I don't think people are buying Misty Rainforest with the intention of flipping it for a higher price at a later date. I think that people are buying Misty Rainforest because they want to play Tarmo-Twin. It's not a bubble, but rather a situation of extremely high demand.
I read this statement in the Modern Huge Gainers thread and I disagree with it.
Here's a theory I've had for a while. I think prices are primarily driven by implicit vendor collusion rather than actual demand. Let's take the fetchlands as an example. Fetchlands are necessary for a lot of Modern/Legacy decks. The recent spike shot blue fetches to $100. As some would argue, this price reflects real demand because the price hasn't adjusted downwards and keeps growing.
I argue that demand is a small component. If no one was buying fetches at $100, then yes, no one would sell it at $100. However! I don't think supply and demand intersect here. There are a lot more sellers than buyers. I think that there are just enough buyers to make the stores notice that there is a little bit of demand at these absurd prices. Thus, I think that stores are simply afraid to sell at lower prices to drive the cost down because they don't want to lose money.
We see it all the time. LGSes who use SCG prices like it when a card spikes. My LGS owner, for example, is very quick to adjust the price up to reflect a spike and is very slow to adjust a price down when the spiked card falls.
Now, if we extrapolated this behavior to every store, then wouldn't the post-spike price linger for much longer than it should in a perfect market economy, especially on "staples"? An interesting phenomenon occurs when the post-spike price lingers. The post-spike price becomes the actual price, rather than the "spike" price. For example, people now accept fetches as $100 (even though they grumble that it's ludicrous). When fetches spiked from $30 to $50 a few months ago, the same phenomena occurred. Stores didn't immediately adjust- they all kept their prices around $50 until people starting accepting $50 as the price.
It's not like the stores have some sort of pricing syndicate going on; it's just that they don't want to drop the price as long as someone is buying. As long as someone is buying, they won't lower the price too much because they think they'll lose profit.
Ultimately, there are billions of Magic cards printed each set, hundreds of millions of each Mythic and probably enough fetches for the entire playbase twice over. Maybe those numbers aren't fully accurate, but there is an artificial scarcity that is maintained by several factors. Ultimately, that's why buyouts are so effective. If this was a "real" market, prices would readjust easily and quickly.
So, to summarize, when prices rise, stores have incentive to maintain the high prices and eventually the high prices become the actual prices. Demand is barely involved. If I were to hazard a guess, most of the demand at these prices is from a small group of wealthy individuals who are new to the game (and thus accept the current price as the actual price), highly competitive, and are entering Modern for the first time.
Edit:
Players also have incentives to keep prices where they are. If fetches are suddenly $100 everywhere and you own a Scalding Tarn, would you trade it for the pre-spike price of $50?
I think there really is a demand but there are a lot of people just waiting tell they absoulely have to buy the cards. Like someone may say they are going to wait for a reprint to buy blue fetches, but sooner or later an event will come along and players will end up buying them even though they don't really want to. That's why I think they spiked before richmond. Do you really think someone will skip an event like that just because of 4 scalding tarns and some arid mesas?
There isn't vendor collusion. The reason there is a lull between when prices get raised and when people accept the prices is there are still some available for the old price via physical locations that don't sell online and lesser used online stores.
There aren't more sellers than buyers. If this were true, then there would be a seller out there sitting on 1000 fetches, and they could sell them all for $90 instead of $100 and control the market.
That being said, there is a large supply out there. Where is it? It's in other players and former binders and boxes, collecting dust. These people are not sellers. Some are collectors, some are hoarders, some are investors, and some just don't realize the value of what they have. And quite a lot of them simply don't want to part for nostalgia reasons. I've spoken to dozens of ex-magic players, begging them to sell their collections which are doing NOTHING but hurting the game and driving up prices for everyone else by sitting in their closet, and most of them just won't sell.
Encendi, what you're describing is not 'vendor collusion', it's common business practice and you see this everywhere, at gas stations, supermarkets, etc. Small stores copy more successful (usually bigger store) prices, that's fine and I'm with you all the way to the point where you say that demand is barely involved Suppose SCG raises price of card X to $300 from $100. Let's further suppose every store in the world copies that price and lists at $300. A week later, a month later, if NOBODY IS BUYING, the stores are going to feel the pinch and somebody is going to drop their prices to $280, for example. Then $250, etc. and so on and so forth until actual sales occur. What I'm saying is this - demand IS involved. Just because you don't think anybody is going to buy it at that price doesn't mean that nobody is. Quite obviously, SOMEBODY is buying otherwise the stores are not making money - not SCG, not your LGS, no sales = no profits.
There's a lotta disposable income out there, mtg is really not that expensive compared to many other hobbies and yes, there are people out there buying cards at these prices (or at least at yesterday's prices).
P.S. Players with fetches might have 'incentive' for prices to remain high but the only way they can enforce it is to keep buying fetches if there's a drop in prices just to maintain their value? That's...not too smart and is going to fail miserably when a reprint occurs. There are also numerous failed examples of this in the financial markets but some people have to learn it the hard way. I guess the other way to do it is to constantly post on market street - tcg high prices have doubled and fetches are rising zomg! implicit GET THEM NOW!
P.P.S. 'Vendor collusion' refers to a situation like so: SCG calls up several other stores and says 'Hey guys, let's raise the price of card X from $100 to $300, all in agreement? Done'. That's collusion.
I suggest reading this post by Ben Bleiweiss. It's from the very first page of the Legacy Huge Gainers thread from about three years ago, back when people accused SCG of collusion and market manipulation, just like they do today. You might not have believed it then, and still might not believe it now, but I think his logic is sound.
Just because you or I are not willing to pay that price doesn't mean nobody is. If there are enough people who are willing to pay that price for the item, why not sell it to them for that much? Sure, it sucks for those who want it but don't want to pay that much for it, but that's going to be the case with somebody regardless of the price point.
You guys missed a keyword- "implicit." Explicit collusion is exactly as Dresden described, everyone calling each other up and saying "keep the prices high." Implicit is more about signaling and involves more factors.
