Live Nation calls for more aggressive ticket pricing from artists

Courtesy of Financial Times:

The head of the world’s biggest concert promoter has urged artists to be more aggressive in pricing tickets to reflect demand in a similar way to airlines to maximise revenues and tackle the rise of touts.

Michael Rapino, chief executive of Live Nation, said that artists were missing out on billions of dollars by underpricing tickets that are snapped up by touts at face value and then resold for a profit on the $8bn-a-year secondary market.

“We have to start pricing the house to match the market,” he said. “We’re only scratching the surface of the opportunity for the artist.”

Live Nation generated the bulk of its $7.2bn of revenues last year from concert promotion and sold 465m tickets through its ownership of Ticketmaster, the world’s largest ticketing company.

Controversially, TicketMaster’s fastest-growing business is allowing people to resell tickets above face value through its secondary ticketing websites, such as Seatwave and GetMeIn.

Artists including Prince, Adele and Mumford & Sons have this year accused online resale marketplaces of facilitating ticket touts and preventing ordinary fans from buying tickets at a fair price.

The consumer group Which? found in an investigation last year that the four biggest resale sites — Seatwave, GetMeIn, StubHub and Viagogo — had “attracted touts operating on an industrial scale”.

However, Chris Carey of Media Insight Consulting, a research group, said that artists had good reasons to be wary of selling tickets at market-clearing prices. “The perception of price gouging would lead to disastrous PR” and could undermine their relationship with fans, he said.

Mr Rapino said “there is no simple answer” to the secondary market, and “no right or wrong”. But he argued that reselling would remain rife until artists “price the product at what the market is able to pay”.

While Mr Rapino argued that the live music industry had a lot to learn from the airline industry, he stopped short of calling for the wholesale adoption of “dynamic pricing”, or adjusting prices in real time based on demand.

“We don’t believe that true dynamic pricing is right for all fans,” he said. “We want to make sure that the fan never gets penalised for buying early. We don’t want to start dropping prices along the way.”

Rather than price every ticket dynamically, he suggested that a concert tour might have a dozen different tickets tiers from $20 to $4,000, depending on factors such as the day of the show and the location of the seat.

Charging significantly higher prices for the best seats would allow artists to charge lower prices for less desirable seats that might otherwise have gone unsold, he said. “Catching the top end allows you to subsidise the bottom end.”