other than the actual fee charged to the venue by the card clearing house) should be a crime carrying a punishment of 100% of annual turnover for each event where they are charged - you see a gig advertised for a certain price, that's the amount you should pay if you are paying via the cheapest method (plus up to 30p or so for the max plausible difference between your credit card fee and the cheapest debit card fee).
**In the UK - there already is in the USA

My point about cheese shops was that you can't usefully define scalping as "scalpers sell stuff for more than they paid for it" because the entire economy does this. If you want to legislate or regulate, as opposed to just pontificate, you first have to have a clear definition of what it is that you want to prohibit. The "scalpers create artificial scarcity" definition doesn't work either, because they don't -- the scarcity comes before the scalping. It seems to me that the part people are really upset about is the "unnecessary and unwanted interlopers". If Sony set a recommended retail price of $1000 for the PS5, people would grumble about the PS5 being too expensive, but they wouldn't label Walmart and Best Buy as scalpers. But banning reselling by individuals who aren't established shops would also be problematic.

I understand the dislike for scalpers -- oh good, maybe I don't have an intellectual and moral deficit after all -- but I haven't yet seen an adequate definition that could actually be implemented in a law or regulation aimed at banning them.

There are some U.S. state (but not federal) laws banning ticket scalping. None, so far as I know, that attempt to ban PS5 or graphics card scalping. And in my experience, the ticket scalping laws are mostly pretty ineffective. Also, not necessarily useful.

[bolo]

Yikes. Sounds like somebody using a bot to buy loads of consoles would absolutely be reducing availability, in that case.

They would be reducing availability at the artificially low price set by the regular retailer. They would simultaneously be increasing availability (elsewhere) at the market-clearing price. If you mean "availability at the price I would prefer to pay", then yes, sure.

[Bird on a Fire]

It's not about me - I wouldn't buy one at any price.

But availability is a matter of degree, not yes/no. If something's online-only it's less available than something on the high street. If something's only available on eBay it's less available than something available from a variety of outlets. Something expensive is less available than something cheap.

If I go round all the cheese shops in town, buy all the cheese, then sell it from a shack on top of a mountain I've created cheese scarcity even without changing the price.

I agree that getting a tight definition is important. But I think scarcity/availability is about how much power someone needs to access something, not about whether or not it exists. After all, we talk about water shortages on a planet that's 70% covered by the stuff.

[tom p]

Actually, I would argue that normal market supply and demand do fit their (bands & fans) needs ok. It's the deliberately distorted market created by the touts who use tools not available to the rest of us to bulk-buy (or make multiple individual purchases of) tickets that is not fitting either artist or fans' needs well.
Which is why there should be legislation** to prevent these unnecessary and unwanted interlopers creating artificial scarcity and jacking-up the price.

Bolo - if you can't tell the difference between a ticket tout & a cheese wholesaler, then you have a significant intellectual & moral deficit.

*Although booking fees (other than the actual fee charged to the venue by the card clearing house) should be a crime carrying a punishment of 100% of annual turnover for each event where they are charged - you see a gig advertised for a certain price, that's the amount you should pay if you are paying via the cheapest method (plus up to 30p or so for the max plausible difference between your credit card fee and the cheapest debit card fee).
**In the UK - there already is in the USA

My point about cheese shops was that you can't usefully define scalping as "scalpers sell stuff for more than they paid for it" because the entire economy does this.

Nobody tried to define it as such, other than you. Furthermore, your point was utterly specious. Cheese shops purchase cheese in bulk from farmers (or those blessed cheesemakers) in the countryside and transport them to the shops near where you live in a city and sell small quantities of it that will fit in your fridge (this covers most cases in the developed world). They provide a service. When it comes to a concert, the band have already transported themselves to you & the touts are merely stopping you buying the tickets from the legitimate vendors. Also, tickets are different from lumps of cheese (unless the tickets are printed on cheese).

If you want to legislate or regulate, as opposed to just pontificate, you first have to have a clear definition of what it is that you want to prohibit.

The "scalpers create artificial scarcity" definition doesn't work either, because they don't -- the scarcity comes before the scalping.[/quote]
I didn't realise that we were civil servants in the DCMS & this discussion was going to form part of new legislation. I though it was an internet forum where we could complain about things in easily-understood terms without having to have a watertight legal definition; seems I was wrong and you're rightly pointing out the flaws in our proposed laws, and not some 3rd-rate barrack-room lawyer determined to make it a tedious discussion by pretending that there are all sorts of problems with even complaining about the immoral actions of some profiteering bastards.
As it happens, the UK government have managed to ban the resale of tickets to football matches & the federal government in the USA has managed to ban the use of bots to buy up all the tickets online to create a tout market.
Furthermore, at different points in history black markets of otherwise legally available things have been banned, e.g. during the second world war in the UK. So, you know, definitions are out there regarding how to ban the resale of things.

