Monday, December 30, 2019

Concert promoters are using Airline-style dynamic pricing to increase revenue

See Why Concert Tickets Are So Expensive: Over the past decade, the average ticket price for the top 100 North American tours has increased 55% to $94.83 by Anne Steele of The WSJ.

The concert venues and promoters are trying to raise prices on the seats that will have the highest demand. Airlines do this as demand increases for certain flights.

I think that the demand for concert tickets might be (or might have been) less than one since they raised prices but revenue still went up (see the previous post).

These higher prices might increase efficiency. If prices are too low, you will have to have some other rationing system. If the price is below where supply and demand intersect, then you get shortages. Maybe tickets go to who is ever first in line (even if that means buying them online). People might stop what they are doing to try to buy tickets. Waiting in line is not an efficient outcome. If higher prices stop that from happening, efficiency is enhanced.

"Over the past decade, the average ticket price for the top 100 North American tours has increased 55% to $94.83. The average gross per show more than doubled over the decade to $958,000."

"ticketing companies are offering new technology to squeeze out scalpers and make more money the first time a ticket is sold."

"The boom in the live-events business fills a gap in many artists’ revenue streams. As piracy decimated recorded music sales starting in the early 2000s, artists began to rely on touring, ever more so in the past decade. Live shows account for some 75% of musicians’ income, compared with around 30% in the 1980s and 1990s, according to analysis by Alan Krueger, a Princeton University economist who died this year.

Among other things, artists and promoters are now more apt to sell their best seats for what the market will bear, something they avoided in the past either for fear of being perceived as taking advantage of loyal fans or because they didn’t know how much the public would be willing to pay."

"Airline-style dynamic pricing, offered by Live Nation subsidiary Ticketmaster and others, makes it possible to change the list prices at any time or automatically adjust them up or down based on demand.

Promoters, meanwhile, have been pricing seats higher—particularly the most desirable ones, such as those at the front of the house—and collecting more on VIP packages like meet-and-greets and merchandise that get tacked onto tickets. Taking another page from airlines’ playbooks, Live Nation has begun charging more for aisle seats at some shows—labeling them “premium aisle seats” and collecting as much as $30 more a piece."

"Dynamic-pricing efforts . . . put an additional $500 million in artists’ pockets in the 18 months that ended in June . . . driven largely by an increase of more than 30% in front-of-house pricing at amphitheaters and arenas"

"The higher pricing of the best seats is often accompanied by lower prices farther from the stage."

"The Justice Department last week reached an agreement with Live Nation following allegations the company sought to strong-arm concert venues into using Ticketmaster. Live Nation denied the allegations, according to a court filing, but agreed to conditions requested by the Justice Department.

The department believes Live Nation’s conduct has violated the terms under which the government allowed the top concert promoter to merge with the dominant ticket seller in 2010. That agreement, known as a consent decree, forbid Live Nation from forcing venues that want to book the concert promoter’s tours to use Ticketmaster for those shows, and from retaliating when venues choose to use a ticketing competitor instead—conditions designed to keep consumer prices in check by preserving competition in the live-event market."

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