But there is another aspect of the app which is new, pointed about by Malcom [sic] Digest and Tony in the comments at Marginal Revolution. Tyler Cowen uses the word “report” in his link, copied from the subtitle of the Guardian article, but the article does not discuss its significance. The change is that the promotion requires the user to tell Amazon the price in the store. As MD puts it:

Isn’t the whole point of the Amazon Price Check app to allow Amazon.com to adjust prices accordingly? When Amazon is setting the prices for you, it’s not like they need to compete with every store in the country, just the ones in your neighborhood.

Rahul:

The real suckers were the price-checking consumers; Amazon’s eating into the consumers surplus not into the High Street book seller sales.

Of course, they are also getting people to use the old price check functionality and cutting into the bricks&mortar sales, too.

In the 80s and 90s, Ticketmaster provided its phone service and physical box offices and machines. This was a bit barrier to entry with gains from scale, so it was a natural monopoly. At least it was a natural monopoly in each city and there were different companies in different places. Ticketmaster bought them all up. This probably has some gains from scaling the phone system, but otherwise little immediate effect. I don’t see how that could reduce competition, since they were already local monopolies, though having fewer companies probably reduced innovation. I think this is the point that people began being outraged by their prices, so maybe the uniform geographic monopoly was useful to them. Or maybe Ticketmaster was the only company to identify and exploit the value of the monopoly.

More recently, ticket buying has shifted to the web. Web sites are a pretty low barrier to entry. Any venue can set up its own web site and take credit cards. So why do they stick with Ticketmaster and its 40% fees? In 2006, the LA Times seemed to say that Ticketmaster was quite vulnerable to competition. The key quote is

People close to Ticketmaster say that other concert companies have made similar comments about the ticketing company, only to sign new Ticketmaster deals once they got the terms and upfront payments they demanded.

If Ticketmaster is a to be believed, the competition cut into its bottom line. But it didn’t lower prices; instead it kicked the money back to the venues in the form of up-front payments. The venues have a lot to gain from competition, but I wonder how many of them noticed that? By keeping the prices fixed and structuring the discount as kickbacks, other venues might not notice what is going on. They see that, say, the 76ers switched away and came back and conclude that they should stick with Ticketmaster, when in fact switching or threatening to switch could get them a lot of money. Another reason to structure it this way is to hide it from the bands. Ticketmaster functions as a bogeyman to let the venues raise prices without giving the money to the band. Maybe there’s some game-theoretic commitment, too. The article also says that half of the fees attributed Ticketmaster were being passed on to the promoted, Live Nation. So even if direct competition wasn’t causing them problems, someone else was able to extract the rents.

More recently, Live Nation merged with Ticketmaster. That could recreate a natural monopoly. Live Nation promotes a lot of big acts, like Madonna. They probably prefer Ticketmaster venues. Thus it is harder for venues to leave Ticketmaster. Or maybe they were already able to demand monopoly rents on their own and Ticketmaster is just a side-show.

(Why do I believe the Ticketmaster quote in the LA Times article? If, as I claim, they want to keep these deals quiet, they shouldn’t mention them to the reporter. But I can’t see what good it would do to make up this particular statement, if it is false. It seems to me if they were going to make up something, that they should say that venues always come back to them and give a vague, positive explanation, perhaps about how they provide a valuable service. So I believe them because it makes them look weak. People usually lie to make themselves look strong.)

I found the LA Times article from a Steve Sailer post. He is not so interested in the economics of Ticketmaster as the psychology of public perception of monopoly and power in general. Also, a post on the economics of scalping.

Prosecution for insider trading is asymetric, too. It seems to me that there is a bias that short action is more suspicious and should be subject to more scrutiny. Are the regulators subject to this bias, or just pandering to the crowd?

Reported (legal) trading by insiders in the US reflects information when it is long, but not when it is short, probably because the sales will attract more attention. Yet in places where insider trading is legal (eg, Hong Kong) reflect information on sales but not on purchases. That’s bizarre? why don’t the purchases reflect information? because the executives are overoptimistic? but why not in the US? because the US executives have such trouble selling, buying must be a big commitment, deserving more thought?