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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.
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.
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