Taylor Swift performs to a sold-out arena during her Eras Tour concert (Photo by Kevin … [+]
Concert ticket prices have soared reached new heights this year, causing anxiety and financial stress for live music fans. Blame was pointed at ticket companies like TicketMaster and profiteering scalpers. President Biden even law Project aimed at the problem. But as with the real estate 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 disconnect between the price an artist like Taylor Swift or Beyoncé would want to charge her fans and the price wealthier fans are willing to pay. These stars may want to offer all their fans affordable concert tickets, but wealthy fans are willing to pay hundreds or even thousands of dollars for guaranteed admission. However, stadiums can only accommodate a limited number of spectators and artists can only do a limited number of shows without burning out. With limited ticket availability, demand from wealthy fans results in ticket prices that are unaffordable for the average fan. Some fans are priced out completely, and even fans willing to spend hundreds of dollars may only be able to afford seats in the nosebleed sections.
This discrepancy is most clearly visible when big music stars decide to organize an event with a limited audience. In 2011, Beyoncé performed for four nights to a capacity of 3,200 people. Roseland Ballroom. The first show sold out in just 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 at a much higher price than the original price or risk missing the event.
Housing vouchers are effectively “exhausted”
A similar phenomenon is occurring in the affordable housing market. Housing choice vouchers, which provide rental assistance to low-income families, are effectively “exhausted.” Families who often qualify for the program wait years to get off the waiting list. Ideally, the government would like everyone eligible to be able to benefit from rental assistance, but with limited supply of vouchers and affordable housing, many families continue to struggle with housing costs.
Worse still, in some cases the housing voucher program is being abused. Landlords sometimes charge too much unsanitary housing. A study found that Milwaukee landlords charge housing voucher recipients about $60 more per month than other renters. This is akin to scalping in the music concert market. Bad actors take advantage of the mismatch between supply and demand to make profits.
Stop bad actors by increasing supply
The best way to combat scalping is to increase the supply of tickets. Take for example the story of the controversial rapper Travis Scott’s recent concert tour. Initially, Scott’s tour was expected to sell out quickly. As a result, resellers flocked, buying thousands of tickets at an initial price of around $60, intending to resell them at inflated prices. In a twist of fate, Travis Scott expanded the tour by adding more dates to his schedule. Suddenly, the scarcity the scalpers had bet on was gone.
As a result, the resale value of tickets has plummeted, with some listed for as little as ten dollars on popular platforms. Scalpers who had invested heavily in these notes found themselves struggling with a sharp decline in the value of their investment. For many, this translated into losses of tens of thousands of dollars.
Increasing supply through policy changes
In the same way, we can make housing affordable and root out bad actors by increasing the supply of housing. This goal 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 fall. Homeowners might stop seeing sizable annual increases in the value of their homes, but it would be easier for them to upgrade to homes that better meet their needs. Owners of multiple investment properties who reap outsized profits from tenants would lose the most. However, more families could access affordable housing.