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Published on October 18th, 2017 | by Alan Cross

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Is This the Solution for Pricing Concert Tickets?

[Earlier this week, I posted an unpopular view on concert tickets. I suggest that they’re priced far too low for the marketplace. This generated a number of emails, including this one from Chris Fievoli. He has a suggestion for settling the pricing of concert tickets once and for all. – AC]

With all the recent attention paid to bots and reseller markets, it is somewhat surprising that no one has tried to apply a Dutch auction model to concert tickets.

A Dutch auction is essentially the opposite of a traditional auction. Rather than starting with a low price and bidding up, a Dutch auction starts with an excessive asking price, which is gradually lowered until it reaches an amount that a buyer is willing to pay. Applied to concerts and other live events, this model has the potential to maintain the fair market value for tickets, but with the revenue going to the artists and promoters, leaving nothing in the pockets of the middleman scalpers.

Here’s how it could work.

Imagine that on the first day that tickets for a concert go on sale, they are all listed at a price of $10,000. That sounds ridiculously high, but that is exactly the point. Perhaps a few hard-core fans would pay that much for the best seats, but the odds are that most tickets would remain unsold at that price. From there, the ticket prices would gradually start to decline. The rate of that decline would be controlled by an algorithm.

The rate of that decline would be controlled by an algorithm. We’ll let some math wizard figure out the details, but the algorithm would set subsequent prices based on, at the very least, the volume of remaining tickets and time until the event. Potential ticket buyers could then watch the price reductions in real time, along with data on ticket availability, and then decide at what price point they want to pull the trigger. If you are willing to pay $200 for a ticket, then you simply have to wait until the price drops to that level. However, if tickets are moving quickly, you may have to jump in at a higher price, rather than run the risk of being shut out.

And it works the other way as well. If there are lots of tickets left close to the concert date, the algorithm would set prices low enough to clear the remaining inventory. Rather than selling out in a matter of minutes, ticket sales would then go on for a longer period of time, as the algorithm figures out what buyers are willing to pay at each point in time.

The one advantage of this model is that it potentially eliminates the reseller market. The whole point of buying tickets for resale is to do so at a higher price. But under this structure, that price point will have already passed. If you purchase a ticket for $100 hoping to resell it for $200, anyone willing to pay that price will have already done so. And because of the exorbitant original price, there is no advantage to scooping up tickets as soon as they go on sale, even if a reseller had pockets deep enough to do that.

What this model can’t solve is the problem of affordability, but it’s not clear how that problem can be rectified in any circumstance. If fans are willing to pay $500 to see U2, then there’s not much that can be done about that. At least this approach maintains a fair market value, gets the revenue to the artists and promoters instead of the scalpers, fills the concert venue, and eliminates those annoying bots from the equation. (If you want to come up with a program to subsidize the cost of tickets to a level below market value, then go right ahead, but I would suggest there are better uses for your money.)

It’s probably worth a try if some enterprising individual is willing to give it a shot.

 

 




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About the Author

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker.

In his 30+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.


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2 Responses to Is This the Solution for Pricing Concert Tickets?

  1. fred says:

    Not a bad plan to be honest. There will be cries of concerts only being for the 1%’ers but lets face it, that is not far from the truth now. If you are lucky enough to get in on a presale, you might get decent seats but you are still paying an arm and a leg ($600 for 4 Ed Sheeran tix puts that out of reach for most people anyway) and if you aren’t lucky enough to get in, you are looking at $500US a ticket on Stub Hub (just look at the prices for P!NK). Might also get us away from this verified fan/boost/social media pump crap that artists are doing (shouldn’t have to play 2,000 Taylor swift vids and buy stuff just to get tix).

    Downside…you have to watch every day, all day until your price is met. At least now, you know at 10:00:30 you are gonna have to pay $500 a ticket!

    And you will see bots come out of the woodwork for this. The difference will be, they will be for us not the resellers. You will be able to tell the bot how much you want to pay and it will watch and bid for you. AI will lead to these being more intelligent.

    The more I think about it, the more I like it. Google went public this way. And they avoided using traditional investment bankers meaning more $$$ went to google/less to the bankers. Artists could run their own auctions. Cut out Ticketmaster all together.

  2. Matt says:

    There is never going to be a system for pricing tickets that feels “fair” to everyone involved. People form an emotional attachment to bands. They get possessive. We see this already when a relatively obscure band gets popular. There are always going to be people who see themselves as “true fans”, more committed and therefore more deserving than other fans. Any system that doesn’t give those “true fans” preferential access is going to seem deeply unfair to them. And since there’s no correlation between level of fanhood and income, pricing tickets higher isn’t going to give them the preferential access they want.

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