He basically goes right to the heart of a big pet peeve of mine. Even though he cites current streaming sites, the practice of offering lower introductory rates to new subscribers goes back decades. All through my youth I would hear pitches from long distance phone services, cell phone carries, cable companies, cable channels like HBO, Showtime, etc., which would offer discounted rates to new users while maintaining higher rates for loyal long term users. The message was clearly that your loyalty wasn’t valued.
In the two minute video, Reich spends over half emphatically reinforcing the fact that they haven’t raised the price in three years and that this increased price only applies to new and returning subscribers. Since the new rates don’t go into effect until May, interested folks have a month to become classified as an existing subscriber. Meanwhile, he reminds viewers that the cost of their Netflix subscription has jumped twice in the time it took to watch the video.
The rest of the video he discusses that Dropout has increased their spending sixfold in the last three years to create more product, that the increase will help pay the staff a fair wage, and that as the CEO he does not own a boat.
While I first assumed he was implying he did not receive an exorbitant salary I later realized he might want to buy a boat. (Given that Dropout is comedy content the intended message may be both.)
So in this spirit, I will close by suggesting folks might want to consider using the analytics function of their ticketing system to identify people who have regularly attended over the last 3-5 years and send them a coupon code for a discount or some other benefit to thank them for their loyalty.
As part of the study, the authors created a hypothetical concert venue which they used as the basis to ask people about their seating preferences when seeing a favored artist performing a favored genre of music including what price they would pay, whether they preferred reserved or general admission. Additionally they wanted to explore how willing people would be to purchase a VIP package based on cost and type of access they might be granted.
Six levels were chosen for the VIP package attribute, each comprising different combinations of three VIP services: meeting the headlining artist, taking a backstage tour, and accessing the venue early to watch the soundcheck.
Noting that people may have different seating preferences based on the venue they were attending, the researchers conducted a pre-study survey to determine the best general characteristics for their hypothetical venue.
Each area differs in terms of distance from the stage, elevation, and viewing angle. Variations in distance and angle were communicated to participants through the hypothetical venue map, as displayed in Table 1. Additionally, participants were informed that Areas 1 and 2 were located on the ground floor, Areas 3 and 4 on an elevated level, and Areas 5 and 6 on the upper level.
Here is an example of how the choices for seating, pricing, and VIP package was presented to survey takers when the artist was Taylor Swift.
Among the findings of the study are that people value being closer to the stage than further away. Reserved seating is more valuable than general admission seating. However, for people with children and older respondents, reserved seating held significantly more value. The researchers suggest that people without children and younger attendees are generally indifferent to whether seating is general admission or reserved. Whereas those who are older or have children are more willing to pay a premium for reserved seats.
In terms of the VIP package, people were more interested in meet and greets with the artist than backstage tours and early admission to soundchecks.
In terms of price, the study found that there isn’t a lot of consistency associated with specific consumer characteristics and as a result, there are limits to what artists can charge based on assumptions about consumer groups.
…there is little evidence of substantial preference heterogeneity associated with consumer characteristics. This is turn implies that limits exists with regards to musicians’ ability to practice price discrimination by targeting specific ticket types at particular consumer groups.
Furthermore, the evidence on variation in venue area preferences implies that there are limits to the returns musicians can generate by employing between—and within—venue area price discrimination.
While I was reading this study i was comparing their findings to the writings of folks like Sean Kelly at Vatic, a company that specializes in using data to dynamically price venues in order to optimize ticket revenue. My first thought was that because they were having people choose huge sections of seating, they weren’t really drilling down to discover the specific preferences people have about their seating and the price they are willing to pay.
When they look at those yellow sections in the maps above, they are imagining themselves sitting in a specific seat for which they would be willing to pay the suggested price. Ten seats to the right or left of that (or away from the aisle), they may not be willing to pay as much.
On the other hand, the researchers say there is much more capacity for musicians to generate revenue through offering VIP packages. People seem to show a greater willingness to pay more for those experiences. Though there is a suggestion that the mix of experience and cost would be specific for each artist to discover.
However, research shows that offering VIP packages can create dissatisfaction among non-VIP fans so artists who wish to cultivate an environment of fairness may choose not to offer them. Similarly, dynamic pricing may also result in a perception of unfairness. There is apparently an association made between dynamic pricing and non-traditional distribution methods which appear to disadvantage the average ticket buyer.
Indeed, the use of dynamic pricing may be constrained by consumer concerns associated with perceived fairness, and the disdain consumers typically display for non-traditional allocation methods (Sonnabend, 2019; Roth, 2007).
Indeed, important parallels exist between the contemporary experience with dynamic pricing and that of ticket auctions, the use of which has declined over time despite evidence that it enabled the market to work more efficiently (Budish & Bhave, 2023). If consumers continue to respond with repugnance to non-traditional pricing strategies in the music industry, understanding how musicians can engage in optimal posted ticket pricing when organizing concerts will remain important.
A couple caveats to note. 1 – There were a number of hypothetical elements in this study despite referencing real music artists. 2 – While there are lessons applicable in other areas, this study was conducted with self identified attendees of five specific genres of music – Pop, Rock/Alternative, HipHop/RnB, Dance/Electronic and Classical. It doesn’t include other music genres, theater, musical theater, family theater, dance, etc., so may not be completely reflective of the preferences of those audiences. Nor may it be applicable to smaller venues.
Yesterday, I focused on theater leadership’s perception that they didn’t have enough time to digest research on promising practices* and a desire to have access to big thinkers on systemic change from outside the theater world.
The sense that theater managers were feeling lost and unsure about how to tackle the challenges they were facing seemed to be the subtext of the responses the listening session participants provided. On an individual basis, I am sure these professionals generally felt they are competent at their jobs and secure in the knowledge they possess. In aggregate the responses almost painted a picture of a group that is struggling and didn’t feel equal to the task.
While the image of a harried, overworked staff has been a stereotype for theaters for decades if not centuries, some of the quotes the report includes about needing to have good manners when speaking with donors doesn’t do theater professionals any favors. I hope it was taken out of context.
As one participant said, “We’re finding it difficult to keep up with foundations or our state agencies and what their requirements are in terms of changing what panelists are looking at.”
Similarly, there was a recognized need for financial consultative services in many topic areas. These areas included how best to use existing funds, how to become financially stable, and how to price services or tickets. “Perhaps an area of expertise that we’re struggling with is that we are quickly having to learn how to be a single ticket shop,” one participant said. Another remarked: “It would be nice to also get funding for support in terms of financial advisement.”
…“If you’re asking people for money, you … have to have the good manners to speak their language,” one participant noted, “that’s something that would be helpful … if you can help teach or give our organization resources on the language that you need to keep your donors and your boards happy.” This service might help theaters to become transparent about their financial needs and current fiscal standing and, therefore, to communicate more effectively with employees, donors, boards, and other funders.
….Participants proposed using technological tools such as AI, electronic tip jars, ticketing apps, management apps, and fundraising software to help theaters increase and manage their financial resources.
…“We want investment from the tech sector to fix this, one participant said. “I wish we could do better because it’s hard enough … even to get working internet in our theaters so people can check the QR codes that we’ve given them already.”
As I mentioned in my post yesterday, there are already people addressing many of these issues but there is definitely a need for more robust and widespread education and resources on finances, ticket pricing, technology, communication, programming design and philosophy etc., in order to effectively respond to trends and expectations.
But again, as I suggested yesterday, does the availability of these resources do any good if those who might benefit most don’t feel they have the time and bandwidth (and money) to receive and use them?
*Want to give credit to Anika Tene from CreativeWest for introducing me to the term “promising practices” instead of best practices. Although it was a quick mention in a webinar she was leading, I immediately realized that the term relieves pressure on organizations to immediately implement new practices at the most effective level. Also, there is a suggestion in promising practices that these practices are not one size fits all organizations. They may be beneficial, but the value may not manifest in the same manner or degree for everyone.
Colleen Dilenschneider and the folks at IMPACTS experience released some more great research last week. This time regarding tolerance for online transaction fees. (subscription required)
High-propensity visitors to cultural organizations will likely tolerate online transaction fees up to $4.95…provided the organization charging this fee has been deemed competent and successful in terms of the guest experience, the online purchase experience, and favorable reputational equities. Critically, these data may be more insightful for market leaders considering implementing transaction fees than for those organizations which could be struggling to meet their audiences’ expectations.
Before you click away having decided that is all you need to know. There is more to consider. Number one, notice they use the term high-propensity visitors which means people who already have an inclination to attend exhibit or performance based experiences. Tolerances can differ for people who have less of an inclination for the experience. The other thing to note is that the organization must have already earned the confidence of audiences in terms of quality of difference experiences and reputation.
There are other factors like perceived value —which they take pains to note is not the same as price. An experience can be viewed as expensive while also being perceived as having high value. Readers may recall a post I made in August where IMPACTS found that free and low cost organizations often receive lower satisfaction score and intent to return responses. So low price does not always result in high satisfaction or perception of value.
Looking at perception of value, willingness to recommend to others, and intent to return, intent to return seems most impacted by online fees followed by perception of value and willingness to recommend.
Overall, intent to return begins to decline at the $3.00 mark, value perceptions begin to decline at the $5.00 mark, and willingness to recommend visiting to a friend starts to decline at the $6.00 mark. Depending on myriad factors concerning content, programming, reputation, the online purchase experience, and broad value perceptions, the ill-advised deployment of a transaction fee may risk a negative impact on an organization’s market potential and its ability to attract guests.
One other thing they called out – labeling additional fees as “convenience fees” elicits increased negative perceptions. Purchasers don’t necessarily see it as convenient for them.
There is a lot more nuanced analysis and cross-refencing to earlier posts they have made in this recent post so it is probably worth taking a closer look if you want to know more.
Dave Wakeman’s appearance on Angela Meleca’s ARTS Redefined podcast was making the rounds of LinkedIn last week. One section in particular where Wakeman discussed his opposition to discounting caught my attention. (Starting at 27:10, the index in the video is way off for some reason)
Wakeman says people tell stories about themselves –what type of person they are, what value they have in the world. He says discounts do the exact opposite – it removes the value narrative and says you are a commodity and suggests you don’t believe in the value you are offering.
Wakeman recalls one of his marketing professors taught him that for every 1% you discount, you can lose up to 40% of your profit. Wakeman acknowledges it is an extreme example and the typical loss is around 10-11%. He cites additional research on the other side that shows for every 1% you raise your price, you gain 10-11% in profitability.
He says that the first time you discount, you might get good results but then people learn to wait for the discount. The better approach is to just recognize you set the price too high, change the price and continue with that new price.
Without naming names, Meleca gives Wakeman the example of an arts organization that makes all their tickets $11 with the expectation that people will enjoy the experience and come back again at a higher price.
This is clearly a reference to Opera Philadelphia’s $11 pay what you want campaign that was introduced at the end of August. I suspect the podcast episode must have been recorded around then because Wakeman doesn’t seem aware of this and I am reasonably confident I saw him comment on the story in early September.
I will say that based on Opera Philadelphia reported ticket revenue being generally 13% of their revenue, I don’t necessarily think they were depending on people returning at a much higher price point in the future. Fundraising is probably at the core of their plan to stay in the black.
Interestingly, Wakeman brings up a “not going to name name’s” example of a sports team that did the same thing. He characterizes the belief that people will come back at a higher price as just stupid. He says it is much tougher to raise a price when you have lowered it.
He goes into detail about the approach of just changing the price and how to communicate it in a way that is positive for you. Announcing a whole new block of seats at $20 Vs 20% off ticket price is a more constructive framing. The discount raises questions about the value of the show and how it is selling.
That said, I want to point out you can only do that so much. There were a lot of concerts this past summer where people had purchased tickets at $300 or more several months out only to find them selling at around $50 dollars a couple weeks out from the show. Based on what I saw unfold on regional concert venues this summer, I am pretty sure some of that is attributable to 3rd parties buying up all the tickets, ratcheting the price, and then trying to unload them when they wouldn’t sell.
Whether it was 3rd parties or the venue themselves, there were a lot of pissed off people making videos and comments on social media because their perception shifted from being smart for getting tickets early to being cheated of the hundreds or thousands of dollars difference between their purchase price and the current sale price.
Wakeman talks about this shift in perceived value in regard to discounting as well. He suggests having a strong data based process in place for price setting so that you have the best chance of creating an accurate price in the first place.
He says pegging it to the actual cost of presenting the show is bad because that often doesn’t align with perceived value.
Once you set the price, don’t be timid or apologize for it – promote it confidently and proudly.
