Way back in 2007, a company called Amie Street introduced variable pricing for MP3 sales. The premise was simple: The more copies sold, the higher the price. The concept didn't work out so well. Amie Street was purchased and subsequently shuttered by Amazon in 2010. That hasn't stopped Ticketmaster from taking the premise and applying it to ticket sales, which it will reportedly do by the end of the year.
In case you haven't noticed, ticket revenue has been down considerably over the years, t12.5 percent by some estimates. Fact is, people aren't going to as many shows these days. The reasons are debatable, but ultimately, at least part of the problem seems to be charging too much for shows nobody wants to see.
Dynamic pricing means tickets with low demand should be more affordable for people who might be on the fence about going. Most of the time, ticket purchasers are likely to see lower prices; high-demand shows, however, which are already rather expensive, could end up being priced even higher. Somewhere out there, Ayn Rand's ghost is smiling.
The purpose of all this, of course, is to sell more tickets. Instead of trying to guesstimate what the demand of a given show will be, Ticketmaster is banking on the automated variable pricing system to eliminate the guesswork. If this sort of free-market, pre-programmed, automated system works, it could result in more people going to more shows.
On the surface, this seems like a great idea. What happens, however, when someone pays $40 for a ticket the day they go on sale, then find out tickets have dropped to $15 a month later? Many companies already offer pricing protection on pre-orders -- Amazon is one of them. For its variable pricing strategy to be effective, Ticketmaster needs to follow suit.
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Ticketmaster's dynamic pricing is supposed to be ready to launch at some point this year, but the company hasn't announced when or what the first shows will be. If fans collectively banded together and refused to purchase tickets until the day before a show, could they then ensure a lower price? Perhaps. Only once the system is up and running will we be able to see how it will actually operates in the real world.