I’m going to Reading Festival this weekend which 80,000 music fans are expected to attend. It’s my second music festival and I can’t wait! Reading Festival certainly isn’t cheap. For many teenagers of my age with only part-time jobs, the cost of Reading Festival (£155 + p&p, other spending) is at least a whole months wages. £155 could buy a lot else. So are music festivals a big rip off? Well, obviously it’s a personal and a subjective opinion. I’d argue that at £155, it’s great value. Here’s why.
Two facts: Tickets for Reading Festival sold out very quickly – less than two hours. Tickets on the black market (eBay) have gone as high as £300 each. A friend of mine was offered £500 for his ticket.
As an economist, this indicates to me that, in fact, music festival tickets are under priced. In economics, we have something which is called the equilibrium price. This is the price for which supply equals demand. For example, if 80,000 people want a ticket at a price and 80,000 tickets are available at that price, the market is said to be in equilibrium.
photo: Ian Wilson
In the case of Reading Festival, it is obvious that at the price of £155, more people want tickets than the number of tickets which are available. So the organisers could increase the price of a ticket and still sell out to capacity.
Why is that a problem? Surely the fact that tickets are “too cheap” is good news for festival goers such as you and I. We’re saving money after all aren’t we? Kind of.
Firstly, it’s a waste of everybody’s time to queue up overnight for tickets, or to have to keep refreshing a website to buy them.
Secondly, there is the problem of the black market. People are buying tickets for £155 and selling them on the black market (i.e. eBay) for double that. That means £150 of profit has gone towards a ticket tout, who has served no useful purpose at all, as opposed to towards the organisers who could put the money into improving the festival for everyone.
photo: Stig Nygaard
The black market is also a dangerous and difficult place to deal. Many fans bought tickets on unofficial sites such as SOS Tickets and never received them. They’re now disappointed they can’t go and may have difficulty in getting their money back. And the sole reason why people had to turn to the black market in the first place is because they can’t get them from legitimate agents, so it’s as a direct result of below equilibrium prices.
There are several reasons why Reading festival may have been under priced. It’s possible that the organisers wanted publicity from queues outside stores, and being able to announce that it sold out within 2 hours on the news headlines. Or they simply didn’t expect demand to be so high.
Reading Festival tickets are cheaper than they should be. For the lucky ones amongst us who were at the front of the line to get tickets, that’s great news – we’re getting a bargain. But for everyone else, it’s bad news. It leads to a secondary market, and that’s a recipe for being ripped off, scammed and paying vastly over-the-odd sums: most of which doesn’t even go to the festival organisers.