This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
Why does much of the public feel strongly entitled to below-market pricing for certain luxury goods and services? And on the flip side, why do some companies seem to intentionally yield profit to scalpers? Why not dynamically price every premium product/service in today's day and age?
Case study A: Taylor Swift is making the news for selling record amounts of tickets for her upcoming tour. The internet in response has been raging against Live Nation's monopoly, corporate greed, price gouging, bots, scalpers, and Citizens United over both the expensiveness and the lack of availability of her tickets. The brouhaha predates TS--over the past few months, it seems like every time a popular musician launches a tour, the same headlines resurface about greed, price gouging etc.
Case study B: Nvidia's 4000 series graphics cards have been catching flak for their pricing. Same talking points as above, minus the monopoly part because there is real competition in graphics cards.
All this seems silly to me:
Concert tickets, like most everything else, and especially like luxury goods and services, are fundamentally priced by supply and demand. The internet is livid that TS tickets are both expensive and then resold for even more, and directs its anger at TS, LN, and scalpers, arguing that real fans are being cheated somehow. But I don't understand how any of it is actually unfair. Is a concert goer a fake fan if s/he buys from the secondary market at a higher price rather than waiting in 8-hour-long virtual queues the moment tickets go on sale? Super Bowl tickets routinely sell for thousands or tens of thousands. Are your average working class fans being cheated somehow because they cannot afford that? And if the NFL set up a buggy virtual queuing system that allowed people who otherwise cannot afford it buy Super Bowl tickets at a hefty discount (maybe that's exactly how it works. Idk--I've never once thought of trying to buy SB tickets), should society be critical if they then turn around and resell said underpriced tickets for a profit, and then presume to spend the money on goods and services that deliver them more utility? It's not like there is anything particularly virtuous about making sure people who buy tickets to a ball game are committed to attending rather than being free to change their minds or profit from gross pricing inefficiencies.
Nvidia's 3000 series ran into extensive problems with extremely mismatched supply and demand for something like two years, and this of course led to plentiful scalping, which if nothing else is a huge waste of resources considering all the time and money spent on shuffling products to and from middlemen. For the 4000 series, Nvidia smartly priced its products substantially higher than before, which should reduce the mismatch and get inventory to people who want it the most. They can then cut prices and offer discounts once sales slow down in the coming months/years.
Live concerts and premium graphics cards are luxury goods and services. The songs themselves remain extremely affordable through streaming services, and graphics cards released 5 years ago can handle the vast majority of games so long as you do not insist on playing on max settings. It's hard for me to see anyone's rights are deprived because their desire to go to a live concert or play games at the highest settings cannot be met. All the outrage that that either TS or LN is price gouging just sounds so stupid--it's a concert, people. If you don't like the price, don't go. We're not talking about overcharging for gasoline prices when a hurricane is about to hit.
But ultimately, the above is all noise to me. The simplest solution seems to be just to price all luxury goods and services dynamically. Consumers understand that airline and hotel prices are heavily dependent on supply and demand--traveling the Wednesday before Thanksgiving will cost far more than the Wednesday a week later, and flying first will cost substantially more than economy. Hotels on weekends when large conferences are in town will be priced significantly more than otherwise, and suites cost more than standard rooms. There is no scalping that happens for either product because, aside from the TSA, tickets are priced using algorithms that adjust automatically so there is no need to scalp.
So why not do that? Why not dynamically price every luxury good in high demand? Disney does it for its parks. I didn't look too closely into it, but it seems like maybe TS opted into dynamic price this time around, but clearly it's not dynamic enough if there are any scalpers who still make a profit. As for graphics cards, I think the world is better off if Nvidia prereleases the 4000 series online a few weeks ahead of public releases (since traditional retailers can't dynamically price as easily); and during that prerelease period, use algorithms to fully satisfy demand at the market clearing price. Like I mentioned, scalping is a waste of resources and productivity for all, so get rid of it. If Nvidia can retain the vast majority of profits and recapture waste from middlemen shipping and handling, that capital can be redeployed to R&D or paid back in dividends, which then can be invested in other productive enterprises.
Something I thought about extensively at the date of the last iPhone launch was that this entire situation comes down to archaic pricing practices and a dearth of seemingly obvious technological solutions.
For example, instead of selling phones at a "first come first serve" basis and forcing people to suffer through stressful virtual queues and server overloads, why not just introduce a sort of "dynamic auction"? Give people an X-day grace period with which to register their blind bids. For each 'batch' of products that come from the factory, take the top N bidders at that point in time, and have them all pay the price needed to outbid the N+1th person in the queue. Break ties by number of 'batches' the person has been in the queue for, and break sub-ties by random chance.
Easy to understand (the more you're willing to pay, the faster you get your phone), simple, stress/DDoS-free, and all of the profit goes to the company making the product - not middlemen scalpers.
