A few days ago, NPR’s Planet Money ran a story asking why there isn’t demand pricing for movies where you pay more for blockbusters and less for the stinkers. Among the suggestions the correspondents made were having some movies free with a two popcorn cover.
They spoke to a movie theater owner who expressed concerns about low prices signaling that a movie was bad. Not to mention he worried that people would pay for the stinker and sneak into the blockbuster.
The biggest impediment to demand based pricing, however, is the movie studios. As the reporters mention, no studio wants to invest tons of money into making and advertising a show only to have a movie theater price it at $1.
If you are not aware, something similar occurs with many of the big Broadway touring shows, especially those that are getting a percentage of the gate. Theaters have to submit proposed ticket pricing and a marketing budget for the production company’s approval.
One interesting fact that came to light was that the term “B-movie” actually refers to an early practice where movies were graded A, B, C, etc and had corresponding pricing. The practice has fallen by the wayside, but the B movie term stuck around in common parlance.
One of the problems live performances face is the ability to provide such transparency in its pricing for audiences. The price for single perform doing a solo acoustic set might be low because the cost to the theater for one person is low. On the other hand, if that single performer is Eric Clapton, the ticket price is going to be commensurately high.
But a ticket price may be low because the theater has good funding, or will take a loss to encourage people to attend or because the quality stinks. The audience member doesn’t know why prices are the way they are and there isn’t really an elegant way to communicate it, should the arts organization so desire.
As I listened to the reporters asking if movie theaters weren’t foolish not to institute demand based pricing, I wondered if we might be approaching a place where audiences would be psychologically ready for arts organizations to implement similar pricing strategies for their own events. The whole question of demand pricing has been hotly debated by arts organizations and the fact that the subject is popping up in various forms indicates the topic isn’t going away any time soon.