Demand Pricing and Extraction Mindset

This story has been getting a lot of circulation today on social media, but I think it was Thomas Cott who first linked to a story about how a new law in Washington State will prohibit the use of “ticket bots” to buy up all the tickets for a show and then resell them all at higher prices.

In the comment section someone complained about the law saying the venue likely undervalued the tickets if people were willing to pay the reseller’s higher prices. Someone responded noting that perhaps the venue was actually trying to make the show affordable for a wider range of people.

Since the subject of people moving from the corporate world to head up non-profit organizations has been on my mind recently, my first thought was that these two people represent the difference in philosophies between the for- and non-profit sectors. If more people transition to non-profit management, this could be the subject of increased tension.

Except, it is already a focus of debate in the non-profit arts community. There are a number of non-profits who have started to institute demand based pricing for their shows as unearned revenue continues to diminish.

Even organizations that have no desire or technical capability to effectively implement demand based pricing are increasingly pressured to use it. I regularly get contracts that say if the artist is getting a piece of the gate, we will be required to establish milestones at which we will employ demand pricing.

Seth Godin had a post a month ago in which he addressed this exact situation which he termed the extraction mindset.

Thirty years ago, I asked the fabled rock promoter Bill Graham a question that I thought was brilliant, but he pwned me in his response. “Bill, given how fast a Bruce Springsteen concert sells out, why don’t you charge $100 a seat and keep all the upside?” (In those days, $100 was considered a ridiculous sum for a concert ticket).

“Well, I could do that, but the thing is, I’m here all year round, and my kids only have a limited budget to spend on concerts. If I charged that much for one concert, they wouldn’t be able to come to the other shows I book…”

Bill wasn’t just spreading the money out over time. He was investing in a community that could develop a habit of music going, a community that would define itself around what he was building.

Now this was 30 years ago. It is difficult to be sure rock promoters are employing this same mindset anymore.

Though I was actually faced with the same question regarding an annual Christmas show by a national act we present every year. Someone suggested given that we always sell out and have the date for the next year set before the current year’s concert starts, why not sell tickets for next year when the curtain comes down this year.

Problem is, people are so rabid about getting the same seats they had the year before, we were concerned we might force them to decide between buying tickets for the following year or buying Christmas presents. Better that we wait and not put them in that sort of bind.

Godin goes on to talk about the two different economic mindsets that exist today.

The promise of our connected economy was that it would reward the good guys, the long-term players, the people who cared enough to contribute. The paradox is that this very same economy has become filled with people who are easily distracted, addicted to shiny objects and too often swayed by the short-term sensation or by short-term profit.

I think most people embody both mindsets and unless they are really mindful of their actions, don’t necessarily see a conflict between them. People will take advantage of the low prices and convenience of shopping on Amazon and religiously show up to the farmers’ market on weekend mornings because they also value personally connecting to their local producers.

There isn’t necessarily a contradiction in this approach if there aren’t any local companies that make sleeping bags and vacuum cleaners for them to connect with the way they do with the beekeepers, farmers and candle makers.

Even without contractual obligations, when it comes to setting pricing it can be a real challenge for arts organizations to balance economic necessity with access. If you have 1000 seats, gauging whether an additional $10 a seat is going to be an impediment to audiences can mean a difference of $10,000.

If the show sells out easily, there is a lot less labor and expense involved in making that $10,000 than if you have to approach someone for a sponsorship, or write a grant application and final report.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker ( website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.


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