Tuesday, April 19, 2011

Ticketmaster to Start Dynamic Ticket Pricing

"Ticketmaster will begin pricing events based on consumer demand in a drive to take revenue from resellers and boost overall sales. Clients including sports teams, music acts and promoters will be able to adjust ticket prices based on how well the event is selling. 

The world’s biggest concert- promoter and ticketing company is partnering with Los Angeles- based MarketShare to provide the so-called dynamic pricing. The system lets venue owners target the markups that brokers charge for top events and sell more tickets for less-popular acts. Dynamic pricing will reduce scalping, freeing-up more tickets for consumers, the company said."

MP: So now Ticketmaster, venues, and bands and their promoters are acknowledging that it was under their control all along to reduce, minimize or even completely prevent ticket scalping by simply pricing and supplying tickets according to market forces.  It's only because venues, bands and their promoters have regularly under-supplied tickets at below-market prices relative to fan demand that a secondary market has flourished, with concert tickets frequently being sold above face value.

As Paul mentions in the comments below, when a band has a show that is sold-out, they can simply add more shows to increase the supply of tickets to meet the demand of their fans.  Greedy ticket brokers ("scalpers") have taken all of the blame for the secondary ticket market, when the real blame should be directed towards the non-market-based, anti-fan behavior of bands and their promoters, who frequently under-supply the number of tickets their fans want to buy.  They then play to sold-out shows, which creates the secondary market for tickets to those shows, but only because there is excess demand that the band failed to meet.        

Update: To paraphrase/quote NormanB in the comments, "The degree to which scalpers can make money is directly related to the: a) under-pricing and b) under-supplying of the tickets in the first place."  Since the: a) price and b) supply of tickets is under the direct control of the bands and their promoters/managers, they're the ones responsible for creating the secondary market.

14 Comments:

At 4/19/2011 3:08 PM, Blogger juandos said...

This comment has been removed by the author.

 
At 4/19/2011 3:36 PM, Blogger pkd said...

It's worth a try, but won't there be howls of protest when prices for the more popular events go up?

 
At 4/19/2011 3:40 PM, Blogger Scott A. Robinson said...

Sounds like owner of the product (the event) will maximize their revenue rather than the secondary market maximizing revenue.

 
At 4/19/2011 3:42 PM, Blogger w said...

Anything and everything that this scum company does, is for its own interest and never for anyone else...

Under their scheme, prices will always have a floor, but of course, never a ceiling...

This company operates in a complete vacuum and has been granted monopoly power by both the entertainment industry and the cities which own the arenas...

Professor, you forgot Ticketaster last foray to limit resale of tickets in the secondary market with paperless tickets...

Juandos, has it right Ticketaster is the real Ticketscalper....

 
At 4/19/2011 3:43 PM, Blogger Paulie's Books said...

Dynamic pricing will reduce scalping, freeing-up more tickets for consumers, the company said..

Consumer will have access to the same amount of tickets no matter what. They will still be paying the same price as they are paying now on the secondary market. Ticketmaster just wants more of the profits.

 
At 4/19/2011 3:55 PM, Blogger Paul said...

Consumers should not make the mistake of thinking that this is somehow doing them a favor, especially when ticketmaster fees are based on a percentage of the face value. If anything, it's the consumers who are losing.

Here's how intelligent performers handle the scalping issue: last week in Portland, the Deftones performed two concerts (quite odd a relatively small city). The first concert sold out in about a week and a half. Rather than complaining about scalping, they simply added one more show. Outside the show, scalpers were dumping tickets for half the face value.

 
At 4/19/2011 5:51 PM, Blogger Hydra said...

Not a problem for me, I hate crowds.

 
At 4/19/2011 7:37 PM, Blogger NormanB said...

As has been enunciated so perfectly before, "The degree to which the scalpers can make money is the inverse of the under-pricing of the tickets in the first place". (Who said that?)

But they should just auction the tickets ala EBAY in the first place, forget about ascertaining demand. This has got to be a very easy programing issue. Maybe in ten more years it'll come to pass but it will come to pass.

 
At 4/19/2011 7:49 PM, Blogger Bernie Ecch said...

Ticketmaster has ripped off concert goers ever since it bought up the competition (such as Teletron). Shipping and handling costs have skyrocketed. When Pearl Jam tried to fight them, they found it hard to do. Clearly the DOJ needs to file an anti trust suit.

 
At 4/20/2011 5:08 PM, Blogger Mike said...

