loosely translate. . . . just take the screwing . . . . . How long should injustice be allowed? Rocket River
The question is where does it fall out, and is it good, bad, or very bad for the consumer? Based upon a brief examination of monopoly equilibrium: http://www.pinkmonkey.com/studyguides/subjects/eco/chap11.e1111301.asp [...] At this point the monopolist produces and supplies output quantity Q. This is the only profit-maximizing condition for the monopolist. Under the given demand-cost structure no other level of output can help to enhance his profit. [...] Monopoly profits are permanent and enjoyed in the short as well as long run. There is no fear of monopoly profits being competed away. Monopoly profits arise out of control over conditions in the market. The monopolist follows restrictive policies and charges a higher price. This is the source of his profits. [...] By nature, a monopolist is not likely to allow his profits to fall. He will maintain some positive profits through restrictive practices.
Refman, there is nothing twisted about the economics myself and others are presenting. I don't think anyone is arguing with you over the fundamental economic issues - yes, in the long run, a monopoly will reach an equilibrium. My argument is whether that is a desirable situation. I believe it is not. A monopolist possesses complete control over the market - they can set their output levels to maximize profits with no regard for the action of competitors.(The economic term is abnormal profits) The monopolist is fully aware that if he raises prices, demand will fall and less people will go to concerts/events. Ultimately, he is deciding how many people will go to a concert, and it has a trickle down effect on the number of acts. I don't want anyone limiting the entertainment options to me, let alone a crummy ticket agency. I would much rather have a number of ticket selling agencies competing for the business from entertainers, and us. Yes, there are industries that are natural monopolies (usually ones that have very large economies of scale) but I strongly believe that ticket selling is NOT one of them. I simply cannot believe that you think this is a desirable situation. It is inefficient and Ticketmaster will continue to become less efficient as time progresses.
http://www.rollingstone.com/news/newsarticle.asp?nid=16402 Trouble for the Tour Biz Ticket prices up, attendance down in 2002 (rollingstone.com, Aug. 4. 2002) [...] attendance is actually down, and the increase in revenue is due solely to a hike in ticket prices, which have jumped by about four dollars. [...] Rock concerts in 2002 have split into two separate markets: nostalgia fests for baby boomers willing to pay as much as $100 a ticket, and tours by current bands whose younger fans usually aren't expected to pony up more than $30. The result? More money spent on fewer tickets. According to concert-industry publication Pollstar, the Top Fifty tours grossed $538 million during the first half of the year, a rise of six percent from the same period last year. But the 10.6 million tickets sold were 300,000 less than what the Top Fifty tours racked up during the same period last year.
Your idea of injustice is really skewed. That you have to pay an extra $7 for concert tickets being injustice is really laughable. From the very inception of the entertainment industry your entertainment options have been limited by large enterprises. Until the recent advent of indie films, your options were limited by the big studio oligopoly. And in time the situation will straighten out. I do see that there are problems here, but I just don't think the solution is a governmental one. Having seen what happened in College Station with TCA cable (now Cox), I'd venture a guess to say that you might want to check on that a little more closely. These monopolies operate with little to no government intervention.
The "injustice" is to the upcoming artists, the industry itself and the fans as much as the random individual ticket consumer. Further, while the courts are willing to admit there may be a violation of the Clayton Act, they are not willing to listen to either a consumer or an artist on the matter. Straighten out how? Ticketmaster seems quite happy with the status quo, meaning the current (bad) situation is the BEST we can ever expect? That bit of "ECON 101" says it all: In a monopoly situation, the company wins, and continues to win by screwing the "little guys" at the bottom of ladder.
I wouldn't classify indie films as a recent advent. They've been around since the beginning of the industry in one form or another. From the second tier movie studios like Republic to the growth in smaller companies with the advent of home video to today, there's always been some form of independent cinema. Some would argue that with the death of mom & pop video stores and small movie theaters has helped to reign in the independent scene.
Jeff very astutely pointed out that the artists are part of the pricing problem. They are seeking biggerand bigger payoffs. That's hardly an injustice to them. Having studied both micro and macroeconomics, I can say the following. When dealing with a luxury item (like entertainment) the market will find its way back to equilibrium, even in the face of a monopoly. Where monopolies are particularly deleterious is in the market for necessity goods. I don't know who taught you that little piece of economics...but it is flat out wrong. The Republics of the world had their films yanked out of theaters, largely at the behest of the major studios. The recent advent that I was referring to is the release of indie films widely in the local megaplexes across the country. You are right, and I feel I must restate my point.
Maybe but injustice for one. . is injustice for all. If I take candy from a baby it is injustice. . . .Injustice is not measured in size. . but in principle. . . . . . Rocket River
UP AND COMING artists. Read the accounts. The folks with predominantly older fanbases who can and do pay $100+ per ticket are getting paid more. No doubt about it. The ones in the middle are only maybe breaking even. Clear Channel might be giving them more up front, but the reduced attendance cuts into the back end. ($41 + charges + parking to sit on the LAWN for Melissa Etheridge in 2002?) The smaller acts simply aren't getting the tours, and spending more and more time on buses and playing bars. The whole ecosystem is down a notch, and that's bad for musicians considering how touring used to account for the majority of income for "baby bands." To a somewhat lesser degree, the industry has been "broken" for ten years. It has only existed for forty. That decline has been exacerbated in the last few years with the advent of Clear Channel in the concert industry. It seems to me John Stuart Mill described this situation exactly: "This case, in which the value is wholly related by the necessities or desires of the purchaser, is the case of strict and absolute monopoly; in which, the article desired being only obtainable from one person, he can exact any equivalent, short of the point at which no purchaser could be found."
