Pricing

What Profits A Man To Gain Riches, But Lose His Ardent Fans

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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.

Keep An Eye On The Ticketing Uproar

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With people feeling more comfortable going to public events again, the travails consumers suffer when trying to purchase tickets are coming front and center. Last week TicketNews reported that President Biden is urging Congress to pass legislation limiting excessive fees and mandating transparency about hold back practices.

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.

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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.

Friendly Fraud And Other Ticketing Trends To Watch

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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.

Ticketmaster Serves Its Customers. The Customer Isn’t You

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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.

The reason, according to an article by Mark Dent on The Hustle, is that ticket buyers are not Ticketmaster’s customer, performance venues are.  Ticketmaster’s business model prioritizes venues, artists and promoters, not buyers.

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.