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Musicians and Promoters: Scalpers May Not Be the Enemy After All

Thursday, August 21, 2014   (0 Comments)
Wall Street Journal (07/25/14) Karp, Hannah

Primary ticket sellers often can benefit from the resale market, although musicians and concert promoters usually argue ticket scalpers are cannibalizing their business, according to research recently published in Strategic Management Journal. The research, from professors at New York University, Harvard University, and the University of Southern California (USC), examined the effect Craigslist had each time it launched in a different local market from 2003 to 2008. The researchers found that regardless of size or geographical location, promoters generally reacted by raising prices along with booking smaller venues or taking other measures to get shows closer to selling out. Promoters said they did so to take advantage of a phenomenon: when the secondary market "thickens," primary ticket issuers benefit—but only if demand for a particular show exceeds supply. The cost of primary tickets rose because average fans are more likely to buy face-value tickets from a primary ticket issuer if they believe they will be able to resell them for a profit at the last minute should their plans change. Promoters generally started booking smaller venues to ensure this outcome, which enabled them to price primary tickets higher, says USC's Victor Bennett.

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