This topic is actually related to my business and I believe you all may have it...WRONG!

I have/have had no connection with TicketMaster other than my former (and my wife's current) employers working with them to promote/sell concerts.
I'm not defending them regarding the monopoly accusation because they are (not so) secretly the same company as the largest concert promoter, Live Nation. TicketMaster gets a fee per ticket and the promoter stands to win or lose based on the success or failure of the event....however, when Live Nation promotes the show, they get the fee and the profit...but don't forget the loss factor. Concert turnout is incredibly difficult to predict in most cases and concert promotion can be a VERY risky investment.
None of that is very important anyway, a big competitor wouldn't lower prices. In fact, I think bidding wars for tours may actually increase ticket prices.

First, the idea of 'just adding shows' is really a non-starter for the vast majority of 'relevant-to-scalping events' (certainly can't be done with sporting events) because of the touring schedule of the artists involved (remember, you're scheduling opening acts as well as headliners and those openers change based on their own deals). You simply can't schedule 2 or 3 'flex days' for each city, hoping for a quick sellout....so, if you don't sell out...what? You just sit Taylor Swift in Peoria for 2 days? Send everybody home for 2 days until the next gig? Can't happen. You'd be surprised at the schedules these people keep, including the lighting, sound and security, many of whom are local and can't possibly schedule 2 events on the same day for insurance....just like the venue, do you want to put them on hold in hopes of good sales when they could schedule other work or tenants? Good luck with that.

The under-supplying of tickets you mentioned is not that simple. Houston, for example, has venues like this:
Venue A has a capacity of 2,000
B=3,000
C=5,500
D=18,000
E= 65,000
Obviously, that's a pretty big jump between C, D and E. The rents are very high and staffing and backline prices go up with the venue size, so if you believe your demand is 7,000, and you can profit (both financially and promotionally) by getting a sellout with less risk in C, but D would be a big loss...hello scalpers.
Sure, you can raise ticket prices, but you risk over-pricing and an unacceptable snowball effect for the artist: lack of interest.
This is SHOW BUSINESS. Waaaayyyy better to sell out for less than seem unpopular. It can KILL your career. But a sellout may take you to the next level.

 
At 4/20/2011 5:09 PM, Blogger Mike said...

IMO, I think some of these ticket prices (especially sports) are politically motivated due to the public funds used for the bigger venues. It's a big deal for politicians to make it look like they have given you an affordable asset for your tax dollars, but the scalpers are making that difficult. The funny thing about all of this is that the scalping makes artists and events seem more popular than they are and the performers LOVE it. If people would wake up and realize that this crap is a luxury and not at all important, artists wouldn't be given free publicity, politicians would have one less excuse to get on TV and get in our way, and ticket prices would be what's printed on the ticket.

Lastly, and maybe more important...where are you free market guys? Do you only believe in supply and demand until it comes to The Eagles?? Even working under the assumption that this evil empire is a monopoly, they've made the risky investment to pay the artists and are certainly more entitled to maximize their profit than some 3rd party scalper.
For those who don't know, promoters pay the artist "$X" regardless of the success or failure of the show and, believe me, the artists are demanding big bucks up-front. Now the internet has made everybody a potential scalper. One no longer has to put up loads of money for bulk tickets to be part of the problem...now, people are buying tickets to shows they want to see until the value of the ticket out-weighs their desire to see the show. You can also blame the internet for concert prices. Artists used to tour to support album sales, now they tour to make money and put out albums in order to spark interest in the tour.

Just because you may have an emotional involvement with a team or artist does not mean concerts and sports aren't businesses with real risks.
For those of you damning Ticketmaster for trying to make the money that is rightfully theirs based on their investment: The next time you argue free markets and supply+demand with some 'idiot', just keep in mind that they may be emotionally attached to the topic and forgive them.

 
At 4/20/2011 7:16 PM, Blogger w said...

We can than, Fred Rosen founder of Ticketaster, who according Fordes magazine thought of this brilliant idea.

Ticketaster, would significantly increase fees and share half of them with the venue.

In exchange, they would be the only authorized ticket agent for the facility.

Bam, scam thank you fans.

 
At 4/21/2011 1:40 AM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 4/21/2011 1:43 AM, Blogger Ron H. said...

pkd

"It's worth a try, but won't there be howls of protest when prices for the more popular events go up?"

Yes, but not nearly as loud as the howls at present from people who really want a ticket but can't get one at any price.

Here's an opportunity for everyone to demonstrate how badly they want to attend an event.

 

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