It's pretty weird how popular music and comedy acts resist setting ticket prices at market clearing levels. If you're selling tickets at a flat rate and a sellout happens in a few minutes that means your tickets were too cheap. Shortages in a market are bad and can be solved with higher prices. Acts that leave surplus on the table are mostly benefiting scalpers not the fans, and it is also part of the reason Ticketmaster can tack on their huge fees. In the internet era there is no reason not to setup an auction system and sell the tickets to the highest bidders.
What seems to happen is that acts worry about their shows having too many random rich people and not enough "real fans". They think without the super-excitement from the "real fans" it would ruin the experience of the show. I'm not sure if that is true, anyone willing to pay a lot of money to attend is probably a real fan, rich or not. But if the bands want to they could allocate a smaller portion of tickets at a lower price using some other method, maybe a lottery, but it's going to be hard to keep the scalpers out.
With all the problems with the copyright-based business models fans should actually want their favorite acts to raise prices and make as much money as they can from touring, instead of the money going to middlemen.
In general, I 100% agree with you that prices should rise or fall until markets clear, but there is a counter argument that I believe is correct in some cases:
Fans are a complex system, and the people who might turn out for dozens and dozens of shows over years, create buzz, convert friends to your cause, etc. may not have the funds to pay for tickets priced at the margin.
Thus, it might be a mistake to charge market clearing prices that cause long term damage in your fan base.
I don't know for sure that this is correct, but in general, the market evolves behaviors that make sense, so the fact that very few performers try to squeeze every last dollar out suggests to me that it might be a reasonably intelligent strategy to avoid the quick profit that way.
the people who might turn out for dozens and dozens of shows over years, create buzz, convert friends to your cause, etc. may not have the funds to pay for tickets priced at the margin
Maybe that could be solved with a loyalty system?
E.g. tickets could get a discount weighted according to how many tickets you've previously bought for that act.
Of course the discount should only apply for one ticket (or a small number) to prevent the scalpers from taking advantage.
Not how many tickets you have bought, but how many shows you have actually shown up to. Scan people's tickets at the door, and keep a database so that you can reward those who attend reliably.
That's the same thing unless you have some kind of double authentication to prove the person who bought the ticket is the same one using it at the show. Like, say, matching it to an outside-authenticating number, like SSN or driver's license number.
Otherwise a scalper can just use "employees" to purchase a few tickets (the limit) at each venue, and resell them.
Let's also have some backscatter imagers to make sure nobody brings weapons into the venue. Emulating the airlines is a business model guaranteed to succeed!
I have always wondered about a market for an auction platform that serves events/similar. After the success of the restaurant Alinea in Chicago, the owner's next project (Next) actually sells tickets to eat there:
'Whether Mr. Achatz’s fans will be similarly loyal remains to be seen. Next will have a highly unusual online-only booking system that sells nonrefundable tickets, rather than accepting reservations. Once a seat for Paris 1906 is bought on line, if the baby sitter cancels or the girlfriend doesn’t feel like going out, it can’t be canceled. It can, however, be sold, scalped or bartered. “We are very interested to see what that secondary market might bring,” said Mr. Kokonas, who devised the system.'
Restaurants that oversell inventory could use a similar tactic but with an auction platform for some of their seats to allow people a chance with last-chance bookings if they're willing to pay. I know I would definitely have considered it when I was heading to Chicago and couldn't get a booking weeks in advance.
The Next ticketing system is a good idea for Achatz because it eliminates an obstacle to purchasing tickets: the near total uncertainty as to when you might get a table. A seating for 4 people at Alinea might require a month or two advance notice; a prime date perhaps even more. So it's a win to be able to look at a website and see when you might be able to get a table --- or, with the new Sicily menu, quickly discover that there are no seatings to be had.
Incidentally, if you're hoping for last minute seatings, there's always the strategy of just calling them at the last minute or even just showing up to see if they've had cancellations. I've gotten lucky at least once.
I'm from South Australia, so when I'm near exceptionally popular restaurants, it's usually while travelling so I have a fixed window and won't usually have locked that window in until a week or two beforehand.
