
The problem with San Francisco Opera ticket prices - thegeneralist
http://www.perfectprice.io/blog/opera-pricing-strategy-problems
======
alexbeloi
There was an interesting NPR episode on ticket resellers a while back: Planet
Money (episode 468 - Kid Rock vs The Scalpers)
[http://www.npr.org/sections/money/2013/06/25/195641030/episo...](http://www.npr.org/sections/money/2013/06/25/195641030/episode-468-kid-
rock-vs-the-scalpers)

They talked about how it's more complex then resellers charging mark-ups to
meet market demand. Often, venues have either social pressure or pressure from
artists to keep prices low. The idea is that if the venue sells Katy Perry
tickets at market price (say $2000/each), her fans are going to be upset with
not only the venue but also her, so her management will make sure that doesn't
happen.

However, simply lowering ticket prices means losing out on tons of money for
both the venue and artist. One solution that is used is: the venue offloads
large chunks of their ticket pool to ticket resellers (ticketmaster/stubhub)
under the condition that they split a % of the markup with the venue and
artist. The reseller absorbs the social blame for 'egregious' ticket prices,
the venue/artist keep more of the profits than if they had kept prices below
market price.

~~~
maxerickson
You forgot to mention the one weird trick that Kid Rock uses to help keep
ticket prices for his shows lower -- he plays a lot of shows.

~~~
hyperbovine
The second trick is being Kid Rock.

------
noahlt
The fact that arbitrage is happening is obviously bad for the Opera, but I
want to point out that every opera ticket is sold at a loss. Selling opera
tickets just at break-even would drive down attendance significantly (and it's
already low).

Opera companies run like VCs: most of the audience/startups are losses, but a
few of them are donors/unicorns who keep the opera/VC afloat.

~~~
acchow
> at break-even would drive down attendance significantly (and it's already
> low).

But there's an arbitrage from reselling, so clearly retail prices can be
raised without hurting attendance significantly?

~~~
eridius
That would only be true if the opera always sold out and lots of people
couldn't get seats. If every person that wants to go to the opera is able to
do so, the fact that some of them are paying higher amounts doesn't mean
everyone should. If the ticket prices raised to the amount the brokers charge,
then a lot of the people who are buying direct might just stop attending at
all.

~~~
TheOtherHobbes
I'm somewhat distantly familiar with a British opera company. The usual rule
is to do one or two mainstream bums-on-seats shows which are more or less
guaranteed to be successful, and then fill in with less standard repertoire
around the edges.

So sell out shows do happen, at more or less standard prices that are
surprisingly affordable, and much less than big name pop artists charge for
their tickets. But the sell out shows are more or less at capacity. There
certainly aren't thousands of people willing to pay five times as much for a
seat.

And in fact there is absolutely no way that income from ticket sales would be
enough to keep the company running.

The rest of the money comes from sponsors and from Arts Council funding.
Getting money from both is a highly skilled full-time job.

This company happens to be very good at fundraising, which is why they still
exist. (Actually they're very good at everything, not least the artistic
side.)

Would on-demand pricing work? Absolutely not. The audience is older and fairly
faithful, and they tend to feel they have a personal relationship of sorts
with the company.

Variable on-demand ticket pricing would completely destroy that relationship,
and I would be hugely surprised if it didn't also make sponsors feel like less
like contributing.

------
scurvy
Always buy higher-end arts tickets directly. You can probably claim most of it
as a charitable tax deduction (the difference vs a GA ticket). The SF Ballet
even has a page on it: "*You may deduct up to 80% of your Preferred Seating
Premium on your taxes. Please consult your tax advisor for more information."
[https://www.sfballet.org/tickets/seating/repertory](https://www.sfballet.org/tickets/seating/repertory)

------
falsedan
The author is suggesting yield management to mitigate price arbitrage.
Airlines have been doing this for years (maximize butts in seats & profit).,
and require entire teams of business analysts to monitor the supply & demand
of tickets, and reclassify seats so they stay balanced.

Every flight/hotel-comparison website has its goal to make the yield
management team as ineffective as possible. Being too effective means running
your suppliers out-of-business!

------
db48x
Arbitrage is never shady.

Sure, the seller might feel upset that they lost out on a slice of the profit,
but that doesn't imply that the reseller is in the wrong.

~~~
vertex-four
If I really, really want to ensure that people who might not be able to afford
market price can reasonably come to see my show while still making a
reasonable profit, there's no mechanism under capitalism to be able to do
that, because of arbitrage. I think that's sad.

~~~
zeveb
> If I really, really want to ensure that people who might not be able to
> afford market price can reasonably come to see my show while still making a
> reasonable profit, there's no mechanism under capitalism to be able to do
> that, because of arbitrage.

But people who can afford your artificially-cheap tickets can sell them to
folks who can afford the market price, making them better-off.

~~~
vertex-four
> But people who can afford your artificially-cheap tickets can sell them to
> folks who can afford the market price, making them better-off.

Except that in reality they can't because other large companies and people who
have this down to a business buy all your tickets first. Also, money does not
actually replace not getting to see a unique show. We can see this by the fact
that not everybody sells their cheap tickets onwards.

Long story short - the group of people who really wants to see the show but
can't afford it, and the group of ticket scalpers, are really, really not the
same groups, 99% of the time - unless all your fans are ticket scalpers. This
is pretty much by definition. Why is worship of capitalism more important than
a person's desire to ensure their fans can actually afford to go see them?