More options
Context Copy link
The ticketmaster thing is a problem in the sense that it’s creating artificial scarcity. Her tickets are not sold out at the price she offered or at least not to humans. Tickets have been captured by bot-buyers who buy the entire lot for resale. Humans simply cannot buy the tickets at list price from the venue because they sell out in mere milliseconds after the “public” sale — all to TM and a few other resellers. And so it’s not that the fans aren’t really fans if they rebuy from TM, it’s that TM has used bots to get themselves a virtual monopoly on ticket sales for concerts and large events.
How is there artificial scarcity? The bots aren't reducing the supply of tickets.
More options
Context Copy link
As OP said though, that "artificial scarcity" is just market pricing + inefficient secondhand market distribution. "not sold at the price she offered to humans" is the market pricing it - there's more demand than supply, so price increases, and if the original seller isn't willing to do that an automated intermediary will do it (and if you ban that somehow, human intermediaries will do it instead). None of that solves the problem of scarcity - there are way fewer tickets than there is demand for tickets at the price offered, raising the price just means they're sold to the subset of buyers-at-initial-price who can pay more as opposed to the subset of buyers-at-initial price who click fast enough
You mean more demand than supply
yeah fixed
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
When it comes to the concerts/sports event there is more to it than just supply and demand. You are not only selling the performance of entertainers/athelets, you are also selling the overall atmosphere of the event. If you match supply with demand for high prices, you will end up with stadium filled with boring people just sitting and sipping their drinks. There will be no crazy chick flashing her tits while riding on her boyfriend's shoulders, there will be no hymns sang by hardcore working class fans with flags and all that. One can argue that allowing for poorer hardcore fans to attend events makes it more enjoyable not only for the rest of the attendees but also for the performers who need to have other than monetary incentive to grind on concert tour or sports season.
Reminds me of how Billy Joel doesn't have allocated seating at his gigs with his explicit reasoning being that he wants the people in the front row to be dedicated hardcore fans who love his music, as opposed to rich people for whom $1,000 is pocket change and who'll maybe sing along to the chorus of "Uptown Girl" and nothing else.
Sure, one just have to look at some high-end corporate events. I have seen star bands and artists perform to empty dance floor with everybody just standing around and chatting with their peers about latest project or simping for promotion. For them it is mostly social gathering where they want to mingle with their peers, and the artist is there just as an accessory to show off. It requires C level honcho on the dance floor for "fun" to start. It is ridiculous and artists hate it, but they do it to pay the bills.
A corporate event where most of the attendees never even intended to see the artist is completely different from the crowd you'd get at a show with $1000 tickets
Quite to the contrary. A $1000 show means a guy next to you may be somebody to do business with. It becomes a networking event first with performance being secondary. It is something happening even to top 300,000 global wealthiest people - they attend certain events almost out of obligation. There actually are even lower level analogies, something like Vienna Opera Ball
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
Some immediate thoughts:
*There's only really two GPU manufacturers, though (maybe three if you count Intel's integrated graphics chipsets), and the competition is just barely enough between Nvidia and AMD. There used to be more manufacturers/brands (3dfx (which was bought out by Nvidia), PowerVR, S3, ATI (which was bought out by AMD), Rendition, Matrox...).
*I actually got to go to a concert for the first time ever this year, and it was for a band that's fairly popular, but not Taylor Swift-levels of huge. I'm just glad the tickets weren't eye-watering, but I probably would have been bummed if they were triple-digit priced.
*How is higher pricing supposed to stop GPU scalping? I'd contend that the Great Crypto Crash of 2022 is the very reason people are complaining about the prices (also probably doesn't help when the lousy connectors are melting, people demand better when they pay more)--Nvidia's pricing is only because they need to make money, they couldn't delay the cards, but there's also a glut of former mining cards out there--and those likely aren't 5 years old. But had the crash not happened, would putting a bigger price tag on the 4000 series have stopped crypto miners?
And how do you dynamically-price a concert? Or a GPU? Their demand curves presumably don't work like the seasonal examples you give. If anything the term "dynamic pricing" reminds me of the time Valve Software tried it in Counter-Strike: Source, and it went so badly it became a meme for a while. I suspect that higher prices don't scare off scalpers, but could instead feed them in a vicious cycle.
EDIT: another thought: didn't Michael Jackson make an effort to have free concerts/tickets for the underprivleged?
I'm not sure I understand your objection. Scalping is only profitable when you can buy something that's artificially underpriced and sell it for what buyers actually are willing to pay. By raising the MSRP to the level that buyers are actually willing to pay, scalpers no longer make any profit. Problem solved.
At the crudest level, announce to fans on the purchasing page that in order to deter scalping, prices will be set artificially high at launch, and then discounted automatically when sales fall below a certain velocity. So right out of the gate, apply a 10x surge multiple to the current face value. If anyone wants to buy them at that price, great. Otherwise, target sales of 1% of all tickets per hour, and whenever actual sales complete slower than that, reduce the 10x multiple. And whenever the multiple has been reduced to a level where target sales is proceeding at faster than 1% per hour, indicating high demand, slow or halt the multiple reduction until sales slows again.