One of the things they found is that people expect to pay less for exhibit based and performing arts experiences in 2024 than they did in 2019, There is a lot nuance to this result according the Dilenschneider on her colleagues. First of all, this response is based on what people remember paying for their experience in pre-pandemic 2019. As you might imagine, they note that memory is imprecise and so comparing what they expect to pay this year compared to what they remember paying five years ago isn’t going to provide the most accurate results. In fact, data about what was spent in the first two quarters of 2024 tends to be higher than what they said they planned to spend.
The other thing to know is that people aren’t planning to cut back on admission tickets, but rather the other activities surrounding the central event. What IMPACTS terms off-site spending:
As of Q2 2024, the top area where folks recall spending money in relation to their visit is admission. Still, we do not see that admission costs are a top barrier to attendance to cultural organizations. So, to continue our work as data detectives, we’ll want to observe where other changes have taken place.
[…]
Folks are spending more on parking, admission, and onsite retail, and they are spending less on the other aspects surrounding the cultural experience.
Nowadays, despite rising food costs and restaurant prices, cultural participants plan to spend less (and actually do) on food and beverage. In 2019, performing arts patrons were more likely to grab a dinner before the show and perhaps drinks afterwards. Now, however, the data suggest that patrons may be more likely to only do pre-theater drinks, or perhaps skip the fancy bottle of wine for a single glass or choose a more affordable fast casual option than a Michelin-starred meal. These choices reflect consumers’ decisions to “trade off” or “trade down” when it comes to making their cultural-related spending choices. Fortunately for many cultural organizations, these “trades” thus far seem to primarily affect offsite spending (and indicate less sensitivity to onsite consumer behaviors).
Of course, these results are associated with people who actually made the choice to participate in an experience. A fair part of the article is devoted to a conversation about the general pessimism people in the US especially feel about the economy. Ticket prices are fairly low on the list of cost related barriers to visitation compared to concerns about the economy, prices, inflation, investment, personal finances, etc.
Freakanomics did a two part show about how the Broadway play Stereophonic came together. The first part is broadly about the 11 year creative process playwright David Adjmi went through to make the show. The second part focuses a bit more on the economics behind a Broadway show.
If you have been involved with the performing arts for any length of time, you can probably predict the process Adjmi underwent – cobbled together funds from two commissions and a grant, plus had two architects let him live in their house rent free for years while he wrote. He had to put some pressure on Playwrights Horizons to consider the show and the cost of over $1 million was a lot for an off-Broadway production.
But it became a hit based on essentially breaking the formula of Broadway shows – a straight play about music, but not a musical, no stars in the cast, and runs long at 3.25 hours. Apparently it has a strong appeal to men based on the observation the men’s restroom line is longer than the women’s.
There is a lot more to the story than that. The first episode is 70 minutes alone and the second about 55 minutes.
Being the arts management nerd I am, I was even more interested in the second episode which talked about the economics and decisions that were made. Everything from the cost of putting on a show in NY vs. London, who can and how to invest in shows in both cities, what the actors got paid off-Broadway vs. after the move to Broadway, decisions about pricing tickets, and the marketing mix they used.
In terms of the pricing tickets, the producers say they can now get up to $349 for a ticket though they re-evaluate their pricing three times a week, but they started out much lower during previews:
We had preview pricing that was $40, $80, $120 to start, for the month of April. But you have to catch up to it, because now we can get $229 for them. You kind of play a game of chicken with yourself and with your audience. For something like Stereophonic, because it’s an unknown title — obviously it’s getting more well-known — but two, it does not have a major mega-star in it. It has a group of incredible rising stars, but they’re not household names. The way that we get there is by getting people in the door, and really building to that moment.
Thanks to improved audience analytics tools, the producers have changed their marketing mix from what it once was as well:
Oh, it’s almost entirely all digital now. It’s all mobile. It’s all through Meta — it’s all through Instagram, Facebook. We do still take the traditional behavioral banner ads that follow you around the internet. We still do some prints, but not a ton. We have dabbled into television, but we’re taking specific ads. We’re not taking giant flights with multiple spots on Good Morning America or the Today Show, which was always your bread and butter.
[…]
The R.O.I. is much easier to figure out because you can actually track people. Our zip code reporting is way more sophisticated now than it was before, whereas you had to blanket the market with something and then you didn’t see a direct correlation. Now it’s less things, but you can still see how your wraps jump due to specific things of press, like a C.B.S. Sunday Morning piece, or if your stars are on Morning Joe. There are fewer things that give you that pop, but at least you know, “If I’m on Morning Joe, then we’re going to have a good day at the box office.”
If this sort of information interests you and you have the time, I recommend giving the pieces a listen. Host Stephen Dubner says they are working on a longer, more involved series on the economics of making theater so I am going to keep an eye out for that as well.
For instance, people born before 1980 prioritize: free admission, priority access, members only functions, advance notice of upcoming activities, and member subscriber discounts, in that order.
Those born after 1980 prioritize: free admission, belonging to the organization, supporting the organization, supporting the mission/program, and making a positive impact toward the mission.
I immediately jumped to a conclusion that Colleen and team cautioned against. They note that while it appears that younger groups might be focused on mission related benefits, that just may be a result of the fact they haven’t been marketed to for as long as the older generation.
However, consider that a person born before 1980 has a bit more experience being marketed to by cultural organizations. These folks have simply been around longer! Maybe they’ve been a member or subscriber to more cultural organizations!
Either way, when we ask a person who’s been in market longer about their top membership benefits, they may be more likely to think before responding, “What have I been told are the top benefits of membership?” These folks may have more opportunities for recall, while a younger Millennial or adult member of Generation Z may have fewer marketing data points to draw on. They may be better able to answer the question based on their own experiences and what they value rather than what they’ve been told to value as a top membership benefit.
This said, since a younger segment of the population seems drawn to mission related benefits, that is what marketing for them should be oriented toward. Later in the article they show why people motivated by mission related reasons tend to have stronger relationships with organizations than those motivated by transactional benefits.
They list a similar distinction between those identifying as BIPOC and those that don’t. However, they include a caveat that there are a lot of flaws inherent to the limitations of racial self-identification questions on surveys that blur nuance.
From the data they do have, membership benefit priorities for non-Hispanic whites are free admission, priority access, members only functions, supporting the organization, supporting the mission/program.
Priorities for BIPOC identifying are: free admission, belonging to the organization, support of organization, support of mission/program and priority access.
Similar to the generational comparison, they suggest there is a possibility that since many arts organizations have only recently begun to focus on marketing to BIPOC communities, the group has been predominantly getting messaging focused on belonging and other mission driven goals and not transactional benefits.
Colleen and team transition into talking about why mission driven members are better than members driven by transactional benefits. Among the charts they feature which breaks out responses for exhibit (museums, zoos, gardens) and performing arts based organizations, people who are mission driven tend on average to spend more on their membership/subscription than transactionally motivated members. (i.e. purchase a higher tier subscription/membership).
Those motivated by mission related benefits tend to perceive their membership as more valuable than those tranactionally motivated, even though they spent more money than the latter group. And the mission driven folks tend to renew memberships/subscriptions more reliably.
Excitingly, research shows that younger and more diverse members are generally more mission-motivated than members who fit the more traditional profile. The takeaway may be simple: Highlight supporting the organization and its mission as a primary benefit of membership. Not necessarily instead of transaction-based benefits, but alongside them.
At the very least, it may be helpful to stop underestimating the importance of your mission in securing attendance and cultivating supporters. Your mission need not be the kale hidden within the sugary fruit smoothie of discounts.
I was curious to see if there are any lessons to be learned for arts ticketing in terms of online purchasing vs. in person purchasing. Even though a large portion of tickets are sold online, something I have noticed over the last five years or so is that greatest concentration of ticket sales in a period of time tends to generally be during the hours the ticket office is open. I was hoping to get some insight into whether there might be a trend toward people wanting more personal contact during the purchase experience. In the context of increasing conversations about loneliness, it isn’t too far-fetched to imagine a shift away from interacting only with machines.
The researchers conducted studies with five slightly different designs to try to control for things like what people were accustomed to doing at the supermarket, whether people felt rewarded for the choice of check out, number of items being purchased, and intentionally priming participants mindset by reading different texts before going shopping.
Basically, while people who felt they were being rewarded for using self-check out, whether it was due to some benefit or being primed by a reading passage, tended to feel more loyalty and satisfaction as a result, the biggest factor was actually number of items being purchased. The more people exceeded approximately 15 items, the less satisfied and supported they felt by the supermarket while using the self-check lane.
That seems pretty logical given the small amount of space you are provided to bag and stage groceries in a self-check out lane. The more items one purchases, the greater opportunity to encounter errors. I imagine this is even more likely when trying to ring up produce which may not have been effectively labeled or indexed for look up. Often there is only one person monitoring 10-15 checkout stations and you have to wait while the staff member assists others.
The researchers note there is a lot more research about self-check out that needs to be done since there are many factors in play. Some researchers have looked into issues like perception that you are contributing to the loss of jobs by doing self-checkout. Then there is the related question about why you aren’t getting any incentive to do an employee’s job. I have seen some great videos for clothing self checkouts where people experienced a great deal of frustration removing the anti-theft tags on top of having to remove hangers, fold and bag.
Probably the clearest lesson here for arts organizations is that people need assistance the more complicated their transactions become so you always need to provide an opportunity for purchasers to speak to a live person. Certainly it is frequently impractical to provide live assistance 24 hours a day, but having the availability of live help posted clearly and repeatedly can help people feel supported.
This may sound blatantly obvious, but in the last few months I was in a conversation in which someone commented that venues in some countries have completely ended staffed box office hours outside of performances. I may be misremembering slightly and the phones were staffed and there are no walk up interactions. Certainly, other countries have different cultural expectations about customer service.
FTC Chair Lina Khan said in a statement that “by hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront.
[…]
A new rule with more precise language can do a better job with specifics, the agency argues:
It is an unfair and deceptive practice and a violation of this part for any Business to offer, display, or advertise an amount a consumer may pay without Clearly and Conspicuously disclosing the Total Price.
[…]
….and now this new proposed FTC rule could force other businesses in different industries, from airlines to hotels, to follow suit
If successful, the new rule could put an end to bait-and-switch tactics, which consumers have told the FTC that they’re constantly experiencing. Consumers have also said they often don’t know what certain fees are for.
Other articles about the proposed rule include examples of some of the arcane abbreviations associated with added fees that people couldn’t decipher. It was noted that the rule wouldn’t get rid of all the added fees resulting in cheaper prices, but it would force businesses like concert venues, hotels, and airlines to disclose full prices upfront.
As I mentioned in my post last week, the rule will need to be written well to eliminate loopholes which will allow for the addition of fees not covered by the rule. It should also be noted that hospitals have been required to provide transparent pricing for common procedures since 2021, but a recent study revealed only about 1/3 of hospitals are in compliance. So there needs to be real enforcement of the rules as well.
On June 25, the TKTS booth in Times Square turned 50. I have written about some precursors to the discount ticketing booth The whole history is pretty fascinating, especially if you view it in the continuum of online ticket resellers.
The AP ran a story about the history of the booth. The recent $18 million renovation in 2008 resulted in the slick, glass enclosed booth with the amphitheater like seating area. However, the original booth was an abandoned trailer donated by NYC Parks Department placed with the goal of stabilizing the seedy neighborhood. I remember that original booth…and the seedy neighborhood.
Mayers and Schiff were given just $5,000 for the capital budget, and they rented scaffolding to go around the booth. They wove a translucent plastic fabric with the iconic logo among the bars and clamped spotlights on the frame.
[…]
They thought it would stay up for a year or two, at best. Instead, it won design awards and lasted decades. Their influence can be seen in the abbreviated, vowel-less apps and company titles of today — Flickr to Unbxd and DNCE.
I get a kick out of the idea that this cobbled together structure won design awards.
If you have been to Times Square recently you know it is the riotous center of activity with costumed characters available for paid selfies and people urging you to buy tickets to specific shows. The atmosphere can tend to be a little off-putting. However, the TKTS staff are not permitted to advocate for a specific show, but instead can make recommendations of multiple shows based on the genre of show you might like to see. Or you can ask other folks in line for recommendations since it can take up to 45 minutes to get through the line.
A little over a month ago, I wrote about the newly formedFix the Tix coalition which is urging the US Congress to pass legislation to protect ticket buyers from exploitative ticket pricing/manipulation, ticketing scams, and use of bots to purchase high demand tickets.
