Monday, 28 November 2011

First come first served

Is the natural, normal way of selling tickets: as fast as you can, until there are none left.

But when the demand is very much higher than supply, and everyone knows it, everyone's worried there will be none left, so try to secure tickets as soon as possible. The Principal of Scarcity - "we want what we’re afraid we can’t have" - means that the risk of not being able to get tickets when we do want them turns into an even stronger desire to get tickets in the first place. Everyone hits the websites and phones the second they are open, servers start to melt, and hilarity ensues.

This is especially awkward when the event in question is publicly funded, or for other reasons the limited stock of tickets must be seen to be allocated "fairly"; one's ability to get to the computer and press F5 repeatedly at the crucial moment is not a particularly fair measure on which to allocate tickets.

Dynamically raising ticket prices based on speed of demand might blunt this inital surge, but is still basically FCFS.

Selling tickets at auction can work. I've mostly seen it done for certain charity events, where the point is to show off how rich and generous you are by bidding way over the top for tickets, of course in the name of a good cause. When TicketMaster put a large proportion of its allocation for a some concerts directly on its aftermarket auction site TicketsNow without first offering them to the public at face value, people were understandably upset: a Class Action lawsuit, (recently settled, it appears) was the result. But if the event promoter deliberately chose to auction the tickets in the first place then there would be much less to get cross about.

The other option is the ticket ballot or lottery. Glastonbury Festival's adoption of the ticket ballot has changed the annual scrum of ticket buying panic into a much more orderly affair. Registering in ones own time means the systems are not overloaded, and being able to batch-process the orders also means that the credit card authorisation service, often a bottleneck for large onsales, is no longer a problem: having selected the winning applications from the ballot, the authorisation no longer has to be done in real time.

A brilliant example of how to completely cock this up is the 2012 London Olympics. Because the tickets are divided between all of the different events, each drawn from the ballot separately, the ballot does not diffuse the innate human psychological timebomb that is the principal of scarcity. Rather than putting their name down for only the events they wanted, and waiting patiently for the ballot as with a Glastonbury ticket, many people wanting tickets - or, more accurately, worried that they wouldn't get tickets - applied indiscriminately for everything. I was told an anecdote last night about a couple who applied for £10,000 worth of tickets, and who then got "lucky" (or unlucky) in the ballot, and who now find themselves obliged to attend a large number of Olympic Figure Skating Quarter Finals and the like, tickets with a face value of £5,000, and no opportunity to either resell them or return them to the box office. In this case the natural response of someone trying to maximise their chances of getting a ticket for something worked very much at odds with the process, and I expect the Olympic audience is going to be largely comprised of people who really wanted tickets for something else, aren't very interested in the event, but have shown up because they've had to pay for the tickets anyway and don't want to "waste" the money.

A simple fix would have been to offer Olympic Ticket buyers a list of events in order of preference, and if their number came up, they would get tickets for the top not-sold-out event on their list. That way, they'd be buying a predictable number of tickets rather than a potentially large liability, for events that they actually wanted to see.

An innovative use of the ballot - and one which worked well, though I've not seen it used since - was the Live 8 concert. Wikipedia says:

Although the concerts were free, 66,500 pairs of tickets for the Hyde Park concert were allocated from 13 to 15 June 2005, to winners of a mobile phone text message competition that began on Monday, 6 June 2005. Entry involved sending the answer to a multiple choice question via a text message costing £1.50. Winners were drawn at random from those correctly answering the question. Over two million messages were sent during the competition, raising £3m. Thus entrants had a roughly one-in-28 chance of winning a pair of tickets.

That works out at £45 raised per ticket, quite a reasonable selling price. What's nice about this approach is that
1. You're raising money from all the people interested in tickets, not just the ticket buyers. This is nice because a lot of the costs of provisioning web servers and call centres are proportional to the number of people interested in tickets, and not the number sold. If Madonna decided to play the Barfly, then you'd still get a million people on the website, even though there were only a hundred tickets available.
2. People know what they're buying - a chance at a ticket, not an actual ticket - and can spend exactly as much as they want to.
3. People not prepared to spend a lot still have a chance at a ticket. You could have just sent one text message for the Live 8 tickets, and hoped you got lucky, and if you did you'd get a pair of tickets for a bargain £1.50. So poorer people are not excluded.
4. People prepared to spend a lot can still do so. If you really wanted tickets and you'd spent £45 on text messages, you'd have a pretty good chance of getting in. So richer people can still hand over more of their cash.