This is just the crude alpha. Far more sophisticated and smooth UX versions can be designed and implemented. Plenty of features can be built over time, like letting customers set strike prices where they purchase tickets when it's below a threshold, in order to remove the need to stair at a computer for hours on end.
This makes it sound like scalpers are doing a service and keeping people from foolishly spending less money, as if a buyer is going to say "oh man, I'm glad I bought [thing] for $200 instead of $100!"
I think, in practice, scalping is more "guy buys 50%+ of the stock of [thing], forcing people to buy it from him because it's sold out because the guy bought 50%+ of [thing]." You can raise the prices on something, but so long as it is sufficiently scarce, it probably won't stop someone from thinking they can flip it for better. (See also: gun and ammo prices during the pandemic)
Your dynamic pricing idea also doesn't seem to account for botting--what happens when the price dips to a good low point, and then is immediately hammered for north of, say, 10% of all tickets?
Math is entirely correct (and this is just econ 101), but put very simply and less precisely - if the original market is well behaved enough, and there's "enough" thing for everyone who's willing to pay $100, then the scalpers can't make money, because people can buy from the original seller at $100. And the people who haven't bought tickets are willing to pay less than $100, so the people the scalper crowds out by buying extra tickets are 'on the margin' and willing to pay $100, so the scalper doesn't make money - they buy for $100, sell for $100. But in cases of 'scalping' there usually isn't enough thing for everyone who's willing to pay $100, so there are lots of people who are willing to pay $200 who aren't getting a ticket, so the scalper buys for $100 and sells for $200.
This 'makes the market more efficient' in cases where the thing matters and isn't a concert ticket - if company A wants to buy thing for $10k because it's a critical component for centrifuge and company B wants to buy the thing for $5 because it looks nice on their wall, and the seller is selling for $5, and B buys it, this is just dumb - whereas if the scalper scalps it and sells it for $10k, the economically useful thing happens, and the scalper gets the monetary benefit (which the original seller can capture by raising the price themselves).
More options
Context Copy link
There are a finite amount of product/service. There are more people who want product/service than exist. Someone is getting screwed no matter what, the only question is who.
With dynamic pricing, the product is distributed according to some combination of desire and wealth. If we have 5000 things all sold to the highest bidder, then the 5000 people who are willing to pay the most get it. If you really really really want it, or have lots of money and resources of your own to exchange for it, then you get it. While people who only slightly want it don't get it. Importantly, this is decentralized: people can decide on their own the maximum amount they are willing to pay. In some sense, casual customers who only want it badly enough to pay $100 losing out to obsessives who are willing to pay $300 is a good thing, because the obsessives actually want the product more. Also importantly, there is no deadweight loss. The extra price goes directly to the seller, and via market forces will incentivize them or competitors to produce more comparable goods/services (if all GPUS cost double, then existing manufacturers can afford to scale up production, and investors will fund more competitors)
With fixed pricing and no scalpers, the product is distributed on a first come first serve basis. The first 5000 people who get there get the product. Now, this does nonrandomly favor customers with a higher valuation on the product who will be more likely to obsessively stand in lines or wait for product release, but in a much weaker way. It rewards people with more free time on their hand instead of people with more money. It's much more "fair" in the sense that rich people don't have an advantage over poorer people, but much worse at assigning product to people who actually want it more, as some people may not have the same time flexibility as others. And, importantly, this extra time spent is pure deadweight loss. A person standing in line for 48 hours doesn't benefit the seller whatsoever, it's just 48 hours of time lost in order to change their order. The supply/demand feedback breaks down and fails to send the proper signals to the producer that they need to produce more of the good.
Scalpers provide the "service" of effectively changing the second system into the first one, which is more market stable. People who value the product at a very high level but failed to get lucky with the timing would be screwed in the second system when someone else buys their product. But if they pay a scalper then they can get their slot as if it were in the first system. And, since they value the product more highly than the average customer who would buy the product at the low price, value is created, because products are distributed to people who want them more.
Now, scalpers can also rentseek by creating artificial scarcity (if there are 10,000 seats at a concert and only 5,000 willing customers, then allocation wouldn't normally be an issue, but a scalper who buys 9000 tickets creates scarcity). But for anything that would have sold out anyway this is not a concern. The only real concern is that they're sapping the profit that by all rights ought to go to the producer and incentivize them to create more product. In some ways it's the worst of both worlds. But they are providing a service to high-value customers who want the product and wouldn't get it without them. And, importantly, dynamic pricing would provide that same service without the rent-seeking. The market is broken, scalpers are a symptom and not the disease.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
1.) If you ask the median person, whether they'd want a scenario where every ticket was $150, or there was a chance they had to pay $190, but somebody on the same row as them got to pay $110, they'd absolutely despise it. People despise surge pricing, even if there's a somewhat better argument for it. People want stability and firm prices, not basically having to roll a dice every time they try to make any purchase.
Ironically, both libertarians and socialists at the ends of the economic chart think people should be nothing but economic input and output machines, and don't like it when human beings act differently.
