By Tom RogersShareNewsweek is a Trust Project memberAffordability is the ultimate political issue throughout the country these days. It is a hotly contested issue in Congress when it comes to health care with a vote on continued Obamacare subsidies likely to happen before the end of the year.
Grocery prices continue to rise, causing President Donald Trump to back off tariffs he imposed on certain items such as coffee and bananas. Prices overall at Target, Walmart and Amazon are rising much faster than the overall rate of inflation. The administration is unable to claim any real progress when it comes to the affordability issue, even though most observers believe Trump's campaign pledges on the issue were the key to his victory.
...There is one area where substantial relief for consumers is on the way because of government action. It is not an area affecting consumer prices that go to the basics of life such as food and medicine, but it does relate to prices affecting the consumer pocketbook when it comes to discretionary entertainment dollars. In fact, it is the music space—concert and sports tickets—which are going to be coming down in price. Moreover, unlike the debates on health care, rent control or free bus rides, the government effort on this front is quite bipartisan. While tariffs have raised prices and created enormous global friction, the efforts to tame ticket prices are in sync throughout the world.
Anyone who has bought tickets for concerts or sporting events online knows about the secondary ticket market— StubHub, Vivid Seats and SeatGeek. These are sites supplied with tickets largely supplied by professional brokers who buy up tickets when they go on sale and then resell them on these sites at much higher prices, sometimes astronomically higher prices.
Ticket prices, particularly for music concerts, were often very underpriced relative to market demand because the performing artists and promoters wanted to create an appearance that the events were accessible to all, in large part to foster goodwill among fans. Ticket scalping at high prices is an issue also for sporting events, but there tend to be many more sporting events over the course of a season for most sports, as opposed to a concert performance which may only have a couple of dates in any one venue making the demand issues far more acute. This led to the arbitrage of ticket prices with professional brokers/sellers buying up tickets as soon as they went on sale using multiple accounts and automated bots to get around limits on how many tickets one could purchase. This led to enormous price gauging where the ultimate price to the consumer bore no relationship to the original intended price.
In stepped the government with a series of actions that have begun to seriously undermine the secondary seller practices. Earlier this year, the Trump administration issued an executive order titled “Combating Unfair Practices in the Live Entertainment Market,” directing regulators to more strictly enforce the 2016 Better Online Ticket Sales (BOTS) Act. Then, in September, the Federal Trade Commission filed a lawsuit against Live Nation Ticketmaster, the largest seller of primary tickets—those sold directly by the event arena. One of the key intended elements of that legal action was to force Ticketmaster to take more dramatic action against ticket brokers buying large blocks of tickets and jacking ticket prices way up on resale.
Since then, Ticketmaster has substantially increased its efforts to ensure bots cannot obtain tickets and supposedly has canceled over a million accounts where the identity of the buyer could not be determined. These actions are really squeezing out brokers and putting enormous pressure on StubHub and the other secondary sellers. In fact, StubHub just recently went public, and its stock has declined precipitously because of these actions.
The performers, promoters, and venues are also getting much better at pricing tickets in a way which better takes into account market demand, and the use of AI data will probably only make these efforts more sophisticated so that prices in arenas will move in a direction of differential pricing for almost every ticket based on the location of the seat. These efforts will undoubtedly put some upward pressure on the original pricing of tickets, but ticket prices should still substantially settle down with secondary brokers largely out of the way or far more constrained.
The Trump administration, in a move that further underscores they are not necessarily true adherents to free market capitalism, through the FTC, is supposedly considering imposing price caps on the resale of tickets. This would be a possible action taken as a way of implementing Trump’s executive order. What many consider more likely is that we see regulatory action of this sort at the state level. The bipartisan nature of this policy consideration is demonstrated clearly by such blue state jurisdictions as Maine and Washington, D.C., where Maine has already put in place price caps on ticket resale, and Washington D.C. is well on its way to accomplishing the same thing. The Maine solution of a 10 percent price cap may not be the most reasonable remedy, but it does go to the heart of the problem.
Incoming New York City Mayor Zohran Mamdani has said he is in favor of imposing price caps on tickets to the World Cup, which will be hosted in part in NYC. In addition, countries from Japan, Australia and Ireland, with the U.K. close behind, are taking similar actions relative to secondary ticket sales.
There is nothing about any of these activities that is going to solve broader concerns about affordability. There are millions of people in the United States who cannot afford tickets to entertainment and sports events for which these actions do absolutely nothing. However, it is a case study in a government response to an affordability issue—that there can be a bipartisan approach to dealing with a pocketbook issue, where the government can move to restructure how a market is working in a way that can create a much fairer and responsive system for consumers. That should be music to our ears.
Tom Rogers is executive chairman of Claigrid, Inc. (the cloud AI grid company), an editor-at-large for Newsweek, the founder of CNBC and a CNBC contributor. He also established MSNBC, is the former CEO of TiVo, a member of Keep Our Republic (an organization dedicated to preserving the nation's democracy). He is also a member of the American Bar Association Task Force on Democracy.
The views expressed in this article are the writer's own.
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