by Richard Kastelein

OP/ED - Katie Allen of the UK Guardian penned an interesting piece on Seatwave's CEO, Joe Cohen today - which highlights some of the more interesting arguments around the secondary ticketing industry.

Seatwave and rivals such as Viagogo have been accused of encouraging the growth of "bedroom touts", who snap up tickets with the sole purpose of making a profit by selling them on. Although ticket prices on Seatwave, which takes a commission on sales between individuals, have fallen over the last year they are still, on average, higher than at the box office.

Encouraging the growth of bedroom touts? It's called supply and demand. If the primary industry can't price according whether through dynamic pricing or another model - then they can expect resale. Economists such as Paul Krugman have pointed that out. Clearly people are prepared to pay more than the list price for convenience, timeliness, and guaranteed tickets on the secondary market. Once the tickets get out onto the market, the market sets it's own rate - through the secondary channels.

But Marc Marot, former chairman of the Resale Rights Society, which calls for a levy on secondary site transactions to allow artists to claw back profits made by touts and fans, said: "The music industry believes that sites such as Seatwave are in fact swamped by organised brokers." Marot, who manages artists including Billy Ocean, said such sites not only represented lost earnings for musicians but were also an affront to fans – especially when young bands set ticket prices low to make them affordable for an equally young audience. "We believe corporate sellers effectively hijack and suck all of the profit out of the tours in order to enrich themselves ... it's a parasitical arrangement."

Maybe Marot should address the fact that many artists, and promoters (the Concert Promoters Association of the U.K. have a secondary ticketing site) are actually participating in the secondary market themselves... and there's been cases of tickets being directly dumped into the secondary market. 

Seatwave has sought to separate itself from the murky world of what it calls "dodgy touts in dark car parks" and the uncertainty of online auction site eBay, which it accuses of a lack of consumer protection. Cohen's business has signed up household names as partners such as media company MTV and retailer HMV, and provides insurance on all tickets sold, as well as guaranteed delivery times.

Great comment and strategy on Cohen's part here. White label deals and corporate relationships with global brands are legitimizing the secondary marketplace model. There's no doubt about it. The socialization of the events and ticketing industries may be a noble concept, but the economic fact is, supply and demand and a competitive environment will drive the industry in the future. Merger attempts such as the Live Nation-Ticketmaster proposed deal are a last ditch effort to control the entire market but this will very likely increase pricing in the future and create a monopoly. 

Brilliant quote by Cohen to wrap the interview.

"We are tickling the belly of profit."