We live in a consumer society that runs heavily on supply and demand. The more people want something, the more that companies can get away with charging. Not only does this benefit the party behind the product, but it also keeps the product from being bought by people who are buying it for the sake of buying and not out of want or necessity.
Have you been feeling that as time marches on, ticket prices keep rising? Maybe five years ago, you saw your favorite artist for an affordable price, but now they’re out of your price range. There’s a likely culprit for this rise, and that’s dynamic pricing.
Image credit: Ginny | ginnerobot
First, let me explain what dynamic pricing is. Dynamic pricing, also sometimes called surge pricing, is a supply-and-demand business model that sets flexible prices for products to reflect the current market. This means that companies can raise the prices of their products to match the present demand.
For example, let’s say Taylor Swift is going on tour. She has 81 million listeners on Spotify alone. She’s going to 50 cities where each arena can hold 40,000 people. (let’s not get too convoluted with workers, crew, etc.) That means only a maximum of 2 million fans will get a ticket to attend one of those shows. Fans who are desperate to one of 40,000 will pay whatever it takes to make it happen. In this scenario, the ticketing company would take advantage of this situation and boost the prices of tickets to match the immense demand. Even if some fans balk at the pricing, others will not. They will pay the price to see their favorite artist, and the ticketing company knows they’ll get their money either way, so why not make an even bigger profit?
Looking at the above example, you might have one of two reactions.
That’s really scummy.
That’s genius.
Where do you fall? At first, my gut was telling me to think of it as scummy only. I can see a lot of cons to it. But there are also pros to this type of pricing that put my stance somewhere in the middle. For one, it’s usually artists who make this final decision on if their shows use dynamic pricing or not. It isn’t just the ticketing companies taking advantage of a household name. I found this type of discourse super interesting so, let’s get into some pros and cons of dynamic ticket pricing.
Pros
The artists choosing this type of pricing usually aren’t choosing to do so out of greed. A lot of times, they choose this method to pay the crew and others who work for them well during the grueling touring cycle. As stage designs become more elaborate, it becomes pricier to put on a show. They know their worth and popularity, so they allow dynamic pricing to help pay the staff and themselves higher wages.
This method of pricing also helps keep more tickets from being bought for cheap and then hiked up in price in secondary markets. If the tickets require more money to acquire, it’s not as easy for scalpers to want to invest in the payout. With less going to reseller sites, more money from ticket sales goes to the artist, venue, and crew.
Dynamic pricing allows tickets to be bought at all different kinds of price points. Whether a fan has $1,000 to spend or $50, having dynamic pricing allows for flexibility based on where the seat is located in the venue. The people who want the front row and are willing to pay the price, whatever it is, will get that chance. Those who don’t care where they sit and want to save money can pick a cheaper seat. More seats get filled when they’re at different prices.
Cons
For starters, taking advantage of the consumer... hurts the consumer. People who are desperate not to miss out could possibly pay far more than they expected or could afford. The consumer who cannot afford the current-demand pricing misses out on their chance to see their favorite artist. Suddenly, live music becomes a middle-to-upper-class privilege. Some could argue that it always was, but what happens when the prices become so high from demand that a large portion of a fanbase is alienated? A large group of loyal fans no longer have access to their favorite artists because they’re being kept behind an ever-rising paywall.
With much of the ticketing industry being run by one company (Ticketmaster/Livenation), there is usually little that can be done to avoid fluctuating prices. It’s either you pay the price, pay a higher price on a reseller site, or you miss out. This leads to angry customers, some may boycott the company and demand change. Just last year, Taylor Swift fans were demanding Ticketmaster’s methods to change to be fairer after they sold out of tickets in the presale for her Eras tour, forcing them to cancel the general on-sale. Basically, they let too many people in for presale and oversold tickets. So, unless you were one with a pre-sale code and had enough luck on your side to get past the virtual queue, you were screwed. It’s moments like this that show that, while dynamic pricing and the Ticketmaster monopoly benefits the suppliers, it screws over the consumers to get there.
Thus, it kills brand loyalty. If people keep feeling screwed over by dynamic pricing by a ticketing company, they may take their money elsewhere. If they’re going to pay mortgage-level prices for a concert ticket either way, they may turn to the reseller sites first. At least doing that will save themselves the headache of virtual queues and obscenely high “processing” fees.
Even more so, competitor ticketing companies can take advantage of high prices and mark theirs a little lower to clinch a sale. I myself had to do this once. I was looking to sell a ticket for a show I couldn’t attend anymore. I didn’t care about turning a profit. I just wanted to make back some of what I spent. I saw that tickets around my seat had risen up to $90 before fees, so I put mine up $75, and the ticket sold within a few days. People love a bargain.
While this type of pricing benefits ticketing companies and artists now, it’s possible it won’t forever. People may get fed up with it after a while. I’ll be interested to see what happens if they do. Now that you’ve seen the pros and cons of dynamic pricing, where do you stand? I can see its benefits, and I acknowledge it can help the artist, but getting that at the cost of fans doesn’t feel right to me. Let me know your thoughts in the comments! Thank you for reading, and let’s hope we find some affordable concert tickets this year!
Written by Kristen Petronio
Special thanks to the sources that helped me put together this blog…
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