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Today’s columnist is Jesse Lawrence, founder of TicketIQ and FanIQ.
New York Gov. Kathy Hochul is expected to sign an invoice that would require ticketing sites to disclose all fees in advance. would be the regulation with the greatest impact on the ticketing market in the last 25 years.
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Unlike the 2016 anti-bot law, the existing bill is not concentrated in the opaque chain of ticketing sources, but rather in the customer’s fun when buying worthwhile tickets. Anyone who has bought a worthwhile ticket knows what it is. it’s like figuring out, in the last step of the five-minute checkout procedure, that a $100 ticket is worth $125, to buy it anyway. The bill would not restrict “market-driven” profit maximization, but if implemented, it would create a foundation of value transparency that would save ticket buyers time, money, and frustration, all through a basic quirk in behavioral economics.
Economists call the practice of not disclosing tariffs in advance “drip prices. “Although synonymous with the industry of worthwhile event tickets, the effect of drip pricing turns out to be universal. A 2009 study by Raj Chetty, now an economics professor at Harvard. , titled “Salience and Taxation: Theory and Evidence,” showed that TTC value labels at a grocery store reduced demand by up to 8 percent compared to tax-free value labels. Although he made an attractive article, he did not make a smart deal and the experiment lasted only a month.
The price ticket market, on the other hand, has been exploiting its own edition of drip prices with wonderful benefits for decades. Up to that point is detailed in a 2015 article by Berkeley economist Steven Tadelis. Tadelis is part of a team hired in 2015 through eBay, owner of Stubhub, to measure the effects of switching from drip to all-inclusive price. The effects were consistent with what happened in the grocery store experiment, only the other way around.
Events with drip prices had a 14% higher conversion rate than events where rates were exposed in advance. In addition, and perhaps most importantly, the average transaction value for events with drip prices was 21% higher than for events without them. In addition to affecting the conversion of prices at the list level, the drip price also turns out to skew the consumer’s benchmark for what constitutes a “good” deal for the occasion as a whole.
Whether it’s aversion to losses or the specter of unrecoverable costs, the eBay-Stubhub study showed that once a user becomes addicted to a ticket, it’s hard for them to get by. While this knowledge has been enough for any executive looking for bonuses to maintain drip prices, stubhub/eBay’s control did the opposite: they made carpet after carpet. According to Tadelis, the confidence around the table, with which he agreed, was that Stubhub, the market leader, would force the festival to evolve. By the way, they would generate great goodwill among customers and gain more market share.
It was a virtuous vision of the market of worthwhile tickets, doomed to failure. With the exception of a few sites like Tickpick and TicketIQ (of which I am the founder) that use all-inclusive securities, worthwhile ticket buyers continue to be subject to an ever-increasing game of value deception. Driven through a combination of privately funded markets looking for returns and small players looking to survive, drip pricing has the industry’s “best practice. “Even the teams, the market makers themselves, can’t help but bet the game.
While consumers have accepted the punishment inflicted by the ticketing industry for more than two decades, as an industry, it is harmful to assume that they will continue to do so. Turning the existing bill into law is a big step, but it doesn’t mean anything. without its implementation, either through the public and private sectors. Not only will the consequences have to be big enough to do business, but personal market advertising platforms like Google and Facebook will also have to play a role, through correct verification. of ticketing advertisers.
In addition to TicketIQ, I am also the founder of FanIQ, a platform that helps teams, venues and festivals manage direct-to-consumer marketing. Plugin, TikTok and Pinterest.
After a 2018 law passed by former New York Gov. Andrew Cuomo that limited speculative sales, Google has a very high bar for approving price ticket advertisers. In doing so, they proved that it was imaginable for a marketing platform to make money while being a fair actor. Emerging price ticketing platforms will have to adjust to their demand. If they do, the government won’t have to worry about fines thanks to some other basic law of the economy: source and demand.
While low-volume tactics exist to locate ticket buyers for price, paid virtual advertising is the maximum scalable source of visitor acquisition on the planet and the main driving force of industry expansion in 2022. Following Google’s lead, marketing platforms have focused on live events. you can guarantee that any market that continues to use drip prices will suffer the maximum penalty: you will have no one to sell to.
In addition to TicketIQ, a leading priced ticket search engine, Lawrence founded FanIQ, a data-driven ticket marketing platform for sports teams, venues, festivals, and other live event promoters. You can locate it on Twitter here.
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