Encendi, what you're describing is not 'vendor collusion', it's common business practice and you see this everywhere, at gas stations, supermarkets, etc. Small stores copy more successful (usually bigger store) prices, that's fine and I'm with you all the way to the point where you say that demand is barely involved Suppose SCG raises price of card X to $300 from $100. Let's further suppose every store in the world copies that price and lists at $300. A week later, a month later, if NOBODY IS BUYING, the stores are going to feel the pinch and somebody is going to drop their prices to $280, for example. Then $250, etc. and so on and so forth until actual sales occur. What I'm saying is this - demand IS involved. Just because you don't think anybody is going to buy it at that price doesn't mean that nobody is. Quite obviously, SOMEBODY is buying otherwise the stores are not making money - not SCG, not your LGS, no sales = no profits.
Here was my point involving demand. In a perfect market economy, demand would equal supply- thus price would be a reflection of demand. The truth is, price is actually above the demand right now. However, like you said, some people are buying at these prices. Stores are fully aware of this and are unwilling to lower prices simply because they might lose money because someone might buy it. Again, there is little incentive for them to lower prices as long as someone is buying. Holding onto the cards involves little cost aside from opportunity cost- Magic cards don't have a shelf life and they don't take up a lot of space.
I suggest reading this post by Ben Bleiweiss. It's from the very first page of the Legacy Huge Gainers thread from about three years ago, back when people accused SCG of collusion and market manipulation, just like they do today. You might not have believed it then, and still might not believe it now, but I think his logic is sound.
Just because you or I are not willing to pay that price doesn't mean nobody is. If there are enough people who are willing to pay that price for the item, why not sell it to them for that much? Sure, it sucks for those who want it but don't want to pay that much for it, but that's going to be the case with somebody regardless of the price point.
My entire point was that stores have little incentive to lower prices once they've gone up. People seem to believe that prices are a reflection of demand, but I'm arguing that store psychology is a much larger component. If someone is buying at $100, why lower your price to $80 to sell faster? It's not like you incur much cost from holding onto the cards and if someone is buying at $100, you might as well sell it at $100. Clearly, not everyone is buying at $100, because there are so many cards on the market.
About SCG: I think they don't practice that much price manipulation. The thing is that they are so prominent within the MTG market that they inadvertently have a lot of pricing control. A lot of LGSs use SCG for pricing and I'm guessing pretty much every store follows what they're doing. If the price of X card is $10 and they raise their buylist to $15, then yes, the card will go up. And like I mentioned, the price will likely stay up, because no one wants to lose money selling for less.
There aren't more sellers than buyers. If this were true, then there would be a seller out there sitting on 1000 fetches, and they could sell them all for $90 instead of $100 and control the market.
That being said, there is a large supply out there. Where is it? It's in other players and former binders and boxes, collecting dust. These people are not sellers. Some are collectors, some are hoarders, some are investors, and some just don't realize the value of what they have. And quite a lot of them simply don't want to part for nostalgia reasons. I've spoken to dozens of ex-magic players, begging them to sell their collections which are doing NOTHING but hurting the game and driving up prices for everyone else by sitting in their closet, and most of them just won't sell.
In a price equilibrium, supply would equal demand. We'd see cards leaving TCGplayer as fast as they're listed. The truth is that many of the cards on there have been there for a long time until the price is jacked up again.
As for the large supply of cards out there, yes, most of it is in the hands of various groups. But the point I was making wasn't that cards are inherently worthless- I was saying that there is an artificial scarcity controlled by a small population of stores. There are what, 100 Scalding Tarns on TCGplayer right now? And how many millions were printed? No matter how you look at it, it doesn't make sense for these stores to set the general prices.
In a price equilibrium, supply would equal demand. We'd see cards leaving TCGplayer as fast as they're listed. The truth is that many of the cards on there have been there for a long time until the price is jacked up again.
As for the large supply of cards out there, yes, most of it is in the hands of various groups. But the point I was making wasn't that cards are inherently worthless- I was saying that there is an artificial scarcity controlled by a small population of stores. There are what, 100 Scalding Tarns on TCGplayer right now? And how many millions were printed? No matter how you look at it, it doesn't make sense for these stores to set the general prices.
I never accused you of making the argument that cards are inherently worthless, and you're wrong about the artificial scarcity. The artificial scarcity is created not by stores, but by the "various groups" that you admit to having them and not selling them. For a vendor to sell Scalding Tarns at $50 instead of $100, they have to buy a whole bunch at $25. The people holding the cards in collections aren't selling at any price, let alone $25.
In a price equilibrium, supply would equal demand. We'd see cards leaving TCGplayer as fast as they're listed. The truth is that many of the cards on there have been there for a long time until the price is jacked up again.
Perhaps, but irrelevant to anything I said.
Actually its very relevant, it proves that stores are not selling the cards, and are not lowering their price. If the demand existed to drive the price up to double what it was a year ago, and was maintained, then the cards would still be selling very quickly. However after the fake demand increase, yes I said fake, we know buyouts are fake demand, the price rose and has not dropped. Why should it? There is another issue here, and its the buylist. Most mom and pop shops buylist at 50% or so, so if a fetch goes up to 100$, then I as a possible seller have to agree to lose 50$, why would I do this? The higher the price of a card, I would argue, the less likely its going to be turned into a store for cash, and more likely it would just be traded away, continuing to leave less stock in the stores, artificial scarcity, 100 of a card on tcgplayer vs the millions printed being used to gauge its price.
The way a real market works is that the product is freely available, you don't have that situation here. With MTG cards some people just do not sell at the listed value, do not trade at the listed value, some do not want to sell at all and all the stock is not available to gauge its worth. Its almost foolish to treat it like a real market with basic supply vs demand because the supply is not available and the demand is actually unknown. Making the assumption that I only have 20 fetches because I only listed listed 20 of my 100 fetches in my store is absurd, especially when the ones listed the supply are the ones who need to maintain the value. The only way real supply vs demand works is if the stores had full access to as much product as they wanted, and had a need to sell quickly, like the product could naturally depreciate in value or spoil. Even more importantly, since its not the only product they sell, they sell thousands of different cards, there is no imperative to care if the fetches are sitting longer, selling 1 a week instead of attempting to sell them all out.
This isn't a real market. Stop treating it like it is.
In a price equilibrium, supply would equal demand. We'd see cards leaving TCGplayer as fast as they're listed. The truth is that many of the cards on there have been there for a long time until the price is jacked up again.
