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In an op-ed unlikely to make him many friends in the live business, Institute of Economic Affairs' Mark Littlewood argues the secondary market is necessary—and desirable
By IQ on 30 Jan 2018
The secondary market is a natural consequence of demand for concert tickets outstripping the supply, and any kind of cap on resale prices is both unworkable and contrary to the “basic realities of economics”.
That’s the view of Mark Littlewood, director-general of the Institute of Economic Affairs (IEA), who has argued that the growing movement to curb ticket resale in the UK is the result of failure to properly grasp the economic concepts of scarcity and value.
Writing in the Times, Littlewood (pictured), who has led the influential free-market think tank since 2009, says anti-touting campaigners “have to accept that popular live events will always involve disappointed people missing out”. Using the example of Ed Sheeran’s latest album, ÷, which was streamed more than 200 million times in its first week of release, Littlewood says if 200m people wanted to see Sheeran live, “he would have to perform at Wembley Stadium every night for more than seven and a half years. Sheeran’s already hectic schedule is unlikely to make this feasible.”
He also argues that it is “folly” to believe a ticket’s face value “somehow reflects its intrinsic, objective value”. “As with all other goods and services, a ticket is worth whatever someone will legally pay for it,” he writes. “A rare chance to see my beloved Southampton FC play at Wembley may not be worth the £90 asking price to the overwhelming majority of people, but it is worth it many times over to me.”
“It is folly to believe a ticket’s face value somehow reflects its intrinsic, objective value”
This, he says, “highlights the absurdity” of a proposal by Labour MP Sharon Hodgson to cap resale prices at 10% above face value. “Why would we apply a legal cap on the mark-up of ticket prices, but not on other things?” Littlewood asks. “If in 1938 you purchased the first issue of Action Comics, featuring the debut of Superman, for 10¢, you could now sell it for more than $3 million. Presumably, Ms Hodgson believes you should only be allowed to sell it for 11¢ – or, if she is willing to take account of inflation, for a maximum price of $1.84.”
The secondary market, then, is necessary to allow those who can afford to buy access to shows they otherwise would have no chance of attending, Littlewood concludes.
“The reason that you can get into some events – if you have the cash and are willing to spend it – but may be unable attend others, irrespective of the financial sacrifice you are willing to make, hinges on whether an effective secondary market in ticket sales is allowed to operate,” he writes.
“Secondary markets in tickets are not a modern phenomenon. In ancient Rome, tickets for gladiatorial games or chariot races were typically given away. This led to the swift growth of the locarii – a profession dedicated to the purchase and resale of these tickets, which were made of shards of pottery. With modern technologies, today’s resale market is rather more sophisticated, but the principle remains the same: to get things into the hands of people who want them more than the people who currently own them.”
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