The problem with San Francisco Opera ticket prices(perfectprice.io) |
The problem with San Francisco Opera ticket prices(perfectprice.io) |
They talked about how it's more complex then resellers charging mark-ups to meet market demand. Often, venues have either social pressure or pressure from artists to keep prices low. The idea is that if the venue sells Katy Perry tickets at market price (say $2000/each), her fans are going to be upset with not only the venue but also her, so her management will make sure that doesn't happen.
However, simply lowering ticket prices means losing out on tons of money for both the venue and artist. One solution that is used is: the venue offloads large chunks of their ticket pool to ticket resellers (ticketmaster/stubhub) under the condition that they split a % of the markup with the venue and artist. The reseller absorbs the social blame for 'egregious' ticket prices, the venue/artist keep more of the profits than if they had kept prices below market price.
Opera companies run like VCs: most of the audience/startups are losses, but a few of them are donors/unicorns who keep the opera/VC afloat.
But there's an arbitrage from reselling, so clearly retail prices can be raised without hurting attendance significantly?
Every flight/hotel-comparison website has its goal to make the yield management team as ineffective as possible. Being too effective means running your suppliers out-of-business!
Sure, the seller might feel upset that they lost out on a slice of the profit, but that doesn't imply that the reseller is in the wrong.
That's very much an opinion, not a fact.
By that logic and taking it to the extreme then it's perfectly logical some drug companies are raise the prices on their essential drugs, leading to prolonged sickness and death for some that can't afford the markup. I mean, they don't want to leave profit on the table!
But people who can afford your artificially-cheap tickets can sell them to folks who can afford the market price, making them better-off.
It went so far that ticketing companies even gave them ticket stock for re-selling with a high margin to get a higher cut of the ticket sale. This especially happens for very popular concerts where the demand is high and people are willing to pay.
Their conclusion that "Demand and Supply is out of balance" seems to assume that each buyer is the same and has some probability of buying at a given price. Instead, there are a few people who buy at the bigger price without thinking. The fact that these people exist does not mean that raising the price won't decrease the number of buyers.
So let's untangle these two sentences near the end of this essay.
1. I believe that the San Francisco Opera should raise its prices to match - or exceed - what this ticket scalper site is asking. 2. But lower ticket prices will usually result in more butts in seats.
The entire post is written from the perspective that the Opera should be making the absolute highest amount of money per ticket sale possible. But at the end of the post, the author very casually mentions that this is going to probably mean a lot fewer butts in seats watching opera. And then completely ignores it, going on to suggest ways the SFO could learn from TicketMiddleManThatHopesYouDon'tThinkVeryHard.Com.
I have not been to the San Francisco Opera; I do not know how much it's focused on the bottom line. But I would bet money that, if offered the choice between getting about twice as much per seat, and getting more viewers, the SFO would probably choose the latter. Because arts organizations don't just exist to make money; they exist to spread their art. You have to pay enough attention to the bottom line to be able to pay everyone involved enough to keep doing it, but it should never be an organization's only concern.
The author of this post also offers us no statistics on how many tickets to the SFO are actually bought though the scalper site that's selling them for about twice what they cost versus ones sold directly by the Opera. The fact that someone built a robot that automatically scrapes a ton of venues and offers their tickets at 200% markups, and did some SEO tricks to make it pop up higher than the actual site for people who don't block ads, doesn't mean they're automatically capturing the money of everyone who types "san francisco opera tickets" into Google. Without evidence of that, I seriously doubt his thesis that this is money the SFO is leaving on the table.
I am also pretty amazed by the fact that the closing paragraphs suggesting "dynamic pricing" and noting that it can be very complex to do don't casually link to any of the services provided by the company whose blog this is on, because they seem to be trying to do just that.
tl;dr:
1. the existence of a bot that offers San Francisco Opera tickets at a crazy markup doesn't mean enough people actually buy through it to be worth chasing,
2. raising prices to match this bot probably runs counter to the part of an opera house focused of Getting More People Interested In Watching Opera Instead Of Playing Video Games Or Whatever.
3. geeze dude you write an essay this long that's a stealth ad for your company and you can't even slip a link into the concluding paragraph?
vs
> Nearly every major venue and sports team sells to brokers. This brings cash in the door and reduces the risk to the venue.
These two comments are in direct opposition to each other. I don't like scalping of tickets, but if a venue is knowingly and willingly selling to scalpers, then obviously they do get some net benefit.
Not exactly. I mean yeah, I sometimes pay them, but I simply go out far less because of them. So choose wisely if you're going to go that route!
Sure, if there's nothing available or available seats aren't great, I might suck it up and go to a ticket broker if I really wanted to see something. But my assumption going in would be that I should expect to pay a big premium.
Maybe there are people out there who aren't price sensitive and default to making ticket purchases through StubHub or whatever, but I have trouble believing it's the norm.
I'd just add that although I don't really think dynamic pricing is a good idea here, presumably the San Francisco Opera, like many such organizations, does price discriminate is various ways: VIP seating, student tickets, more expensive weekend tickets, etc.
So sell out shows do happen, at more or less standard prices that are surprisingly affordable, and much less than big name pop artists charge for their tickets. But the sell out shows are more or less at capacity. There certainly aren't thousands of people willing to pay five times as much for a seat.
And in fact there is absolutely no way that income from ticket sales would be enough to keep the company running.
The rest of the money comes from sponsors and from Arts Council funding. Getting money from both is a highly skilled full-time job.
This company happens to be very good at fundraising, which is why they still exist. (Actually they're very good at everything, not least the artistic side.)
Would on-demand pricing work? Absolutely not. The audience is older and fairly faithful, and they tend to feel they have a personal relationship of sorts with the company.
Variable on-demand ticket pricing would completely destroy that relationship, and I would be hugely surprised if it didn't also make sponsors feel like less like contributing.
Except that in reality they can't because other large companies and people who have this down to a business buy all your tickets first. Also, money does not actually replace not getting to see a unique show. We can see this by the fact that not everybody sells their cheap tickets onwards.
Long story short - the group of people who really wants to see the show but can't afford it, and the group of ticket scalpers, are really, really not the same groups, 99% of the time - unless all your fans are ticket scalpers. This is pretty much by definition. Why is worship of capitalism more important than a person's desire to ensure their fans can actually afford to go see them?