But it's inefficient: at an artificially low price (let's stipulate that's what $45 is for Louis C.K.), the show attracts more buyers, a larger proportion of whom aren't dedicated fans. Meanwhile, dedicated fans (not heartless rich people) might be perfectly happy to pay $46, $48, or $54 dollars; they can't, though, because they've been locked out by a flood of superficial fans.
This is to say nothing of the deadweight loss of the inevitable efforts, much of which will be successful, to game the system.
Ostensibly, Louis C.K. wants to keep prices low in service to his fans. But to be totally responsive to the desires of his fans and improve his financial outcome, he should recognize that his shows are going to sell out, his tickets are therefore a scarce good, and some kind of auction mechanism is needed to figure out the right price for a ticket.
Inefficient for whom? The only person who is affected by a low price is Louis CK. He already said that he's making more than enough money for himself so that he's content, so as a show of good will, he's trying his best to lower the cost of the tickets for his fans. For his fans, it's good. Sure, he could make more money by increasing the prices of his tickets, but he doesn't want to do that because he wants to pass along the cost savings to his fans.
Also, he recognizes that he can't lower the price and not deal with the scalper problem, so he is attacking it by doing his best to traffic anyone who tries to sell his tickets for above face value. If this works, then it solves the problem of the scalpers not being able to make a profit, and Louis CK being able to keep ticket prices low for his fans.
The idea that "true" fans are being locked out by "superficial" fans is just plain dumb. What makes a "true" fan vs a "superficial" fan? If I've only seen one of his concerts on HBO, that means that I'm not eligible to go see him live? Do we really need a pissing contests between fans to see who really "deserves" to go see him live? That's dumb.
Sometimes it's not about extracting the maximum possible dollar amount. Artists like sharing their work with other people. Many of them would gladly do it for free if they could, but charge because they have to make a living just like everyone else.
>some kind of auction mechanism is needed to figure out the right price for a ticket.
If Louis is happy with what he's making off the tickets, then they're set at the right price. What you're proposing would essentially lock out many of his fans that couldn't afford the "right" price that would be set with an auction system.
The traditional problem with intentionally setting an artificially low price is that resellers would buy up tickets, sell them back at market prices, essentially locking out those fans and also reaping the additional profit that the artist was intentionally forgoing.
What Louis is trying to do is design a system that locks out the resellers, and in turn essentially turns the ticket selling process into a lottery for those fans that care enough about seeing him to go buy a ticket early.
As long as there are more people that want to see him than can fit in the venue, there's no way to make it totally fair for everyone. But the approach he's taking allows him to make an amount he's happy with while keeping the financial cost of getting in at a point that he feels is fair to the fans.
It may be inefficient from a pure market standpoint, but, frankly, I think it's going to accomplish exactly what he wants it to.
When I was in college, the opportunity cost of a $45 ticket was eating badly instead of eating well for two weeks. Now I have a regular job, the opportunity cost of a $45 ticket is much lower - I'll have to wait a few weeks until I buy that DVD box set of 'House MD'.
So now I can buy tickets that before I could not afford. Have I become a more dedicated Louis CK fan? Or have I just become a richer fan?
I agree with you in theory, but I don't think the argument works here. If the shows are under-priced, they will sell out quickly. The dedicated fans will be the ones who know about the show and buy early.
As I remember, the economic concept of "efficiency" has a pretty narrow meaning: The market for a commodity will reach an equilbrium at the most efficient state if prices are allowed to change freely (a free market). An efficient outcome is defined as being an outcome that maximizes the surplus value when the surplus of each individual transaction is summed. The surplus value of a transaction is the difference between the lowest price a seller would accept and the highest price a buyer would pay. The strongest negotiator will take a bigger share of the surplus.
Even if the surplus is split unfairly on many transactions, the market is still said to be efficient if it meets the above definition.
Louis CK's ticketing idea is a pretty unique case because in some ways tickets are easily fungible and lend themselves to this traditional economic analysis.
On the other hand, if Louis ck decides he's only doing 50 shows at mid sized venues, and prices are 45 dollars, as long as all tickets sell the market is actually perfectly efficient. Louis has no more product to sell. If he could have sold the same amount of tickets at $65 all that means is that fans are taking more of the surplus, as opposed to scampers. Even though there might be way more fans than tickets, the market is at an efficient equilibrium because Louis CK's supply curve has become totally inellastic at $45.
This is to say nothing of the deadweight loss of the inevitable efforts, much of which will be successful, to game the system.
Ostensibly, Louis C.K. wants to keep prices low in service to his fans. But to be totally responsive to the desires of his fans and improve his financial outcome, he should recognize that his shows are going to sell out, his tickets are therefore a scarce good, and some kind of auction mechanism is needed to figure out the right price for a ticket.