Groupon, Live Nation start discount ticket venture to draw in new customers

USA Today, 5/9/11

Promoter Live Nation Entertainment and social-media-driven shopping site Groupon will launch a joint venture this summer that will offer fans access to discounted tickets to concerts, sports and other live events.  GrouponLive will give Live Nation and its ticketing business, Ticketmaster, a new avenue for reaching casual consumers not attracted by traditional marketing. It's aimed at those who are unaware of an event or don't decide to buy a ticket until the last minute.  Live Nation, which promotes 20,000-plus shows annually, and the rest of the concert industry struggled in 2010 as the economy cut into ticket sales. Attendance at Live Nation concerts dropped 9.4% from 2009.  "You have to look at different ways and price points to sell those final 10 rows," says Michael Rapino, president/CEO of Live Nation.  Groupon, launched in 2008, features daily bargains at merchants, restaurants and other businesses in more than 500 markets worldwide. No launch date is set yet for, which will be free to subscribers.  Groupon founder/CEO Andrew Mason says the partnership allows his site to broaden what it offers. "Live entertainment was the one area in which we weren't strong," he says.  The new venture is not just about cutting prices, but drawing in new consumers.  "Discounting tickets is the easy part," says Rapino. "The hard part is finding a value partner with 70 million eyeballs that wake up every morning with their shopping carts open."


Detroit Symphony dramatically lowers its ticket prices to increase its audience

The Detroit Free Press, 5/6/11

The cost of hearing the Detroit Symphony Orchestra is going down -- way down.  DSO officials are announcing a sweeping rollback in single-ticket prices. The average cost will be one-third lower next season, and the cost of some seats will fall by more than half. A $53 main floor ticket will now cost $25. Dress Circle seats will fall from $71 to $50. The cheapest seat will cost $15.  Orchestra industry studies say price is among the biggest barriers to attendance. In its post-strike drive to become more accessible, the DSO is trading the possibility of short-term drops in ticket income for fuller houses and banking that more people in seats will lead to more excitement, relevance and philanthropy.  The DSO will also announce a drop in subscription prices and increasingly flexible packages later this month. Orchestras that have substantially lowered prices have seen jumps in attendance and giving.  Baltimore Symphony officials say attendance jumped 13% after all subscription tickets fell to $25 in 2007-08.  After the St. Paul Chamber Orchestra dropped prices and tied a new fund-raising initiative to the measure, subscriptions soared and revenue increased 20%.  Attendance at DSO classical concerts stands at 63% of capacity. Sales have to rise about 7% for the orchestra to make up revenue lost from lowering prices. Ticket sales account for just 20% to 25% of the budget; contributions make up the rest.  "Full houses will inspire our large legacy donors and families and also inspire first attendees to think something special is happening here," said DSO executive vice president Paul Hogle.


Commentary: To attract young audiences, get them to pay their age

Chad Bauman, Arts Marketing blog, 5/8/11

The predominant method to attract young audiences involves the last minute discounting of available inventory. At Arena Stage, we had a similar system which [offered theatergoers 30 or younger] $15 tickets at 10am on Monday for that week's performances. The $15 price represented a 75% off discount, so these tickets were in high demand. With such a popular program, you might be asking why are we trying to fix something that is "working"?  Well, it wasn't working because...

We were losing them at 31. Imagine if you had spent ten years paying $15 for a good seat, and on the day you turned 31, you received a birthday card saying "congratulations, in order to attend your favorite theater from now on, you must now pay 75% more."

We were encouraging late buying behavior. Experts have blamed decreases in subscriber bases on younger patrons who are not willing to commit in advance. Well, why should they? For years, we have been giving them great seats at the best prices at the absolute last minute.

We could not fulfill demand. By requiring 30 and under patrons to wait until Monday to purchase tickets for that week's performances, we found that in many cases, we had very limited, if any, inventory available.

