For the ticket geeks amongst us...

AEG Presents President Rick Mueller Talks Ticket Sales at Canadian Music Week: 'If You Sell Out the First Day, You're Underpriced'

[www.billboard.com]

“If you sell out any show the first day, you’re underpriced,” declared AEG Presents president Rick Mueller during his onstage “conversation with” Bob Lefsetz, during Canadian Music Week in Toronto last week.

The music industry pundit and Lefsetz Letter namesake got the Taylor Swift business out of the way -- “no, the tour is doing great,” said Mueller, contrary to several New York Post reports -- before getting into on-sales and flex and dynamic pricing.

What’s the biggest challenge facing you today? Lefsetz asked.

"Trying to put shows on sale in this day and age when you have a hot tour, you try to service the fan the best we can…the amount of hurdles there are getting a ticket to the consumer through what is the secondary market agenda, the band fan club agendas, how scalpers in the secondary market try to manipulate those systems, how they attack ticketing systems, that putting a ticket in the hands of the fan in this day and age is a very difficult thing to do and execute it well.”

He cites the recent sale of K-pop boy band BTS. “They couldn’t be hotter. Blew out four shows at the Staples Center [in Los Angeles] in 10 minutes, but the attacks that we would see on the ticketing system from malicious bots, and people who are just trying to manipulate that in the secondary market, is such a head-scratcher right now, how you handle it and how you keep up with it.”

Lefsetz, surprised to learn the top ticket price is $250 and that scalpers are still buying them, was met with this hard-and-fast rule from Mueller: "If you can sell out four shows at Staples Center in 10 minutes, you’re underpriced. If you sell out any show the first day, you’re underpriced.”

Lefsetz then moved on to “flex pricing,” flexible or dynamic pricing, which allows the artists and venues to adjust the price in real time, based on demand. “That’s been a big thing in the press in the last six months, the sea change in price,” he said, citing The Rolling Stones, an AEG-promoted act.

“I think almost every arena show, we do have flex pricing,” Mueller said, explaining, “There’s probably two differences between flex pricing and dynamic pricing, so typically flexing in arenas have been if you have had a price level 1 or price level 2, you hold seats in between those sections and you decide what that’s going to be, depending on how hot your on-sale is or you're going to go up with more, you’re gonna take a lower price.

“The dynamic price is really to try and mirror what market pricing is. We touched briefly on this one when I did your podcast a few months ago. Neil Young did a theater tour several years ago. It’s the first time we did a solo acoustic theater tour in a long time. Tickets came out. He was charging $275, I think, and people were in a bit of an uproar at the time because those were some pretty aggressive prices because the fan felt entitled to see Neil for $50, or whatever they felt the appropriate price was.

“Well, Neil sold out like that, those theaters, and people were pissed off about it. I looked at it as if Neil had played for $50 or $75, scalpers would have found a way to get the tickets, and they would’ve made a healthy margin off of that. So my opinion is people who’ve invested in this equation -- the artist, the manager, the promoter, the agent -- deserve a share in that gross, not the secondary market, not people who are opportunistic. Scalpers on that show are probably making more money than I am, as the promoter, so I think that you can’t change what the market price is for your ticket.

“There is technology coming out that will be able to -- here’s two paths you can go: You can charge market pricing, or you can try and use technology to try and lock the ticket price and make it non-transferable. That will dictate if a fan and an artist has a desire for their fan to buy a ticket for that $50 to $75 range, or whatever it is they want to charge, having a digital ticket, a true digital ticket, where it’s assigned to you or to me, whoever buys that, will be able to kind of keep that continuity in place of what the artist intended to charge.

“So I’m a big fan of going either way depending on what the artist’s agenda is. I would like to see us maximize revenues whenever we can.”



Edited 1 time(s). Last edit at 2018-05-19 19:00 by bv.

Good share! Thx -

This article only tells part of the story. I've researched and written about
this issue on another site, but don't feel like digging it up at the moment.
But here's the full story in digested form:

1) With dynamic pricing, If You Sell Out Before The Day of the Show, You're Underpriced

2) Combined with dynamic pricing, flexible capacity is used to assure sell-outs

3) But the real kicker is Lucky Dip, which I believe is a system
patented by the Stones and currently unavailable to other artists, although
it will be licensed to others in the future. Further, Lucky Dip is not a gift
or giveaway but rather (and I know this is counter-intuitive) Lucky Dip is
actually, combined with dynamic pricing and flexible capacity, a brilliant
innovation, controlled by sophisticated algorythms, that maximizes revenue.

