Below is a guest post from Adam Webb, founder of PR agency AL1 Communications, and campaign manager for FanFair Alliance, the UK-based campaign against online ticket touting.
Writing in a personal capacity, he voices concern about the growing US trend for “dynamic pricing”, where tickets in the primary market are inflated according to the prices set by touts on platforms such as StubHub, Vivid Seats, SeatGeek and viagogo.
In theory, dynamic pricing enables artists to recapture value being lost to the secondary market, although Webb argues that the impacts might actually be counterproductive – and particularly in the UK, where there’s been significant progress in the battle against audience exploitation by touts.
“With a microscope now permanently fixed over the economics of music streaming, the seemingly static cost of a monthly subscription service has become a key debating point in how artists and songwriters are rewarded for their work online. This was all recently explored in a recent Music Ally guest post by former PRS and Spotify economist Will Page – who compared the complex and counter-inflationary pricing dynamics of streaming against the rocketing cost of Malbec.
It’s a clever and thought-provoking read. Albeit, while the cost of streaming seems permanently locked at £/$/€9.99 (over even less for a family plan) elsewhere in the recorded sector there are evident counter trends – the rising price of a vinyl album, for one. Or the staggering trade in the catalogues of heritage artists, or the astronomical price tags attached to a tiny proportion of NFT’s and other ephemeral novelties. Safe to say, it’s a more complex picture than it first appears.
However, the more pronounced increases in consumer prices are not in the recorded market – they’re in live. And in some instances, particularly in North America, the cost of a concert ticket is making the price of a vintage red look like, well, pretty small beer.
Prices have been rising for some time
Even before the pandemic, evidence suggests that ticket prices have been steadily rising for some time. Published in December 2019, a Wall Street Journal investigation found the average price to attend the Top 100 US tours was up 55% in a decade. Clearly, there were many factors driving this trend in 2019, and in 2022 there will be a number more – such as runaway inflation, the supply chain crisis and the ongoing impacts of the pandemic. Vladamir Putin’s illegal invasion of Ukraine has, of course, potential to magnify all these negatives.
However, at least partly, these increases were attributed to the adoption of what is termed “dynamic pricing” or “market based pricing”. This is where tickets are issued without a stated face value, and where the cost of entry rises and falls depending on “demand”.
The logic here appears sound. Unlike the infinite world of streaming, all live events have a limited capacity. There is a limited number of tickets. At the hottest shows, demand will outstrip supply, especially for the prime viewing locations – as evidenced by listings in the so-called “secondary market” (ie sites like StubHub, viagogo, SeatGeek and Vivid Seats) which suggest that some audience members will pay significantly higher than the “face value” determined by the artist and promoter.
In this scenario, the touts and speculators – who invest nothing in the show – grow fat off the cream.
Rather than allow secondary resellers to capture this “value”, so the theory goes, dynamic pricing allows the artist to sell primary inventory closer to “the market price”. Meaning they too can share in the spoils. In turn, this has also helped fuel an argument, made in that Wall Street Journal article by Live Nation CEO Michael Rapino, that concert tickets have historically been “underpriced”.
It was a viewpoint reiterated in Live Nation’s most recent earnings call on February 23rd, which revealed average 2021 ticket prices were up an astonishing 20% on 2019 – and mostly due to a substantial increase in the adoption of Platinum (re: dynamic) ticketing. Veering into corporate speak, Live Nation CFO, Joe Berchtold, referred to the value gap between primary and secondary tickets as an “unrealized pricing opportunity”. Platinum was a “great tool to get a higher ticket price”, he added, before stressing its significant growth potential, given dynamic’s “low penetration” across Live Nation’s global business.
“Our job,” reiterated Live Nation’s President & CEO, Michael Rapino,”is to figure out how to get all of that secondary into the primary bucket for the artist. So they make the dollars and then we, obviously, that fires our flywheel.”
However you want to phrase it, this is certainly a seductive argument. Not only for shareholders and investors, but for artists too. By pricing more “efficiently” (ie “expensively”) you’ll make more money, and you’ll undermine the touts. What’s not to love?!?
Do fans want dynamic ticket pricing?
This is a seductive argument for the industry – ie make more money, and clobber the touts. But whether dynamic pricing is desired by audiences is a thornier question, and the practice is certainly not without its controversies.
For one, dynamic appears to be wholly dependent on secondary platforms setting the benchmark for pricing – which (a) doesn’t exactly create incentives to crack down on their exploitative practices; and (b) ignores the endemic speculation on these platforms where touts frequently list tickets they don’t actually possess.
Anyone who thinks viagogo offers some sort of pure litmus test of supply / demand, is either incredibly naive or off their rocker. That website, in particular, appears to be ridden with what are effectively “phantom” tickets.
Dynamic also means promoters and artists are, to some extent, ceding control of their pricing strategies to the high-volume ticket touts that dominate these platforms – some of whom may have acquired those tickets unlawfully.