2.) The difference with hotel & plane prices is the time dynamic - when two people buying a ticket on the same row, at the same time, can see a different price, that's when people get pissed, and the reason hotels and flights get away with it is twofold - there's less feelings connected to a plane flight and more importantly, there's not thousands of people trying to get the same flight at the same time.
3.) Why do artists care? Because contrary to popular contrarian opinion, not all famous people are unfeeling sociopaths hell bent on screwing over as many people as possible. But, even looking at things selfishly, artists understand that to an extent, having only an audience that can afford insane ticket prices will be a less hyped audience than people for whom this is basically the high point of their lives, as opposed to somebody more focused on being an influencer in the first row or whatever. But also though, many artists probably have memories of being unable to afford tickets to the people they liked, and want the ability for many types of their fans to able to get into a show.
4.) The combination of basically automated scalping + Ticketmaster's pointless fees + their monopoly of tickets plus stadiums is what really upsets people. If somebody waits in line for 12 hours to get the first tickets, then sells them, people may not like it, but they can respect it. They have zero respect for some dork who wrote some code so they can buy 8 zillion tickets on the first day.
I joke, but only halfway that if Biden came out tomorrow and said he was starting anti-trust action into breaking up Ticketmaster/Livenation and pushing regulatory rules to limit fees, he'd gain ten points in approval overnight. Donald Trump would beat Ticketmaster in an election in even deep blue states.
I remember the times when fan clubs would get to buy N tickets ahead of everyone else, the idea being that fans would be extremely unlikely to resell a ticket to their favorite artist's show.
More options
Context Copy link
That seems like the wrong framing. Why would we assume that pricing tickets at a market clearing rate means screwing people over? Is Per Se sociopathically screwing over Joe the Plumber by charging $1000 for dinner for two? There are only so many seats and time in a day and it's impossible to satisfy unlimited wants. Further, market clearing profit made by TS doesn't go to Putin to fund his invasion; it is taxed and then most likely plowed back into the economy as investment capital, or else goes to pay her staff and indulgences.
I am skeptical of the importance of the hype element. You seem to assume people shelling out thousands for TS are 65 year old retired O&G executives. More likely is they are the teenage daughters of said executives, and I'm sure they get just as hyped, if partly because that's what other young people do at concerts.
More options
Context Copy link
More options
Context Copy link
Companies, brands and individuals can face substantial PR backlash when they charge a true market price for something in exceptionally high demand. For example, in your airline-and-hotel-prices-around-the-holidays example, it's possible that the airlines could charge even more of a premium for that Wednesday-before-Thanksgiving ticket than they do, but they figure the extra profit for one day isn't worth the negative publicity.
In Taylor Swift's case, I'm assuming that it's easier to let her fans be pissed off at scalpers than at her, if she was the one charging $20k or whatever for a ticket to one of her shows. She's already rich as Croesus and will make plenty of bank of this tour as it is. She probably craves public adoration more than money at this point.
As far as "why does much of the public feel strongly entitled to below-market pricing for certain luxury goods and services" goes, another commenter already pointed out that it's as simple as "I want this thing I can't afford so badly that I've convinced myself it's somehow an injustice that I'm not getting it". It's the same vibe you get from certain self-described incels when they're in "bailey" mode ("oh, why won't that beautiful girl who works out every day and spends an hour a night on her skin care routine date me even though I don't put any effort into my own physical appearance because that's for losers").
That's more true with flying during Thanksgiving because of the sentimentality around seeing family, but not so much if we're talking about taking a nonstop first class flight from LAX to JFK that gets you home by 8pm. I'd place a sold-out Taylor Swift concert closer to the latter than the former.
You're certainly right that people still irrationally feel what they want to feel, but my response here then is it's up to the industry and its stars to correct such misconceptions. Music fans should be taught that it's natural to self-sort their exposure to their stars based on what they can afford: if you have $10, buy CDs or stream. If you have $100, buy nosebleed seats. If you have a $1000, come on back stage. This really isn't some kind of awful dystopia. Just look at movie stars! The masses get to see them in movie theaters or streaming for a handful of dollars. You don't have some kind of claim to be able to see them perform live for $50. If you want to hobnob with them in person (appearing in promotional panels doesn't count because they are PR events with immediate costs in hopes of recuping long term returns, whereas concerts are meant to be fundamentally profitable and sustainably so), you'd need to shell out a lot more, perhaps by buying your way through some kind of charity gala.
I also argue it's a bit simplistic to think that just because TS is rich, she should forget about maximizing profit. If that same mentality applied broadly to the economy, perhaps consumers would be better off very briefly, but in the long run we suffer collectively as innovation grinds to a halt and capital is deployed inefficiently.
I mean, what you listed, with some modifications, was working, and most people were fine with. The issue is, now those nosebleeds are $300 with another $100 of "fees" tacked on, if you can get to the tickets before some scalper buys 5,000 seats from his basement.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
Well, the Taylor Swift thing is superficially silly—of course basic white girls aren’t entitled to socialized ticket prices.
