Question

An article in the Economist noted that for the Broadway musical Hamilton, "Every time the show's producers release a new block [of tickets] to sell, they immediately get snapped up by 'ticket bots,' high-speed ticket-buying software." The musical's producer called the ticket bots "computerized cheaters." a. How do people earn a profit from using the bots to buy tickets? b. Is there a strategy the musical's producer could use to eliminate the profit earned by the ticket bots? If so, why doesn't he use it?

Short answer

People using ticket bots earn a profit by buying tickets at the initial price as soon as they are released and then selling them at a higher price due to increased demand. The producer could potentially reduce bots' profit by legal or technical measures, or by setting ticket prices closer to market levels. However, these strategies could be costly, technically challenging, or result in decreased accessibility for some fans.

Step-by-step solution

Understanding bots profit

People earn a profit from using bots to buy tickets due to differences in supply and demand. When a popular event like a Broadway musical releases new tickets, the demand usually greatly exceeds the supply. Bots can buy tickets as soon as they are released, before individuals have a chance. The people using the bots can then sell these tickets at a higher price. This is possible because they have essentially cornered the market on available tickets, creating a selling price (often significantly higher than the initial cost).

Outlining a potential strategy

There are several strategies that a producer could use with the goal to eliminate the profit earned by ticket bots. These include legal actions, technical countermeasures, or adapting ticket pricing. For example, they could establish rules and regulations that make the use of ticket bots illegal or implement technical measures to prevent bot purchases. However, these measures could be challenging and costly to implement.

Analyzing the producer’s hesitation

One main reason the producer might be hesitating to implement measures could be cost effectiveness. Building and maintaining a bot-resistant ticketing system might be expensive. Another reason could be fear of repercussions from a segment of clientele. If prices were increased drastically to eliminate the incentive for bots, it could make the tickets inaccessible to a portion of the fan base, leading to decreased overall sales or negative publicity.

Key concepts

Supply and Demand

Have you ever tried buying a ticket for an extremely popular concert or event, only to find they sell out in moments? This is a classic example of the principles of supply and demand hard at work. Demand occurs when many people want to purchase the same product, like a ticket to a hit musical. However, the supply is limited because there are only so many seats in a theater.

In ticket resale economics, when the demand outstrips the supply, those possessing many tickets can sell them at a higher price. That's where profit comes in. Those utilizing bots can quickly buy a large number of tickets when they are initially at face value. Later, they sell them at a premium, capitalizing on the unmet demand.

This creates a secondary market where consumers have to pay much higher prices than intended by the producers. Unfortunately, this forces some fans to miss out on events they love because the price becomes too high due to artificial scarcity created by bot owners.

Understanding this relationship helps explain why certain events become inaccessible to the everyday buyer and outlines why the profit margin for bots exists.

Market Dynamics

Market dynamics pertain to the forces that influence the prices and availability in the marketplace. In the context of ticket sales, several key players affect the market: producers, consumers, and resellers, whether individuals or bots.

Bots disrupt the normal market dynamics by capturing most tickets on release, manipulating availability. They shift the balance favorably towards resellers. This dynamic inflates prices and creates inefficiencies as the true consumers wish to purchase directly but are forced to engage with secondary sellers.

Suppliers, such as producers, manage pricing and ticket availability. However, the disruptive presence of bots introduces unpredictability. If they choose to increase prices to match demand levels set by bots, they may alienate their customer base.

Producers often face a catch-22: do they prevent bots by investing heavily in anti-bot technology, potentially bearing negative costs, or do they accept secondary market dynamics? The decision impacts how accessible events are to the general public.

Anti-Bot Strategies

Many producers are on a quest to fight bots through various anti-bot strategies, aiming to protect ticket availability for real fans. These strategies can be technical or legal.

From a technical standpoint, producers can implement CAPTCHA or more advanced identity verification during ticket purchases. Bots have difficulty navigating these security features, slowing them down or even blocking them.

• CAPTCHA challenges often prevent non-human exploitation of ticket systems.
• Two-factor authentication ensures the buyer is a genuine human, not a script.

However, these measures may not always be foolproof and require ongoing adjustment as bots become more sophisticated.

Legally, producers can lobby for stricter anti-bot legislation to make bot usage illegal or penalize resellers severely. While laws exist to curb this practice, enforcement and loophole exploitation remain significant issues.

These strategies are not without their own challenges. High implementation costs and potential impacts on buyer convenience are reasons producers may hesitate. Nevertheless, persistent efforts to refine these strategies can greatly enhance fair access for consumers.