The bands that bring in more revenue make more money...what the hell is wrong with that? Sounds like economics to me. The more an individual produces for an organization, the more the organization will pay for their services. The bottom line is that when these smaller venues stop selling out or close to it on a regular basis things will change. Until that point, they will charge what people will pay and that would happen if there were 100 companies that did this. This is because whether you like it or not, companies are about maximizing profits...they are not benevolence societies. So if people will pay $100 for a ticket any number of companies would charge $100 for that ticket...sheesh.
How many concerts actually sell out these days anyway, as a percentage of the total number of concerts? I know I've been to many, many concerts that didn't come close to selling out. Prices didn't go down for the next one, though. Seems like this discussion hinges on the idea that all or nearly all concerts sell out. Is that really the case? By the same token, think about how sports teams often approach their ticket prices. The Rangers hardly ever sell out and have never consistently sold out since moving into the Ballpark in Arlington. In the years that attendance is up, the prices increase. That could make sense (though since they aren't selling out very many games, we know the equilibrium price should be lower rather than higher). But when attendance falls, the teams often raises prices again. The thought apparently being "Well, we aren't making enough money on ticket sales, we need to raise prices". And then attendance tends to drop again. Now part of what affects baseball ticket prices is the performance of the team (though not necessarily. Attendance has gone up during bad seasons and down during playoff seasons). But obviously, the lack of sell-outs has not done anything to drive down prices at the Ballpark. (Reportedly, the Rangers are going to try the trick of making the Ballpark smaller. I've heard that the team is planning on taking out several sections of seats and replacing them with advertising signage).
Nothing is wrong with that. What is *wrong* is that bands who *could* bring in more money are not given that opportunity. Jeff said it awhile back. Acts who *could* play the Compaq Center are not being given the opportunity because of Ticketmaster and their fees. Decreased head count with increased fees? Who cares, we make the same amount...only the artist gets less! Read the articles. THEY HAVE NOT BEEN SELLING OUT Further, attendance has been on the decline (by double-digit percentages) for at least the last four years, and it has only gotten worse. For thirty years companies were making money, artists were making money, and the fans were satisfied that they got value for the dollars they spent. Since the rise of Ticketmaster, and the subsequent consolidation of the industry by Clear Channel, only one of those is guaranteed to happen.
Well then your studies should have told you that this has absolutely nothing to do with macroeconomics. Simply not true. Fundamental economics will tell you that as price increases, demand will drop. A monopolist will sell X tickets at $100, because that is the profit maximizing situation for him. If he has one or more competitors, there will be more than X tickets sold, for less than $100 each, because that is the profit maximizing situation for all firms. The ONLY time this is not the case is if it is some form of natural monoply, which I strongly contend is not the case in ticket sales. Here is a passage I have copied for you from Economics, 5th Edition, Begg et al 1997 p49. "Competitive markets generally work well, but markets where either buyers or sellers can manipulate prices generally do not. In particular, too little output will be produced and price will be too high in a market where a single seller controls supply. A monopolist is the single seller of a good or service. Monopolists can earn high profits by restricting the quantity sold and raising the price. Because they are the only sellers, they have no fear of being undercut by competitors - and consumers end up paying more than they should. Some monopolies are almost unavoidable. Most public utilities (gas, for example) are potential monopolies. The government can regulate such companies by controlling the prices they are allowed to charge, or it may elect to supply the products itself. Other monopolies may be artificial, brought about through manipulation by firms. Here governments intervene with competition laws, seeking to make competition more vigorous and to prevent monopolies or other attempts to control supply. Any buyer who has the ability to affect market price significantly is described as having market power. Government intervention to limit market power, for instance by preventing firms with market power from charging high prices, can improve the allocation of resources. I have presented nothing but fundamental economics or verbatim copy from an Economics text book above. Refman - you may be happy with paying the extra 20% or whatever it is, but surely from the above, you will admit that :- a) With Ticketmaster as a monopoly, there will be less tickets sold at a higher price, than if they had competitors. b) This is not a desirable situation for the general public I will admit to your positions (which I never disputed anyway) that monopolies are worse when the goods are necessities, and that even in a monopoly, equilbrium will be reached, however I don't see their relevance to the argument.
Macroeconomics is relevant, but only in the sense of how this fits in the overall economy and the comparisons which can be made across different industries. But for the most part, this is in fact a problem of microeconomics. They are relevant in the sense that certain people are asserting that the disequilibrium will carry on basically forever unless there is some governmental response. I was merely stating the economic principles which show this to not be true.
Except, of course, that you've done no such thing. All indicatons are that the industry is happy enough with the current situation. Thus, they have no incentive to ever make it any better. In other words, this mythical "equilibrium" is at the current level ("screw the consumer") or worse.
From my points squared with your I deduce that there are large areas of agreement. I simply believe that the market will fix itself in time. You apparently believe that some intervention is necessary. Please forgive me if I am mistaken. But I have made myself very clear, and on some of the finer points and nuances we will agree to disagree.
Nothing could be further from the truth. If you had been paying attention, I have stated on multiple occasions that even in the face of a monopoly in the market for luxury goods the market WILL ADJUST OVER TIME. This means by its very definition that the status quo will not persist in the long term. ADJUST infers change. I really must ask you to read my posts before misquoting me.
I guess the question then becomes: How much time? In time, we'll all be dead. Even if the situation will eventually right itself on its own, how much time should it be given to right itself? At what point does the situation become harmful enough for some sort of regulatory intervention? I don't have the answer, but I can see where some would believe that any time a monopoly is allowed to exist at the detriment of others is too long.