In addition to restrictions on just plain gouging, the plan calls for the end of speculative ticket selling by requiring sellers to legally have physical or virtual ownership of tickets.
● require that resellers and ticket resale platforms legally obtain each ticket and have each ticket in possession, virtually or physically, prior to placing it on sale.
● require that the ticket resale platform has written proof that a reseller possesses a ticket to sell.
Similarly, they ask that attempts to make a ticketing site masquerade as official outlet of a venue be made illegal.
● make illegal the use of deceptive URLs, search engine optimization, or advertising that improves the visibility of secondary sites over primary sales platforms and makes fans believe they are buying tickets from the venue or artist.
● require secondary ticketing resellers and platforms to clearly and conspicuously disclose:
○ a notice that it is not the primary ticket issuer and venue;
○ that a ticket may still be available from the primary ticket seller and link back to the primary ticket seller;
○ the original face value and fees of each ticket; and
○ a certification that the event ticket offered for sale is in the possession of the reseller or secondary ticketing platform.
Note, I haven’t listed everything they are asking to occur in each of these situations. Check out the full document for more info.
As you might imagine, they are also insisting on full transparency for fees up front during the purchasing experience.
In terms of privacy and safety, they are asking the secondary market sellers be required to provide venues with the contact info of ticket purchasers so they can be reached in case of emergency or rescheduling. But they also insist that secondary market buyer information be protected and not used for sales and marketing without purchaser permission.
As mentioned, Fix the Tix also want to prevent tickets from being snatched up by bots and to ensure secondary ticket sales are made at or near face value on a one on one basis rather than by corporations to individuals:
● ensure that artists, working with venues, determine how to get tickets into the hands of actual fans.
● prohibit companies that operate both primary and secondary ticketing platforms from forcing tickets sold for more than face value to only be resold on their platforms.
● encourage ticketing platforms to operate exclusive, no-fee, fan-to-fan exchanges of tickets as long as they are not exchanged on those exclusive platforms for more than the face value (or the original total cost) of the ticket.
● prohibit companies that are primary sellers and secondary resellers from offering secondary resales on the same web page or display where the primary seller also offers tickets for primary sale.
“The mega-exhibitor, which has already introduced sightline seating in select markets, is betting movie-goers will pay more for a better view of their favorite Hollywood titles, as do patrons of music and sporting events.”
They are testing this pricing out in select markets so I popped over to the site Lincoln Square 13 in NYC to see what the chart looked like. Below are the recliner and regular seating arrangements for the new Magic Mike movies. The tan seats are the premium priced seats, the blue are the discounted seats and the white are regular price.
I should note that the recliner seating chart is for the 7:45 showing and the regular seating chart is for the 9:15 showing. I looked at the 6:15 screening chart for the regular seating and there are only a handful of seats sold. It may be that time is not really convenient, but it seems like a lot of folks in NYC are willing to pay extra for recliner seating plus a premium on a Monday night. And I assume AMC realizes 7:45 is probably more convenient and makes sure the screening with the recliners is available so they can make a little extra money.
That said, another Hollywood Reporter article on the same subject noted that Paramount worked with theaters, including AMC to lower the ticket price for the movie 80 for Brady, just days before AMC unveiled this new premium seating plan.
” For years, some distribution executives have argued in favor of variable pricing, whereby tickets are lowered depending upon a movie’s target audience. In this case, Paramount presented evidence showing that older demos are more sensitive about ticket prices.
But no sooner had 80 for Brady opened over the Feb. 4-6 weekend to a pleasing $12.7 million then did AMC reveal Feb. 7 that it is implementing a hefty $1 and $2 price increase for many seats…The news quickly put the 80 for Brady initiative on the back burner since AMC’s plan goes in the opposite direction by introducing higher costs.
This has created a bit of a philosophical tension between the two approaches-varying price based on target audience vs. vary prices based on seating location. Paramount says it won’t have final numbers for another week or so, but preliminary data shows that admissions were higher for 80 For Brady than its other release, Knock at the Cabin. The latter ended up making more revenue than the former the first weekend of February, but by Monday Brady exceeded it in revenue.
There has been some criticism from some like actor Elijah Wood who says that these pricing schemes will exclude lower income families from an activity that has been relatively democratic. Others are concerned that complicated pricing will provide an incentive to stay home and stream.
Hollywood studio executives, however, are concerned about the moviegoers who aren’t as eager to pay more, or who already have doubts about resuming their moviegoing habits. Notes one distribution source, “my biggest worry is that all of this pricing becomes too complicated.”
I was not keeping close tabs on the topics President Biden was expected to cover in the State of the Union so it was a coincidence that yesterday’s post was about exorbitant add on fees on the same day he was addressing that issue.
It is probably less of a coincidence that another article from TicketNews came across my feed today reporting what I alluded to in the last lines of yesterday’s post. A Bruce Springsteen fanzine decided to call it quits after 43 years due to Springsteen’s decision to engage in dynamic pricing and slow release of inventory practices.
But for Springsteen, who built much of his reputation on the appearance of being a man of the people rather than interested in exploiting his fans for as high a value as he can capture, the reputational damage has been significant. The Backstreets closure is merely the latest, and highest profile, chapter of it.
“There’s no denying that the new ticket price range has in and of itself been a determining factor in our outlook as the 2023 tour approached — certainly in terms of the experience that hardcore fans have been accustomed to for, as Springsteen noted, 49 years,” reads one part of Phillips’ message to readers. “Six months after the onsales, we still faced this three-part predicament: These are concerts that we can hardly afford; that many of our readers cannot afford; and that a good portion of our readership has lost interest in as a result.”
Part of the issue is that some of Springsteen’s public statements seem to dismiss the concerns of his fans. The fact that ticket prices have dropped from $4000 in the initial roll out to $450-$1000+ with $61 seats available for some shows, does seem to indicate demand pricing theoretically works.
However, the article suggests that the damage is done and younger artists need to be cognizant of the current environment.
What will be interesting is whether or not younger artists – many of whom don’t have decades of good will from their fans to squander – will see what dynamic ticket pricing and openly fleecing your biggest fans can do to their future interest in your work and think twice about embracing the Ticketmaster/Live Nation model of “slow ticketing” going forward.
The issue of high fees that are often hidden until you are well into the purchasing process is pretty well-known and complained about. Hold backs on the other hand, are less obvious and more in the realm of a suspected, but not confirmed practice.
While companies like Ticketmaster and Live Nation regularly blame ticket resale or “bots” for the enormous spike in ticket prices consumers are paying, many believe that price inflation by hiding the true available supply through holdbacks is the biggest factor in that price surge, with the industry hoping to sell consumers and lawmakers on resale being the issue rather than their own deceptive practices.
[…]
Support for President Biden’s plan was also put forward by the National Association of Ticket Brokers, a trade group supporting ticket resale rights and consumer-friendly policy. Its statement specifically called out the “scheme called slow ticketing” used by Ticketmaster and Live Nation to hold back huge portions of tickets for most events without disclosure when tickets go on sale. Once the public is convinced that tickets are sold out, additional tickets are slowly released to the market, leading to a perceived yet artificial scarcity that convinces consumers to pay surged prices – referring to the process as a deceptive marketing practice.
Transparency and fair pricing may be a bigger issue in the attendance decision than we may realize. Among recent online reviews of my venue, comments about fair pricing and low fees appear multiple times.
It bears paying attention to public sentiment and how lawmakers move to resolve these growing concerns.
Perception of practices by some of the larger operators are so poor that suspicions may be raised about the entire event industry, painting everyone with the same brush. Engaging in relatively straightforward demand based or dynamic pricing practices may easily get lumped in with attempts at artificial manipulation, shunting tickets directly to resale markets and excessive fees.
Last week there was a post on the INTIX website listing 19 trends for 2023. The list contains prognostications from people handling tickets for both arts and sports events so your mileage my vary on some of the thoughts, but I wouldn’t totally dismiss those that don’t align with your favorite industry.
At the top of the list is being able to identify all the ticket holders and potentially cultivate relationships with them rather than the ticket buyer. Because the ticket buyer will often distribute tickets electronically to family and friends, it will be possible to identify who those people are. You may view this news with with anticipation, dread or both.
Unsurprisingly, staffing issues were also near the top of the list due to the stress of dealing with customers and low pay don’t make customer service roles attractive. What also won’t be surprising to find on the list is an anticipated increase in fraudulent purchases, including what the article terms “friendly fraud” where customers initiate chargebacks on ticket purchases.
“I think that we will also see an increase in what’s called first-party [or friendly] fraud, where if a lot of ticket buyers do not get the refunds that they want, they will file a chargeback. I think that will start to happen as well because people were so used to refunds happening for so long during COVID. I think people still want to be able to get refunds, and especially, unfortunately, with inflation, people might be looking at how they can get their money back, and they might go that route of chargebacks.”
Related to this is the need to provide more flexible purchasing arrangements as people move away from subscription purchases. So not only flexible subscription packages, but targeted discounts. And flexible refund and exchange policies.
“We saw such movement during the pandemic of adapting away from ‘no refunds, no exchanges.’ It was such a hard line in the sand, and we had to blow that all away because we needed to change things … due to health concerns and restrictions,” Spektrix’s Nothstein says. “I think we are going to continue to see flexibility in that perspective.”
“We had to offer things that we would not have previously considered offering because of COVID and what it meant to the return to the venue,” Ticket Philadelphia’s Cooper says. “I don’t know that it’s practical or advisable for us to try and revert to what we were in the days before COVID happened … Ultimately, the goal is to retain the customer.”
The Director of Service and Retention for the Oakland Athletics, mentioned that people were buying on a very short horizon rather than season ticket packages or single tickets months before opening day. They structured a very targeted, short term ticket sale for the celebration of 50th anniversary of the A’s 1973 World Series title.
Ziegenbusch continues, “So, think shorter, getting your patrons to make these micro-decisions along the way. Present offers that are deeply discounted and value-rich but for a short period of time.”
I have seen Collen Dilenschneider offer similar advice to arts organizations on her website.
The article also raises the need for accessibility both to allow those with physical disabilities to participate in events, but also as accessibility relates to diversity, equity and inclusion. This is both in terms of programming/how an experience is structured and how it is priced.
Also listed were broadening the media and channels through which people can learn about your organization and make purchases, including facilitating transactions and empowering self-service.
I am obviously skimming over a lot so if the ticketing side of your operations is a central concern, give the article a deeper read.
I am sure most people are aware of the clamoring anger about ticket sales for Taylor Swift’s concerts, mostly blaming Ticketmaster for screwing things up, but also potentially being complicit and profiting off of high secondary market sales, plus ever increasing ticket fees.
Those who have been around while know that the anger at Ticketmaster’s fees and monopoly has been something of a cyclical topic with outrage peaking every few years. In fact, the intervals between periods of outrage seem to be decreasing of late. You might wonder why Ticketmaster never seems to respond to ticket purchaser complaints and make the experience better.
Rosen believed venues, not concertgoers, were his company’s real customers, and flipped Ticketron’s model:
Instead of charging venues to use their ticketing system, Ticketmaster offered to pay them with a cut of the service charges.
In exchange, Ticketmaster became their exclusive ticketing platform.
[….]
Many concert promoters eventually wanted a piece of the fees, too, and, years later, some top-tier artists started to negotiate for a share, according to Rosen.
The article posts numerous receipts from different concerts people purchased recently to show the type of fees people are paying. The best apples to apples comparison of fees where you can start to see there may be more hands asking for a share is Taylor Swift’s March concert in Las Vegas where you pay $5 for order processing, $8 for a facility fee and $70.40 per ticket for service fees compared to her Atlanta concert a month later where you pay $5 each for processing and facility fees and $23.20 for service fees. Base ticket price is $265.14 and $109, respectively.
Fred Rosen, former CEO of Ticketmaster is unapologetically indifferent to the complaints of the ticketbuyer.
Rosen said he didn’t care that the system annoyed fans, noting there’s still high demand for concerts, fees and all.
“When you bring that up, it’s irrelevant to me,” he said. “The fact that no one shared in the service charge was idiotic. No one thought that ticketing was a business. I thought it was a business. I’m not ashamed of that.”
Dent writes that breaking up the Ticketmaster monopoly may not do much to solve the problem. Competitors like SeatGeek and AXS subscribe to Rosen’s philosophy and likewise offer payments to venues in return for exclusivity. And that money comes from fees levied on ticket purchases.
The solution instead may be breaking up the exclusivity arrangements, though unlike how the exclusivity of telephone companies and some utility have been broken up in the US, it may be difficult to force diversification upon venues who had apparently entered into the exclusive contracts of their own freewill.