It sounds like you're attempting to take an intro level Econ argument and use it to broadly describe the world. You can't. It doesn't work. There's basically always a factor that isn't or cannot be included in the model. It would be AWFUL if cards left TCGPlayer the moment they were listed. Customers LIKE cards to be in stock when they go to a store. Having selection is a good thing. Can you imagine going into...I don't know...a clothes store and being told "sorry, out of shirts. We price very competitively so we run out of shirts the moment we put them on our shelves."
There aren't more sellers than buyers. If this were true, then there would be a seller out there sitting on 1000 fetches, and they could sell them all for $90 instead of $100 and control the market.
That being said, there is a large supply out there. Where is it? It's in other players and former binders and boxes, collecting dust. These people are not sellers. Some are collectors, some are hoarders, some are investors, and some just don't realize the value of what they have. And quite a lot of them simply don't want to part for nostalgia reasons. I've spoken to dozens of ex-magic players, begging them to sell their collections which are doing NOTHING but hurting the game and driving up prices for everyone else by sitting in their closet, and most of them just won't sell.
Just to add a little anecdotal evidence to this: my roommate last night asked me if I still had that 'multicolor deck that murders people on T2 a lot (TES).' I told her that I sold it, and the entire notion of selling cards seemed just unfathomable to her. She didn't object to selling expensive, older cards or even to selling cards in general; the entire concept of selling cards to her was so foreign to her that it has literally never entered her mind and she has no intention of ever giving it a minute of thought.
A very small portion of the card market is as fluid as we would like to think.
Actually its very relevant, it proves that stores are not selling the cards, and are not lowering their price. If the demand existed to drive the price up to double what it was a year ago, and was maintained, then the cards would still be selling very quickly. However after the fake demand increase, yes I said fake, we know buyouts are fake demand, the price rose and has not dropped. Why should it?
No, it's not relevant, for many reasons:
1. The number of TCG store listings above the market price is small. Your theory requires a much larger supply to be "hoarded" by sellers, and that simply is not the case. The larger supply is hoarded by non-sellers, and often non-buyers as well.
2. Demand does not solely exist at a fixed price point but a range. A smaller percentage of buyers are willing to pay more; pricing your stock to satisfy those buyers makes total sense when supply is limited. (If I have 1000 Mistys I'll sell at $90; if I have $10 I'm better off trying to sell those at $100).
3. There are other value-adds that explain price differentiation - shipping policies, packaging safety, grading reliability, customer loyalty, etc. Magic cards are not *entirely* a commodity, although they are close.
There is another issue here, and its the buylist. Most mom and pop shops buylist at 50% or so, so if a fetch goes up to 100$, then I as a possible seller have to agree to lose 50$, why would I do this? The higher the price of a card, I would argue, the less likely its going to be turned into a store for cash, and more likely it would just be traded away, continuing to leave less stock in the stores, artificial scarcity, 100 of a card on tcgplayer vs the millions printed being used to gauge its price.
This "isn't an issue"; there are other markets at which this is also true. Why you would sell is because that's your preferred way to sell; you don't want to take the time and hassle to sell on eBay or TCG or MKM. But, if you do want to maximize your value, you absolutely can become a seller; no one is barring you from the market. So buylist prices don't explain why you're holding the card instead of selling it. In any case, the scarcity isn't the fault of the major sellers (whom you're blaming); it's the fault of the many smaller card holders not selling. If you think the major sellers are gouging by keeping buylist prices too low, then you are free to create a business with better buylist prices, but keeping the same selling prices, thus cornering the market with a smaller profit margin. Good luck with that.
The way a real market works is that the product is freely available, you don't have that situation here. With MTG cards some people just do not sell at the listed value, do not trade at the listed value, some do not want to sell at all and all the stock is not available to gauge its worth. Its almost foolish to treat it like a real market with basic supply vs demand because the supply is not available and the demand is actually unknown. Making the assumption that I only have 20 fetches because I only listed listed 20 of my 100 fetches in my store is absurd, especially when the ones listed the supply are the ones who need to maintain the value. The only way real supply vs demand works is if the stores had full access to as much product as they wanted, and had a need to sell quickly, like the product could naturally depreciate in value or spoil. Even more importantly, since its not the only product they sell, they sell thousands of different cards, there is no imperative to care if the fetches are sitting longer, selling 1 a week instead of attempting to sell them all out.
This simply isn't true; these sorts of things are true of some other markets as well. I think what you're trying to say is that it's not a *perfect market*, which is true but irrelevant, as no market is perfect. Even a commodity market isn't perfect.
As for your contention that a seller can hold some cards at a higher price point in exchange for a lower velocity of sales, while still hoping to maintain cash flow from other sales, that's true, and something even I as a small seller have done. But that doesn't give me magic pricing power; when my Infernal Tutors and Bitterblossoms didn't sell at the price I was asking, I had to lower my ask. When people started buying Dark Confidants at a price higher than I was asking for a playset, I rose the price of my playset before it could be snapped up at a bargain. But if I actually had 1000 Bitterblossoms I was sitting on you can bet I'd be selling them at a lower price. Heck, I've personally undercut the prices of vendors of slower-moving cards on eBay only to see them respond by undercutting my prices in turn, so it's just not true that they set artificially prices and then sit on them.
Guys, if you stop and consider the fact that it takes 'time' for markets to reach whatever theoretical equilibrium state you have in mind, I think you may all be somewhat more satisfied with the state of the market today. All the people who think the stores are pricing too high to actually sell, well, give it some time and see what happens. If prices remain up there, you're probably going to have to revise your estimation of market demand or supplier willingness to sell. Simple as that. Also, every market is 'real' Whether or not they are efficient or optimal is another story.
I suggest reading this post by Ben Bleiweiss. It's from the very first page of the Legacy Huge Gainers thread from about three years ago, back when people accused SCG of collusion and market manipulation, just like they do today. You might not have believed it then, and still might not believe it now, but I think his logic is sound.
Just because you or I are not willing to pay that price doesn't mean nobody is. If there are enough people who are willing to pay that price for the item, why not sell it to them for that much? Sure, it sucks for those who want it but don't want to pay that much for it, but that's going to be the case with somebody regardless of the price point.
My entire point was that stores have little incentive to lower prices once they've gone up. People seem to believe that prices are a reflection of demand, but I'm arguing that store psychology is a much larger component. If someone is buying at $100, why lower your price to $80 to sell faster? It's not like you incur much cost from holding onto the cards and if someone is buying at $100, you might as well sell it at $100. Clearly, not everyone is buying at $100, because there are so many cards on the market.
