Rascher Paperless Ticketing Presentation - CONSUMER

8/6/2019 Rascher Paperless Ticketing Presentation - CONSUMER

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PaperlessTicketinganditsAntitrustImpactontheSecondary

Market

DanielA.Rascher,Ph.D.UniversityofSanFrancisco

OSKR,LLCAndrewD.Schwarz

OSKR,LLC


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WhatisPaperlessTicketing?

Ticketlessentry creditcard/ID seatinglocationslip

Designedtocurbtheresaleoftickets Especiallyabovefacevalue.

Originalpurchaser mustshowuptotheeventandswipetheircard togetsomeonein.

InApril,2010,TicketmasterbeganallowingresaleonitsownsecondarysiteTicketExchange.

Resalecanoccuriforiginalpurchasershowsupandletsnewcustomerin.

TheseticketsshowuponStubHub,TicketLiquidator,TicketsNow(ownedbyTM),etc. Someoftheexchangestrytoremovethem.

ForsomeeventsTicketExchangeistheexclusiveresellersite(convertstopdf) extraroundofsellingintheprocess.


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Agenda

TheProsandConsofTicketlessEntry(orPaperless

Ticketing)

IsMonopolyLeveragingFeasible?

WhatHappenstoCompetitionwithPaperlessTicketing?

ANaturalExperiment MichaelBubl


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Pros&ConsofTicketlessEntry Savespaper? No,seatingassignmentprintedatvenue

Cantloseorforgettickets? Yes,butmobilephoneticketsmaybecomparable

Counterfeit? Dontallowresale

AllowresalethroughTMssitegoingfromcreditcardtocreditcard Currently,platformsguaranteetheticket

Integrateresellerplatformwithprimarysellersite(happensinMLBwithStubHub)

Willresellershowupatvenuewithcreditcardoncetheyhavetakenthebuyersmoney?

Gifts? No,thegrandmaproblem

Speedatvenue? No,slowerlinestogetin verifyingcreditcardstakeslongerthanticketreadersortakers

Groupcoordinationdifficulties? Yes,cantbreakupticketspurchasedingroups(togetgroupofseats). Couldemailthepdf ofeachseattoeachattendeeaheadoftime. Ifonefanneedstosellherticket,shellhavetogetthecreditcardholder

involved.

ReducedAvailabilityofTickets? ResearchQuestion Seabrook(2009)saysthatamountofticketsonsecondarymarkethasbeenradicallyreduced.

ManyplatformswontallowPaperlessTicketstoberesoldbecauseofguaranteedfaceshigherrisk. Generalhighcostofmeetingatthegatetoletsomeonein.

Higherpricesinsecondarymarket? ResearchQuestion Willthehighercostsandincreaseddifficultyleadtofewerticketsavailableandhigherprices?

TMstatesthatitsgoalistoreduceticketresale. Willitalsobeabletomonopolize thesecondarymarket?


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Agenda


Ticketing)





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HowwouldTMmakeanymoneyinsuchacompetitive

secondarymarket?

PaperlessTicketingthatisRestrictedtoTMsResaleSite(s)

AntitrustEconomicsConcept:

BarriertoEntry:

technological

barrier

preventing

competition

raisingrivalscosts,foreclosure,essentialfacility

Turnsacompetitivemarketintoamonopolisticone.

SoWhat?


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Agenda


Ticketing)





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SecondaryMarket

CompetitiveMarket:CS=$108,000,PS=$0,W=$108,000MonopolisticMarket:CS=$27,000,PS=$54,000,W=$81,000


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Agenda


Ticketing)





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EmpiricalFindings MichaelBubl

Ticketmastersoldsomesectionswithtraditionalticketing

optionsandusedPaperlessTicketingforcertainsections.

