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\u201cToday, the concert ticket industry is broken,\u201d a government attorney told jurors at a civil antitrust trial in early March. Ticketmaster and its parent\u00a0Live Nation Entertainment have monopolized the market, the Department of Justice argued, driving up the prices for everyone.<\/p>\n
Leaving the antitrust issues to one side, Judd Kessler sees something else going on: a market being hidden.<\/p>\n
If you\u2019ve ever watched a Taylor Swift ticket disappear from your cart at the last second, stared at a frozen Ticketmaster screen, or refreshed a Resy page only to see that 7 p.m. table vanish in a blink, Kessler has studied the strange form of economic activity. You\u2019re a participant, he says, in what he calls a \u201chidden market,\u201d a system in which demand overwhelms supply, prices are kept artificially low, and the real allocation happens somewhere offscreen.<\/p>\n
These hidden markets are a big part of where modern life gets decided: who gets into the hottest restaurant, who sits closest to the stage, who skips the line at Disney World, who lands the interview for the most coveted job. They\u2019re not labeled as markets, and they rarely look like the Econ 101 diagram you saw in college. But they are structured, they follow rules, and most crucially, someone is profiting from the resulting friction.<\/p>\n
Kessler, a Wharton professor and author of the new book\u00a0Lucky by Design, has spent his career pulling back the curtain on these systems. His core diagnosis is disarmingly simple: \u201cThe reason it\u2019s a hidden market is because there is excess demand given the price that is being charged.\u201d <\/p>\n
Judd Kessler, Howard Marks Professor, Department of Business Economics and Public Policy, Wharton School.<\/p>\n
courtesy of Wharton<\/p>\n
When the price of something scarce\u2014concert tickets, Saturday night tables, theme park rides\u2014is set far below what the market would naturally bear, the scarcity doesn\u2019t disappear. It just moves sideways, into queues, lotteries, intermediaries, and perks\u2014into hiding, in other words.<\/p>\n
Frankly, he told Fortune in a recent interview from his New York City apartment, it\u2019s \u201cweird\u201d how people act around hidden markets, sometimes even preferring them to visible ones.<\/p>\n
The price of feeling fair<\/p>\n
At the heart of hidden markets, according to Kessler, is a collective discomfort with using price alone to allocate everything. <\/p>\n
\u201cIf we do allocations by prices, the allocation of any scarce resource gets distributed based on the inequalities in wealth and income,\u201d Kessler argued. And people really don\u2019t seem to want a world where the only way into a beloved artist\u2019s show or a neighborhood restaurant is to outbid everyone else, so we hold face value down.<\/p>\n
\u201cIt would be weird if the restaurant sold the reservations to the highest bidder,\u201d Kessler said. \u201cThat would seem weird\u2014[for] the same reason, like, Taylor Swift doesn\u2019t sell tickets to her tour for $3,000 a piece, because that would seem too high, even though that\u2019s what the secondary market says the prices kind of should be.\u201d The super-popular restaurant could auction off reservations, too, but we think that would be weird too, Kessler added. <\/p>\n
\u201cWe don\u2019t like when other people buy [or] claim the reservations and then try to sell them to us,\u201d he said.<\/p>\n
What\u2019s not weird, for some reason, is the extra benefits that accrue to, say, American Express Platinum card holders, Kessler offered. (American Express acquired Resy.com in 2019 and gives Platinum holders a tier of \u201cGlobal Dining Access\u201d reservations that are more exclusive than regular app holders, along with special events, such a \u201cPlatinum Nights by Resy.\u201d) At least for the moment, Kessler said, society has found a solution to the hidden markets problem. \u201cSomehow, we\u2019ll give the folks who are willing to pay over here for the Amex, we\u2019ll give them the early reservations. And that\u2019s how we\u2019ll solve this problem \u2026 no one seems to complain about that.\u201d<\/p>\n
Benjamin Shiller of Brandeis University recently talked to Fortune about his separate research about \u201cpersonalized pricing\u201d by companies including credit card providers. \u201cMy more recent research in that vein is looking at the potential for firms to hide how they do it, to basically personalize prices without having any consumers be aware. And so that\u2019s something that\u2019s hard to prove,\u201d Shiller said.<\/p>\n
Shiller said he hasn\u2019t studied the particular examples mentioned by Kessler, but agreed in theory that it sounded similar. \u201cI\u2019d also mention that those credit card companies are doing personalized pricing as personalized coupons.\u201d In graduate school, he added, he studied the video-game and music markets and saw commonalities. <\/p>\n
