Economics found itself back in the headlines in the United Kingdom this week. This time around though the issue was – thankfully – not declining standards, a slide in the value of sterling, or a near-crisis in government debt markets, all things with which British newspaper readers have become familiar with over the past two or three years. Instead, the issue taking up column inches and even prompting a response from the Prime Minister was ticket pricing. Specifically, the pricing of Oasis’ 10 reunion performances which is due to happen next summer.
Much like cricket, most Americans did not seem to ‘get’ Oasis at the time. Only one Oasis single broke into the Billboard Hot 100 singles chart stateside and their best-selling album, on that side of the Atlantic, peaked at number two in the charts. But in the mid to late 1990s, they were, without a shadow of a doubt, the biggest band in Britain. All seven albums reached number one, they achieved the number one single place eight times and had a further 15 top ten hits. In 1996 they played to 250,000 fans over two nights in Knebworth, still the largest crowds at a concert in British history.
So the news that the band was reforming, after a hiatus of 15 years, to play ten concerts next summer was of some cultural significance.
Sadly for the band, the sale of the eagerly anticipated tickets did not – from a public relations perspective – go especially well.
Ticketmaster, which handled the online sale, experienced exceptionally high demand leading to a long digital queue being put in place with fans waiting up to 4 hours between logging on and being able to choose their tickets and pay. Whilst this was going on the site’s dynamic pricing algorithm, which adjusts prices in response to demand, kicked into action. The result was that the cheapest tickets – which had initially been advertised as costing £135 (about $180) were being quoted at £335 by the time many got to the front of the line. Four hours of waiting in front of a computer screen only to be told that the item you are trying to purchase has more than doubled in price since you logged on does not make for an excellent customer service experience.
Sir Keir Starmer, the Prime Minister, has now pledged to ensure that concert tickets are “at a price people can afford” and the culture minister has promised a government investigation into dynamic pricing for event tickets.
But whilst Oasis might be a peculiarly British (and Irish) phenomenon, concerns over dynamic pricing – whereby prices adjust to demand at a rapid pace – and perceived unfair corporate pricing policies are very definitely a trans-Atlantic issue.
Back in 2022, Taylor Swift’s tour ticket prices and selling practices caused a similar outgushing of concern in the US media. Vice President Harris has promised to make tackling “price gouging” a key plank of policy if she wins the election for President.
Dynamic pricing is one of those issues on which the views of economists tend to differ from those of the general public.
A belief that prices should respond to the demand is, after all, pretty central to mainstream economic thinking. Such behavior, in the view of most economists, is not “price gouging” which is better thought of as the abuse of a monopoly position. It instead is a system which serves to maximize both producer and consumer surplus by ensuring that those who value a limited good or service most get to access it whilst the producer is fairly compensated for providing it.
In that case, the initial allocation of tickets was sold at a fixed price, after which those lucky enough to have got ahold of them could – if they wished – sell them on to others.
The result was that fans desperate to see Swift ended up paying over the odds to touts who had snatched up as many tickets as possible with little intention of attending themselves.
The panel was asked whether “the present system of initial ticket selling and reselling through secondary ticket intermediaries often leads to large transfers between different groups of ticket buyers that could be partially captured by artists through higher initial ticket prices?” More than 70% of respondents, weighted by confidence, either agreed or strongly agreed.
The system used for the Oasis ticket sales, by contrast, did not have these features. It avoided (mostly, some will no doubt sell on their already highly priced tickets) the transfers between different groups of purchasers and ensured a greater share of what customers were ultimately willing to pay was captured by the performers.
Had dynamic pricing not been in place, the newspapers would no doubt contain less anger about Ticketmaster’s antics and more about touts charging very similar prices to desperate fans. Fans would be no better off in general and the performers would be less well rewarded. It is hard to argue that would be a preferable outcome.
On Thursday, four days after the initial allocations sold out in a matter of hours, Oasis announced they would perform two additional gigs next summer. In other words, it would seem higher prices have induced additional supply. Exactly as any economist might have expected.