(I've done a patent search on Lucky Dip and come up empty, although there
are less sophisticated ticketing systems that are indeed covered by patents,
So I believe the Lucky Dip patent has been registered in one of the countries
that do not allow patent searches, but whose patents are still internationally
recognized, the same places where for example apple and google hide some of
their patents until they bring the product to market and make the patent public)



Edited 3 time(s). Last edit at 2018-05-19 16:11 by rev20.

rev20 I'd be interested in seeing what you have written elsewhere. You're right that LDs are an essential part of the strategy, though I don't see how it is a patentable invention. There has been much discussion of ticketing/LDs on the forum - search for threads in which I've participated (not all of my posts are about tickets, but many are!).

syrel

It all sounds like a scam this flexing and dynamic pricing - whether it's the greedy promoters or scummy scalpers, it's the average fan that gets the short end,

As is already done by many to keep prices reasonable, the artist/promoter can simply require the purchaser to show up at will call with id and credit card, and along with their guests be ushered directly into venue.

_____________________________________________________________
Rip this joint, gonna save your soul, round and round and round we go......

Quote
Hairball
It all sounds like a scam this flexing and dynamic pricing - whether it's the greedy promoters or scummy scalpers, it's the average fan that gets the short end,

As is already done by many to keep prices reasonable, the artist/promoter can simply require the purchaser to show up at will call with id and credit card, and along with their guests be ushered directly into venue.

I think they would rather not keep prices reasonable and allow for the fact that brokers would assume some of the financial risk of producing an event. And making all tickets will call adds to the expense. Venues hate this and promoters only do it very reluctantly at the request of the artist.

Lucky Dips - if they have unsold tickets at the back of the floor that aren't really worth $500 they can put the buyers there while selling the upper rows to someone who wants to "only" pay $200. Definitely part of the flex/dynamic pricing strategy.

Quote
Hairball
It all sounds like a scam this flexing and dynamic pricing - whether it's the greedy promoters or scummy scalpers, it's the average fan that gets the short end,

As is already done by many to keep prices reasonable, the artist/promoter can simply require the purchaser to show up at will call with id and credit card, and along with their guests be ushered directly into venue.

You may not like it (which is understandable), but it's not really a "scam" for the seller of an item to try to sell it for the highest possible price. That's how the whole social system works (again, whether you approve or disapprove). What's interesting to me is that there are many commodities where the price has always fluctuated according to demand (houses, airline tickets, stocks and shares...) but the internet is enabling more and more, different kinds of commodities to take on the same kind of dynamic pricing (Uber rides, concert tickets). Some people seem very upset about that (not just on this forum).

syrel

okay, syrel, i'll try to be pithy about what is not recognized about Lucky Dip

by way of preamble, unlike a typical hardcore Stones fan, i am a great admirer
of Oldham and Oldham-on-steroids (jagger) and their business machinations. one
of my first posts 24 years ago on Undercover, when people were bitching about
ticket prices, was "hey, i'd be happy if they could get $20,000 per ticket.
I wouldn't pay it, but I'd be happy for the Stones".

This did not win me many friends LOL. and its been downhill ever since LOL.

also, there is even a more "dark", if you will, fourth facet of the strategy.
Besides dynamic pricing, flexible capacity, and lucky dip, there is
secondary market control, that is, wherever it is legal, moving tickets in
and out of the secondary market, aiming to get a cut out of what is sold at
above face value...

anyway, Lucky Dip: I will use a simplified static example, with only one stage
location possible, no legal way to exploit the secondary market, no
current market-survey to better estimate demand, no timing of the Lucky Dip
and other ticket release(s), no use of some Lucky Dip as a goodwill gesture,
and no special deals for platinum card holders or frequent buyers of
Charlene's Chicken Cutlets (tennessee residents only)

In our example, it is a 40,000 concert-capacity stadium with 2,000 of those
seats being "marginal", that is, extreme side view and/or somewhat obstructed viewing...

so what you do is sell 2,000 lucky dips and go for the throat on the other
38,000. obviously, if you've underestimated demand, you immediately have sold
38,000 at premium price and the 2,000 crap seats at the bargain price, and
you've done very well. But really you've blown it! you set the prices too low.
you could have made more.

so that's why you intentionally first set the initial prices very high. remember,
you don't want to sell out til the last day.

so a more typical pattern would be: you sell a certain amount each day, and
dynamically adjust the price each day to keep on your selling target, day by day.

and this is where Lucky Dip comes in. Let's think about Taylor Swift versus
the Stones, and a market where they have about equal demand at equal prices.
30 days before the show, Taylor Swift has to start radically reducing her
prices or she's gonna have a lot of empty seats. But the Stones don't!
They can hold on to their premium prices much longer because their back-up
plan is already in place. Lucky Dippers will be moved into any unsold seats,
an equal number of marginal seats will simply disappear from the books,
never having really existed. So the boxscore will read, for example,
38,765 out of 38,765 possible. A sell-out!