\u201cWhen you transition from selling something from a physical product to a digital product,\u201d Shiller explained, \u201cit allows the seller, the publisher to restrict resale, they can prevent you from reselling the item, and that ends up being very profitable, particularly for the types of goods that people grow tired of.\u201d This suggests that companies selling these goods have a strong incentive to find ways to distribute products where people can\u2019t resell it, with digital distribution a great way to accomplish this. Resale markets tend to disappear in these markets as a result, he added: \u201cI think it\u2019s more hidden rather than acknowledged.\u201d<\/p>\n
The Disney flywheel<\/p>\n
Conversation with Kessler drifted to the DisneyWorld experience, now so fundamental to the entertainment giant that it accounts for roughly 70% of operating profit. Disney\u2019s new CEO Josh D\u2019Amaro, after all, came from the parks side, not the content side.<\/p>\n
Would-be park goers have options on the ticket website for DisneyWorld such as a standard date-based ticket for around $119 per day, depending on the time of year. If you wanted to go tomorrow, you would be paying between $174 to $199 per day, depending on which of Disney\u2019s four parks you want to visit. From there, you can bounce around multiple parks for an extra fee. The most flexible package sells for around $293 per day and includes \u201ca certain number of visits to a water park or other Walt Disney World fun.\u201d Tickets are about $5 cheaper for kids between the ages of 3 and 9. You can also add on options that allow you to cut long lines and prepay for your meals.<\/p>\n
Kessler said these are relatively standard price discrimination strategies, not something he\u2019d consider a hidden market. What qualifies to him is, for instance, the ways to access rides once you\u2019re in the park. \u201cYou need to wait in line for the really desirable rides. But then \u2014 for a price \u2014 Disney offers various \u2018lightning lane\u2019 passes that allow folks to have access to a shorter line or otherwise skip the line with a reservation time. These are the strategies that Disney uses to monetize the hidden markets that they create inside the park.\u201d Once you\u2019re inside the world of the park and you discover the opportunity to pay extra for additional benefits, \u201call of that screams hidden markets,\u201d Kessler said.<\/p>\n
Brett Schneider, a marketing veteran who teaches the business of fandom for UCLA Extension, told Fortune he sees the same phenomenon from a consumer perspective\u2014and there is some \u201cgatekeeping\u201d going on, with the risk being that \u201cyou alienate the true fans.\u201d In general, Schneider added that he thinks the \u201ccorporatization\u201d or \u201cmonetization\u201d of fandom is a \u201creally slippery slope.\u201d He disclosed that his wife has worked in Disney\u2019s corporate office for the last seven years and, while he\u2019s not privy to any inside information, he has a \u201cfront-row seat\u201d in many ways and they enjoy discussing the ins and outs of the business.<\/p>\n
Influential entertainment journalist Matt Belloni recently described Disney\u2019s overreliance on theme parks\u2014and their various monetizing schemes\u2014as a \u201creal danger\u201d for the company on his podcast, The Town. The \u201cstratification\u201d of the Disney consumer has resulted in a parks business \u201cfocused on mining the upper class and kind of weaponizing nostalgia to get more money out of these diehard Parks fans,\u201d he said. This risks alienating young Disney families, Belloni added, claiming that his sources inside Disney are \u201cconcerned\u201d about this dynamic. <\/p>\n
The Wall Street Journal reported in February 2025 that \u201ceven Disney is worried about the high cost of a Disney vacation,\u201d citing comments from CFO Hugh Johnston in December 2024 that the company has to be \u201csmart about pricing,\u201d especially at the lower end. Incoming CEO D\u2019Amaro said in May 2025 that he thinks about pricing every day and framed the many tiers of price options as something that welcomes in lower-income fans: \u201cHow do we create experiences and pricing structures and optionality to invite as many families as possible into these experiences?\u201d<\/p>\n
Kessler agreed that D\u2019Amaro\u2019s appointment shows that the parks are a crucial part of the \u201cflywheel effect\u201d in which movies lead to merchandise sales which lead to theme park visits, especially in the age of streaming and fragmented consumption. In fact, a 1957 napkin sketch by Walt Disney himself has been hailed by Harvard Business Review a \u201ccorporate theory of sustained growth.\u201d In other words, the parks make the flywheel complete.<\/p>\n
