Solving Taylor Swift's Ticket Problem with 3 Market Designs
Recently, a friend informed me that Taylor Swift's concert tickets are being sold for thousands of dollars in the secondary market. However, this practice is unfair to consumers because professional resellers often use bots to purchase tickets, leaving genuine fans with empty hands. Although mechanisms like "Verified Fans" were implemented to filter out resellers, they have proven to be ineffective in practice.
Moreover, the ticketing platform is not motivated to develop countermeasures unless they are legally obliged to do so. Several market dynamics prompt resellers to engage in this behavior:
- Unlike airline tickets, concert tickets can be easily resold.
- Secondary markets facilitate these transactions, and trust issues can hinder buyers in entirely over-the-counter transactions.
- Reselling tickets at a premium price is a lucrative business.
From a social welfare standpoint, we want to remove as much unfairness as possible. Specifically, our goals are:
- We want fans to be able to get the ticket they want, not the resellers.
- We also want fans to be able to trade tickets among themselves in the case of a schedule change.
The Proposed Solution
So, how do we achieve these goals? Here, I propose three market designs that can be used to solve this problem. Consider the following rules:
- Each ticket is connected to an ID (with a legal name on it).
- However, tickets cannot be transferred directly to another individual. It must be transferred back to the official seller, who will list it on an open auction market.
- Each time the ticket is transferred, 100% of the price premium is given back to the artist (or to charity, or a combination of both).
These three rules together eliminate any incentive for resellers to participate. Rules #1 and #2 ensure that resellers cannot engage in P2P trading. If you purchase a ticket and are unable to attend, rule #3 allows you to sell it back while ensuring that no one can benefit from reselling.
However, this system does create some minor inconveniences. For example, if you are unable to attend the concert, you cannot simply give the ticket to a friend; instead, it must be put back up for public auction. One possible solution to this issue is to provide a finite list of “transferable personnel” at the time of purchase.
Naturally, these rules can easily be implemented on a centralized platform like TicketMaster. Artists may also consider launching their own ticketing platforms to ensure total control and avoid the anti-competitive pricing of monopolistic companies like TicketMaster (which can charge upwards of $100 in convenience fees).
NFT May be the Answer
A more interesting idea is to build a ticket system using NFT. There are two main benefits of doing so:
- The artist can write some smart contracts to enforce the above rules rather than investing millions to build their own centralized platform that is capable of handling a lot of traffic.
- This would make the ticket a collectible (rather than the ugly paper ticket or the ticket in your Apple Wallet)
NFT also allows for some exciting ways of promoting fairness and equity. For instance, it is possible to air-drop free tickets to fans on a massive scale (maybe 10% of the total volume?). Because there is no incentive for reselling, you are guaranteed that you are giving it to those who want to attend in person.
I believe this is how NFT can truly provide positive utility to society. Just some quick thoughts after I heard the news last night from a friend. Looking forward to some discussions!
This post was from my Twitter thread published at thread.pub/chzenan/ts-ticket. I've rewritten some parts to make it more readable in a blog post format.