Online Ticket Sales

My sister-in-law tried to buy Hannah Montana tickets and was unsuccessful at face-value. They're "sold out." She could easily buy them online for many multiples of face-value though through various ticket re-seller sites. Here's the question: Why has purchasing tickets turned into a business where the resellers - or "scalpers" as they're more lovably known - often stand to make more on the ticket than the people putting on the show?

Since ticket sales have pretty much moved online it offers an opportunity for a new business model. Here's my proposal to Ticketmaster and other primary ticket-seller sites when you clearly have a show where demand exceeds supply.

Option 1: When tickets go on sale: instead of selling out all your tickets in 15 minutes at face value (demand is obviously more than supply at that price), why not go to a declining auction system? For instance, start ticket prices on sale at $1000 each and then start lowering ticket prices gradually throughout the day as folks bid on tickets as the price declines? There are many auction based sites that function fairly smoothly using an auction system, including ebay. People could watch in real time as seats sold out, see what prices, and know what the "market" for seats appears to be for a particular show. This is similar to the market-maker system in the stock market. Ticket sellers manually match supply with demand.

Option 2: Have a sealed bid auction system. Similar to purchasing stocks, folks could put in "limit" orders for how much they're willing to pay for a group of tickets. No need to sit and watch the auction, and if an outlet has 8000 tickets to sell, the top 8000 folks placing bids would get the tickets. People placing higher bids would get filled with the better grade seats closer to the stage/box seats/etc (a priority system could be devised for seats as every arena will be different but still allow a bidder to opt out of the priority seating if they preferred a lower priority seating but still wanted to make sure they got in.)

I think either of the above are better for the industry as a whole. The folks putting on the show capture more of the revenue for the show - capturing the value of the extra demand they've created, and at the same time folks that are willing to pay more than face price can still get a ticket without having to go through scalpers.

Purely conspiracy theory: I expect that there's some arrangement between the acts, the primary ticket sellers, and the resellers in any event involving kick-backs in lots of directions. The acts don't want to be seen as gouging their fans so they set below market prices, but they know the tickets are going to sell for far more than face value in most cases. Instead of just giving all that profit margin up to scalpers they're probably working to cut deals to capture the surplus. Same for the primary sellers with the resellers. The systems proposed above would probably just make all that activity more public than it currently is. Just a guess anyhow.

Here's a NYTimes article of you have access.