And the reason I hate calling is that I imagine I'm one of a string of no-chance hopefuls just being a nuisance. And the staff are on the other end thinking "Doesn't this guy know who we are?! You're two months late, bozo."
Would love a web-based system to get around all this!
(Only been to Chicago once and quite liked it despite the weather at that time of year. We enjoyed Avec and The Violet Hour. Had a chance to go to Moto but bailed in the end.)
> And the reason I hate calling is that I imagine I'm one of a string of no-chance hopefuls just being a nuisance. And the staff are on the other end thinking "Doesn't this guy know who we are?! You're two months late, bozo."
Speaking from personal experience, once you get past barriers in yourself like that, life opens up to you. Using the internet as a crutch to avoid social interaction with a possibility of embarrassment is unhealthy.
You're right and luckily I'm only like that with phones. Generally sociable, well-rounded and out-and-about otherwise. Just the phones...
Of course, if I worked the phones at a restaurant like that, you can bet I'd be driven nuts by all the calls and wish people would give it up or the boss would devise another system!
I'm not saying tiered pricing is bad, or that expensive tickets are bad. I as a fan may not like it, but, I get it. I can grok that. It's one thing to trade in goodwill for money. To insinuate fans should be happy about it, or that this simply solves the problem? That's simply crazy talk.
You're not "solving" the problem of shortages, you're just deciding to make it a "cost" problem for fans. And that has its own set of fan-related problems (namely burn) that, if you can't solve, are bigger than "we can't justify renting a venue for another showing, sorry everyone."
"If you're selling tickets at a flat rate and a sellout happens in a few minutes that means your tickets were too cheap."
Not necessarily. I see nothing wrong with attempting to control the entire end to end experience, including ticket price. If he's selling at $45 because that's what he wants, there's nothing wrong with that.
Or should cancer or diabetes pills be $1000 per pill because the manufacturer will find enough people to pay? There are other legitimate factors in pricing besides maximizing profit.
But it's inefficient: at an artificially low price (let's stipulate that's what $45 is for Louis C.K.), the show attracts more buyers, a larger proportion of whom aren't dedicated fans. Meanwhile, dedicated fans (not heartless rich people) might be perfectly happy to pay $46, $48, or $54 dollars; they can't, though, because they've been locked out by a flood of superficial fans.
This is to say nothing of the deadweight loss of the inevitable efforts, much of which will be successful, to game the system.
Ostensibly, Louis C.K. wants to keep prices low in service to his fans. But to be totally responsive to the desires of his fans and improve his financial outcome, he should recognize that his shows are going to sell out, his tickets are therefore a scarce good, and some kind of auction mechanism is needed to figure out the right price for a ticket.
Inefficient for whom? The only person who is affected by a low price is Louis CK. He already said that he's making more than enough money for himself so that he's content, so as a show of good will, he's trying his best to lower the cost of the tickets for his fans. For his fans, it's good. Sure, he could make more money by increasing the prices of his tickets, but he doesn't want to do that because he wants to pass along the cost savings to his fans.
Also, he recognizes that he can't lower the price and not deal with the scalper problem, so he is attacking it by doing his best to traffic anyone who tries to sell his tickets for above face value. If this works, then it solves the problem of the scalpers not being able to make a profit, and Louis CK being able to keep ticket prices low for his fans.
The idea that "true" fans are being locked out by "superficial" fans is just plain dumb. What makes a "true" fan vs a "superficial" fan? If I've only seen one of his concerts on HBO, that means that I'm not eligible to go see him live? Do we really need a pissing contests between fans to see who really "deserves" to go see him live? That's dumb.
Sometimes it's not about extracting the maximum possible dollar amount. Artists like sharing their work with other people. Many of them would gladly do it for free if they could, but charge because they have to make a living just like everyone else.
>some kind of auction mechanism is needed to figure out the right price for a ticket.
If Louis is happy with what he's making off the tickets, then they're set at the right price. What you're proposing would essentially lock out many of his fans that couldn't afford the "right" price that would be set with an auction system.
The traditional problem with intentionally setting an artificially low price is that resellers would buy up tickets, sell them back at market prices, essentially locking out those fans and also reaping the additional profit that the artist was intentionally forgoing.