You're not viewing it correctly. The goal isn't to always be out of stock by selling everything you have all the time. The goal is to be at an equilibrium where you can earn the profit you need. What SCG (or any secondary market dealer) does is resell. They buy things at cost X and sell them at cost Y. They need a certain inflow in order to match a certain outflow. If they are selling too much, they won't be able to keep anything in stock and that means that the market can bear a higher price than they are currently selling at. So they adjust their prices up, a few at a time, until they reach equilibrium. If the cards stay on the shelves and aren't selling as quickly as they are obtaining them, then that means the cards are priced too high and the market won't bear that price out.
Vendors have two options at their disposal: Adjusting the prices at which they sell, or adjusting the prices at which they buy. The difference in these prices is what is needed for the company to earn the profit margin they have determined that they need to survive - it isn't arbitrarily set. Neither are the prices at which they sell, or the prices at which they buy. If they cannot sell what they have, they adjust the sale price down until they can. If they cannot stock what they need, they have to raise the price at which they buy, which usually adjusts the price at which they sell upward in order to maintain the profit margin necessary for survival. If they have too much incoming stock and not enough sales, and the profit margin is already too thin, then they will adjust the buy price down so that they don't get as many.
There is an opportunity cost to buying, holding, and not selling - you've got a finite amount of money to spend on inventory, and if you tie it up in card X, that means you can't use it on card Y or card Z. If it just sits there, it earns you nothing until it does sell. This is one reason why some stores will sometimes have big sales - they just want to get their capital back, and would rather take a small loss on it than a big loss by not getting that money they spent on it back. Remember, the goal is to be able to have a steady flow of sales while keeping some amount of stock on hand for people who want it. The worst thing is when a customer comes to you and you can't sell the card because you're out of stock.
This is all rational behavior. Prices for cards that weren't in demand *have* fallen. Just look at Bitterblossom, Aluren, or even the history of Wasteland and Force of Will. A few years back (I want to say around 2010-2011), Wasteland and Force of Will both spiked in price but couldn't maintain that price and they eventually fell. They might not have fallen on the stuff some people want, but that's more likely because the demand for that card is higher.
What people forget is that big vendors do not print these cards, and don't make a profit equal to the sell price of the card. Their profit is the margin between buy and sell prices. Increasing costs don't necessarily benefit a vendor, as fewer people have the means to buy their product at the new price. If Wizards was selling fetches or duals direct to customers at $100 a pop and raising the prices regularly that would be a transparent cash grab, but when cards go up vendors need to pay more to acquire them for resale too. They benefit from increased demand (growing player base) and the increased sales that brings, but the limited availability of staples relative to demand doesn't help vendors anymore than surging beef prices would benefit McDonalds.
SCG probably makes more money (on volume) buying Elspeth, Sun's Champion at 15 and selling at 30 than they do buying blue fetches at 70 and selling for 100. It is in their best interest to see demand for all formats rise, and for cards to change hands frequently and be accessible to everyone, since as the middle man they're making money on every exchange. Hoarding product would be foolish for them. Stores do not want stock sitting on their shelves. They're a retail establishment, not an investment bank. If they were playing some sort of long game on card prices they wouldn't be buying fetches at all, let alone raising their buy prices, as they know like everyone else that reprints are a question of when and not if.
Actually its very relevant, it proves that stores are not selling the cards, and are not lowering their price. If the demand existed to drive the price up to double what it was a year ago, and was maintained, then the cards would still be selling very quickly. However after the fake demand increase, yes I said fake, we know buyouts are fake demand, the price rose and has not dropped. Why should it?
No, it's not relevant, for many reasons:
1. The number of TCG store listings above the market price is small. Your theory requires a much larger supply to be "hoarded" by sellers, and that simply is not the case. The larger supply is hoarded by non-sellers, and often non-buyers as well.
2. Demand does not solely exist at a fixed price point but a range. A smaller percentage of buyers are willing to pay more; pricing your stock to satisfy those buyers makes total sense when supply is limited. (If I have 1000 Mistys I'll sell at $90; if I have $10 I'm better off trying to sell those at $100).
3. There are other value-adds that explain price differentiation - shipping policies, packaging safety, grading reliability, customer loyalty, etc. Magic cards are not *entirely* a commodity, although they are close.
There is another issue here, and its the buylist. Most mom and pop shops buylist at 50% or so, so if a fetch goes up to 100$, then I as a possible seller have to agree to lose 50$, why would I do this? The higher the price of a card, I would argue, the less likely its going to be turned into a store for cash, and more likely it would just be traded away, continuing to leave less stock in the stores, artificial scarcity, 100 of a card on tcgplayer vs the millions printed being used to gauge its price.
This "isn't an issue"; there are other markets at which this is also true. Why you would sell is because that's your preferred way to sell; you don't want to take the time and hassle to sell on eBay or TCG or MKM. But, if you do want to maximize your value, you absolutely can become a seller; no one is barring you from the market. So buylist prices don't explain why you're holding the card instead of selling it. In any case, the scarcity isn't the fault of the major sellers (whom you're blaming); it's the fault of the many smaller card holders not selling. If you think the major sellers are gouging by keeping buylist prices too low, then you are free to create a business with better buylist prices, but keeping the same selling prices, thus cornering the market with a smaller profit margin. Good luck with that.
The way a real market works is that the product is freely available, you don't have that situation here. With MTG cards some people just do not sell at the listed value, do not trade at the listed value, some do not want to sell at all and all the stock is not available to gauge its worth. Its almost foolish to treat it like a real market with basic supply vs demand because the supply is not available and the demand is actually unknown. Making the assumption that I only have 20 fetches because I only listed listed 20 of my 100 fetches in my store is absurd, especially when the ones listed the supply are the ones who need to maintain the value. The only way real supply vs demand works is if the stores had full access to as much product as they wanted, and had a need to sell quickly, like the product could naturally depreciate in value or spoil. Even more importantly, since its not the only product they sell, they sell thousands of different cards, there is no imperative to care if the fetches are sitting longer, selling 1 a week instead of attempting to sell them all out.
This simply isn't true; these sorts of things are true of some other markets as well. I think what you're trying to say is that it's not a *perfect market*, which is true but irrelevant, as no market is perfect. Even a commodity market isn't perfect.