What you're doing is making sure you get the full benefit of those last-
minute deep-pockets purchases, a law firm buying for one of its clients,
a rich guy buying for one of his mistresses, etc

So, in summary, it is this ability to hold on til the last minute to your
premium pricing which is how Lucky Dip maximizes revenue.



Edited 6 time(s). Last edit at 2018-05-20 08:02 by rev20.

The Rose Bowl Taylor Swift shows heat up in the last week the prices on both secondary and primary (I think) were adjusted upward.

Hi rev20, sounds like you and I think very alike... I agree with your analysis about LDs, and about secondary markets.

I'm particularly interested in what's going on in the secondary market for this tour - prices for Golden Circles are plummeting already. Clearly these tickets were priced at the top end of what the market could stand - there are still primary face value tickets available and people looking to resell are therefore having to significantly undercut the primary market. However, without hard data, it is impossible to tell whether this is the system working perfectly (from a promoter's perspective), or whether it is genuinely because ticket sales have been much slower than expected. I don't believe the 70,000 sold figure from Dublin (though I don't believe it was a box office failure either; my guess was 60-62k at the gig).

syrel

Irish Press, which I suppose is really experienced on estimating crowds at Croke Park. reported unanimously 70,000. And, based on the photos and clips I have seen, it is right. Croke is one of the three - four huger stadiums of the Europe. If there were 60,000,I guess we would see much more and larger empty seated sections.

Quote
laertisflash
Irish Press, which I suppose is really experienced on estimating crowds at Croke Park. reported unanimously 70,000.

Why do you assume they estimate crowd sizes? They read press releases.

EDIT: Just to add, I don't have any moral position in any of this. I don't cheer if they sell out, cry if they don't, or feel pleased that 'rip-off' promoters/artists have 'failed'. I'm just very interested in the business strategies of ticketing.



Edited 1 time(s). Last edit at 2018-05-20 10:43 by syrel.

i tentatively agree with laertisflash

the capacity was originally listed as 80,000 so since it certainly looked
7/8 full, i will guess that the flex-capacity was right around 70K. we'll see

syrel, you are following ticket sales and the secondary market far closer
than me for this tour, so i have to accept what you say about demand

the last time i closely followed such numbers was for the aptly named
Zipcode tour (see my comment on targeted marketing below)

in fact on shidoobee for a while i ran a daily market report
that tracked both selling prices and amount of tickets on the
secondary market

on the basis of this market report, i was able to project with a few
days to go a virtual sell-out for the first show, while others were
still projecting huge sections being tarped-out. i was also able to
project very early on that the Orlando show would be far more packed
than the Bigger Bang show at the same venue

yay me.

it was the Zipcode tour that taught me about targeted marketing,
which involves such things as civic pride and local sports teams and
local businesses and billboards to make the show locally viral even if
it is nationally and internationally only a blip

thus targeted marketing becomes the fifth spoke on our wheel...

dynamic pricing, flex capacity, lucky dip, secondary market control,
and targeted marketing

so this is why where this sudden ticket market downturn has blind-sided
both Swifty and not-so-swifty (bono). mick and the stones withstand!



Edited 3 time(s). Last edit at 2018-05-20 11:17 by rev20.

Ah, I remember your Shidoobee analyses! For me on Zipcode I did daily monitoring of the premium ticket prices for a couple of the shows, but didn't come up with anything conclusive.

Despite all of this, I still end up overpaying for tickets

"Why do you assume they estimate crowd sizes? They read press releases"

Syrel, I think that Press, reporters, are estimating crowd sizes, when they write articles for the next day. These estimates can be confirmed or denied later, by the official numbers. By numbers published on Billboard's Boxscore.

Usually, the first estimates (by Press) are, more or less, right. But I also claim that the number 70,000 seems realistic, judging by the clips and the photos.