NaturalexperimenttocomparetraditionaltoPaperlessTicketing

controllingforvenue,performer,relationshipacrossnearbyseatlocations(withandwithoutPaperlessTicketing)

LadyGaga,DaveMathews,KingsofLeonwerethecontrolgroups

Data:TM,SH,RazorGator,TicketCity,TicketLiquidator,TicketsNowtakendirectlyoffoftheirwebsites.

VerizonCenter,WashingtonD.C.,11/27/10

TDGarden,Boston,11/30/10


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VerizonCenterPaperless

Conventional


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Paperless

Conventional

TDGarden


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ThePaperlessTicketMarkethadMuchLowerQuantityAvailableforResale


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RatioofTicketsforResaleforPaperlessTicketingandConventionalTicketing

FewerPaperlessTicketsarebeingresold itsworkingasTMintended


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MarkuponPaperlessTicketingTicketsforResalevs.ConventionalTicketing


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MarkuponPaperlessTicketingTicketsforResalevs.ConventionalTicketing


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EmpiricalModelofSecondaryMarketTicketPrices(indollars)


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EmpiricalModelofSecondaryMarketTicketPrices(innaturallogarithms)


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Conclusion Upstreammonopolistcannotgainmaximumprofitsby

simplypricingproperlyupstream.

Incentivetomovedownstream

Attemptstomonopolizethedownstreammarketwitha

technologicalbarrier,raisingrivalscosts.

Thisincreasestransactioncosts,decreasesquantity

supplied,andincreasesprice.

Whenresale

isharder Itlikelyhurtsprimarymarketdemand

Moreticketsgounused(preventingParetoimprovingexchanges),

loweringancillaryrevenues.


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DoesthePrimaryMarketBenefit? Williams(1994)showsthatmarketsthatallowresalehavehigherprimarypricesinthe

NFL(byabout$2).

Depken (2006)showsthatcitiesthatdonot allowresale,averageseasonticketprices

arehigherbyabout$10 teamrevenues. Sweeting (2008)findsthatMLBcities(20002007)withthemostlistingsandhighest

secondarymarketpricesarethosewiththehighestrealizedattendances. Also,higher

demandgameshavemoreticketsavailableinthesecondarymarket.

Spindler (2003)arguesthatSMMsincreaseprimarydemandbecausetheyhave

differentrevenueandcoststructuresallowingthemtomakemoney.

Courty (2003)saysthatSMMsselltohigherincome/moreuncertainbuyersright

beforeeventoccurs. SMMsactasprimarysellerssalesagent.

KarpandPerloff (2005)andGeng etal.(2007)notethatSMMshelpprimarymarket

sellersearnprofitsassociatedwithpricediscrimination. Thiscanbenefittheprimarysellerandconsumers.

Thiel (2003)notethateffortstopreventsecondarymarketssimplyraisethecostof

resellingandbenefitnoone.

Leslieand

Sorenson

(2007)

primary

market

sellers

revenues

decline

with

revenues

capturedbyresellers. Notethattheyassume primarymarketpricesareexogenousand

consumersconstitute45%ofresoldtickets,notprofessionalresellers.


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PrimaryMarketMonopolistSetsFees,notPrices

T=FixedFee:P*m=50+T/2,T*m=$50, =$375K.tP=ProportionalFee:t*m=0.67, =$375K.

*

mP


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WhydoestheSecondaryMarketExist? Pricesbelowmyopicmonopolypricing rewardtruefans,value

buzz,ancillaryrevenues,greatexperienceforfans(repeatcustomersandbuyersofcomplementaryproducts/mp3s),riskaversioncausewantasellout. (KruegerandPray,2008)

Experiencegoods oftenhavelowerpricesbecauseoftheasymmetryofwhatisactuallybeingpurchased(Krueger,2005)

Coarsepricing atvenues(oftenjust2or3differentprices). (LeslieandSorenson,2007).

ExcessDemand secondarymarketsfacilitateParetoimprovingtransactions.

Scheduleschange evenifperfectpricediscriminationoccurred,thetimelapsebetweenpurchaseandconsumptioncancausepersonaldemandtochange. Secondarymarketsareaformofinsurance(Courty,2003;Drayeretal.,2008).

