Trent Reznor Versus Michael Arrington

Recently Trent Reznor of Nine Inch Nails joined the legions of people who officially hate the secondary ticket market. He write a post about how ticket resellers or scalpers are parasites which has once again gotten a lot of people talking about and debating the evils of reselling tickets. At the end of his diatribe, lots of fans posted comments, all of which were variations on how much they all hated ticket resellers and how unfair it is. Here’s an excerpt from Trent Reznor’s site:

. . . we want true fans to be able to get great seats and not get ripped off by these parasites.

I assure you nobody in the NIN camp supplies or supports the practice of supplying tickets to these re-sellers because it’s not something we morally feel is the right thing to do. We are leaving money on the table here but it’s not always about money.

Being completely honest, it IS something I’ve had to consider. If people are willing to pay a lot of money to sit up front AND ARE GOING TO ANYWAY thanks to the rigged system, why let that money go into the hands of the scalpers? I’m the one busting my ass up there every night. The conclusion really came down to it not feeling like the right thing to do - simple as that. 

Michael Arrington from TechCrunch who used to be Razorgator’s CEO wrote an excellent rebuttal to Reznor’s post. Here’s an excerpt from that:

People seem to understand that things have fluctuating prices based on supply and demand (like stocks, or gold, or ice cream). But when it comes to event tickets people ignore the realities of supply and demand and talk about fairness. Anyone who tries to sell tickets for a profit is greedy. Or, as Nine Inch Nails’ Trent Reznor says today, ticket resellers are parasites.

People pay big dollars for premium events like the Super Bowl and certain concerts. But they pay it to middle man ticket brokers, lovingly referred to as scalpers. Ticket brokers are really just market makers. They risk capital, hold inventory, and place bets that they’ll be able to make a living on the spread.

Pricing tickets is very, very hard. Demand for an event peaks just before it occurs, then falls to zero as it begins, like food that has gone bad. Changes in the economy have a dramatic impact on ticket prices, too. A good ticket broker is thinking about the quality of the event, the date of the event, the venue, the seat locations and the state of the local economy when pricing tickets. And if they do it wrong, they eat their inventory and take a loss.

The benefit to the artists and promoters is clear - brokers create a smooth demand curve for tickets. When an event doesn’t do well, no one feels bad for the brokers. But when tickets for a hot event go for four or five times the face value of a ticket, everyone points to the brokers and says they’re greedy. What they don’t realize is that the broker has paid so many people along the way for those tickets, they’re probably only making a 10% margin on their investment. And that’s when things go well.

This debate has been going on for a long time and I don’t see it ending any time soon. The big take-away from all this is that event tickets are no different that anything else. They are subject to the laws of supply and demand. No one gets angry at people who buy other things at one price and then resell them at a higher price on eBay. And this is an excellent analogy since people now actually make a living doing this on eBay, just like online ticket resellers.

There are two sides to every story, and I recommend reading both Reznor’s and Arrington’s posts and the comments in full. It may shed some light on why the secondary ticket market is hated and why the hate may be unfounded.