As for your contention that a seller can hold some cards at a higher price point in exchange for a lower velocity of sales, while still hoping to maintain cash flow from other sales, that's true, and something even I as a small seller have done. But that doesn't give me magic pricing power; when my Infernal Tutors and Bitterblossoms didn't sell at the price I was asking, I had to lower my ask. When people started buying Dark Confidants at a price higher than I was asking for a playset, I rose the price of my playset before it could be snapped up at a bargain. But if I actually had 1000 Bitterblossoms I was sitting on you can bet I'd be selling them at a lower price. Heck, I've personally undercut the prices of vendors of slower-moving cards on eBay only to see them respond by undercutting my prices in turn, so it's just not true that they set artificially prices and then sit on them.
1. You don't actually know this, you making an assumption. But not only are you making an assumption, your assumption takes into account the ammount of product listed as available is all the product that is available. They sellers are not hoarding, they just have no imperative to lower prices on a few cards, even if there is barely anyone buying at that price, because they have thousands of other cards to sell. They are simply choosing not reveal all of their stock, or not to drive prices down on their own which they are not required to do, nor need to do. Because this isn't a real market.
2. Your attempting to use supply and demand again, but its not a real market. If a store only sold Mistys they would be likely to adjust the price of Mistys according to the number of Misty's they are selling on average, but they actually have no need to. In fact if all MTG card stores only sold Mistys then you would see price variation and lowering prices because they would be competiting to sell the same product, but they are not because the entire market is not Misty Rainforest, instead they leave the price where it is, hope one sells once in a blue and sell all the other cards instead. This is why its not a real market, there is too many items being sold, there isnt an ultra specific market for each card all following normal supply and demand.
3. Possibly, but this doesn't really count when looking at TCGPlayer, this only works when comparing TCG to StarCity. Sure it can be a factor but we don't know how much because we don't know the true stock of every store or how much they are selling each day, like you would know in a true market.
I am not blaming anyone for "scarcity" I am arguing that we don't actually know if there is scarcity because we do not know true stock, we have no clue if person X purchased 50,000 Misty Rainforests off the market. You look at a website and make an assumption that all the stock listed on the sites is all the stock that exists. My argument is that its foolish to do that. It doesn't have to be a perfect market, red herring, but its not a market if you have no information that you can list as 100% true, and instead are basing the market on everyone elses private or volunteered information. Thats not a market, if you don't know how much the actual supply is, or the actual demand, you have no market based on either.
As for your Bitterblossom argument, anecdotes do not make facts, but even worse I am sure you wouldn't care if you just had 5 Bitterblossoms, then you probably wouldn't get into a price war to sell them, which is an issue.
Fetches are format warping. Rainforest and Tarn are used in decks that don't even have both land types in them.
They're the reason Deathrite Shaman is banned.
Personally I think of MTG as being 3 formats.
Dual land
Fetch land
Standard
I'm sure many players think this way too.
If you can't afford the lands you don't play. All the other cards are secondary concerns.
Mana bases are the heart and soul of magic. Wizards has made bad decisions to print powerful lands and then has made the even worse decision to not reprint those lands to make them scarce.
Personally I would be very happy if they banned all the power lands. The game would be better for it.
Here's a theory I've had for a while. I think prices are primarily driven by implicit vendor collusion rather than actual demand.
This shows that you simply don't understand the basics of how a marketplace works, and lets the reader stop right there and save the time of continuing to read.
Vendors set prices, yes, but supply and demand decides if those prices will result in sales or not. If they don't, the price drops until the item sells. For collusion to be present, there would have to be a LOT fewer copies of each card. In the hundreds, rather than millions.
Save yourself the trouble of typing up another thread like this. Use it instead to learn how the market works.
Fetches are format warping. Rainforest and Tarn are used in decks that don't even have both land types in them.
They're the reason Deathrite Shaman is banned.
Personally I think of MTG as being 3 formats.
Dual land
Fetch land
Standard
I'm sure many players think this way too.
If you can't afford the lands you don't play. All the other cards are secondary concerns.
Mana bases are the heart and soul of magic. Wizards has made bad decisions to print powerful lands and then has made the even worse decision to not reprint those lands to make them scarce.
Personally I would be very happy if they banned all the power lands. The game would be better for it.
If they did this the game would become a mono-color fiasco, I mean seriously no one would attempt 3-4 color decks and would probably at best play mono-color splashing a second color. I don't want to think you want to live in a world where this game become mono-color+a splash in every single format it would lead to such lack of diversity it would make your head spin. The only colors that would see primary play in each format were the best colors overall, there is a reason why they leave stuff like fetch lands and dual lands around it is because it breeds diversity period.
Crap, back when the original dual lands were in extended, due to popular demand they let the dual lands stay in extended longer by themselves. The types of decks you can make with fetch lands+dual lands or shock lands are so cool and fun that people actively wanted them to stay longer in a format like extended. When Revised and some other sets at the time rotated out of extended you could still play original dual lands for another few years, just to keep the diversity of the format.
Anyways you can make my words in 2-3 years at most we will see fetch lands reprinted enmasse and those that neglect to pick up their playsets when prices drop below 10 bucks a copy are fools period. If shock lands didn't show up in RTR block and we instead had some other random block, we would be looking at 50 dollar hollowed fountains and 45 dollar breeding pools right now easily.
The fact of the matter is reprinting these cards is easier said than done since WotC works so far in the future its kind of insane. They do that to try to prevent broken standard formats, and try to make each set enjoyable from a draft perspective. Obviously, these broken formats still emerge from time to time with stuff like Cawblade, or original Affinity back in Mirrodin but overall the work they do is for a good cause. I really hate 1 deck formats and that is what standard can easily become, when one deck is so far beyond the others its laughable to play any other deck.
Ultimately, there are billions of Magic cards printed each set, hundreds of millions of each Mythic and probably enough fetches for the entire playbase twice over.
I'm sure you're off by several orders of magnitude.
Private Mod Note
():
Rollback Post to RevisionRollBack
Due to real-life obligations, I am taking a long break from Magic which may include missing the local Legacy GP. Apologies for not being able to keep my threads updated.
I read this statement in the Modern Huge Gainers thread and I disagree with it.