That said, Dent cites the example of Great Britan in terms of what non-exclusive arrangements might mean for consumers:
Budnick says the Great Britain model may provide lower service charges for consumers.
British venues rarely have exclusive ticketing platforms. When companies don’t try to gain exclusivity, they don’t have to offer as large of a cut of the fees, bringing down the amount charged to concertgoers.
Fans typically see fees closer to 15% of the face value of a ticket.
Offer people options that don’t have value to nudge them toward purchasing more a bigger subscription package than they might have. I don’t know that it would transform a lot of single ticket buyers into subscription buyers unless we are wrong about flexibility being more important than price. A mini-subscription that offered flexibility and appeared to be a great value might have some success in getting single ticket purchasers to commit.
I also wonder if offering non-premium options with your show helps make them look more attractive than your competitors’. Ariely talks about another experiment where they offered people the option of an all-inclusive trip to Rome or Paris. In this case it is really apples and oranges since the two cities are in different countries have have so many different attributes to value. Once they add the option of going to Rome but having to pay for coffee in the morning, suddenly people preferred [all-inclusive] Rome over Paris by a larger degree due to the lesser option being available.
It doesn’t seem logical to me to think that given the option between the symphony and a free cocktail at intermission and the opera and a free cocktail at intermission, that people would flock to the orchestra if a no cocktail option for the same price was offered. But as Ariely points, out the decision being made are not entirely rational.
In a recent post Colleen Dilenschneider reported that recent research reflects the title of this post. While inflation is a big concern for people right now, ticket/admission pricing does not seem to be a barrier to participating in a cultural experience.
However, the cost of everything else surrounding that experience is a concern – food, gas, parking, babysitting, gift shop purchases.
While those may impede the decision to attend, Dilenschneider says the research shows that often people are opting to downgrade on these ancillary aspects in order to still have the central experience.
This research suggests that people expect to spend less overall in support of their cultural experiences. Of course, this doesn’t mean that they are abandoning or deferring cultural experiences; instead, they are contemplating economic tradeoffs to align their actual spending to expectations. Think carpooling instead of driving separately. Parking in the garage instead of using the valet. Eating at a fast casual restaurant instead of the Michelin-starred culinary temple.
Dilenschneider cautions arts and cultural organizations against discounting admission as a way to entice purchases because most of the concerns people have are far outside the scope of the organization’s control and are multiple time as concerning as admission prices. Among those with a high propensity to attend, factors like inflation, the general economy, and financial markets were much greater concerns with much more weight than admission cost.
Taking $3 off your admission prices won’t offset an airplane fare costing $400 more than it did last year. Nor will it reduce the amount of fuel required to visit or improve the ROI for someone’s 401k. More to the point, there is scant evidence that a significant number of high-propensity visitors are even asking organizations to lower their admission costs.
[…]
Tampering with your ticket prices in reaction to broad economic perceptions risks doing more harm than good. While admission pricing may be one of the few cost-related factors within our control, the research indicates that it is not a notable barrier for those with interest in attending.
Last month Drew McManus had box office manager Tiffin Feltner make a guest post on his Adaptistration blog on the topic of comp tickets. It has taken me about three weeks to stop grinding my teeth long enough to make a post of my own on the topic. You will see a lot of posts about optimizing ticket prices based on various criteria and I think those assume people have a handle on their comp ticket policies. But let me tell you, in my experience there are a lot of people out there you think would know better who have absolutely bonkers approaches to comp ticketing.
Feltner notes that about 40% of comps go unused. I wondered if that is a nationwide statistic or just what they have observed in terms of the venues they serve. Reports I have pulled from my ticketing system often show much greater rates than that.
Organizations I have worked at have ticketed events for rentals of our own venue as well as served as a community ticketing hub providing service to other organizations at their venues. Many times they are not only comping tickets for individual events, but providing comp subscriptions which results in a large number of empty seats for the entire year.
There are so many issues that arise because of comp ticketing decisions. First, because organizations like to comp tickets and subscriptions to important guests, they place them in large, consecutive groups in the closest rows. Which means if people don’t use the comps, you can have a nearly sold out event where the first 10 rows are virtually empty and those in attendance are packed like sardines in the back of the venue.
Then there are other cases when the event is sold out in the ticketing system and the client can’t get a special last minute guest in because they distributed the house seats held back for this purpose days earlier. Then of course, when the show starts there are a bunch of empty seats because so much of the house had been comped.
We have run into situations where the client decides a ticket holder has forfeited their seat by not showing up five minutes before, without ever having communicated that policy. (Because it didn’t exist until just now.) Sometimes the ticket holder shows up to find their seat occupied, sometimes that bullet is dodged.
Then there have been times the client tells us they have confirmed a ticket holder is not attending, asked us to assign the ticket to someone else, and then put a sign on the seat reserving it for a third person.
Not only are poorly considered ticketing policies bad optics and create poor customer relations, most of the time the ticketing staff ends up as the target of blame for these bad decisions–often by the people responsible for making these bad decisions. This is what makes me grind my teeth because all these bad feelings and awkward situations could be avoided with a little forethought and policy discipline.
In their guest post, Feltner suggests using a card that can only be redeemed on the night of the show as a solution to the comp issue. That is similar to an approach my staff has used with clients where we suggest unassigned blocks of seats strategically placed in places with good sightlines. These blocks can be assigned as needed when it is known what VIPs will be attending. This allows for better placement and assignment of seats prior to an event date.
However, there needs to be strong comp policy guidelines in place so that there isn’t a gradual creep back to 1/3 of the seats being comped well in advance. If your venue scans tickets, you are probably able to pull a no-show report broken down by ticket category that can provide insight into how many of the comps are being used which can inform tweaks to the ticketing policy.
While I am advocating for a robust comp ticket policy, this is not to say that you shouldn’t be offering comp tickets. There are a lot of reasons why free admission is a bad idea, but it can be useful to achieve targeted goals. As Feltner mentions, it is important to have some sort of tracking mechanism in place to evaluate whether you are achieving those goals.
One thing to consider if you are offering comp tickets as a sponsorship or donor benefit is to ask the recipient if they plan to use the tickets. In my experience, a fair number of people provide support because they believe in the organization’s work, but don’t necessarily intend to redeem the benefits that come with the support.
Not only does that allow those seats to be filled, but it also allows a greater portion of their donation to be credited as tax deductible because they are not receiving material benefit. However, this benefit needs to be refused immediately at the time of the donation. You can’t ask people in December after you have had 8 events occur and then retroactively provide credit for unattended shows. If they do decide to attend one event at a later time, you can always comp them in then and make an appropriate adjustment to their donation credit.
” Older audiences will only be around so long. If you teach the rising generation that the theatrical experience is completely extraneous, that experience probably won’t be around for the next one.”
Sentiments like these have been expressed for some time in the performing arts world. In fact, it has been said so often it probably has risen to the level of cliche.
However, I pulled this quote from the end of a Washington Post opinion piece regarding movie theaters. The columnist, Sonny Bunch, placed a lot of the blame on movie studios which were either streaming movies a short time after they were released in theaters or releasing the movies straight to streaming.
Judging from the comments on the piece, older audiences may not attending movies in theaters much longer either. There were complaints that movies aren’t being made for them any longer, rising concessions prices, people eating too loudly and the power recliners being uncomfortable.
While live performances share many of the same issues with movies theaters in terms of rising prices, uncomfortable seating, and being disturbed by others in the space, one advantage live experiences have is greater control of the content and nature of the experience. There is a greater capacity to provide content that engages the community at a time, place and manner suited to the particular needs of that place.
Likewise, there is a greater ability to make a decision to provide better hospitality and experiences customized to the content of a performance, unconstrained by corporate policy. Leaning into that in communications and social media to raise awareness and differentiate yourself rather than constantly promoting upcoming programming are among the best ways to leverage that advantage.
I caught a story on NPR’s Marketplace yesterday that discussed the way airlines use premium seating. One of the people interviewed mentioned that airlines craftily use the separation of time to get people to upgrade. Because the flyer is offered the opportunity to change to premium economy around the time they check in, months or weeks after they purchased the ticket, consumers view the upgrade payment as a different transaction from the initial seat purchase rather than thinking about the total amount they have spent.
Of course, that got me thinking about how this could be applied in the arts realm. While there are performing arts venues that employ dynamic pricing to extract additional revenue from ticket sales, by and large most organizations don’t have the interest or the computing infrastructure to implement that sort of ticketing.
However, many venues have ticketing systems that are capable of providing the view of the stage from a particular seat or notes about which seats have more leg room. There may be other characteristics about the performance space people value that can be integrated into seating choice as well.
An email can be sent out a week before the event with information about how to prepare for the visit, including parking, restaurants, etc., and offering an opportunity for an upgrade in terms of sight lines, leg room, or whatever.
The offer of the upgrade doesn’t have to wholly be driven by a profit motive. It can be offered as a loyalty incentive to help fill houses now and in the future. Because you have been a loyal attendee or purchased well in advance, you can upgrade from the $35 seat to a $60 seat for an additional $10 rather than $25.
If you know that part of your audience base are price sensitive, last minute purchasers, you have just freed up a cheaper seat that can be sold and incentivized loyal patrons who plan in advance to continue to do so.
While I was thinking about all this, I recalled an instance where a person on my staff suggested that a renter do something of an inversion of the usual seat pricing approach and price seats up close less than those further back. I was a little conflicted about this because while we as insiders felt that seats in rows G-L are among the best seats, pricing should be based more on what seats the buyer thinks are the best.
But I also wondered if people have been trained by the way things are priced to think the highest priced, closest seats are the best? Given their choice in a general admission setting at a live, non-festival experience, people rarely head immediately to the front and fill in as close as they can possibly get. More often than not, the front 2-3 rows are virtually empty by the time the show starts unless the event is close to sold out.
Is there a psychological element inherent to reserve seating events that changes the calculus for people? If the front few rows are priced less than those behind, do people think the venue management are fools and they are getting away with something by paying less? And is that necessarily a bad thing if it has people watching closely for when tickets will go on sale so they can grab those great seats at a cut rate? Will they relent and buy slightly higher tickets if the cheaper ones sell out before they get there?
Of course they need to be confident those seats did sell and weren’t held back to manipulate sales or weren’t grabbed by resellers. This approach wouldn’t work well in places that are subject to scalpers with an automated purchase process.
Krispy Kreme grew to become a doughnut behemoth in the US. The formula was simple: Scarce supply, high short-term taste satisfaction, and a dozen priced almost the same as just four.
As a result, most people bought a dozen. But few could eat a dozen, and you can’t really save them, so you realized that sharing a warm doughnut was the way to go.
Carmine’s restaurant in New York was the hot ticket for decades. One reason was that the only way to get a reservation was to come with five other people. So you needed to talk about it.
He goes on to talk about how a book he worked on about climate change, The Carbon Almanac, has priced pre-orders to make it cost effective to share copies with others.
The general concept is a springboard for ideas for arts organizations, which much like Krispy Kreme, offers a product with an ephemeral lifespan. Offering tickets/entry fees and memberships at prices which incentivize sharing the experience with friends–and intentionally promoting it within that framework provides exposure to a broader range of people.
While providing free admission to an event can also serve to expose your work to a broader range of people. One – surveys show that people who attend free admission events are ones who would have attended anyway. Even if they bring a friend, the friend may not be incentivized to return and pay for admission in the future.
Second – charging some form of admission creates an associated value with the experience. If tickets are $15 but five person pass costs $50, two people may technically be getting in for free, but the group is more likely to think of the tickets being $10 each. The pass created a situation where two people who might not have attended now have. If they have a good time, any of the five may not balk at paying $15 in the future when the pass or four friends aren’t available. (Or they may work to invite some new friends along.)
The venue I am at does something along these lines with movie passes which are good in any combination – an individual to 10 movies, five friends to two movies, two friends to five movies. Tickets are $5 regularly and with the larger passes I think you end up only paying $3/ticket. We end up selling quite a few of the passes and have a lot of them redeemed at each screening. It has been relatively easy to administer and worthwhile overall.
Reading Godin’s post has me thinking about how we might structure pricing and experiences for other events to encourage people to share then with friends.
So it appears Howard Sherman gets first mention a second day in a row on my blog (not that he doesn’t deserve it). He called attention to the fact the production The Lion King on Broadway was not only offering free refunds and exchanges on ticket purchases, but Disney would be picking up the dreaded Ticketmaster service fees. Apparently Disney is doing the same for Aladdin through August 7, 2022
I actually went online to price tickets to see what they were charging and at the end of September I found third row orchestra seats for The Lion King at $125 which didn’t seem too bad. Though I don’t know what they were selling for in February 2020.