But Ticketmaster/Live Nation is the vertically integrated nightmare monopoly that haunts anti-trust’s dreams. While it profoundly doesn’t matter, because it’s just concerts, having a conglomerate that controls ticket sales and owns the concert venues and manages the artists that play at those venues is really kind of a textbook example of an evil monopoly. It is really quite difficult to establish a fair market price and have competition when one company owns so much of the live music scene. They are also just shockingly incompetent, speaking from personal experience—I live near and attend events at 2 Live Nation venues, and their apps and websites are failure-prone pieces of shit that fall down on the very basics of keeping you logged in and showing available tickets. I just don’t know how such a large company has such a bad UX/UI experience…oh right, monopoly power, gotcha.
-
Now on the Nvidia front…yeah, that’s just whining. These cards cost so much at launch because they cost so much to make. These are fabricated on TSMC’s absolute latest process, and it’s thought the masks alone cost $100 million to fabricate. The EUV systems to make these require huge amounts of power and have very low throughput, especially for GPUs, which are just big honkin’ slices of silicon, and require lots and lots of patterning passes. And there’s a whole mess of supply issues for all semiconductors right now…including obscure problems like a global shortage of neon, because something like 70% of the world’s neon is captured in Ukraine, for odd reasons.
I think the ticketmaster situation is ultimately a distraction. Fundamentally these tickets have their supply limited by the size of the venue. If there were multiple companies selling tickets to the same show it wouldn't change the fundamental problem that supply is lower than demand at prices considered "normal". I agree with OP. It's just entitled brats complaining.
More options
Context Copy link
At one point, and for a long time, people thought Facebook was unassailable, shielded from competition because of its network effect. Then Apple flipped a switch while TikTok took off and down it goes. Gradually, and then suddenly, LN can suffer the same fate.
Moreover, American industry doesn't just stand by helplessly when there is extreme profit being made in an entire sector. LYV is valued at $17B; Elon Musk can buy it tomorrow. But perhaps he doesn't want to, because LYV had a net income of -$2B in 2020 and -$650mm in 2021. In 2019, before the pandemic, it made a paltry $70mm on $12B in revenue.
This is not the hallmark of some almighty puppeteering evil conglomerate that's inundated with money stolen from children with cancer. It may own lots of components in live entertainment, but the market sure doesn't value that ownership very highly.
More options
Context Copy link
More options
Context Copy link
You can't price graphics cards dynamically because OEMs and third party manufacturers would be completely screwed. Nobody would be able to produce cards except the company that designed them.
Interestingly, that's what nVidia's been doing for the last few years. EVGA is no longer working with them mainly for that reason, and every other company still making GPUs with them doesn't make most of their money on those products to begin with.
More options
Context Copy link
You mean like Alienware not being able to sell prebuilt gaming PCs if Nvidia goes dynamic? Or AIB partners like Asus/MSI/EVGA?
For one, this can be sidestepped if the prerelease period where cards are dynamically priced are targeted toward only the DIY crowd. But even during general release, I don't see why OEMs and AIBs can't dynamically price too, at least online. It's probably trivial to have Nvidia set up an API that publishes its prices in real time so OEMs can do a simple cost-plus. Retail is more difficult, but dynamic pricing is being deployed in physical locations too with digital price tags that can change many times a day.
I'd also argue the entire ecosystem will benefit from disruption. Some players will suffer if they cannot adapt quickly, but that should leave more profit for those that can innovate away the inefficiencies around secondary markets. A physical store that resists change might not be all that different from car dealers that lobby against allowing consumers to buy directly from manufacturers.
Plenty have been impossible or "not how it works", until they're forced to adapt by innovation. I'm sure travel agents everywhere argued the same at the advent of the Expedias of the world. Same for cab companies when Ubers came out--no way drivers and riders would accept unpredictable prices! You can only operate on a fixed rate from downtown to the airport or a flat fee plus fixed price per mile and minute!
I don't mean to be flippant toward you, but my response would be... so?
Tesla and its sincere imitators push hard to skip dealers, and as far as I can tell, consumers generally like that. Let dealerships fail, particularly those in states protected by law from competition.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
File under "the world would be better if people understood basic economics".
On the plus side, I think people will slowly come around to dynamic pricing. It might become standard in 15 years or so, if the world lasts that long.
More options
Context Copy link
In the case of sports I wonder if it's a case of some unarticulated feelings about how there is an unpriced social good being destroyed in the process of optimising for the aspects that can be priced?
Here in Ireland you get the same thing happening with Gaelic Athletic Association sporting matches, except the GAA explicitly articulates a focus these unpriced social goods, with an emphasis community (It's no surprise that one of its original motivations was the fostering of Irish nationalism). All players are amateurs who often work other jobs on the side (their celebrity status and endorsement deals make up the shortfall) and everyone else involved is a volunteer, tickets are priced well below market value so as to not exclude any devoted fans, and showing up to an all-Ireland final without knowing a thing about the game (and taking the place of a true fan) isn't something that will win you popularity. There was a big controversy a few years ago when Sky bought the exclusive rights to screen some games as it was thought to go against the inclusive spirit of the organisation.