Differentialcostandrevenuefunctions ofresellerscomparedto

primaryseller.


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SecondaryTicketingandPricing

Generalneedforcompetitioninsecondarymarket

Elfenbein (2006)showsthatinmarketswithantiscalpinglaws,there

arefewersecondarymarkettransactions,fewerresellers,higher

concentration,andhigherresaleprices,analyzingover400,000NFL

transactionsoneBay.

Welfare

Courty (2003),Spindler (2003)showefficiencygainsfromsecondary

marketsandprimarymarketgainsalso.

LeslieandSorenson(2007)showthattotalwelfare by16%ifsecondarymarketswerefrictionless.


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TheoreticalModelofPaperlessTicketing LinearD

D1:CS=$540K,PS=$720K,W=$1.26MD2:CS=$450K+$90K,PS=$720K+$90K,W=$1.35M


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TheoreticalModelofPaperlessTicketing NonlinearD

D1:CS=$13.50,PS=$9.375,W=$22.875D2:CS=$9+$4.50,PS=$9,W=$27.375


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How

a

Firm

Sets

Fees

in

Primary

and

Secondary

Markets

Monopolist insecondarymarketcouldunilaterallysetfees

unlikeinprimarywheretheyarejointlyset.

EvenifTMcouldmonopolizeandpricetheprimarymarket,

therewouldstillbeasecondarymarket (fromscheduling

issuesanduncertainty)thatTMmightwanttomoveinto. Inprimarymarket,TMchargesafixedfee perticketsold,ora

proportionalfee basedonthepercentageoftheprice,orahybridofthetwo.


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SecondaryMarketMonopolistSetsFees,notPrices

P*m=$87.50,DWL=$4,687.50,pi=$9,375. T*=$12.50


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EconomicIssueswithPaperlessTicketing

Ispreventingticketresalealaudablegoal?

Ifnot,shouldthesecondarymarketbelargelycontrolledby

anupstreamnearmonopolist orconsistofmultiplethird

partyplatforms?

Marketshares

Ticketresale

Welfare

Downstreamintegration

Naturalexperiment


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Details Lessthan10%ofticketsareresold(Leslie&Sorenson,2007)in

music,buthigherinsports(duetoseasontickets).

Thedownstreammarketishighlyfragmented(800+entities)

ThereareplatformslikeeBay,StubHub,RazorGator (someactasbothaplatformandreseller)

TMownedTicketsNowandTicketExchangearesometimes

designated

as

the

only

reselling

platform

when

Paperless

Ticketing

isused.

Individualresellers Sweeting (2008)estimatesthatforMLB,70%ofresellersareconsumers

reselling.

Leslie&Sorenson(2007)estimatethat45%ofresellersinthemusicconcertmarketareindividualsellers.

Secondaryticketpricestendtodeclineaseventapproachesinsports,andareUshapedinmusic.

Betterseatsareresoldmorecommonlythanpoorseats.


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RollingStone,July923,2009


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ProsofResale Possible seasonticketsales

Increasesattendance(Drayer

etal.,2008) Ancillarysales

ExcitementandHFA

Internet

uncertaintyandimprovedmarkets

Usualgainsfromtrade

Harrington(2010)showsthat

whenstatesrepealedanti

resalelaws,quantityoftickets

resoldrosesubstantiallywhile

priceremainedfairlysteady(NHLgames)

ConsofResale Purposefullow pricingcanbe

thwartedbysecondarymarkets

Truefanproblem GaininCSmaybecapturedby

professionalbrokers

Althoughpricescansellfor

belowfacevalue

Botsbuylotsoftickets

TMusestechnologytotryto

preventthis Counterfeitticketsandillwill

towardteam/artist/venue

Onlinesiteshaveguarantees

Technologyisoftenintegrated

with primary seller

Documents

Rascher Paperless Ticketing Presentation - CONSUMER