Furthermore, it's not true about scarcity when it comes to concert tickets.
There is a limited supply due to the popularity of the band, size of venues in the area and willingness of the band (or otherwise) to play multiple shows every night in your area; but even so, all of that is taken into account when the venues for the gig are selected. Essentially, most bands play a venue they might just be able to sell out. Even if you only sell 90% of the tickets, you'll still make money and it'll be a good gig without large pockets of embarrassing quietness. The touts create artificial scarcity by buying up huge proportions of the tickets and thus limiting the numbers of tickets that people who want to see the band can buy from the band (or promoter/venue - whoever is legitimately selling them), forcing the fans to buy from them at (usually vastly) inflated prices with no benefit provided for the consumer or the producer. Indeed, if nobody bought tickets from the touts, then the few fans who can go to the gigs would suffer as it would be a sh.tty half-empty gig devoid of atmosphere.
They are an illegitimate participant in the market, which is an appropriate word to describe a bunch of bastards.

[monkey]

Ticket/graphics card/PS5/etc. touts/scalpers are good example of rent seekers. Rent seekers aren't normally seen as useful beings towards having an efficient economy.

But also, there are aftermarkets that are encouraged by the producers; mostly in the fashion branding world, as far as I can tell. Nike learnt pretty quickly in the 80s that artificially reducing supply of Air Jordans was good for their brand in the 80s and now limited edition trainers are bought and sold as commodities and Nike, addidas, etc. know exactly who is buying these and why. The business model of supreme seems to be based on producing limited runs of stuff with their brand on, for people to speculate on the collectible market with. But they at least they don't try to hide what they do, going so far as to sell a brick ($30 from the shop, current value $240). This was really just a bit of a "f.ck you" to their customers, but one they seemed to like because they're all masochists or something.

[Grumble]

Ticket/graphics card/PS5/etc. touts/scalpers are good example of rent seekers. Rent seekers aren't normally seen as useful beings towards having an efficient economy.

Thank you, I’d never heard of the concept before, but that’s very useful.

[Millennie Al]

If I go round all the cheese shops in town, buy all the cheese, then sell it from a shack on top of a mountain I've created cheese scarcity even without changing the price.

A local scarcity in town, balanced by a local abundance at the top of the mountain. If you can make a profit from that, there must be plenty people at the top of the mountain who appreciate your efforts.

But I think scarcity/availability is about how much power someone needs to access something, not about whether or not it exists.

You can make up your own definitions of words if you like, but it's not likely to help you be more persuasive.

After all, we talk about water shortages on a planet that's 70% covered by the stuff.

Except, it's not. A water shortage is referring to fresh water, while the vast majority covering the planet is sea water.

[monkey]

Ticket/graphics card/PS5/etc. touts/scalpers are good example of rent seekers. Rent seekers aren't normally seen as useful beings towards having an efficient economy.

Thank you, I’d never heard of the concept before, but that’s very useful.

It is a good one. I think it's a concept that most people already know about, but don't have the words for. Most of the time when you read about it, it'll be regarding companies/sectors lobbying the government to get favourable subsidies or regulations/laws, which is probably the most common form nowadays (or the most noticeable one, anyway). Some (generally free marketers) even say this is the only definition, but the broader one of "attempting to make money without doing anything productive" certainly fits here.

[Bird on a Fire]

Most landlords, for instance (which is obviously the origin of the term).

[monkey]

Most landlords, for instance (which is obviously the origin of the term).

Yes, but that was when landlord was mostly a bit more literal. Georgeism and the game of Monopoly* was based on that. But economic rent is different to rent in general. The important bit is whether the person you're giving money to is doing something to increase the wealth in the system, or just looking to get more than they should for whatever they're doing.

Nearly all modern landlords do buildings as well as the land they are on, so they provide a service, in addition, your landlord may have built your building themselves, or if they didn't, they should be putting money into the maintenance of your flat**, counteracting any depreciation. With the former they have added value to the land, and with the latter there is more wealth there than there would be if they did nothing - even if the net wealth has gone down - so they shouldn't be rent seekers, even if you have to pay them rent. Of course a landlords can be a Bastards and overcharge or do nothing to keep their property up to spec, which should count as rent seeking.

Scalpers/touts do nothing like this. They add no additional value in getting goods to a consumer, but pocket profit.


*Before it was Monopoly.

**Often legally required, if not enforced well enough.

[Grumble]

Just spent a productive few minutes on eBay reporting dodgy PS5 listings. Well I hope they were productive, probably will be because I was reporting them for something eBay cares about - trying to bypass the payment system and get cash. There was one dodgy listing on there that wasn’t even a listing, it was just an abusive message against women. First time I’ve seen that on eBay.

EE974CCB-AE71-42FA-BB69-2D8F12F2C8DE.jpeg (124.89 KiB) Viewed 1510 times

(Why does my phone insist on autocorrecting ebay to eBay when they dropped the capital B ages ago?)