I was so amazed at this, I wondered to my co-workers if this might not turn into an industry trend that the public came to expect. I hadn’t thought to check if other shows were doing the same thing until I saw a tweet by journalist/critic Jonathan Mandell linking to the refund/exchange policy which applies to all Broadway theaters owned by the Nederlander Organization., including the Minskoff Theatre where Lion King is showing. I didn’t see any expiration date on this offer.
The Shubert Organization which owns the Telecharge ticketing service as well as some Broadway houses is offering free refunds and exchanges through January 17, 2022.
I didn’t see anything about refunds and exchanges on the Jujamcyn Theaters website, the company that owns a number of other Broadway Theaters. But it should be noted they also didn’t have tickets for any of their shows on sale either.
Getting back to the question of whether waiving ticket service fees might become a thing, this is something my staff and I have been discussing for a few years now. (Truth be told, the staffs of different theaters at which I have worked have been talking about it for about 10-15 years now.)
We have been trending toward including the fees in the advertised price of the tickets, however many of those who rent our venue have wanted it added on top at check out. Because it is different from the usual experience it occasionally elicits a “hey wait a minute…” response from some of our more frequent attendees.
You have to wonder if people come to see this as a normal experience based on their Broadway experience, will there be pressure to continue the practice indefinitely?
Of course, this doesn’t even mention the free, no questions asked exchange policy. There are restrictions as to number of times you can request an exchange and people who buy tickets from resale market or 3rd parties are probably going to have issues if their name and contact information aren’t associated with the tickets. But expectations may shift in toward hassle-free refunds, especially if the threat of Covid continues to loom in the background generally for some years to come.
While I am not really plugged into the visual arts gallery/museum world, one topic I have seen come up repeatedly is the sense that the creator of a piece should realize some benefit when the price of their work skyrockets during resale. Apparently there has been some specific concern about buyers targeting the work of contemporary black artists with an intent to quickly flip works for significantly higher prices.
Each artist will receive 100 percent of the proceeds from the sale of their work. All buyers must also sign a contract with extensive conditions. They must agree not to resell the work at auction for at least five years; if they do want to sell, they must give the artist right of first refusal; and, if they sell to someone else, they have to give 15 percent of the upside back to the artists.
I was initially skeptical about how effectively this type of agreement could be enforced. Though if Christie’s had the will to enforce it, they certainly have the clout and capacity to penalize bad faith purchasers. According to the article, the conditions didn’t seem to dampen the enthusiasm of buyers and most of the pieces have already sold.
According to the specialist at Christie’s coordinating the show with Ross-Sutton, the buyer covenant will benefit the auction house by providing them with insight into sincere collectors of works by artists of color.
The project also has the benefit of giving Christie’s access to collectors it might not have met otherwise, and insight into their preferences and holdings. “We’re excited to cater to this emerging clientele as well as develop programs that specifically cater to collectors of color,” Cunha adds.
Curator Ross-Sutton sees the success of a purchase agreement backed by an organization like Christie’s as an important message to artists not to underestimate their ability to insist on similar conditions.
Ross-Sutton hopes the experience will empower artists to take charge of their careers, including by pushing their gallery representatives to implement similar sales restrictions. “Many artists do not realize the power they have,” she says. “We cannot only put the blame on these so-called ‘flippers’—artists have to be more discerning and so do galleries.
I was trying to think of a parallel situation in the performing arts. Even though the value of a performance is more variable and transitory, I am sure there is some corresponding situation, perhaps with playwrights, choreographers, designers, etc, with which this situation might have relevance, (other than the lack of representation of people of color in many of these roles), but I feel like I am suffering from a momentary lack of imagination.
Seth Godin offers a pretty good definition of amateur, professional and hack in a recent post. While I haven’t fully considered all the implications of his definition, I feel like it makes the best distinction between professional and amateur I have come across because it avoids explicit or implicit comparisons of quality, dedication, training/education that are often present in discussing these terms.
The amateur contributes with unfiltered joy. There’s really no other upside–create your work because you can, because it helps someone else, because it makes you feel good.
The professional shows up even when she doesn’t feel like it. The professional understands the market, the customer and the price to be paid for work that’s worth paying for. But the professional isn’t a hack.
A hack is a professional who doesn’t care.
If I have one quibble, it is that his definition of professional is tied to economic value of a product. Granted, the classic definition is that amateurs do things for the love of it and professionals get paid, but we all know that often professionals are asked to do things for exposure or told they shouldn’t expect payment for something they enjoy, and that doesn’t make them any less of a professional.
At the same time, I appreciate the way the definition of a professional includes a sense of dedication that goes beyond the love of the creative process and implies the professional has done the work to educate themselves about external factors surrounding their work. There is the idea that one’s work has market value and all the complicated discussions we have about the quality of work having no relation to market price, but also the sense that the professional knows when their work is being devalued.
Godin’s distinction between hacks and both amateurs and professionals is that the latter two groups have a longer view about the role and value of their work in the greater ecosystem:
Serviceable is for hacks. Memorable and remarkable belong to professionals and hard-working amateurs.
At first I was just drawn to listen because Kadakia presented a familiar story of someone who loved dance and continued dancing even as she was studying Operations Research and Economics at MIT. As I got into the story, I realized it held some lessons about discounting and subscriptions for arts and culture non-profits.
It was the desire to dance that lead her to found the earliest iteration of ClassPass. She was looking to take a class in NYC and couldn’t figure out time, place, price and transportation. She struck on the idea of making a search engine that would unify this information and allow you to find and make reservations for classes in the way OpenTable allows you to make restaurant reservations.
The idea was so compelling to people that when her boss at Warner Music called in her to ask why she was quitting, she walked out with a $10,000 check from him as an investment in her unformed company. While the company was feted with great fanfare, it took 10 days before they had their first reservation. Kadakia says that is when they approached the dance & exercise studios to get a sense of customer behavior and realized that unlike plane and restaurant reservations where people have already made a decision they are going to fly or go out to eat, people looking for classes (this is ~2012) hadn’t decided to take a class.
This is where the lessons about human nature, discounts and subscriptions starts to kick in (about 34 minutes into the show.) As Guy Raz observes, in the course of about 5 years, Kadakia ends up running 5 different companies because the business model changes so drastically. (It may not seem drastic on a small scale, but when you realize she goes from raising around $40 million in her second round of funding to a recent $1 billion valuation, each change has big implications.) Kadakia says each time they changed the model, human behavior changed on them.
One of the first things they did was offer 30 day passes to a range of different classes. They promised studios around 70% of people would convert to more permanent students. It ended up about only 10% did which Kadakia admits was unfair to the studios. What they discovered was that people were continuing to take classes by signing up with a new email address. Now, my first instinct was to accuse them of gaming the system and curse them under my breath.
Kadakia and her team may have done that, but what she said they realized was that people enjoyed being able to attend a variety of classes. Instead of $45 for a 30 day product, they moved to a subscription model for $99 where you could take up to 10 classes a month, but no more than three at the same studio. Eventually they moved to an unlimited class model.
As the company grew, the fitness industry of spin, barre, bootcamp, etc classes was growing as well and they began doing business with bigger, more marquee names. This raised the average per-class rate they had to pay to studios. Kadakia says they reached a place where they were faced with adopting the business model most gyms use where they are counting on you not exercising in order to make their money. As someone who both continued to dance and took classes every day, she felt the idea of betting against their customers was anti-ethical to their founding principles of getting people to exercise.
Faced with the prospect of having a lot of people angry at them for drastically raising the price of the unlimited pass, they moved away from that as their core product and now package classes differently.
As referenced earlier, one of the main things I took away from this was that sales and subscription models not only need to be structured differently for different communities, but potentially changed up across the lifespan of your organization because audience dynamics and expectations are likely to evolve. I fully expect most venues will find the ticketing model and policies they had in place pre-Covid won’t as fit well for audiences now.
She had previously written, and summarizes in this recent post, that discounts tend to bring people who are already engaged with the organization back through the doors rather than achieving the goal providing additional access to people who can’t easily afford entry. She suggests that part of the reason is that the discounts are communicated through the same channels that made existing audiences aware of the organization rather than through channels and techniques that reach the desired additional audiences:
Thus, it’s often the people who already know that the experience is worthy of their time who take up a general discount. Also, general discounts – even if they are intended to pique the interest of income-qualified audiences – are often promoted using the same channels as every other outbound message, resulting in more awareness of access programs amongst people with household incomes greater than $250,000/year than individuals with household incomes of less than $25,000/year. (Here’s more on this topic.)
The new data she presents surprisingly indicates that the lower the price, the lower the value people place on the organization and experience.
In terms of satisfaction which influences whether people will return, tell their friends and have a higher value-for-cost perceptions,
This may surprise some. (“How can people who get discounts be more satisfied than people who paid no money at all to attend!? They got in for free, for goodness sake!”) What may surprise folks even more is that average satisfaction is notably highest of all among people who paid full admission prices for their experience.
In terms of likeliness to endorse the organization to others, it is much the same.
General admission visitors were significantly more likely to endorse an organization than those who got a discount or attended for free.
As it turns out, when organizations provide a general discount, visitors generally discount them right back.
Perhaps most importantly, what people paid for admission influences the perception of how dedicated the organization is to its mission.
When an organization discounts its onsite experience through free or reduced admission, it impacts how visitors perceive the organization’s mission, too. What happens onsite doesn’t just stay onsite
That’s why this finding may be the most important of all in this article.
People who paid full admission price believed much more strongly that these entities were effective in executing their missions. The difference is dramatic.When an entity discounts its admission price, it changes how the public perceives its mission and what it stands for.
She doesn’t say all discounts and free admissions are bad. As implied earlier, a disciplined, focused strategy of communicating discounts to a specific target audience rather than to the broader constituency can achieve the desired aims. However, it takes time and energy to cultivate relationships with the right people and direct money and resources to the correct communication channels.
Some important information about changes to music performance rights came to my attention today and I wanted to share it with readers.
Apparently the consent decrees under which ASCAP & BMI operate are up for review by the Department of Justice. The public comment phase is ending on Friday, August 9. You can find out more about the consent decrees on the MIC Coalition website.
Basically, because ASCAP & BMI operate akin to monopolies, they and other performing rights organizations (PRO) are limited as to what they are able to do when licensing performing rights. They want these limits loosened. You can provide feedback to the Department of Justice here.
Even with these limits, dealing with these companies is often confusing and criteria seems inconsistent. Many have felt they were forced into purchasing broader licenses than they needed.
Today I received a huge flurry of emails urging myself and others to oppose the loosening. I was confused about why there was this sudden urgency when the public comment phase opened at the start of June. I started to wonder if there was an effort to create a huge sense of urgency by rallying support at a late date. Especially since there were initially few details provided about why one should voice their opposition.
Come to find out, the reason is that a large number of organizations across the country received revised licensing agreements from BMI this week containing some alarming changes. There is some suspicion they timed the mailing to hit toward the end of the public comment phase.
In section 1 (g), terminology has been changed from “Gross Ticket Revenue” to “Gross Revenue.” According to the new definition, in addition to ticket sales, calculation of a fee will now be based upon revenue from sales on the secondary ticket market, service charges, handling charges, VIP packages, advertising revenue, box suites, sponsorships, merchandise, concessions and parking.
So essentially, if you have a sponsor for your show; sell VIP packages, merchandise, food, and charge for parking, all that gets factored in to what you pay BMI rather than just ticket sales as was the case in the past.
From what I am told, the definition of “licensee” has been expanded to include a wider range of activities.
For events without an admission charge, the definition of what is included in the fee calculation has been expanded from a flat fee based on seating capacity to one based on entertainment expenses like room, board and transportation costs for the artist.
There are other problematic issues which are a little difficult to explain in a blog post and might not apply widely to many venues. I suspect there are problems that people have yet to discover. If you do any sort of licensing with folks like BMI and ASCAP or if you have been trying to fly under the radar, you want to pay attention to this.
If you don’t think this applies to you at all, but you have live music performance, you may find that it does. That band that plays at your museum during First Fridays is probably subject to music licensing.
With more opportunities for revenue available, especially if the strictures of the consent decrees are loosened, there is more incentive find the places that have been trying to slide under the radar.
If you have concerns, check out the MIC Coalition website to learn more or provide feedback to the DOJ. Also –read any new licensing agreements you get very, very carefully.
