“If you sell out any show the first day, you’re underpriced,” declared AEG Presents president Rick Mueller during his onstage “conversation with” Bob Lefsetz, during Canadian Music Week in Toronto last week.
The music industry pundit and Lefsetz Letter namesake got the Taylor Swift business out of the way -- “no, the tour is doing great,” said Mueller, contrary to several New York Post reports -- before getting into on-sales and flex and dynamic pricing.
What’s the biggest challenge facing you today? Lefsetz asked.
"Trying to put shows on sale in this day and age when you have a hot tour, you try to service the fan the best we can…the amount of hurdles there are getting a ticket to the consumer through what is the secondary market agenda, the band fan club agendas, how scalpers in the secondary market try to manipulate those systems, how they attack ticketing systems, that putting a ticket in the hands of the fan in this day and age is a very difficult thing to do and execute it well.”
He cites the recent sale of K-pop boy band BTS. “They couldn’t be hotter. Blew out four shows at the Staples Center [in Los Angeles] in 10 minutes, but the attacks that we would see on the ticketing system from malicious bots, and people who are just trying to manipulate that in the secondary market, is such a head-scratcher right now, how you handle it and how you keep up with it.”
Lefsetz, surprised to learn the top ticket price is $250 and that scalpers are still buying them, was met with this hard-and-fast rule from Mueller: "If you can sell out four shows at Staples Center in 10 minutes, you’re underpriced. If you sell out any show the first day, you’re underpriced.”
Lefsetz then moved on to “flex pricing,” flexible or dynamic pricing, which allows the artists and venues to adjust the price in real time, based on demand. “That’s been a big thing in the press in the last six months, the sea change in price,” he said, citing The Rolling Stones, an AEG-promoted act.
“I think almost every arena show, we do have flex pricing,” Mueller said, explaining, “There’s probably two differences between flex pricing and dynamic pricing, so typically flexing in arenas have been if you have had a price level 1 or price level 2, you hold seats in between those sections and you decide what that’s going to be, depending on how hot your on-sale is or you're going to go up with more, you’re gonna take a lower price.
“The dynamic price is really to try and mirror what market pricing is. We touched briefly on this one when I did your podcast a few months ago. Neil Young did a theater tour several years ago. It’s the first time we did a solo acoustic theater tour in a long time. Tickets came out. He was charging $275, I think, and people were in a bit of an uproar at the time because those were some pretty aggressive prices because the fan felt entitled to see Neil for $50, or whatever they felt the appropriate price was.
“Well, Neil sold out like that, those theaters, and people were pissed off about it. I looked at it as if Neil had played for $50 or $75, scalpers would have found a way to get the tickets, and they would’ve made a healthy margin off of that. So my opinion is people who’ve invested in this equation -- the artist, the manager, the promoter, the agent -- deserve a share in that gross, not the secondary market, not people who are opportunistic. Scalpers on that show are probably making more money than I am, as the promoter, so I think that you can’t change what the market price is for your ticket.
“There is technology coming out that will be able to -- here’s two paths you can go: You can charge market pricing, or you can try and use technology to try and lock the ticket price and make it non-transferable. That will dictate if a fan and an artist has a desire for their fan to buy a ticket for that $50 to $75 range, or whatever it is they want to charge, having a digital ticket, a true digital ticket, where it’s assigned to you or to me, whoever buys that, will be able to kind of keep that continuity in place of what the artist intended to charge.
“So I’m a big fan of going either way depending on what the artist’s agenda is. I would like to see us maximize revenues whenever we can.”