Here's a theory I've had for a while. I think prices are primarily driven by implicit vendor collusion rather than actual demand. Let's take the fetchlands as an example. Fetchlands are necessary for a lot of Modern/Legacy decks. The recent spike shot blue fetches to $100. As some would argue, this price reflects real demand because the price hasn't adjusted downwards and keeps growing.
I argue that demand is a small component. If no one was buying fetches at $100, then yes, no one would sell it at $100. However! I don't think supply and demand intersect here. There are a lot more sellers than buyers. I think that there are just enough buyers to make the stores notice that there is a little bit of demand at these absurd prices. Thus, I think that stores are simply afraid to sell at lower prices to drive the cost down because they don't want to lose money.
We see it all the time. LGSes who use SCG prices like it when a card spikes. My LGS owner, for example, is very quick to adjust the price up to reflect a spike and is very slow to adjust a price down when the spiked card falls.
Now, if we extrapolated this behavior to every store, then wouldn't the post-spike price linger for much longer than it should in a perfect market economy, especially on "staples"? An interesting phenomenon occurs when the post-spike price lingers. The post-spike price becomes the actual price, rather than the "spike" price. For example, people now accept fetches as $100 (even though they grumble that it's ludicrous). When fetches spiked from $30 to $50 a few months ago, the same phenomena occurred. Stores didn't immediately adjust- they all kept their prices around $50 until people starting accepting $50 as the price.
It's not like the stores have some sort of pricing syndicate going on; it's just that they don't want to drop the price as long as someone is buying. As long as someone is buying, they won't lower the price too much because they think they'll lose profit.
Ultimately, there are billions of Magic cards printed each set, hundreds of millions of each Mythic and probably enough fetches for the entire playbase twice over. Maybe those numbers aren't fully accurate, but there is an artificial scarcity that is maintained by several factors. Ultimately, that's why buyouts are so effective. If this was a "real" market, prices would readjust easily and quickly.
So, to summarize, when prices rise, stores have incentive to maintain the high prices and eventually the high prices become the actual prices. Demand is barely involved. If I were to hazard a guess, most of the demand at these prices is from a small group of wealthy individuals who are new to the game (and thus accept the current price as the actual price), highly competitive, and are entering Modern for the first time.
Edit:
Players also have incentives to keep prices where they are. If fetches are suddenly $100 everywhere and you own a Scalding Tarn, would you trade it for the pre-spike price of $50?
Cheers
That being said, there is a large supply out there. Where is it? It's in other players and former binders and boxes, collecting dust. These people are not sellers. Some are collectors, some are hoarders, some are investors, and some just don't realize the value of what they have. And quite a lot of them simply don't want to part for nostalgia reasons. I've spoken to dozens of ex-magic players, begging them to sell their collections which are doing NOTHING but hurting the game and driving up prices for everyone else by sitting in their closet, and most of them just won't sell.
There's a lotta disposable income out there, mtg is really not that expensive compared to many other hobbies and yes, there are people out there buying cards at these prices (or at least at yesterday's prices).
P.S. Players with fetches might have 'incentive' for prices to remain high but the only way they can enforce it is to keep buying fetches if there's a drop in prices just to maintain their value? That's...not too smart and is going to fail miserably when a reprint occurs. There are also numerous failed examples of this in the financial markets but some people have to learn it the hard way. I guess the other way to do it is to constantly post on market street - tcg high prices have doubled and fetches are rising zomg! implicit GET THEM NOW!
P.P.S. 'Vendor collusion' refers to a situation like so: SCG calls up several other stores and says 'Hey guys, let's raise the price of card X from $100 to $300, all in agreement? Done'. That's collusion.
Just because you or I are not willing to pay that price doesn't mean nobody is. If there are enough people who are willing to pay that price for the item, why not sell it to them for that much? Sure, it sucks for those who want it but don't want to pay that much for it, but that's going to be the case with somebody regardless of the price point.
Here was my point involving demand. In a perfect market economy, demand would equal supply- thus price would be a reflection of demand. The truth is, price is actually above the demand right now. However, like you said, some people are buying at these prices. Stores are fully aware of this and are unwilling to lower prices simply because they might lose money because someone might buy it. Again, there is little incentive for them to lower prices as long as someone is buying. Holding onto the cards involves little cost aside from opportunity cost- Magic cards don't have a shelf life and they don't take up a lot of space.
My entire point was that stores have little incentive to lower prices once they've gone up. People seem to believe that prices are a reflection of demand, but I'm arguing that store psychology is a much larger component. If someone is buying at $100, why lower your price to $80 to sell faster? It's not like you incur much cost from holding onto the cards and if someone is buying at $100, you might as well sell it at $100. Clearly, not everyone is buying at $100, because there are so many cards on the market.
About SCG: I think they don't practice that much price manipulation. The thing is that they are so prominent within the MTG market that they inadvertently have a lot of pricing control. A lot of LGSs use SCG for pricing and I'm guessing pretty much every store follows what they're doing. If the price of X card is $10 and they raise their buylist to $15, then yes, the card will go up. And like I mentioned, the price will likely stay up, because no one wants to lose money selling for less.
In a price equilibrium, supply would equal demand. We'd see cards leaving TCGplayer as fast as they're listed. The truth is that many of the cards on there have been there for a long time until the price is jacked up again.
As for the large supply of cards out there, yes, most of it is in the hands of various groups. But the point I was making wasn't that cards are inherently worthless- I was saying that there is an artificial scarcity controlled by a small population of stores. There are what, 100 Scalding Tarns on TCGplayer right now? And how many millions were printed? No matter how you look at it, it doesn't make sense for these stores to set the general prices.
Perhaps, but irrelevant to anything I said.
I never accused you of making the argument that cards are inherently worthless, and you're wrong about the artificial scarcity. The artificial scarcity is created not by stores, but by the "various groups" that you admit to having them and not selling them. For a vendor to sell Scalding Tarns at $50 instead of $100, they have to buy a whole bunch at $25. The people holding the cards in collections aren't selling at any price, let alone $25.