I don't think the GAA is offering a different product than other sporting organisations, they're just unique in their recognition and protection of, let's say the wider role of sports in the nation, or in economic terms the positive externalities which it's hard to put a price on. I see English football fans complain about the damage the involvement of insane amounts of money has done to their game and I suspect that they're talking about the erosion of the type of thing that the GAA makes great efforts to protect.
I can see local sports teams having an unspoken (or spoken) social contract with their home cities, whereby subsidized/affordable tickets help ensure sufficient political goodwill that may pay dividends in the form of tax rebates for new stadiums etc. It's the same phenomenon with museums that are free to locals and paid for tourists.
But this calculus doesn't apply to musicians who tour the country/world rather than stick around to represent one city. It's hard for me to see pricing tickets below market helping anyone other than scalpers. Well, it also helps people who can't afford tickets, but I don't see the social good in having progressive pricing for luxury goods and services. If someone cannot afford to pay market pricing for a Taylor Swift concert, it's probably financially imprudent for them to pay for below-market pricing. You could argue society is better off when poor people are allowed to make independent decisions with their money, including shelling out for a concert ticket, but to argue society is better off implicitly encouraging them to do so by subsidizing luxury tickets goes too far.
More options
Context Copy link
More options
Context Copy link
It's a no-win situation for musicians. Price the tickets too low and scalpers will re-sell them, and people complain about tickets being sold out. Price too high and people complain about prices. The only solution is more quantity, such as more concerts in the same city.
Part of the problem is the uncertainty. No one know how popular something will be. Some acts sell-out very fast and others do not ,even if the prices, artist, and venue the same.
Isn't the winning move to secretly price them higher, by having 'scalpers' be the scapegoat but actually internalizing the scalping? A way to do that would be to have ticketmaster ""scalp"" for you, and pay you most of the profit. Not that they're doing that, I haven't looked at all.
More options
Context Copy link
I wonder if that's part of the reason for the giant "service fees" and such that the ticket vendors charge – by claiming a large part of the price is from the vendor, they are effectively unloading the bad publicity on them instead of on the artist. It doesn't really matter that much for Ticketmaster if people hate them, but it does for a musician with a fanbase to think about.
Honestly, this is why I think there's not more industry pushback on how awful ticketmaster is. Ticketmaster's actual business model is being a professional bad guy taking the flak for the artists' high ticket prices.
More options
Context Copy link
More options
Context Copy link
Is it though? People may have unrealistic expectations of how much concerts should cost because of the stupid existing system whereby they are nominally one price (practically unobtainable face value), but in reality another (free market resale / scalper price). If the system is replaced wholly with dynamic pricing, then expectations can adjust. People can complain all they want about how expensive a vacation to Bora Bora is, but that doesn't make the island businesses scalpers.
More options
Context Copy link
More options
Context Copy link
Since we've been covering bourbon in multiple threads this week, let's take bourbon as a toy case here. Buffalo Trace Distillery makes a number of limited availability bourbons that are allocated to liquor stores by distributors. The MSRPs on these products are much, much lower than the going rates on secondary markets, in some cases you're looking at 1000% mark-ups and many of them are 200-300% markups. I am aware of at least three reasons for doing this:
Intentionally driving scarcity - by keeping these products at low prices, they assuredly sell out instantly and develop a cult-like devotion among bourbon fans. This drives hype around the brand more generally, presumably increasing the sale of other products.
Allocation based on liquor store purchases - by distributing only a few bottles of the "good stuff" to their best-buying liquor stores, they incentive liquor stores to purchase more of the mid-line and low-end products. One of my local liquor stores does this, secures those great bottles, and then gives out lottery tickets for the pricey ones based on purchases of the more middling ones.
Brand reputation more broadly - many fans have a high opinion of companies that sell cheap on these rather than capitalizing on the market. I think they're wrong, for exactly the reasons you're getting at, but this is a very uncommon opinion - people get mad at "price gouging" even for completely frivolous products selling for market rates.
There are probably more too! But this is one good example of how a company that has a few premium products and many non-premium products judges it advantageous to keep prices low on the premium products. Marketing and brand value beat getting a few bucks more out of a small number of bottles.
Venues have an incentive to sell at below market value rates to ensure they sell out because (1) the cost of the venue is the same whether you sell out or not and (2) once they get people there more high margin dollars will be spent.
So when ever you sell below market rates you need to figure out a different method to allocate scarce resources. Queuing is one of them. Scalpers are willing to wait in line, and then try to sell to people who value their time more than the mark up they pay for the ticket. Scalper also takes a risk the value of the ticket will decrease.
More options
Context Copy link
These are all decent reasons why a company might decide to underprice their premium products but none of them are reasons consumers have any right to complain if a company chooses not to do this.
More options
Context Copy link
The lottery system isn't the only one used, from what I've heard it's very much more of a be friends with the liquor store owners kind of thing than something so egalitarian.
