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Rhode Island Reacts to Hannah Montana Hype

Hannah Montana performed in Providence last month, but her wake continues to reverberate in the halls of the Rhode Island General Assembly. Companion bills in the House and Senate would single out online ticket transactions for greater regulation in a state that already has one of the most restrictive ticket scalping laws in the country.

Yesterday I traveled to Providence to testify before the House Corporations Committee on H 7090 and H7091. These bills would add new rules that mostly apply to the online buying and selling of tickets. Essentially I was there to ask: why pick on e-commerce?

Hannah Montana is the Disney Channel sitcom on which Miley Cyrus plays Miley Stewart, an ordinary teenager with secret pop superstar identity. Her father is country singer Billy Ray Cyrus, of "Achy Breaky Heart" fame. And due to the popularity of the live shows, tickets have been hard to come by, producing achy breaky hearts in children across the country and irate parents that call their state legislator and demand action. Upon hearing about $60 tickets selling for $600 on the secondary market, legislators want to blame websites like eBay and StubHub.

But the tickets market is not so simple. Ticket resellers are not to blame for the limited supply of tickets and large demand from consumers. Hannah Montana is really about how tickets are issued, allocated, distributed and sold in the primary market, not how tickets are thereafter resold. And as in all markets, if demand exceeds supply and prices are initially fixed at a relatively low level, a secondary market will develop.

At yesterday’s hearing, some legislators thought that it was StubHub itself that was purchasing large blocks of tickets and then reselling for large sums on its site. The reality of course is that sites like eBay and StubHub are mere exchanges that serve as platform for buyers and sellers to meet and transact.  Eric Baker, co-founder of StubHub, explains more in a great op-ed about why anti-ticket reselling laws harm consumers, not help them as many legislators believe.

The bills were tabled for further study, thankfully. If after Hannah Montana leaves town legislators in Rhode Island and elsewhere feel the need to address imbalances in the supply and demand for tickets, they should study the "engineered scarcity" (when limited supply drives publicity that in turn stimulates demand) business practices of the primary market before restricting ticket resales.