Tuesday, 15 November 2011


By which I mean "getting people who don't normally go to the theatre* to go to the theatre", and not "compliance with the W3C's AA standard". Audience Development, in other words.

* Please replace "Theatre" with your art form of choice: Gig, concert, ballet, mime, opera, site specific devised physical community installation, etc.

Also, this is more opinion-y than analytical. And they aren't very rigorous opinions, and I'll make some sweeping generalisations which will certainly be wrong in some respect.

My starting point is a set of feelings and opinions that I believe many of my friends and people like them share:
* That theatre (slash "your art form of choice", I'll stop doing that now) is important and that if more people went to the theatre the world would be a better place.
* That not enough people go to the theatre
* That theatre is not and should not be for the posh people only
* That £10 tickets to the national theatre will somehow help this
* That they, as impoverished theatre makers, who need no encouragement to go to the theatre but aren't rolling in cash, are particularly keen on the £10 tickets and take advantage of them as much as possible, is pure coincidence

In short, that discount or subsidised cheap theatre tickets are important because they broaden the reach of the audience, conveniently ignoring the fact that discount or subsidised theatre tickets are mostly bought by people like them, who are very much in the choir (which is, in some sense, and this metaphor is horribly mangled, being preached to).

I think that access to the theatre is almost nothing to do with ticket prices, and therefore that allowing ticket prices for popular or sold out shows to float to their real market value, allowing promoters and venues and performers to make as much money out of them as they can, would not have undesirable side effects of making the art form intrinsically elitist. It's quite easy to find indisputably non-elitist art forms (let's pick on the X-Factor live, for example. Or football in general) that have ticket prices that seem to me to be massively out of proportion to the value of the performance, that sell very well indeed.

All of the people that I know who love theatre do so because they've been involved in making it. Whether they are now still working as actors or directors or lighting designers or critics, or have got other jobs and spend money on tickets, or have even gone to the trouble of sinking a couple of years of their lives into writing a new box office ticketing system from scratch (Monad Ticketing, thanks for asking), it starts with getting involved, not with cheap tickets.

So the subsidy - and selling a ticket you know you could get £50 for for a tenner is a subsidy, no matter where the money comes from, is in the wrong place. Instead, it should be going into making it easier to put on a show, less of a risk to put on your own little fringe thing whether or not you've been to drama school, cheaper to rent a space above a pub and try it out.

* Audience development is best served by subsiding the costs of putting on a show, not by subsidising ticket prices.
* Popular shows should implement dynamic pricing in order to make as much money as possible, and if this means that no tickets for popular shows are available in the lower price bands at all, that's not a problem.
* Unpopular shows should implement dynamic pricing in order to make as much money as possible, even if the last few seats are filled for next to nothing, because there is a certain price point at which people will go "well, we might as well see what it's like"

Tuesday, 8 November 2011

Dynamic Pricing

To recap:

Some shows sell out. This is lovely, but also difficult because in anticipation of this people rush to the phones and the website as soon as tickets go on sale, servers crash, phones melt, agencies fight to take allocations that they can then make guaranteed money from, touts buy tickets in advance and sell them on ebay, other touts buy tickets outside the venue and resell them and make the place look untidy.

Some shows don't sell out. This is a shame, because whatever the size of venue and level of performance, people put a lot of work into making things, and it would be nice if people came to watch. Also, every empty seat in the house is a missed opportunity; it would be better to sell it 50p than have it go empty, and even if you gave it away free the venue would still make money on drinks.

So here are the pair of statements guaranteed to annoy my friends who work in the arts:
1. Any show that sold out well in advance was too cheap.
2. Any show that did not sell out was too expensive.

For ticket in demand:

Firstly, all of the issues with the "aftermarket", as it is know (touts and fraud) come about because the venue or promoter is selling tickets for less than they are worth.