More options
Context Copy link
More options
Context Copy link
I think one piece missing from your analysis which you need to factor in, is that scalpers distort the market through their actions. The very act of buying up tickets/GPUs/whatever means that there won't be enough to fulfill demand, which drives the price up. Even factoring that in, maybe the original sellers should charge more - but I think you need to account for that as well.
That said, the biggest problem people have with scalpers isn't some kind of desire for below market pricing. It's that scalpers are purely parasites. If Nvidia chooses to charge me $1000 for a graphics card, I can accept that they made it so they get to decide what they want to charge. I won't buy at that price, but I'm not mad. When a scalper buys up all the cards for $500 and then sells them for $1000, they are "solving" a problem of their own making. They are simply scum who want to profit off others without doing anything to deserve it. People would have just as much of a problem if you did this with literally any product, it isn't just luxury goods.
But they need to sell them too, into the original pool of sellers, who still have the same willingness to pay. Outside of things like price discrimination / monopoly pricing it doesn't "drive the price up" any more than the price would've been if nvidia priced it higher.
They're redistributing the cards from people with lower willingness to pay to higher willingness to pay - which can be valuable if it's e.g. a gamer who wants slightly better graphics than the last generation to exactly zero gameplay effect bidding against an AI company, or not matter much at all if it's a concert ticket (but that's because concerts themselves don't matter much). Although - for a variety of reasons, in the past sometimes 'intentionally partly disabling some lines of your product so that you can price discriminate better' but often reasonably, AI chips and gaming chips aren't great substitutes.
More options
Context Copy link
This is not really correct. Scalpers, by definition, have no interest in the goods they're scalping -- they don't want them. Their only objective is to arbitrage the price people are willing to pay and MSRP. If there wasn't demand for the products at the price the scalpers were asking then they wouldn't sell and they'd be forced to lower their prices. There is no scenario where scalpers are "distorting the market", they correct pricing errors and make the market more efficient.
But I don't value market efficiency. Market efficiency is only useful as a means to an end. If nvidia were to charge more, they could at least use that money to make more graphics cards. When a scalper does it, they just increase the price for the consumer. They're worse than the people who drive into disaster areas and sell bottles of water for $50; even if it would be better for the disaster victims to get water for cheaper or free, they're at least generating some value by shipping it in and distributing it. Graphics card scalpers just generate value for themselves while lowering value for actual consumers and being net neutral for producers. As @SubstantialFrivolity says, they're parasites, unhelpful to anyone but themselves.
Yes, I'm in complete agreement with you there. The existence of scalpers is a strong signal that the original price was too low and I'd much prefer the counterfactual world where Nvidia raised its own prices 30-50%, generating more profits (thus delivering more value to shareholders). I can't blame scalpers, though -- their actions are not wrong any more than picking up a $20 bill from the sidewalk is wrong -- it's Nvidia's pricing error that they're taking advantage of, so it's Nvidia's fault. Personally I find the people complaining about Nvidia's higher prices to be more infuriating than scalpers. As you say, at least when Nvidia charges more, that value is going to R&D, manufacturing, stakeholders, etc.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
They're shifting allocation from customers that will spend time to customers that will spend money. You might not value that, but it actually is solving a coordination problem that would otherwise exist.
If anyone's to blame for the scalpers getting a cut, it's the initial seller for using inefficient allocation methods.
The company doesn't randomly put lower prices on its goods; it puts lower prices on its goods because this brings it benefits that are not directly measurable, but are still real. This isn't an "inefficient allocation method" because it's not inefficient after taking the not directly measurable benefits into account.
which are?
More options
Context Copy link
More options
Context Copy link
That is not actually a problem that exists.
Nonsense. Those scalpers are responsible for their own scummy actions. Nobody makes them behave badly, they choose to.
The “problem” solved is converting time-preference into money preference. In theory this ensures the cards/tickets go to the “best” end users, because all the factors which might make use of them can be distilled into money.
I don’t find it very morally compelling, because outside of economic use, I’m skeptical of how well money converts end-user consumption. As largely recreational luxury goods, graphics cards (sigh, not for crypto) or concert tickets are basically sinks of value. Given that the user will not produce anything with them, that makes discussion of “efficiency” moot.
So it would be more accurate to say scalpers are allocating luxury consumables to the lucky/hardworking. Yay.
No I get that, but that's already a solved issue. Just like with every other instance of someone who wishes to spend money instead of time, you pay someone to spend the time for you. The order of operations makes a huge difference here. Hiring someone to stand in line for you is fine, someone getting tickets purely to resell is not.
Its no longer about waiting in line. Its about running custom scripts and having multiple tabs open on multiple computers. I say this because thats why my friend had to do to buy UFC tickets yesterday where all tickets were sold out online in minutes.
Of the 15 tabs he had open, only one got through to seat selection. He was lucky, but the average consumer won't have the technical skills to compete against bots in online ticket purchase release.
More options
Context Copy link
Buying tickets from a scalper who stood in line for you is economically equivalent to paying the scalper to stand in line for you.
