Concert ticket prices have soared to new heights this year, causing angst and financial stress for live music fans. Blame has been pointed at ticket sales companies like TicketMaster and profiteering scalpers. President Biden has even proposed legislation aimed at the problem. But similar to the housing market, the unaffordability of music tickets is due to a fundamental lack of supply.
The Mismatch Between Demand And Supply Of Live Concerts
In the live concert market, there is a mismatch between the price that an artist like Taylor Swift or Beyonce would like to charge their fans and the price that the wealthiest fans are willing to pay. These stars may want to provide all their fans with affordable concert tickets, but wealthy fans are willing to pay hundreds or even thousands of dollars for guaranteed admission. However, stadiums can only hold so many attendees and artists can only do so many shows without becoming exhausted. With ticket availability restricted, the demand from affluent fans results in ticket prices that are unaffordable to the average fan. Some fans get priced out altogether, and even fans willing to spend hundreds of dollars may only be able to afford seats in the nosebleed sections.
You can see this mismatch most clearly when big music stars decide to do a limited audience event. In 2011, Beyonce performed for four nights at the 3,200 person capacity Roseland Ballroom. The first show sold out in only 22 seconds, and the remaining three concerts sold out in less than a minute. Any fan without lightning fast reflexes had to buy tickets on the resale market for considerably more than the original price or miss out on the event.
Housing Vouchers Are Effectively “Sold Out”
A similar phenomenon occurs in the market for affordable housing. Housing choice vouchers, which provide rental assistance to low income families, are effectively “sold out.” Families who qualify for the program often wait years to get off the waitlist. The government would ideally like everyone who qualifies to be able to receive the rental assistance, but since there is a limited supply of vouchers and affordable housing units, many families continue to struggle with housing costs.
To make matters worse, in some cases the housing voucher program is abused. Landlords sometimes overcharge for substandard housing. One study found that Milwaukee landlords charge housing voucher recipients around $60 more per month than other tenants. This is akin to scalping in the music concert market. Bad actors take advantage of the mismatch between supply and demand to earn a profit.
Stop Bad Actors By Increasing Supply
The best way to fight scalping is to increase the supply of tickets. Take for example the story of controversial rapper Travis Scott’s recent concert tour. Initially, Scott’s tour was expected to sell out rapidly. As a result, scalpers swarmed in, purchasing thousands of tickets at an original price of approximately $60, with plans to resell at inflated prices. In a twist of fate, Travis Scott expanded the tour by adding more dates to his schedule. Suddenly, the scarcity that scalpers had bet on had disappeared.
As a result, the resale value of tickets nosedived, with some being listed for as low as ten dollars on popular platforms. The scalpers who had invested heavily in these tickets found themselves grappling with a steep decline in their investment’s value. For many, this translated into losses in the tens of thousands of dollars.
Increase Supply Through Policy Changes
Similarly, we can make housing affordable and eradicate bad actors by increasing the supply of homes. This can be achieved by eliminating single-family zoning, removing red tape that restricts the construction of new housing, subsidizing the construction of affordable housing, and building affordable housing on government-owned land. If we can achieve this increase in supply, rents would stabilize and potentially drop. Homeowners may stop seeing whopping annual increases in their home’s value, but they would have an easier time upgrading to homes that better fit their needs. Owners of multiple investment properties who reap outsized profits from renters would lose the most. However, more families would be able to access affordable housing.