Fed Reserve Bank Addresses Hannah Montana Scalping Issue

Authored by Scott Goldberg on October 31, 2007 - 5:22pm.

Last week on the Federal Reserve Bank of Richmond’s website, economist Doug Campbell discussed the Hannah Montana ticket issue. Seats with a face value of $26 - $56 dollars have gone for several multiples of that on resale websites, inciting a furor among fans and industry observers. A woman in Greensboro, North Carolina sued earlier this month over the $1,050 she paid a reseller for four seats.

"The kid doesn't understand that some company has quadrupled the price of the ticket and Mommy can't afford them," she told the Greensboro News & Record.

Campbell writes: “To economists, this complaint misses the point. The ticket company didn't inflate the price; the forces of supply and demand did. Yes, it may be unfortunate that some little girls won't be able to see Miley Cyrus (the real name of the performer who plays teenybopper Hannah Montana) in concert. The more fundamental issue is that promoters of the Hannah Montana series apparently haven't priced tickets commensurate with demand, opening the door to a secondary market with much higher prices.”

But University of North Carolina Greensboro economics professor Stephen Layson has a similar angle on the argument: "If the promoters are deliberately setting prices low, it seems to me they're just enriching the scalpers. Parents are objecting to the fact that they have to pay such high prices. But my opinion as an economist is that it's just supply and demand. When supply is very limited and demand is very great, then the market clearing prices are going to be very high. That may seem outrageous but nobody is forcing you to buy your tickets."

It has been argued, however, that demand for Hannah Montana tickets has been artificially inflated by internet ticket scalpers. Technology has enabled the secondary market to hoard tickets more easily, thus capturing any of the surplus that exists between the initial offering price of seats and the price fans are willing to pay for a sold out show.

Campbell addressed that issue in his article: “The traditional economic view on ticket scalping has been complicated of late with new technology. Now, scalpers need only sit at computer monitors and quickly buy up tickets from brokers' Web sites. In addition, the Wall Street Journal recently reported that many scalpers may have an advantage — new software that, according to one report, allows them to ‘defeat the various measures’ which promoters use to restrict the number of tickets individuals can purchase. This quite clearly makes the playing field un-level, in particular for 8-year-old girls.”

Extra:
Watch a clip from the first show of the tour here.