But not morally equivalent. Nobody has a problem with scalpers on economic grounds.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
Not true - they are reducing demand on the tickets they hold, thereby making tickets available where there wouldn't be. If the tickets have to be $500 they're all sold and you can't buy one. If scalpers are reselling for $1000, now you can. The market prefers "can buy this for an expensive price" over "can't buy this," and that's why it pays scalpers.
Scalpers can buy, and actually have bought, tickets, sold some at high scalping prices, and discarded the rest.
It's entirely possible that pricing the tickets higher results in fewer people in total buying them. At best, the market is maximizing direct measurable cash income. It certainly is not maximizing number of tickets sold, as you imply here. If 600 people would buy tickets at $1000 and 1000 people would buy tickets at $500, raising the price has reduced the number of tickets sold.
And this doesn't even consider cases where the market is just irrational. The market eventually takes care of irrational people, but not before they cause a lot of damage. If someone buys up all the tickets and charges so much that nobody will buy any from him, he'll go broke--the market will punish him. But he's going to go broke after a whole lot of people have experienced not being able to get tickets.
This would fall into price discrimination / monopoly pricing. But how common is that? If there are multiple scalpers, one scalper doing this gets outcompeted by another selling at 'market price' (and both get outcompeted by the original ticket seller selling at 'market price').
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
I believe that Ticketmaster/Livenation is essentially a monopoly on in-person concerts of any size. They've somehow managed to get contracts with labels/artists and with venues, so they sell tickets for all the major tours. They can pressure other venues into accepting them as the ticket seller, or they won't get any concerts. And they can do the same for new artists: use us or we won't let any venues put on your concert. So they don't need to use algorithmic pricing to try to beat their competitors the way airlines do, they can just have high prices all the time.
In general, I agree that the creator should just price tickets at the efficient level, even if that seems expensive. Otherwise, unrelated middlemen just capture the extra surplus. People don't like "price gouging" which is why I think some companies refrain from doing it in emergencies, and try to use other methods to not run out (like per-customer limits), and similarly artists don't want to piss off their fans.
Side note - the reason why they have the contracts w/ labels and artists is since their merger with LiveNation/AEG, they also own many of the biggest and most important stadiums as well.
Ticketmaster was always crappy, but once they merged with LiveNation, and there was no way for artists who wanted too, like Pearl Jam, to push back reliably, they really went into overdrive w/ the BS fees and pushing up prices. This is just one example - Bruce Springsteen is having a tour early next year. Now, of course, these tickets aren't going to be cheap.
But, in Europe, from what I saw, prices ranged from $50 to $200, while in the US, seats went from $100-$150 for the nosebleeds to literal thousands for the floor. Now, there's not that much of an economic difference or interest difference between the two areas when it comes to Springsteen, so that's where people getting upset kicks in.
It also doesn't help people's trust in TM/LN when they also own a third-party ticket selling site.
More options
Context Copy link
Exactly. Concert tickets might be priced by supply and demand, but the demand is artificially restricted; not just for the artists themselves (it's become more common for acts to deliberately play smaller venues at higher prices because margins are better), but also for substitutes because Ticketmaster also controls things for all the others artists as well.
It's such a blatant violation of anti-trust and there appears to be no governmental will to correct it.
More options
Context Copy link
More options
Context Copy link
I agree with everything here but if you're looking for an answer to the outrage it's very simple. They want something they can't have and are upset about it. There isn't some coherent and well thought out world view behind the outrage. They are simply covetous and they channel it into moral outrage because it's cathartic.
When it didn't rain this season and your tribe needed to raid the tribe next door or starve it is handy to be able to channel covetousness into murderous rage. Accusing them of hexing your fields isn't a claim Antje is going to bother formalizing.
This is not at all true. People don't like scalpers because they are jerks, plain and simple. They are reducing the available supply at the original price and selling it at a higher price just to gouge people. I hate scalpers who scalp things I don't want just as much as I hate scalpers who scalp things I do want.
The original supply at the original price was already too small for most people to get a ticket. The scalpers are redistributing tickets among the group who would've originally bought tickets, and extracting some surplus for the redistribution, but the same number of people still end up with tickets.
Right, but at higher prices than they would have otherwise had to pay. That sounds like a jerk thing to me.
More options
Context Copy link
More options
Context Copy link
If it weren't for scalpers reselling tickets, assuming prices were kept artificially low, I would pretty much never get to go to a concert because I can't block time in my schedule far enough ahead of time to buy tickets the millisecond they release. Reselling is a reasonable service that makes people like me who buy at the last minute pay a premium that we're willing to pay, if the original sellers are giving them an unreasonable amount of market that's the original seller's fault.
No, it's still the fault of scalpers for choosing to scalp. Giving someone opportunity, even incentive, to do something does not make it your fault if they do it.
aquota is claiming they provide a useful service that they are incentivized for (making it possible to buy tickets over a long period of time by increasing price), which makes it no longer 'their fault' for doing something bad
First, it's not a useful service. It's just skimming off the top because they can.
Second, even if it were useful, that wouldn't actually matter. It's still their fault for the actions they take.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link