Arts Professional UK had a great piece on developing a customer relationship management strategy (CRM). It is chock full of great resources including case studies, guides on how to choose a ticketing system and analyzing the costs of a ticketing system. It got me thinking about approaching Drew McManus about employing his web expertise to write something similar in the context of U.S. arts organizations for the ArtsHacker site.
A lot of the materials from that site appear to absolutely be useful for U.S. non-profits so take a look.
The thing that really caught my eye though was that customer relationship management (CRM) was first coined in 1995 and a lot of arts organizations are just starting to think along these lines nearly 25 years later.
Although technology is really what makes it possible to cross reference and analyze information in an effective amount of time, the heart of CRM is an organization wide investment in using the information to inform interactions with customers.
In other words, it doesn’t matter how sophisticated and informative the analysis produced by a CRM system if staff isn’t using it in decision making and conversations with customers.
As Helen Dunnett writes in the Arts Professional UK piece,
A key factor for success is embracing CRM as a strategic function that is led from the top and not seen as purely a marketing function. Being clear about the end-game and the cultural change that will be needed is important in ensuring the technology is used effectively. CRM isn’t a quick fix: the process requires a fundamental change to the way strategies are planned, budgeted, communicated and monitored. CRM has to become a way of life.
Sure, that is all well and good to say, but cost is pretty much the big factor and this sort of data processing capacity doesn’t come cheap, right?
Yep, you are right and this is how to approach that question according to Dunnett,
Cost is often highest in the minds of many arts organisations when considering an appropriate CRM/ticketing system, but there quite simply isn’t an inexpensive system that will offer the necessary functionality.
Do your research across several system suppliers and work out the cost of ownership over a three-to-five-year period. This is the best time period to test comparative cost-effectiveness,…
This becomes especially important when looking at systems that charge on the basis of a commission on the value of sales. 2 to 3% can sound like a low percentage but you need to be clear about what constitutes a sale
Research conducted by Michael Lynn, at Cornell University, who is the foremost academic authority on tipping, has shown that people of color receive lower tips than their white colleagues, which arguably qualifies tipping as a discriminatory pay practice. The system perpetuates sexual misconduct, because service workers feel compelled to tolerate inappropriate behavior from customers who hold financial power over them. As restaurant prices have risen, gratuities—which are tied to sales, as a percentage—have too, so that there is now a substantial and hard-to-defend disparity between the pay of the kitchen workers who prepare food and the servers who deliver it.
A statistical model created by Ofer Azar…found only a small correlation between tip size and service quality, leading him to conclude that servers were motivated mainly by other factors …Another study by Lynn showed that perceived service quality affected tip size by less than two percentage points. A female server, by contrast, can expect to hike her tips by an average of seventeen per cent if she wears a flower in her hair.
A number of restaurant groups and owners have tried to eliminate tipping to help resolve this issues. Some have decided to eliminate tipping and set their prices higher in order to provide health and leave benefits in addition to a living wage.
While there have been some difficulties finding people who are willing to work in a no-tipping environment, the bigger problem is resistance from customers.
New research by Lynn shows that when restaurants move to a no-tipping policy, their online customer ratings fall. One factor that explains that dissatisfaction is how we, as consumers, respond to “partitioned” prices versus “bundled” prices. A partitioned price divides the total cost of an item into smaller components—say, a television listed for a hundred and ninety dollars that has a ten-dollar shipping fee. A bundled price would list the television, shipping included, for two hundred dollars. Consumers tend to perceive partitioned prices as cheaper than bundled ones.
Later the article notes people have an aversion to service charges. Even though people will typically tip 20%, if a 15% surcharge is automatically added in the place of tipping, people perceive it as a “gotcha” even though it means they will pay less. People also believe that service will suffer in the absence of tips.
There is a lot in this article that speaks to the value of using psychology in pricing strategy and providing the perception of the consumer being in control.
If you have ever shopped on sites like Amazon where there are multiple sellers of an item, if you pay attention you will often see items that are offered a few dollars cheaper than the rest of the group—until you get half way through the transaction and you realize that with the shipping and handling it is much more expensive than the sellers who offered free or included shipping. I often wonder if they are counting on people not noticing or deciding it is more trouble to back out of the transaction and starting anew with another vendor.
Surcharges on ticket sales would likely disappear immediately if the sales weren’t restricted to a single service. (Ticket prices rarely fall below face value on re-seller sites.)
Speaking about the ethics and motivations behind your pricing does gain traction with certain demographics and may make them more willing to pay a higher price if they know people are being taken care of. But this New Yorker story seems to suggest tricks like ending a price with a 9 rather than a 0 will still be a significant motivator of purchasing behavior.
In a recent “Taking Note”, National Endowment for the Arts’ Director of Research & Analysis, Sunil Iyengar mentioned that in the coming year the NEA will commission some monographs exploring the role of taste and preferences in arts participation.
He later points out a study conducted in Spain that touches on this very notion. With the obvious disclaimer that the cultural norms of Spain differ from that of the U.S., I wanted to point out a couple interesting observations the Spanish researchers made.
They categorized study participants as either “absolute” or “recoverable” non-attendees. The absolute non-attendees were those who were “impermeable to cultural policy” and would not attend for any reason whatsoever. Recoverable non-attendees were those who had not attended recently but shared characteristics with people who did. Among the “recoverable” are people who might have had children and will become increasingly open to participating as their kids got older.
The researchers categorized willingness to attend across cultural events, visits to historic/cultural sites or attend cinema.
In all three cases, education works independently of income, in positively affecting attendance. Even the effect of income on arts participation is shown to be “more significant” for people at the higher versus lower education levels.
[…]
The researchers conclude that as education rises, interest in arts attendance grows dramatically. For example, changing a respondent’s education level from “primary education”-only to “higher education” would cut his or her likelihood of being an “absolute non-attendee” by 50 percentage points—for all three arts activities.
Again acknowledging that Spain and the US are different situations, I was pretty astonished to see a 50% reduction absolute non-attendance closely associated with education level. In the conclusions, the researchers suggest cultural policy should be more closely integrated with education policy with an eye to the way technology changes expectations and mode of content delivery.
What I also found interesting was that income level doesn’t seem to have the same impact on attendance that education does for arts events and cultural site visits. Cinema is more price sensitive.
At the same time, the category of “recoverable non-attendee” (that is, a person who just feasibly might have attended an arts event) remains inflexible when income levels are raised, for both cultural-place visits and live performing arts attendance. The authors thus remark on the “clear polarization” among Spaniards when it comes to either high demand or absolute non-interest in these activities.
The way I read this was that people with high levels of education are more likely to attend regardless of income level. Whereas people of low education level don’t take on the characteristics shared by “recoverable” attendees as their income level rises. The first section I quoted above appears to say people with high levels of education become more likely to attend frequently as income goes up, but people with high levels of education and low income will have a tendency to attend at some point.
I scrutinized the original research report (which is in English) for a plain statement either supporting or refuting my reading of this, but I didn’t find a statement that clarified the matter for me.
What I was ultimately hoping to find was something that showed preference (or lack thereof) shaped by education was a greater barrier to participation than price. This would resonate with recent research results from a number of sources that suggest price isn’t as large a barrier as has been assumed.
A caveat to my caveats: While I continue to assert the differences between Spain and the U.S., the Spanish researchers themselves say their findings match that of U.S. researchers so don’t read my disclaimers as a diminishing the validity of the Spanish research on U.S. behavior. I am just making it clear that I am not ignoring the distinction.
In the three activities, a very large group of absolute non-attendees is observed that it will be difficult to interest in cultural activities, especially in live performances and sites of cultural interest. This result is very general and similar to that obtained by Ateca Amestoy and Prieto Rodríguez (2013) for the United States.
Back in October I wrote a couple posts about the newest iteration of the Culture Track report. The operative word there is iteration. The study is conducted every three years in an attempt to track the shifting trends in perception and participation in cultural activities by the general population.
In my excitement to talk about the findings, I didn’t really take the time to examine the “shift” element that is intended to make this data so valuable. While preparing to do a presentation on the current findings, it occurred to me to take a look at the past finding as a point of comparison so I downloaded the 2014 data.
Even in a superficial scan of the 2014 materials, this next graph jumped out at me.
The legibility is a little tough at full size so I cropped it down to the top 10 responses about barriers to participation. The blue bar is the 2011 responses and the mauve is the 2014 responses. A mauve only bar indicates they only started asking the question in 2014.
Now look at a representative sample of the top responses for the 2017 survey. One caveat – as best I can tell, the 2011 and 2014 didn’t break out these results by discipline as they did in 2017. Nor did they break it out by barriers for attendees and barriers for non-attendees. That may skew the results in some manner.
In the 2017 responses, regardless of discipline, among those that participate. The number one barrier was “inconvenience.” For the majority, number two and three were “didn’t think of it” and “rather spend time in other ways,” respectively
Among those that didn’t participate, every number one barrier, again regardless of discipline, was “Its not for someone like me.” For the majority, number two and three were “inconvenient” and “didn’t think of it.”
For nearly every discipline, with both participants and non-participants, “It’s Value Is Not Worth the Cost” is number five. (Except for zoo participants where it is fourth and dance participants where it is sixth.)
This significant change in placement really left me wondering what happened in the last three years.
Is cost no longer as big as factor? Does separating out the responses by discipline and participation level provide a truer picture of what presents a barrier to people? Did the researchers ask the questions in a different way that lead to different responses?
This last issue might have been an influence. In 2011 and 2014 they asked if the economy had impacted respondents’ cultural participation and how that manifested. These questions, which seem to have been absent from the 2017 survey, may have primed people to think about costs and their ability to pay.
There was also a question on 2011 and 2014 asking how cultural organizations could make it easier to participate. Lower cost of admission was number one. This question also doesn’t seem to have been included in 2017.
The lack of questions in 2017 suggesting economic factors were a problem and part of a solution may have diminished frequency with which people agreed or strongly agreed that cost was a factor as a barrier. From the information I have been able to find about how each survey was created and conducted, I can’t say if any of these things could have been an influence.
Cost isn’t the only category that make a significant shift. Look at where “I’d rather spend my leisure time in other ways” falls. In 2017 it is usually third or fourth but it was ninth in 2014. I can’t think anything so compelling that has emerged in the last 3 years that has caused people to shift it up in their priorities.
I would like to think that we can attribute these differences to the fact that the researchers are getting a lot better about the way they ask these questions and parse the data.
I was really grateful for Aaron Overton’s very first post on ArtsHacker last week. Aaron is a programmer with a lot of experience in website development for performing arts organizations. (Disclosure: He did some work on the ticketing integration for my day job website.)
In his ArtsHacker post, he talks about how much work goes into making it easy to keep an arts organization website updated and looking good. I had a conversation about that very subject the day before his post appeared. Had I know his piece was coming out, I would have delayed my meeting a day and used the post to bolster my argument.
Because performing arts organizations have an ever changing cycle of events, it can take a lot of work to keep your website current, attractive and put the most relevant information in front of site visitors’ eyes. Publishing platforms like WordPress make creation and maintenance of websites much easier than it was even 5 years ago, but there is still A LOT of coding that has to occur to make the process of adding and removing content quick, painless and in many cases, automatic.
The back end of my day job’s website has a nice set of orderly field that I can plug event information and images in to and everything appears in its proper place on the website. About a year ago, I noticed a less than ideal placement of some information and asked my web guy if he could fix it. I was sitting next to him when he made the fix and even though it was easy to accomplish, I got enough of a look under the hood to realize how much work went into making things so simple.
At the time I even remarked that all those ads for build your own website in minutes services like Wix and Squarespace probably made people underestimate how much work went into making websites work well. Certainly, those sites provide a great service to people and businesses to help them get up and going. But there may come a time in your personal/professional/organizational development where they won’t be enough.
And I made a similar comment in the meeting I had last week.
If you take a look at the first example in Aaron’s post, he mentions desired features that are likely common to many performing arts organizations:
…display headshots of the cast for an event. The set of headshots might have color-tinted photos with the actor’s name displayed on the bottom and some sort of rollover effect that slides in from the bottom when the user hovers or taps.
The client needs to have a pool of actors and be able to build “teams” that can be attached to events. The headshot photos may have many purposes, so they won’t necessarily have a uniform size or aspect ratio.
But to make that happen, he had to consider the following factors:
Provide a way for a site manager to create team member profiles with a large headshot photo.
Provide a team builder to group team members into ordered lists and note their roles on that team.
Create a way to easily place that team on a page for display, along with a few options to allow for different usages.
