Imagine you are a fan of a band or a pop star and you are excited to see their first concert in Brazil. Since you won’t be able to go to the physical box office, prepare to purchase your ticket online. But when it’s your turn in the virtual queue, the tickets are sold out. They try to check other sites but are confronted with absurd prices that can cost up to five times the original value.
This is the scenario that many Taylor Swift fans face when trying to buy tickets for her concerts in Brazil. The sale of tickets to the shows sparked controversy and uproar among the singer’s admirers, who complain about issues such as long lines online and onsite, inflated prices in the parallel market, and even brawls.
The sale of tickets to cultural events is an example of an imperfect market due to asymmetric information, the limited supply of these tickets and high fan loyalty. Nevertheless, organizers usually do not charge the maximum price that consumers would be willing to pay. In practice, these prices, high as they are, could be even higher and the venue would still be crowded. This decision not to “exaggerate” the prices can have several reasons: not to take the risk of not selling all the available seats, not to lose a loyal fan who can buy this commodity, and above all to protect the image of the Artist as a righteous person to preserve.
Beyond Taylor’s show, a community’s notion of fairness directly impacts how prices and wages are set in different markets, according to a study by Daniel Kahneman, Jack L. Knetsch, and Richard Thaler.
The authors conducted 11 randomly sampled telephone surveys of adults in the United States and Canada. Respondents were presented with hypothetical scenarios involving market situations such as price increases, wage cuts, and changes in costs or demand. In each scenario, respondents were asked on a 6point scale from 3 (very unfair) to +3 (very fair) the level of acceptability or unfairness of the company’s actions.
The authors found that respondents follow certain principles of fairness, such as accepting price increases when profits are at risk and rejecting those increases when demand is rising rapidly. These fairness standards influence the behavior of companies and lead to some market anomalies, such as B. Resistance and delays in adjusting prices to increased costs or demand. Striving for fair behavior is a tool for companies to maximize longterm profits, as it avoids the hostile reaction of customers or employees who feel they have been treated unfairly.
Interestingly, it is precisely the difference between the “fair price” and the price fans would be willing to pay that creates the black market for tickets. Scalpers benefit from scarcity, high demand, and the inability of many fans to personally go to the box office. Thus, if they meet the forecast of high ticket demand, they can make a big profit. If they make a mistake, they will likely sell tickets at the box office at lower prices than they bought from the official media.
Since the origin of the parallel market lies in the relatively low prices of tickets sold in official media, the problem is challenging and cannot be solved by strokes of the pen and legislation. One possible path to a solution involves changing the mindset of producers if they start believing that selling tickets directly to fans is a major asset to the artist’s brand.
In this scenario, they could take some measures such as: B. limiting the number of tickets per person, the use of technologies that prevent intelligent systems (robots) from making purchases, the requirement for identification of the buyer and user of the ticket and the implementation of biometric readings at the entrance, offers members of the Loyalty Clubs benefits and uses digital platforms that allow for controlled resale. It’s worth noting that most of these measures, while making ticket sales more expensive, would potentially reassure fans.
The situation faced by fans attempting to purchase Taylor Swift concert tickets here in Brazil demonstrates how many markets set prices based on other behavioral elements in addition to supply and demand. Promoters’ fear of upsetting fans at the prospect of considering the amounts charged unfair results in tickets being made cheaper than they could be and enabling high profits in the parallel market.
So, in practice, there is a paradox: if the producers don’t implement some measures and some of them can lead to an increase in ticket prices in the end less and less happy fans who want to attend concerts of pop divas end up a few thousand shell out euros. Real.