3 ms·

That doesn’t explain why tho

by zandl 8y ago

mamurphy 8y ago
(Random numbers to illustrate a point:) If the symphony was an auction system, tickets might sell for $110 each. It fills up with a $100 each first-come system, most people who want tickets can get them, tickets are sold at only a $10 discount of auction value, and it "feels fair." The first-come-first-serve system works well for the symphony. If the pop-star concert was an auction system, tickets might sell for $999 each. With first-come-first-serve and a set $100 price, each ticket is sold at a $899 discount of auction value. Moreover, most people who want tickets cannot get them directly as they sell out instantly because of the relatively steep discount (90% discount vs 9% discount). The first-come-first-serve system only works well when prices are set near a market-clearing value, like with the symphony. As stated elsewhere in the thread, people would get super upset at $999 tickets. They would think "those greedy pop-stars price tickets way too high, it's so unfair." So pop-stars are unwilling to set prices at the high market-clearing value, and use the first-come-first-serve with way underpriced tickets (getting some money back by having agreements with scalpers or Ticketmaster). Demand way exceeds supply, tickets sell out instantly (mostly to scalpers). Most fans never get to see the concert at the "fair-seeming" $100 price and are upset at "those nasty scalpers" and pay near $1000 to see the concert anyways. But the scalpers (or Ticketmaster) are the ones whose reputations are harmed, saving the artists' reputations.
- bduerst 8y ago
  The purpose of a pricing strategy is to maximize the capture of value from a given market. Auction pricing works when: 1) It is a single event-based POS 2) Every member of audience has the same level of knowledge of what is being sold For a symphony, the audience is smaller and more homogeneous than a pop-star concert. Symphony attendees are typically repeat buyers, who share similar knowledge of what they're seeing, and will know well in advance if they are going to attend. Pop-star audience goers will make the decision to buy and will need to confirm purchase at different time points before the event. They also have varying degrees of knowledge as to how much the ticket price really should be, meaning they are not going to be good at bidding and won't fully participate.
- deleted 8y ago
  [deleted]
Benjammer 8y ago
First come first serve doesn't work for most concerts and live sporting events because the true market value, meaning the rate at which "the market" will bear a price-point and still relatively easily sell out all the supply (seats), or at least enough to cover costs for the venue/act/promoter, is well above what is printed on the physical ticket as "market value." I would guess that Symphony tickets on the secondary market simply don't fetch enough _margin_ to justify the type of extensive secondary inventory sales infrastructure that pop concerts and pro sports games do. You're starting to see this change though, with NYC broadway at least, with shows like Hamilton and The Importance of Being Earnest fetching just as large secondary market margins as any pop concert. If you want data to illustrate this point, there's an article on The Ringer site a few years back that was written by a guy who was the CEO of ticketmaster for several years. He said "If you add up the face value for every seat in the venue, that total number is _less_ than what most popular artists are paid out for that show in just the artist appearance fee." This should show you how fake the entire idea of "face value" is...

That doesn’t explain why tho

by zandl 8y ago

That doesn’t explain why tho

(Random numbers to illustrate a point:) If the symphony was an auction system, tickets might sell for $110 each. It fills up with a $100 each first-come system, most people who want tickets can get them, tickets are sold at only a $10 discount of auction value, and it "feels fair." The first-come-first-serve system works well for the symphony. If the pop-star concert was an auction system, tickets might sell for $999 each. With first-come-first-serve and a set $100 price, each ticket is sold at a $899 discount of auction value. Moreover, most people who want tickets cannot get them directly as they sell out instantly because of the relatively steep discount (90% discount vs 9% discount). The first-come-first-serve system only works well when prices are set near a market-clearing value, like with the symphony. As stated elsewhere in the thread, people would get super upset at $999 tickets. They would think "those greedy pop-stars price tickets way too high, it's so unfair." So pop-stars are unwilling to set prices at the high market-clearing value, and use the first-come-first-serve with way underpriced tickets (getting some money back by having agreements with scalpers or Ticketmaster). Demand way exceeds supply, tickets sell out instantly (mostly to scalpers). Most fans never get to see the concert at the "fair-seeming" $100 price and are upset at "those nasty scalpers" and pay near $1000 to see the concert anyways. But the scalpers (or Ticketmaster) are the ones whose reputations are harmed, saving the artists' reputations.

bduerst 8y ago
The purpose of a pricing strategy is to maximize the capture of value from a given market. Auction pricing works when: 1) It is a single event-based POS 2) Every member of audience has the same level of knowledge of what is being sold For a symphony, the audience is smaller and more homogeneous than a pop-star concert. Symphony attendees are typically repeat buyers, who share similar knowledge of what they're seeing, and will know well in advance if they are going to attend. Pop-star audience goers will make the decision to buy and will need to confirm purchase at different time points before the event. They also have varying degrees of knowledge as to how much the ticket price really should be, meaning they are not going to be good at bidding and won't fully participate.
deleted 8y ago
[deleted]

Benjammer 8y ago

First come first serve doesn't work for most concerts and live sporting events because the true market value, meaning the rate at which "the market" will bear a price-point and still relatively easily sell out all the supply (seats), or at least enough to cover costs for the venue/act/promoter, is well above what is printed on the physical ticket as "market value." I would guess that Symphony tickets on the secondary market simply don't fetch enough _margin_ to justify the type of extensive secondary inventory sales infrastructure that pop concerts and pro sports games do. You're starting to see this change though, with NYC broadway at least, with shows like Hamilton and The Importance of Being Earnest fetching just as large secondary market margins as any pop concert. If you want data to illustrate this point, there's an article on The Ringer site a few years back that was written by a guy who was the CEO of ticketmaster for several years. He said "If you add up the face value for every seat in the venue, that total number is _less_ than what most popular artists are paid out for that show in just the artist appearance fee." This should show you how fake the entire idea of "face value" is...