------
dvcrn
Reminds me of viagogo a bit, a ticket 'second hand' reselling website. Through
some undercover investigations
([https://www.youtube.com/watch?v=WWlnL8drSdw](https://www.youtube.com/watch?v=WWlnL8drSdw))
it turned out that they are only partly a second hand site but have a stack of
credit cards and buy out most of the ticket stock available to resell it with
crazy margins.

It went so far that ticketing companies even gave them ticket stock for re-
selling with a high margin to get a higher cut of the ticket sale. This
especially happens for very popular concerts where the demand is high and
people are willing to pay.

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carstimon
It seems like the article is missing a possible situation (which I believe is
likely). Suppose -The ticket price is the market price and a raise would drive
away a lot of buyers -A small portion of buyers do not do the full ticket
research and are happy with $265 tickets.

Their conclusion that "Demand and Supply is out of balance" seems to assume
that each buyer is the same and has some probability of buying at a given
price. Instead, there are a few people who buy at the bigger price without
thinking. The fact that these people exist does not mean that raising the
price won't decrease the number of buyers.

------
imh
Is changing the pricing scheme the only solution here? Maybe part of the
opera's goal is to appeal to a broader range of demographics, or any other
reason they aren't trying to maximize profits. It would be nice if they could
make a good living for themselves and still keep tickets affordable for
everyone. There must be a way to maintain a discrepancy between what people
are willing to pay and what people have to pay, where the opera can meet their
non-monetary goals while reducing this third party arbitrage.

------
egypturnash
> Clearly, the opera itself should price its tickets to more accurately
> reflect demand. And the great irony is that, by doing so, more often than
> not lower prices will bring new people into the opera, while high prices
> will capture demand from the price insensitive.

So let's untangle these two sentences near the end of this essay.

1\. I believe that the San Francisco Opera should raise its prices to match -
or exceed - what this ticket scalper site is asking. 2\. But lower ticket
prices will usually result in more butts in seats.

The entire post is written from the perspective that the Opera should be
making the absolute highest amount of money per ticket sale possible. But at
the end of the post, the author very casually mentions that this is going to
probably mean a lot fewer butts in seats _watching opera_. And then completely
ignores it, going on to suggest ways the SFO could learn from
TicketMiddleManThatHopesYouDon'tThinkVeryHard.Com.

I have not been to the San Francisco Opera; I do not know how much it's
focused on the bottom line. But I would bet money that, if offered the choice
between getting about twice as much per seat, and getting more viewers, the
SFO would probably choose the latter. Because arts organizations don't just
exist to make money; they exist to _spread their art_. You have to pay enough
attention to the bottom line to be able to pay everyone involved enough to
keep doing it, but it should never be an organization's only concern.

The author of this post also offers us no statistics on how many tickets to
the SFO are actually _bought_ though the scalper site that's selling them for
about twice what they cost versus ones sold directly by the Opera. The fact
that someone built a robot that automatically scrapes a ton of venues and
offers their tickets at 200% markups, and did some SEO tricks to make it pop
up higher than the actual site for people who don't block ads, doesn't mean
they're automatically capturing the money of everyone who types "san francisco
opera tickets" into Google. Without evidence of that, I seriously doubt his
thesis that this is money the SFO is leaving on the table.

I am also pretty amazed by the fact that the closing paragraphs suggesting
"dynamic pricing" and noting that it can be very complex to do don't casually
link to any of the services provided by the company whose blog this is on,
because they seem to be trying to do just that.

tl;dr:

1\. the existence of a bot that offers San Francisco Opera tickets at a crazy
markup doesn't mean enough people actually buy through it to be worth chasing,

2\. raising prices to match this bot probably runs counter to the part of an
opera house focused of Getting More People Interested In Watching Opera
Instead Of Playing Video Games Or Whatever.

3\. geeze dude you write an essay this long that's a stealth ad for your
company and you can't even slip a link into the concluding paragraph?

~~~
ghaff
In general, I guess I'm confused why someone wanting a ticket to an event
wouldn't at least check to see whether it was available and for how much on
the venue/organization's own site. It would certainly be the first place I'd
look for tickets.

Sure, if there's nothing available or available seats aren't great, I might
suck it up and go to a ticket broker if I really wanted to see something. But
my assumption going in would be that I should expect to pay a big premium.

Maybe there are people out there who aren't price sensitive and default to
making ticket purchases through StubHub or whatever, but I have trouble
believing it's the norm.

I'd just add that although I don't really think dynamic pricing is a good idea
here, presumably the San Francisco Opera, like many such organizations, does
price discriminate is various ways: VIP seating, student tickets, more
expensive weekend tickets, etc.

------
vacri
> _Not only does nobody benefit (except the broker)_

vs

> _Nearly every major venue and sports team sells to brokers. This brings cash
> in the door and reduces the risk to the venue._

These two comments are in direct opposition to each other. I don't like
scalping of tickets, but if a venue is knowingly and willingly selling to
scalpers, then obviously they do get some net benefit.

------
babesh
The Opera is partly a status indicator and a networking opportunity. Lowering
the prices would drive off the donors. I get the feeling that for a vast
majority of people the Opera is seen as a Richie Rich event off limits to
them.

------
initram
"Booking fees have long been something that consumers grumble about–but pay."

Not exactly. I mean yeah, I sometimes pay them, but I simply go out far less
because of them. So choose wisely if you're going to go that route!

------
raldi
Mods, a de-clickbaited headline suggestion: "A company might be arbitraging SF
Opera tickets"