Actually its very relevant, it proves that stores are not selling the cards, and are not lowering their price. If the demand existed to drive the price up to double what it was a year ago, and was maintained, then the cards would still be selling very quickly. However after the fake demand increase, yes I said fake, we know buyouts are fake demand, the price rose and has not dropped. Why should it? There is another issue here, and its the buylist. Most mom and pop shops buylist at 50% or so, so if a fetch goes up to 100$, then I as a possible seller have to agree to lose 50$, why would I do this? The higher the price of a card, I would argue, the less likely its going to be turned into a store for cash, and more likely it would just be traded away, continuing to leave less stock in the stores, artificial scarcity, 100 of a card on tcgplayer vs the millions printed being used to gauge its price.
The way a real market works is that the product is freely available, you don't have that situation here. With MTG cards some people just do not sell at the listed value, do not trade at the listed value, some do not want to sell at all and all the stock is not available to gauge its worth. Its almost foolish to treat it like a real market with basic supply vs demand because the supply is not available and the demand is actually unknown. Making the assumption that I only have 20 fetches because I only listed listed 20 of my 100 fetches in my store is absurd, especially when the ones listed the supply are the ones who need to maintain the value. The only way real supply vs demand works is if the stores had full access to as much product as they wanted, and had a need to sell quickly, like the product could naturally depreciate in value or spoil. Even more importantly, since its not the only product they sell, they sell thousands of different cards, there is no imperative to care if the fetches are sitting longer, selling 1 a week instead of attempting to sell them all out.
This isn't a real market. Stop treating it like it is.
EDH Decks:
B Toshiro Umezawa B
W Mikaeus, the Lunarch W
G Azusa, Lost but Seeking G
UB Grimgrin, Corpse-Born BU
BGU The Mimeoplasm UGB
GUW Rubinia Soulsinger WUG
GRB Sek'Kuar, Deathkeeper BRG
It sounds like you're attempting to take an intro level Econ argument and use it to broadly describe the world. You can't. It doesn't work. There's basically always a factor that isn't or cannot be included in the model. It would be AWFUL if cards left TCGPlayer the moment they were listed. Customers LIKE cards to be in stock when they go to a store. Having selection is a good thing. Can you imagine going into...I don't know...a clothes store and being told "sorry, out of shirts. We price very competitively so we run out of shirts the moment we put them on our shelves."
Just to add a little anecdotal evidence to this: my roommate last night asked me if I still had that 'multicolor deck that murders people on T2 a lot (TES).' I told her that I sold it, and the entire notion of selling cards seemed just unfathomable to her. She didn't object to selling expensive, older cards or even to selling cards in general; the entire concept of selling cards to her was so foreign to her that it has literally never entered her mind and she has no intention of ever giving it a minute of thought.
A very small portion of the card market is as fluid as we would like to think.
No, it's not relevant, for many reasons:
1. The number of TCG store listings above the market price is small. Your theory requires a much larger supply to be "hoarded" by sellers, and that simply is not the case. The larger supply is hoarded by non-sellers, and often non-buyers as well.
2. Demand does not solely exist at a fixed price point but a range. A smaller percentage of buyers are willing to pay more; pricing your stock to satisfy those buyers makes total sense when supply is limited. (If I have 1000 Mistys I'll sell at $90; if I have $10 I'm better off trying to sell those at $100).
3. There are other value-adds that explain price differentiation - shipping policies, packaging safety, grading reliability, customer loyalty, etc. Magic cards are not *entirely* a commodity, although they are close.
This "isn't an issue"; there are other markets at which this is also true. Why you would sell is because that's your preferred way to sell; you don't want to take the time and hassle to sell on eBay or TCG or MKM. But, if you do want to maximize your value, you absolutely can become a seller; no one is barring you from the market. So buylist prices don't explain why you're holding the card instead of selling it. In any case, the scarcity isn't the fault of the major sellers (whom you're blaming); it's the fault of the many smaller card holders not selling. If you think the major sellers are gouging by keeping buylist prices too low, then you are free to create a business with better buylist prices, but keeping the same selling prices, thus cornering the market with a smaller profit margin. Good luck with that.
This simply isn't true; these sorts of things are true of some other markets as well. I think what you're trying to say is that it's not a *perfect market*, which is true but irrelevant, as no market is perfect. Even a commodity market isn't perfect.
As for your contention that a seller can hold some cards at a higher price point in exchange for a lower velocity of sales, while still hoping to maintain cash flow from other sales, that's true, and something even I as a small seller have done. But that doesn't give me magic pricing power; when my Infernal Tutors and Bitterblossoms didn't sell at the price I was asking, I had to lower my ask. When people started buying Dark Confidants at a price higher than I was asking for a playset, I rose the price of my playset before it could be snapped up at a bargain. But if I actually had 1000 Bitterblossoms I was sitting on you can bet I'd be selling them at a lower price. Heck, I've personally undercut the prices of vendors of slower-moving cards on eBay only to see them respond by undercutting my prices in turn, so it's just not true that they set artificially prices and then sit on them.
Current post- Grand Prix KC Modern Postmortem (7/7/13)
If you want to buy a fetch, buy on ebay. They're $70 if you wait. These are the people who are selling them everyday.
You're not viewing it correctly. The goal isn't to always be out of stock by selling everything you have all the time. The goal is to be at an equilibrium where you can earn the profit you need. What SCG (or any secondary market dealer) does is resell. They buy things at cost X and sell them at cost Y. They need a certain inflow in order to match a certain outflow. If they are selling too much, they won't be able to keep anything in stock and that means that the market can bear a higher price than they are currently selling at. So they adjust their prices up, a few at a time, until they reach equilibrium. If the cards stay on the shelves and aren't selling as quickly as they are obtaining them, then that means the cards are priced too high and the market won't bear that price out.
Vendors have two options at their disposal: Adjusting the prices at which they sell, or adjusting the prices at which they buy. The difference in these prices is what is needed for the company to earn the profit margin they have determined that they need to survive - it isn't arbitrarily set. Neither are the prices at which they sell, or the prices at which they buy. If they cannot sell what they have, they adjust the sale price down until they can. If they cannot stock what they need, they have to raise the price at which they buy, which usually adjusts the price at which they sell upward in order to maintain the profit margin necessary for survival. If they have too much incoming stock and not enough sales, and the profit margin is already too thin, then they will adjust the buy price down so that they don't get as many.