If Mr Punter really really wants to see a particular gig, or show, and is prepared to spend £100 on a ticket, when they were on sale from the box office at £50, and manages to acquire those tickets from a tout, then there is £50 that could have gone to the venue or the promoter or the performers - that instead has gone to a middleman whose only contribution was to join in with everyone else rushing the box office the minute the tickets went on sale. If those tickets had been on sale at a higher price, then fewer people would have wanted them, the on sale would have been slower, there might have been some left by the time that Mr Punter got out of bed, there would have been a smaller margin for Mr Tout to skim money from, and the venue/promoter/performers would have made more money. These are uniformly good outcomes.

For tickets with ample supply:

As Easyjet realised quite some time ago now, every unsold seat is a waste. You're putting the show on anyway, and if there are seats unsold 10 minutes before the curtain up, then you might as well sell them at any price as not. If, by dropping the last minute price from £10 to £5 or even 50p, you get one more person in, then that's a good outcome: more revenue, more audience, more bar take.

The objections
that I'm used to hearing, and expect to hear again, are:
1. Allowing prices to float to their market value would stop poor people from ever being able to go to the theater; or at least, good or popular theatre.
2. People who discover that the person in the neighbouring seat has paid dramatically less than them get cross and go and have a shout at box office staff and try and get some money back.
3. Letting some seats go very cheaply devalues the other tickets, and people start expecting them all to be that cheap.

Now, objection 1 is going to need a whole blog post of its own, on "Accessibility". The short response is that ticket price is the least of the barriers holding back the people that performing arts currently don't reach. The availability of cheap seats for some opera is not going to widen its audience; it just means that existing opera lovers buy up all the cheap seats first to save money. For cheap seats to make a difference, they need to be available as an impulse buy, because you might as well, and this isn't a possibility for a sold out show.

Objection 2 can be dealt with by observing that what you are paying for is not just the ticket; it is the certainty of having bought the ticket. If you are planning to take your wife to Phantom because you have taken her there every year of your married life, then you are going to buy that ticket as soon as it goes on sale and not run any risk of it selling out, and that is worth the difference to you. You wouldn't show up at TKTS on the night hoping for a half price ticket, because it would be devastating if there wasn't one. If ticket prices went up and down like airline fares, then the price you paid at the exact point in time you bought it was the right price for you, based on your need for definitely having a ticket, the risk that tickets might sell out, the risk that prices might go up, and the possibility that prices might indeed go down. Paying £50 for a ticket that someone else got for £10 does not mean you have been ripped off; it means that you valued knowing that you would have a ticket above turning up at the last minute and not being sure that you had one.

Objection 3 is the inverse of objection 1; instead of "Tickets would be too expensive", "Tickets would be too cheap". Certainly, someone who dedicated themselves to seeing lots of fringe shows picked at the last minute would not pay very much, and might start to regard a reliable west end spectacular as a waste of money. If they saw 50 fringe shows for the same price as one west end musical, they might well see 49 terrible wastes of time... and one amazing, magical, undiscovered gem more than good enough to make up for the rest. That's been my experience with fringe theatre, at least, and I'd heartily recommend it. Being able to take a chance on a random show because it costs less than a pint or two is qualitatively different from subsidised cheapseats at a big, expensive, popular sold out show.

So, I will argue that ideally, the last ticket to the show will be sold at the last minute before the doors open, having been selling slowly and steadily since the moment they went on sale.

If tickets sell at such a rate that they will sell out weeks before the performance starts, then the prices could be raised, sales would be slower, the box office would have to deal with less of a spike, and more money would be raised, increasing revenue to the arts.

If tickets sell so slowly that the house is only a quarter full, then prices could be lowered, sales accelerated, more people would go on spec, the audience would be larger and have more fun, the bar would sell more drinks, and again, more revenue into the arts.

An effective dynamic pricing module would, therefore, look at the rate of sale per day (or per hour, or per minute, for more sensitivity but adjusted for time of day), and estimate the date and time that all the tickets will sell out. If that is before the performance start, edge the prices up; if it's after, nudge them down.

An exploration of why dynamic pricing hasn't happened to theatre, rock and pop, and other performing arts, when it was implemented across, e.g. the airline industry 10 years ago, to follow in a later post...