Kessler said that Disney should just check in with his younger daughter to see how well the strategy continues to work. \u201cMy daughter is a living example. She\u2019s like, \u2018Hey, can we go on Amazon and buy a Disney princess doll? \u2026 Can I get a Disney princess nightgown so that the doll has something to wear? Now can we watch the movie of the princess while I hold the doll in the nightgown?\u2019 Like, oh my God.\u201d<\/p>\n
Disney, American Express and Ticketmaster did not respond to requests for comment.<\/p>\n
How to \u2018settle for silver\u2019 and actually win<\/p>\n
Faced with these systems, most consumers do one of two things: They rage against the machine, or they resign themselves to impossible conditions. Kessler argued for a third path: Understand the rules of the hidden market you\u2019re in, then play it more intelligently.<\/p>\n
For instance, Kessler shared his own recent, failed attempt to book The French Laundry, Thomas Keller\u2019s legendary Napa Valley restaurant, for his wife\u2019s 40th birthday. Reservations opened at 10 a.m. on the dot. Like everyone else, Kessler went straight for the gold: the prime 7:30 pm slot. By the time the page loaded, it was gone. He then tried 4:30 pm\u2014still relatively attractive\u2014and lost that, too. By chasing what everyone else wanted most, he effectively guaranteed himself nothing.<\/p>\n
The lesson he draws is what he calls \u201csettling for silver.\u201d In first\u2011come, first\u2011serve races in which everything drops at once\u2014whether it\u2019s reservations, tickets, or limited\u2011edition sneakers\u2014the top choice is the focal point. It attracts the most clicks, the fastest fingers, the best scripts. The second\u2011best option, by contrast, is often dramatically less crowded but still very good: \u201cIf I had gone to 4:30 initially, I would have gotten it.\u201d<\/p>\n
Applied practically, that might mean targeting the Wednesday show instead of Saturday, the 5:00 seating instead of 7:30, the mezzanine instead of row one. It feels like accepting a compromise. In probabilistic terms, you\u2019re trading a marginal downgrade in experience for a massive upgrade in odds.<\/p>\n
The Taylor Swift example<\/p>\n
Kessler said this is an evolving field of research, and economists don\u2019t quite understand it yet. Take the Taylor Swift example, and the market indicating the fair value of her ticket is roughly $3,000. But Swift doesn\u2019t charge that much upfront; instead, Ticketmaster sells a limited number of tickets at an illusory low price. Those are immediately gobbled up by bots, and the true value is realized on the secondary market. <\/p>\n
\u201cTicketmaster gives her money back when the sales happen on the secondary platform, so all of the additional surplus goes to her,\u201d he explained. \u201cShe ends up with the same high price, but there\u2019s other people in the process [in] between.\u201d <\/p>\n
He said one theory holds that the more levels of intermediation that occur in a hidden market, the less blame people tend to put on the person driving the economic activity\u2014Swift, in this case.<\/p>\n
When a Taylor Swift ticket is priced at a fraction of what a superfan (or hedge fund manager) would willingly pay, a secondary market is inevitable. Bots scoop up inventory, resellers flip tickets at eye\u2011watering markups, and regulators scramble to ban the most egregious forms of scalping. The resentment is real enough that politicians now campaign on \u201cfixing\u201d ticketing and ordering regulators to go after gouging by bulk buyers and bot operators.<\/p>\n
But the underlying mispricing rarely changes. The primary seller gets to look benevolent, having kept prices low for fans. The platform and the resellers soak up the outrage. The artist\u2019s reputation stays intact; the system, less so.<\/p>\n
Kessler\u2019s rule of thumb is blunt: \u201cIt basically at the end all comes down to this mispricing. People are trying to take advantage of the mispricing.\u201d And in hidden markets, he added, things are \u201c100% mispriced.\u201d What Kessler\u2019s work suggests is supply and demand may work in theory, but in practice, consumers often revolt at life conducted on purely economic terms that feel unfair.<\/p>\n
Schneider, for his part, said he thinks the solution lies less in better pricing algorithms and more in rethinking what loyalty actually means. He envisions gamified systems that reward genuine fans\u2014not just the wealthiest ones\u2014with access to experiences they couldn\u2019t otherwise afford: a free lightning lane pass, a limited-edition collectible, a backstage moment. <\/p>\n
\u201cThe top 1% of people are accountable for 90% of all revenue for most brands,\u201d Schneider said, \u201cbut I think it also has to be the core 1% that is spending time with you.\u201d Attention, he argued, is the most valuable currency\u2014and the brands that figure out how to reward that, rather than simply extracting from it, will be the ones that master the business of fandom.<\/p>\n
#Bidding #Taylor #Swift #ticket #cut #line #DisneyWorld #youre #hidden #market<\/p>\n","protected":false},"excerpt":{"rendered":"
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