There is an opportunity cost to buying, holding, and not selling - you've got a finite amount of money to spend on inventory, and if you tie it up in card X, that means you can't use it on card Y or card Z. If it just sits there, it earns you nothing until it does sell. This is one reason why some stores will sometimes have big sales - they just want to get their capital back, and would rather take a small loss on it than a big loss by not getting that money they spent on it back. Remember, the goal is to be able to have a steady flow of sales while keeping some amount of stock on hand for people who want it. The worst thing is when a customer comes to you and you can't sell the card because you're out of stock.
This is all rational behavior. Prices for cards that weren't in demand *have* fallen. Just look at Bitterblossom, Aluren, or even the history of Wasteland and Force of Will. A few years back (I want to say around 2010-2011), Wasteland and Force of Will both spiked in price but couldn't maintain that price and they eventually fell. They might not have fallen on the stuff some people want, but that's more likely because the demand for that card is higher.
SCG probably makes more money (on volume) buying Elspeth, Sun's Champion at 15 and selling at 30 than they do buying blue fetches at 70 and selling for 100. It is in their best interest to see demand for all formats rise, and for cards to change hands frequently and be accessible to everyone, since as the middle man they're making money on every exchange. Hoarding product would be foolish for them. Stores do not want stock sitting on their shelves. They're a retail establishment, not an investment bank. If they were playing some sort of long game on card prices they wouldn't be buying fetches at all, let alone raising their buy prices, as they know like everyone else that reprints are a question of when and not if.
Rancored Elf will cancel your order if prices go up. Read about him and other shady vendors here.
My Trade Thread!
1. You don't actually know this, you making an assumption. But not only are you making an assumption, your assumption takes into account the ammount of product listed as available is all the product that is available. They sellers are not hoarding, they just have no imperative to lower prices on a few cards, even if there is barely anyone buying at that price, because they have thousands of other cards to sell. They are simply choosing not reveal all of their stock, or not to drive prices down on their own which they are not required to do, nor need to do. Because this isn't a real market.
2. Your attempting to use supply and demand again, but its not a real market. If a store only sold Mistys they would be likely to adjust the price of Mistys according to the number of Misty's they are selling on average, but they actually have no need to. In fact if all MTG card stores only sold Mistys then you would see price variation and lowering prices because they would be competiting to sell the same product, but they are not because the entire market is not Misty Rainforest, instead they leave the price where it is, hope one sells once in a blue and sell all the other cards instead. This is why its not a real market, there is too many items being sold, there isnt an ultra specific market for each card all following normal supply and demand.
3. Possibly, but this doesn't really count when looking at TCGPlayer, this only works when comparing TCG to StarCity. Sure it can be a factor but we don't know how much because we don't know the true stock of every store or how much they are selling each day, like you would know in a true market.
I am not blaming anyone for "scarcity" I am arguing that we don't actually know if there is scarcity because we do not know true stock, we have no clue if person X purchased 50,000 Misty Rainforests off the market. You look at a website and make an assumption that all the stock listed on the sites is all the stock that exists. My argument is that its foolish to do that. It doesn't have to be a perfect market, red herring, but its not a market if you have no information that you can list as 100% true, and instead are basing the market on everyone elses private or volunteered information. Thats not a market, if you don't know how much the actual supply is, or the actual demand, you have no market based on either.
As for your Bitterblossom argument, anecdotes do not make facts, but even worse I am sure you wouldn't care if you just had 5 Bitterblossoms, then you probably wouldn't get into a price war to sell them, which is an issue.
EDH Decks:
B Toshiro Umezawa B
W Mikaeus, the Lunarch W
G Azusa, Lost but Seeking G
UB Grimgrin, Corpse-Born BU
BGU The Mimeoplasm UGB
GUW Rubinia Soulsinger WUG
GRB Sek'Kuar, Deathkeeper BRG
They're the reason Deathrite Shaman is banned.
Personally I think of MTG as being 3 formats.
Dual land
Fetch land
Standard
I'm sure many players think this way too.
If you can't afford the lands you don't play. All the other cards are secondary concerns.
Mana bases are the heart and soul of magic. Wizards has made bad decisions to print powerful lands and then has made the even worse decision to not reprint those lands to make them scarce.
Personally I would be very happy if they banned all the power lands. The game would be better for it.
This shows that you simply don't understand the basics of how a marketplace works, and lets the reader stop right there and save the time of continuing to read.
Vendors set prices, yes, but supply and demand decides if those prices will result in sales or not. If they don't, the price drops until the item sells. For collusion to be present, there would have to be a LOT fewer copies of each card. In the hundreds, rather than millions.
Save yourself the trouble of typing up another thread like this. Use it instead to learn how the market works.
.
If they did this the game would become a mono-color fiasco, I mean seriously no one would attempt 3-4 color decks and would probably at best play mono-color splashing a second color. I don't want to think you want to live in a world where this game become mono-color+a splash in every single format it would lead to such lack of diversity it would make your head spin. The only colors that would see primary play in each format were the best colors overall, there is a reason why they leave stuff like fetch lands and dual lands around it is because it breeds diversity period.
Crap, back when the original dual lands were in extended, due to popular demand they let the dual lands stay in extended longer by themselves. The types of decks you can make with fetch lands+dual lands or shock lands are so cool and fun that people actively wanted them to stay longer in a format like extended. When Revised and some other sets at the time rotated out of extended you could still play original dual lands for another few years, just to keep the diversity of the format.
Anyways you can make my words in 2-3 years at most we will see fetch lands reprinted enmasse and those that neglect to pick up their playsets when prices drop below 10 bucks a copy are fools period. If shock lands didn't show up in RTR block and we instead had some other random block, we would be looking at 50 dollar hollowed fountains and 45 dollar breeding pools right now easily.
The fact of the matter is reprinting these cards is easier said than done since WotC works so far in the future its kind of insane. They do that to try to prevent broken standard formats, and try to make each set enjoyable from a draft perspective. Obviously, these broken formats still emerge from time to time with stuff like Cawblade, or original Affinity back in Mirrodin but overall the work they do is for a good cause. I really hate 1 deck formats and that is what standard can easily become, when one deck is so far beyond the others its laughable to play any other deck.
Feel free to bid on my cards here!
I'm sure you're off by several orders of magnitude.
Legacy
UWR Miracles UWR
GWB Maverick GWB
GB Elves GB
UBR ANT UBR
RG Combo Lands RG
Vintage
BUG BUG Fish BUG
Modern
GBW
Junk PodMagic: the Buylisting