Dynamic Pricing: Two Minutes Too Late?

Dynamic Pricing: Two Minutes Too Late?

As reported by the New York Post, among other popular press, Ticketmaster has figured out that dynamic ticket pricing could help them capture additional profits, sell more tickets and head off the secondary market. But, this announcement, almost two years after I wrote a call for dynamic pricing, two minutes too late.

First, we need to understand why Ticketmaster is pursuing dynamic ticket pricing now. As The New York Post pointed out, “According to concert tracker Pollstar, total ticket revenue dropped to $4.25 billion — the first decline since 1995.” and that “Ticket sales for the top 100 acts fell from 40.5 million to 35.7 million, the lowest number since 2005.” Theoretically, implementing dynamic ticket pricing would enable Ticketmaster to respond to declining revenues by capturing more profits on the more popular tickets while pricing less desirable tickets to consumer demand. This all makes sense, but I wonder if the secondary market beat Ticketmaster to the party in their own way.

The secondary market is growing while the primary market is declining. Though there is no central source for secondary market ticket sales, StubHub is a good litmus. According to a spokesperson, “we have seen double digit percentage sales growth, year over year.” In addition, the StubHub Annual Report states that “Gross dollar sales of concert tickets increased 20 percent from 2009.” While StubHub and other resellers I have consulted describe average ticket prices on the decline, the secondary market remains healthy with prices above $100 – well ahead most primary market average prices.

The observation I make is that while Ticketmaster has taken its time coming to this realization, the secondary market has become a dynamic ticket pricing mega-facility. Bolstered by the popularity of ticket aggregators like StubHub, SeatGeekFanSnap and TicketLiquidator, the secondary market has become a lot more consumer friendly. By no means is everyone happy with the secondary market, but given the choice between Ticketmaster’s high fees and the difficulty encountered finding tickets for popular events, the secondary market is a not a shabby alternative. Time will tell if dynamic ticket pricing will help Ticketmaster, but I think ticket resellers are a couple of years ahead of the game.