Crop the provided headshots to the right size and aspect ratio.
Style the output to account for converting the photos to tinted grayscale.
Accommodate different screen sizes and devices so that the final output looks good whether on a desktop or a mobile device.
These are only some of the tasks. During development, many other tasks have revealed themselves as necessary, most of which may have little to do with the final display seen by the site visitor but are necessary to making sure the feature not only works, but is efficient and doesn’t slow down the user experience.
The purpose of Aaron’s post isn’t to tell people to be prepared to pay a lot for a good website. He provides a number of tips about how to approach the design process and conversations you should have with your programmer early on so that you don’t end up paying too much.
A few weeks ago economist Alex Tabarrok wrote about a strange “pay what you want” promotion a shoe company was running. It struck him and many commenters of the Marginal Revolution blog as a psychological experiment with a goal of getting most people to select the set middle range price.
Probably more importantly, pay-what-you-want pricing is going to be advantageous when the seller also sells a complementary good, such as concerts, which benefit from consumption spillovers from the pay-what-you-want good.
Basically, when you offer an option to pay what you want, there should be accompanying options like food, merchandise, other participatory activities that you can earn revenue from. It doesn’t necessarily have to be the movie theatre model where a bag of popcorn is $10. Offering pay what you want simply because you think it is a good idea without any sense of how you can offset the loss of revenue isn’t prudent. If end up with a higher per ticket price than you had before, that is great, but don’t plan on it.
One of the commenters on the 2012 post noted that the site HumbleBundle allows you to pay what you want, but also posts the average price paid in real time.
Currently, if you pay more than the average of $4.14, you can unlock additional content and if you pay more than $14 there is another level of content you can receive.
Having some sort of bonus content or access people will receive for exceeding the average is a smart idea. It rewards those who act early before the average increases as a result of people paying to receive that content (or just being generous). This content or access could be better seating, merchandise, concessions, meet and greet opportunities, invites to other organizational activities, etc.
I got to thinking about how my ticketing system can tell me what the average selling price of my tickets are on demand. I could theoretically manually update that information on the lobby screens simply as a point of information at various intervals just as a bit of psychological social pressure on people to pay close to that or a little more. While I might also choose to update that information on our website, I am not sure the sense of social pressure would be as significant for online sales.
However, if ticketing software providers created a way to export that information to update in real time like HumbleBundle does, it might be possible to create a sense of tension and excitement in lobbies just prior to performances. (Or if handled correctly, even online). Granted, it could be done manually but I know I have better things for my staff to do than constantly run reports and post data to a public screen.
Watching it tick steadily up with every purchase is much more interesting. Especially if you are experience the dual satisfaction of seeing how much money was being raised for the organization while knowing you got access cheaper than a lot of other people – “Whoo hoo!! We collectively moved the price to $15.63 (but I got mine for $4.85!)”
Thoughts? What experiences, if any, have you had? I know a number of places are doing pay what you want/can, but I am not clear if they are supplementing their income with related goods and services or if they have found a way to energize audiences around the practice in a productive manner.
Seth Godin has a post today that seems like it is written just for arts organizations. Obviously, that is just my ego that views the arts as the center of my universe talking because the assertion in the title, “You can’t ask customers want they want,” applies to every company.
My first thought upon reading the post was Malcolm Gladwell’s story about how Prego achieved dominance with spaghetti sauce by doing a lot of experimentation with sauces that did not conform to the stated preferences of consumers at the time.
Godin says you can’t make a breakthrough in the product you are offering because customers have a difficult time imagining a breakthrough product. Instead, you have to do a lot of risky experimentation.
You ought to know what their problems are, what they believe, what stories they tell themselves. But it rarely pays to ask your customers to do your design work for you.
So, if you can’t ask, you can assert. You can look for clues, you can treat different people differently, and you can make a leap. You can say, “assuming you’re the kind of person I made this for, here’s what I made.”
There are a lot of little details in there that we have heard before in terms of arts organizations needing to know about audiences, what their impediments to participation are and what stories they tell themselves about the type of person they are.
There is an element of Godin’s post that replicates the “fail early and learn” philosophy being bandied about quite a bit lately.
I don’t have to tell you there isn’t a lot of room in arts organization budgets for experimentation and constructive failure. Alas, to a great degree, that is the only option available any more. As he suggests, experimentation doesn’t have to be scattershot, you can make educated guesses from clues and change the way you interact and execute with different people who use your product/services.
I think that last sentence I quoted emphasizes that not everyone in your community is going to be your market. What you made is only going to connect with a certain type of person. There may be 10,000 of that type of person within your reasonable reach or there may be 10.
Goodness knows we think we are making an educated decision about what will appeal to a large number of people only to have our efforts fall flat. Other times, we are delighted to gain an overwhelming response with little effort, but are confounded to figure out how to replicate (or avoid) those mysterious conditions in the future.
You can probably find no greater verification that not everyone in a community is part of the same market by dedicating a month to walking down a supermarket aisle or past a display that you don’t buy from. Every time you go past, notice how much the product is turning over.
Maybe it is the sushi you don’t buy because are not the type to buy sushi that isn’t freshly made moments before in front of you. Maybe it is some strange food from the ethnic food aisle. Perhaps it is the Uncrustables PB&J sandwiches in the freezer case (I mean, how the hell is a PB&J sandwich you have to defrost more convenient than making the sandwich?).
You have a lot in common with thousands of other people in that you both shop at that supermarket rather than another one, perhaps based on your shared self image, perhaps simply due to geography. Yet there are thousands of items in the store that the manufacturers would be happy if you bought, but also understand that you are not in their target market demographic.
Since I was on the subject of how people value the arts yesterday, I thought I would call attention to a post that appeared on HowlRound last summer. Edward Einhorn wrote about Money Lab, a show his company put together that involved the audience in money related games and activities.
One of the things they instituted was a patronage auction.
It was not a commission. The artist would have the full freedom to create whatever he or she wanted to create, in the manner he or she preferred. The patron would merely be providing funding for one hour of that artist’s time, during which the artist would create…something. The only obligation of the artist: afterwards, a “grant report” (a short email) would be sent to the patron, giving an account of that hour of creation time.
When I conceived of the patronage auction, I expected we’d be pushing it to reach $20. Still, I thought, $20 an hour is a pretty good salary for an artist, in our society.
The lowest the hour of artist’s time went for was $42. The highest was over $200.
Over the course of the production run which took place at a number of venues, about 2/3 of the time the audience instigated/requested a change of format that turned the patronage auction into a crowdfunding effort.
Einhorn mentions when they moved the show from Brooklyn to Manhattan, the amount raised by the patronage auctions were low at first which was disappointing.
To me. Not to the artist involved. Because no matter what the amount, the money said to the artist: You are valued, so much so that an audience member, more often than not a complete stranger to you, was willing to give away his or her own money to ensure that you had at least one hour in which you could create, without the pressure of economic reality hanging over you.
…But I do know we only experienced one low total during our final week of performance. It was the performance when an economics class had bought out over half of the house.
“Why should we bid?” I heard one pondering after the show. “What value do we get in return?”
It’s a good question. What value did the patrons get in return? All they were promised was an email two or three sentences long. It’s a question I confront all the time, when looking for funding for my theatre company and my own work. Grant applications constantly ask me to justify the value of what I do, by filling out forms in which they ask me to explain not only my artistic but also my social value. In return, I sometimes get a small sum which, when combined with other similar sums, can add up to enough to create one underfunded project.
The whole Money Lab project is pretty interesting because it explores the psychology of our relationship with money, including the sunken cost fallacy which influences people’s decision to attend performances.
The Willingness to Pay question comes up again as people who have probably paid for admission to a show exhibit willingness to spend additional money to fund an artist during the show. Is it because they are having a good time? Is it due to peer pressure or desire for social recognition? Is it because they can see and immediately identify with the artist being funded?
Does having people pay after they have seen all or part of the show bear further investigation? You may recall I wrote about a Spanish theater that was using facial recognition software that only charged you if you smiled/laughed.
Giving to charities often spikes during the times of tragedies and often online/via social media. I am not suggesting arts organizations trot out their emaciated performers and tell their audiences they can help feed them for only dollars a day.
I really dislike lengthy curtain speeches where you are enjoined to donate, but perhaps I should reconsider. People often respond to the immediacy of things right in front of them and social media giving makes it easier to do so than ever.
Hat tip to Carter Gillies who spotted a wonderful congruence between the posts both I and artist Whitney Smith made yesterday.
Reading Whitney’s post, it almost feels like she wrote it to provide practical illustrations for my ponderings about how the arts community views worth and entitlement.
Where I end my post with a quote from Seth Godin about sharing your work, Whitney mentions it right from the start in the title of her post.
Sharing art work can be weird. Last weekend, when I had a party and sale at my studio, I put all the paintings I’ve been doing on the wall. I didn’t put prices on them because I told myself that I just wanted to show them. But the truth is I didn’t want to put prices on them because I was afraid if I did that, people would feel sorry for me because obviously the paintings are awful and it’s just a little pathetic that I actually thought I could sell them.
She goes on to talk about how she personally likes her “awful” paintings and really enjoyed executing them. As it turned out, some people did want to buy them which put her in a tough spot trying to decide on a price.
I guess this is a lesson to always have a sense of your work’s worth in case people are actually willing to pay you for it. This isn’t really a nudge at Whitney. It happens all the time.
Not more than a month ago I was at a gallery opening where one artist expressed his exasperation that one of the people showing wasn’t prepared to provide a price for his work. Of course this raises questions about whether the guy was really prepared to part with it.
Just as I talked about how sharing and impacting the community is cornerstone of arts philosophy, Whitney echos the idea. (I debate whether I even need to state and give an example of something that is so well known, but there are worse ideas gaining traction through repetition.)
Sharing is part of the artistic process. I believe art is there to give something to humanity– something to think about, a new idea, a connection, a moment of beauty, even a moment of transcendence. If the art isn’t shown, it can’t do its final job of changing people’s hearts and minds. If your art is just for one person– for yourself– maybe there is a good reason for that. But I don’t know what that would be.
Selling is another thing. I don’t think art has to be sold, but there is something to be said for moving it along…
So often the debate about the value of a work of visual art is conducted in the context of a gallery, museum or auction. Rarely, at least in the places I frequent, do we read an artist’s internal debate about the value of their work, when it is considered “done,” when to sell it and what to sell it for.
When conversations about demand based pricing for the performing arts comes up, there is often a comparison made to the airlines and the way they factor in dozens of variables when they price their seats. One airline practice that doesn’t get mentioned is the refundable fare where you pay more in return for the right to cancel the ticket.
The right to exchange, and sometimes even get a refund for tickets, has long been a benefit extended to performance subscribers. Now that subscription sales are fading, perhaps it is time to think about applying it to single tickets?
The thought came to me when I was reading an story on a Microsoft blog about Jet.com The company is heavy into dynamic pricing to the point where the price of an item changes while it is in your shopping cart as variables are factored.
One of the ways people can lower the price of an item is to agree not to return it.
At checkout, customers can waive the right to return certain items, driving the cost down further; choosing one credit card over another — or paying directly from a checking account — takes dollars off, too. The system also suggests purchasing combinations that can save customers money.
With greater control over these variables, shoppers can strike their own personal balance between cost and convenience, something Lore’s team saw as missing in the industry. “The whole concept of Jet is to make transparent all of the costs that go into an e-commerce transaction, and then empower consumers to pull out costs as they see fit.
So what if you offer the opportunity to return tickets for an extra $5-$10 per ticket charge?
Generally the motivation for not allowing returns is fear of not being able to resell a ticket. There are also the labor costs and credit card transaction fees associated with processing a refund. Having different pricing makes the economics of all this more transparent and shifts some control to the purchaser.
If you do decide to allow a refund on a ticket sold as non-refundable, the rationale for a fee is clear. I know some performing arts organization charge an exchange fee which can seem punitive. In the context of this type of discount program, it can seem less so since the customer was offered the choice and the price difference has already been discussed.
I am not advocating this as a new source of income. There are social and emotional transactions that occur during the refund process, the results of which may not be directly correlated to whether a full refund was granted or not. It is better when the subject never comes up, regardless of whether you are generating any income from the exchange.
Still, it is something to think about. Especially if the choice of a discount in exchange for waiving the ability to make a return becomes more widespread and familiar.
If such an approach is implemented, it would definitely need to be handled at the time of sale from the positive perspective of “All our tickets are refundable, but you can get an additional discount if you don’t think you will want to exchange/refund,” rather than a more negative, “it will be an additional $10 if you want to be allowed to get a refund.”