What Louis is trying to do is design a system that locks out the resellers, and in turn essentially turns the ticket selling process into a lottery for those fans that care enough about seeing him to go buy a ticket early.
As long as there are more people that want to see him than can fit in the venue, there's no way to make it totally fair for everyone. But the approach he's taking allows him to make an amount he's happy with while keeping the financial cost of getting in at a point that he feels is fair to the fans.
It may be inefficient from a pure market standpoint, but, frankly, I think it's going to accomplish exactly what he wants it to.
When I was in college, the opportunity cost of a $45 ticket was eating badly instead of eating well for two weeks. Now I have a regular job, the opportunity cost of a $45 ticket is much lower - I'll have to wait a few weeks until I buy that DVD box set of 'House MD'.
So now I can buy tickets that before I could not afford. Have I become a more dedicated Louis CK fan? Or have I just become a richer fan?
I agree with you in theory, but I don't think the argument works here. If the shows are under-priced, they will sell out quickly. The dedicated fans will be the ones who know about the show and buy early.
As I remember, the economic concept of "efficiency" has a pretty narrow meaning: The market for a commodity will reach an equilbrium at the most efficient state if prices are allowed to change freely (a free market). An efficient outcome is defined as being an outcome that maximizes the surplus value when the surplus of each individual transaction is summed. The surplus value of a transaction is the difference between the lowest price a seller would accept and the highest price a buyer would pay. The strongest negotiator will take a bigger share of the surplus.
Even if the surplus is split unfairly on many transactions, the market is still said to be efficient if it meets the above definition.
Louis CK's ticketing idea is a pretty unique case because in some ways tickets are easily fungible and lend themselves to this traditional economic analysis.
On the other hand, if Louis ck decides he's only doing 50 shows at mid sized venues, and prices are 45 dollars, as long as all tickets sell the market is actually perfectly efficient. Louis has no more product to sell. If he could have sold the same amount of tickets at $65 all that means is that fans are taking more of the surplus, as opposed to scampers. Even though there might be way more fans than tickets, the market is at an efficient equilibrium because Louis CK's supply curve has become totally inellastic at $45.
>They think without the super-excitement from the "real fans" it would ruin the experience of the show.
i don't think it's so much about the experience of the show, it's more about the image of the artist. if only adults with full time jobs can afford to go to the shows, then they become known as artists that only responsible old people enjoy. and no responsible old person wants to see a show that only responsible old people enjoy, they want to go to the shows that the young cool people are going to.
In the email he sent announcing this ticketing system, Louis CK explained that he's making what he considers plenty of money, so he wants tickets to be inexpensive for his fans. They also have their system set up so that if they can tell that someone is scalping their tickets, they will refund the money and revoke the tickets. I agree with you in general, but Louis CK doesn't give a shit that he's leaving money on the table. He wants it to be easy for his fans to get to his shows.
You need to put down your name when you buy your ticket and they reserve the right to check ID at the door, meaning it's impractical for scalpers to buy them.
Selling out soon is not a major problem if you assume your biggest fans are those who are willing to act the fastest. I bought a ticket a few minutes after I got the email to ensure I wouldn't dither for a day and not be able to get them.
More and more acts are charging market rates for tickets. I went to buy tickets for the traveling "Book of Mormon" production in Seattle and I had a pretty rude sticker shock.
Better the production get it than the scalpers, I guess, but I can't justify that much on the play when I haven't even finished the book yet.
Broadway is certainly headed this way with "dynamic pricing" and the "airplane model", where tickets increase in rate and availability as the event gets closer.
What seems to happen is that acts worry about their shows having too many random rich people and not enough "real fans". They think without the super-excitement from the "real fans" it would ruin the experience of the show. I'm not sure if that is true, anyone willing to pay a lot of money to attend is probably a real fan, rich or not. But if the bands want to they could allocate a smaller portion of tickets at a lower price using some other method, maybe a lottery, but it's going to be hard to keep the scalpers out.
With all the problems with the copyright-based business models fans should actually want their favorite acts to raise prices and make as much money as they can from touring, instead of the money going to middlemen.