Andrea sent a message to Michael Rapino – President, Chief Executive Officer and Director of Live Nation Entertainment – Email Address that said:
Dear Mr. Rapino,
I am an Italian student currently enrolled in the second year of Economics MSc at Bocconi University (Milan, Italy) and I will graduate in April 2017.
I am following with great interest the current debate going on in Italy about secondary ticketing and I have decided to work on a final dissertation on secondary ticketing applied to the concert industry. I found out that the idea which I am currently working on and that I explain below is very similar to what you explained in some interviews.
The aim of my research, which I elaborated together with my supervisor (professor Chiara Fumagalli), would be to analyze the effects on welfare deriving from a change in the pricing mechanism in the primary market. Specifically, starting from the evidence of underpricing, I would like to check what happens when the promoter increases the price of tickets in the primary market, assuming that this increase in price (epsilon) is less than the price mark-up that emerges in the secondary market.
The idea is that an increase in the face value price could lead to a decrease in scalpers' activity, since the uncertainty of being able to resell all the tickets in the secondary market would increase. Furthermore, some considerations on the distribution of total welfare could be done:
-"promoter" surplus would increase, since the original price has increased and costs have remained constant;
-consumer surplus could increase, assuming that epsilon is less than the price mark-up and that maybe epsilon could be used to offer extra services to consumers or given to charity. Consumers who manage to buy a ticket in the primary market would be worse off, but if there were enough consumers who actually buy a ticket in the secondary market from brokers/scalpers, then the whole situation might be different.
That being said and considering that for now these are only my speculations, I am now moving to the simulation of this case. However, I cannot rely on data, since TicketOne (the Italian main player) doesn't share any data and therefore I'm trying to figure out whether there is some evidence or data that could support this theory.
Has Live Nation Entertainment perhaps done any studies in favour of this proposal or do you have in general any suggestions or tips for my research?
I thank you very much in advance for your time and consideration.
Kind regards,
Andrea