Such controversies are part of an recently announced putative nationwide class action against Live Nation, which accuses the world’s largest promoter of enabling scalpers to inflate the secondary market, and using that as justification to “dynamically” increase primary ticket prices and primary service fees through Ticketmaster.
Yes. Read it. 10% of all Tix reserved for charity. 100% of money above base price on each ticket goes to charities in that city. Charity price fluctuates to counter scalping. When we have final numbers will list charities. Over $3m raised for charity in first 48 hrs. https://t.co/ynAbtrSQT0
— Tom Morello (@tmorello) February 15, 2020
The cultural differences in ticketing
There are cultural aspects at play here too. In North America, for instance, it’s fair to say there’s a greater acceptance of “secondary ticketing” than in other parts of the world. The views of former Culture Secretary Saijd Javid, that ‘ticket tout’ is simply another word for ‘entrepreneur’ would be far more commonplace over the Pond, as is the notion that this is just good, honest free market capitalism in action.
It’s also true that the US has fewer consumer protection laws to disrupt exploitative resale, and that undercutting secondary prices through the use of “dynamic” could feasibly be used as an antidote to online touting. This, in essence, is the business model of a service like Lyte, which sets resale prices at slightly below those of commercial resellers. Similarly, some artists, such as Rage Against The Machine, are seeking to make dynamic more palatable by redistributing “proceeds above the base price” to charity. It’s not fixing the problem exactly, but it is a workaround.
However, in the UK the situation is different. We do have consumer protection legislation in place. All the biggest primary ticket agents, including Ticketmaster, offer “capped” resale services, allowing a customer to sell their ticket for the price they paid or less. Our market is moving in a very different direction.
Meanwhile, thanks in part to the FanFair campaign, secondary sites like viagogo and StubHub have been forced to provide users with a great deal more information and transparency. As a result, not only are these legacy platforms in commercial decline, but it is eminently possible for artists performing in the UK to implement strategies that reduce or even eradicate online ticket touting.
It is then the artist and promoter who determines the “market price”, as it should be, not the touts.
This hasn’t stopped some from utilising dynamic pricing in the UK, of course, the vast majority through Ticketmaster’s “Platinum” service. However, this also creates something of a conundrum because, quite logically, if you want to benefit from dynamic, then you’ll need at least a proportion of tickets on viagogo or StubHub. Otherwise, where’s the “market” to benchmark against? Which slightly obliterates the idea of dynamic as a panacea to tackle ticket touting. There may be arguments for this in the US, but it’s a non-starter in the UK. In the UK, dynamic is solely about increasing revenue.
Short term profit versus long term relationships
In itself, this then raises some slightly more esoteric issues around audience engagement; and about balancing the short-term imperative to make a profit, with the cultivation of long-term relationships between an artist and their fanbase, and with live music generally.
Most promoters operate a high risk and low margin business model. They’re facing ever-greater demands from artists, and ever-greater costs. However, this is also a fan-dependent and consumer-facing sector. For live music to retain long term sustainability, particularly in the present economic environment, then surely it’s vital to keep attracting new audiences – particularly younger audiences, and from the widest possible social demographics. For venues in particular, you want these audiences to attend multiple shows. That means cultivating return business, rather than splurging their budget on a single event.
Such arguments are commonplace in football, where there are often heightened sensitivities about the “prawn sandwich brigade” pricing out and riding roughshod over the interests of supporters – all issues that came to a head with last year’s European Super League debacle, which pushed the UK Government into instigating a “fan-led” review of the game.
These are difficult circles to square, of course. However, with the full-scale return of live music likely in 2022, it’s somewhat surprising that we’re not having more debates and conversations around ticket pricing. Significantly more artists derive a living from live performance than they do from streaming. They have far more skin in this game and its long term future. Meanwhile, as with football, the pandemic has also served to reaffirm the crucial importance and support of fans to the viability of live music – many of whom loyally held onto tickets during the shutdown.
“If you think your tickets are worth £300, then have the confidence to charge £300 a ticket”
From my own perspective, running a campaign to tackle audience exploitation by parasitical online platforms, I just hope artists, managers, agents, and promoters can comprehend why there are more effective anti-touting strategies than dynamic pricing – at least in the UK. And why hitching your ticket prices to the artificial constructs of a viagogo or a StubHub might become seriously problematic.
Of course, artists and promoters should charge what they feel is appropriate for their tickets. Live shows are complicated and risky undertakings. Some are bigger than others. Some are worth more than others. Albeit nebulous concepts like “market price” are mostly in the eye of the beholder, while attempts to quantify them often appear like a hunt for El Dorado.
And maybe that’s the rub. If you think your tickets are worth £300, then have the confidence to charge £300 a ticket. There’s nothing wrong with that, but, for the greater good, let’s stop hiding behind excesses in the secondary market – not to mention some pretty sketchy economics – to justify it.”
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