Airlines handle it in the latter manner. Just think how much happier you would be if the $500 ticket were only $300 if you waived the right to a refund.
Airlines can’t really it that way because people initially hunt for the lowest price. They gain advantage from advertising the lowest price and adding costs as you choose options.
Price hunting doesn’t factor as much into the decision about which production to see so arts organizations have a little more flexibility in that respect.
I would be curious to see if a higher level of satisfaction might result from implementing this type of pricing. Would people feel more satisfaction secure in the knowledge they can either get a refund at any time or having gotten a great discount to something they fully intended to see anyway?
I imagine it would depend on the demographics of the community. Younger people and families might appreciate the low risk flexibility. More established audiences might view the unorthodox approach and additional level of pricing as confusing.
While socializing post-reception for a show that opened at the local art museum, I got into a conversation with the directors about the type of information you include on the cards/plaques next to each piece.
Things got a little spirited when the executive director suggested that the cost of a piece be listed. His reasoning was that people are interested in knowing this information due to shows like Antique Roadshow. His thought was that by including this information, you might appeal to an audience that wasn’t currently being reached.
The artistic director was against this idea. She was concerned that if the prices appeared on the cards, people would orient to that information rather than reading about the importance of the artist to a movement, what inspired the piece, notes that draw attention to technique, etc. For those works that are for sale, she has price booklets available at the entrance of the gallery.
I tended to agree with the artistic director. I pointed out that people might start to equate price with the importance of a work or its intrinsic value. If something cost more, it must be a better quality work or the best exemplar of the movement.
On the other end of the spectrum, I thought it might serve to more deeply entrench the poor impression people had about art. If you are of the opinion that a 5th grader could produce a similar product, what are you going to think when you learn that it is worth $6 million when a piece you like is only worth $20,000?
We also addressed the issue that all pricing is not created equal. Some prices will be what the artist set for them. Others will be market value which may be absurdly inflated thanks to any number of factors. I have seen shows where the artists are required to put prices on their works and don’t have the option to list it as not for sale so they will assign a price that guarantees no one will buy it.
This debate went on for quite awhile and suddenly we hit upon a bit of inspiration that we thought might serve both sides. It is still in the brainstorming stage and it is really more applicable to an educational program for a school or as a fun alternative in a lecture series rather than answering the question of what to put on the display cards.
The idea is essentially an art museum version of The Price is Right where you call people down to try to guess the cost of a piece of art. However, instead of just having them take random, uninformed guesses, you provide some of the background you would on a display card or in a lecture.
The general concept at this point is that you show a slide of a work and talk about many of the particulars: This work is from X who was an important figure in the Y period. The use of A, B, C techniques was impressive to people at the time. It was purchased by Mr. Jones for his collection and given to his daughter for her wedding. It was purchased by the Philadelphia Museum but has been lent to these museums in England, France and Hungary.
Talking about the provenance of an artwork can be nearly identical to the way the hosts on Antiques Roadshow talk about pieces people bring in for examination.
While the price does get mentioned, the opportunity to note that is what was paid in 1810 or at auction, etc allows it to be put in perspective. While this format doesn’t allow for the depth and continuity you might get on a lecture about a movement that spanned decades, it can help spur an interest in learning more.
By controlling the release of information, you can get people to focus on elements that might contribute to why it is valued as it is before unveiling the actual price. This can create an environment where a conversation can occur about how unpredictable and illogical market prices can be when few of these elements seem to factor into multi-million dollar auction bids.
As I said, this is still in brainstorming stage and there have been little consideration given to audience, timing, subject matter, appropriateness, logistics and other related questions. It will be at least 4-5 months before it happens, if they decide to go ahead with it.
If anyone has any feedback, thoughts, ideas, let me know. I would be especially interested if someone could see a way to do something similar with the performing arts.
I am not sure we could really address price in the context of other factors in as interesting a format. If you see some other game that might be played to make mysterious aspects of the performing arts more accessible to audiences, I would be interested in hearing your ideas
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.
The article talks about negative feedback from alumni and students as well but much of that relates to a separate issue with season and student tickets which were more expensive, but not subject to dynamic pricing.
Living as I am in Ohio, I am obligated to suggest that this only goes to illustrate the inferiority of the Michigan football program.
What really interests me about the policy change was that two years ago I wrote about how University of Michigan and the Cincinnati Reds were going to be using dynamic pricing for their games. I took a quick check of the Red’s website and they will continue to use dynamic pricing during their 2015 season.
My post two years ago emphasized that value is not price presenting some thoughts on that concept. As I looked into University of Michigan’s decision to eliminate dynamic pricing, my effort to determine where the balance between price and value became further complicated.
If you look at the bottom of this article, you will see students protesting with signs invoking tradition over money and the university brand. But if you read my original article, I note at the time tickets were already on sale on the secondary market for far more than the published price, prior to single tickets going on sale. At that point, the only ones who had them were season ticket holders and maybe some students.
While not everyone is going to try capitalize and sell their tickets to hot games on the secondary market, it is clear that some of the tickets are more valuable than what you paid for them. Shouldn’t you be happy about getting such a great deal?
As much as you may want to complain about students and alumni being malcontents who want to maintain the status quo rather than acknowledge increasing costs and value, there really isn’t any difference between them and the people who comprise your audiences.
Except maybe they are much more passionate about football than your programming. (Which is why I can’t have shows on Saturdays in the Fall.)
I suspect one of the biggest factors in whether people will tolerate dynamic pricing or not is the level of investment they have in the activity and how strong the sense of community is. The Cincinnati Reds and Broadway shows can probably get away with it because people expect to pay more or less dependent on the popularity of the event.
College football isn’t just a sporting event, it is entwined more deeply with personal identity. For students and alumni, it is directly associated with your occupation for four plus years. You didn’t just live in a locality with sports teams, all the buildings you occupied all day in were owned by the entity that owned the team. All the people you worked, ate and played with everyday were members of that entity.
There is going to be so little distinction between value, price and identity that change to any one of these will result in a strong reaction.
It probably doesn’t help that the university was requiring $150 donation to be considered for season tickets with no guarantee you would get some and no refund if you don’t. (And this is a very common practice among larger university sports programs, even ones that don’t perform very well.)
I don’t think University of Michigan’s decision should dissuade an arts organization from considering dynamic pricing in itself. I think it points to the fact that you need to consider the level of investment your potential audience has in your work and what the tenor of that investment is.
For some, a higher price may only increase the sense of investment as it indicates a greater level of personal prestige. Not surprisingly, for others it will be a sign of exclusionary elitism. Other communities may barely notice the prices changed since they weren’t paying attention to begin with.
Seth Godin posted some thoughts about pricing that are worthy of consideration. The fact this post is about three times as long as his usual posts indicates the importance he places on the topic.
He tackled the concept of substitution which is basically what we talk about when we identify movies, television, Netflix, video games, etc as competitors for people’s entertainment dollars and time.
One of the key elements of pricing is realizing that people have choices, and that substitutes are available. This is more nuanced than it sounds, though, and I want to highlight key things to keep in mind when you think about how much to charge and how people might react.
Marketers make two mistakes over and over. They create average, commodity products and expect that people will pay extra for them. Or, in the other direction, they lose their nerve and don’t charge a fair price for the extraordinary work they’re doing, afraid that people will find a substitute.
This second paragraph that essentially summarizes the situation arts organizations face. Arts organizations are either accused of overvaluing their product and charging too much in the face of substitutes. Or they are accused of setting prices too low leading audiences to expect those prices should be the norm for something that cost five times as much to produce.
Godin addresses a number of factors which impact what price someone will pay. The one I felt was most applicable to the arts was:
Some goods are difficult to understand before purchase and use, and most consumers undervalue them and treat them like commodities
[…]
This leads to opportunity and challenge of marketers who choose to sell something that we don’t buy very often and that we can’t tell if it’s better (or if the story is true) until after we buy it. In situations like this, our instinct is to assume that the thing is generic, a commodity, not worth extra.
Having read this, it occurred to me that as arts attendance decreases there is an increasingly likelihood of arts experience meeting the definition of something that is difficult to understand before purchase and use. As a result, people see it as interchangeable with other entertainment options. To be fair, many elements of the experience are interchangeable, but others are not.
According to Godin, what enables you to sell a good or service at a higher price is if it has a story. The example he used are organic eggs. We are all probably aware of some aspect of the story associated with organic eggs: they are better for you; the chickens are handled more humanely; you support small, local farmers; lack of antibiotics and pesticides; locally sourced means a small carbon footprint in production.
Whether these things are completely true or not can be immaterial. If some part of the story resonates with the consumer, they become more willing to pay a higher price.
However, I think the story for the arts almost has to be more powerful than for organic eggs. When you are in the supermarket already, the story of organic eggs and your image as a responsible world citizen doesn’t have to resonate very strongly to divert your decision from one carton to another. If you are in a farmer’s market, the story and your self image are so self-reinforcing by the surrounding booths, it is actually easier to buy more than you intended.
When you are at work or at home making plans, the story offered by the local arts companies has to be pretty strong if it is going to influence your decision away from your usual activities.
Or at least this is the case for performing arts organizations. Visual arts organizations can benefit from impulse decisions. A couple weeks ago I was chatting with a friend at the front desk of the local museum and about five people came in saying they were in town for a funeral and decided to swing by the museum. Not necessarily the first thing that pops to mind when I go to funerals, but they enjoyed themselves.
In either case, if you do have a story, once people start to involve themselves with your organization, they integrate your story into their lives and it becomes easier for them to decide to do so again.
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.
Over the weekend I read a very interesting blog post by Nick Kokonas who implemented a system where people would buy tickets to his restaurants.
One of the problems he faced was that they were employing 3 people full time just to call people back and tell them there were no seats for Friday or Saturday at 8 pm. They were also losing a lot of money due to no-shows or partial no-shows because they couldn’t call their long waiting list of people to tell them they could be seated in 15 minutes.
What they did was create a demand based pricing structure with non-refundable tickets and put the whole system online. That way patrons could see exactly what was available and see that weekend nights were much more expensive than Tuesday nights and make decisions accordingly.
This creates a lot of transparency and trust with customers because the restaurant doesn’t have to overbook to hedge against no-shows and then divert people to the bar if more people keep their reservations than were anticipated.
They also differed their operations from other online services like Open Table. Most restaurants don’t put their entire seating online and customers have figured that out and call in to the restaurant anyway. Since Kokonas wanted to avoid paying his employees to say “No” all the time, they basically put everything they intended to offer online giving people no reason to call in and try to wheedle a seating.
Their no-shows dropped precipitously and even if only a partial table shows up, they have already collected the cost of the meal from them.
I should note, the restaurants offer a fixed menu so there is not a lot of variability in people’s orders. They do have one bar-restaurant with a more variable menu where they collect a $20 deposit which is applied against your bill and no-show dropped immensely there as well.
But reading this got me thinking– this is a situation where people pay a uniform price in advance to consume a similar product and the the result was a greatly reduced no-show rate.
This sounds lot like going to a live performance. Only when I have looked at the sales versus tickets taken at the door (or just eyeball the audience at a performance) I see more no-shows than I would like.
I wonder at the reasons behind this. It could be that many are subscribers and they forgot they had tickets for the show or they have decided this is the show in the series they are least interested in and want to skip it.
I know this doesn’t just happen to me because I have attended otherwise sold out performances where a significant swath of prime seating remains empty.
While subscribers have the right not to occupy the seats they have paid for, as conversations about demand pricing for seats at performances continue, you have to at least consider whether you are setting prices high enough.
This is absolutely a consideration at sold out performances where you might really have an opportunity to increase your earned revenue in the face of decreasing support from foundations and individuals.
It is also a consideration in less well attended performances where too low a price might not provide enough incentive for people to attend. I have seen a decision to go from free to a $5 charge fill performances. If you are intentionally keeping prices low so a target audience can attend and they buy tickets but don’t attend, then the effort is as much as failure as if high prices dissuaded their attendance.
There are dozens of other factors that can account for the difference in no-show rates between Kokonas’ restaurants and performance venues. The social cachet of eating at a high demand restaurant that only seats about 90 being a significant one.
Even without considering the success Kokonas’ has realized, there are dozens of factors that make ticket pricing decisions very difficult for arts organizations. Still, it is always interesting to see how pricing is used to good effect and ponder what lessons might be derived.
"Though while the author wishes they could buy it in Walmart..." Who is "they"? The kids? The author? Something else?…