Markets are almost always the best way to deal with economic problems, including the problem of not wanting to go out tonight to watch the Dallas Cowboys play their first preseason football game in 100+ degree heat.
So what do you do if you are a season ticket holder and are sitting on tickets to tonight's game? Since it's a preseason game, you might just toss them in the trashcan. But, if those tickets were for a game during the season, they would be worth big bucks.
Hence the "secondary market" for tickets. A ticket is sort of quasi-property. It's not really property--it's more of a license, since the venue almost always attaches conditions to the ticket, and can revoke your "right" to attend the game for many different reasons. But, with a few exceptions such as for airline travel, tickets have largely been considered a transferable good.
The advent of information technology has turbocharged the already-profitable secondary market for tickets. Once the domain of scalpers, today tickets are resold on the Internet through markets like Ebay and EBay's shiny new possession, StubHub. But the increasingly profitable secondary ticket market has spawned a fight between the venues themselves and secondary marketplaces, and this fight is moving into the legislative arena.
It seems that venue owners would like to be able to enter into legal contracts wherein they designate a single legitimate secondary marketplace for their tickets, such as TicketMaster. Any unauthorized transference of tickets would be, well, unauthorized.
On the other side are vibrant secondary marketplaces, who don't want to see any restrictions at all on the free exchange of tickets.
It seems to us that markets are equipped to solve this dispute without legislation. Both ticket purchasers and venue owners are able to freely enter into contracts as they see fit. If venues want to sell tickets that can only be resold through restrictive channels, and the ticket buyers agree to those restrictions, what objection is there?
On the other hand, it may be that customers will rebel at such restrictions and force venue owners to return to less restrictive rules.
What neither venue owners nor ticket exchanges should do is go running to the government to legislate their particular business model--but that's exactly what is happening.
Legislation is circulating in several places that would either (a) prohibit venue owners from restricting resale except through a particular vendor, or (b) severely restrict secondary markets in tickets.
The first legislative approach would legally advantage the business models of Ebay/StubHub to the disadvantage of venue owners. The second legislative approach would virtually outlaw such secondary markets to the advantage of the venues themselves or their designated sellers, such as TicketMaster. Both approaches are wrong.
There are obviously important interests and "rights" on both sides of this issue. Undoubtedly it is in the best interests of consumers to have a vibrant marketplace for secondary tickets. But the bright lines must be drawn at the point of principle, and the principles at stake here are property rights and the right of contract. Policy makers who dare to tread into this issue must be careful that any legislation or restrictions they seek to impose on the secondary ticket marketplace do not erode either the property rights of the venue owners, or their right to set the terms of contract for ticket sales.
So long as their are no legislative restrictions on secondary ticket markets, and also no legislative restrictions on the right of venue owners to set the terms of their ticket contracts, the secondary market for tickets should function optimally.
Now, if only I could find a taker for these tickets to the game tonight . . .