So we developed a new system.  Patrons 30 and younger can purchase tickets starting two months in advance by calling the box office and simply paying their age for their ticket. Tickets [are] held for pickup, and box office associates verify age upon check-in. We have guaranteed 3% of the inventory for each performance will be held specifically for this program. I anticipate that demand for these tickets will be very high, and they will sell out quickly. This in turn will underscore the importance of buying in advance.  In addition, by paying just $1 more per ticket per year, we hope to gradually adjust each patron year by year, so that when the time comes, there isn't tremendous sticker shock.


Commentary: Prices should rise and fall constantly, depending on demand

Jacob Goldstein, National Public Radio, 4/20/11

Tons of people re-sell concert tickets on sites like StubHub and Craigslist by following a basic economic rule: Prices should rise and fall constantly, depending on demand.  This makes a lot of sense in a basic, econ 101 way. When scalpers are re-selling tickets at inflated prices, it means the initial ticket price is too low. When seats are going unsold, it means the price is too high.  But putting this into practice could be complicated.  "When you're talking about a concert ticket, it's about an artist," Marie Connolly, an economist who has studied the music industry, told me. "There's this weird emotional relationship that comes into play here."  A concert ticket isn't a cold, calculated exchange between two people who are never going to interact again. It's one transaction in what is typically long-term commercial relationship between the musician and the fan.  So in the long-term, it may be in the musician's economic interest to sell tickets at a price that's lower than the absolute maximum the market will bear, Connolly said. That way, fans still have warm, fuzzy feelings about the musician -- and keep coming back for more.


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FROM TC: These next two articles are not directly about the arts, but should be of interest:


Lessons in the delicate art of setting prices

The New York Times special section 'Small Business', 4/21/11

Setting prices can be tricky for a small business. If prices are too high, it is usually obvious, and there is an easy solution.  But if they are too low, things can get complicated.  That is because many business owners find it difficult to raise prices -- even if they know they are losing money on every sale.  The fear, of course, is that raising prices will send customers fleeing. While that can happen, many small businesses have raised prices and lived to tell about it.   They echo a common sentiment: setting prices strategically is not just about the numbers.  Buyers are not necessarily looking for the best price, said Mark Kronenberg, founder of Math 1-2-3, a New York-based tutoring and test preparation company.   "I learned it's a misconception that if you raise prices too much, you'll have no business," Mr. Kronenberg said. "There are many customers who shop based on quality, not lowest price."   Over the years, some prospective clients have balked at Mr. Kronenberg's rates -- his highest hourly rate is now $200 -- but he said the company has more than made up for the losses by attracting and retaining higher-end clients who are more inclined to keep a tutor for a long time.   "I think it's best to avoid a race to the bottom," he said.  "It's an easy race to win, but you won't have a lot of profit to show for it."


6 tips for the tricky task of raising prices

Crains New York Business special section 'Small Business', 5/8/11

Many entrepreneurs are concerned about keeping their businesses profitable as inflation threatens to increase overhead expenses. An April survey by the National Federation of Independent Business found that 24% of its members planned to raise prices for their goods or services, compared with 9% a year earlier.  Obviously, getting customers to pay more isn't a simple matter. Changing its price structure is a critical decision for any small business.  Experts and entrepreneurs offer these tips to determine if and how your business should raise prices.

1. Gather market intelligence.  Find out what competitors are doing before you make a move.  If they're not [raising prices], look for other ways to maintain your margins.

2. Do a small-scale test.  A pilot hike will help gauge customer reactions and mitigate risks.

3. Consider the willingness to pay.  Some industries have it easier than others. Service providers may find their clients will bear fee increases.  But things become more complicated for a vendor of mass-market [items], which customers may defer purchasing if the merchandise is too expensive.

4. Let data be the guide.  Many entrepreneurs make the mistake of relying on gut instinct to decide about increases. Instead, use real numbers, such as information collected through a point-of-sale system. Look for clues that indicate your customers' tipping point on price.

5. Phase out old rates gradually.  [Begin by] charging new clients more, rather than trying to upgrade existing ones.

6. Be transparent.  Explain increases to customers rather than trying to gloss over the reality.

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