Neil is a great businessman as well as a popular songwriter (though he’s unlucky in love and that cost him).  In an earlier post, I wondered why artists do not simply price discriminate and not let scalpers get the rents.  If they do not want to look exploitative, then can try to use some other instruments (e.g. a refund to loyal fans) to avoid just letting scalpers exploit the fans.

Another answer is that artists actually do perform price discrimination using the scalper as the intermediary:

Less than a minute after tickets for last August’s Neil Diamond concerts at New York’s Madison Square Garden went on sale, more than 100 seats were available for hundreds of dollars more than their normal face value on premium-ticket site The seller? Neil Diamond.

Ticket reselling — also known as scalping — is an estimated $3 billion-a-year business in which professional brokers buy seats with the hope of flipping them to the public at a hefty markup.

In the case of the Neil Diamond concerts, however, the source of the higher-priced tickets was the singer, working with Ticketmaster Entertainment Inc., which owns TicketExchange, and concert promoter AEG Live. Ticketmaster’s former and current chief executives, one of whom is Mr. Diamond’s personal manager, have acknowledged the arrangement, as has a person familiar with AEG Live, which is owned by Denver-based Anschutz Corp.

Selling premium-priced tickets on TicketExchange, priced and presented as resales by fans, is a practice used by many other top performers, according to people in the industry. Joseph Freeman, Ticketmaster’s senior vice president for legal affairs, says that the company’s “Marketplace” pages only rarely list tickets offered by fans.

According to the lead singer of Nine Inch Nails:

the true market value of some tickets for some concerts is much higher than what the act wants to be perceived as charging. For example, there are some people who would be willing to pay $1,000 and up to be in the best seats for various shows, but MOST acts in the rock / pop world don’t want to come off as greedy pricks asking that much, even though the market says its value is that high. The acts know this, the venue knows this, the promoters know this, the ticketing company knows this and the scalpers really know this. So…

The venue, the promoter, the ticketing agency and often the artist camp (artist, management and agent) take tickets from the pool of available seats and feed them directly to the re-seller (which from this point on will be referred to by their true name: SCALPER). I am not saying every one of the above entities all do this, nor am I saying they do it for all shows but this is a very common practice that happens more often than not. There is money to be made and they feel they should participate in it. There are a number of scams they employ to pull this off which is beyond the scope of this note. is an example of a re-seller / scalper. So is

Of course, the danger is that the fans find out what the artist is doing – e.g. Neil Diamond’s strategy has been fully revealed thanks to the WSJ.  Either this leads to a counter-reaction or fans just get used to it and accept the new norms.  Hard to say what is happening but the Bon Jovi VIP pricing without using a scalper as a middleman suggests more fans are accepting direct price discrimination by the artist.

(Hat Tip: Troy Kravitz and Mallesh Pai)