Broadway Brett

Broadway Brett

John brought a great article to my attention today:

http://www.alleyinsider.com/2008/8/why-ebay-loves-the-brett-favre-trade-ebay-

 

Since Favre’s earthshaking trade to the Jets, Jet tickets have become THE must have item. The article cites StubHub data that shows over 7000 Jets tickets have moved within the last 24 hours (compared to 36 per week prior to the trade) and the average price has increased from $138 to $252. Probably almost as earthshaking as the Favre trade, though, is realizing that StubHub collects a 25% commission on all tickets sold.

 

Let me say that again. StubHub collects a 25% commission on all tickets sold - 10% from the buyer, 15% from the seller. Wow.

 

For yesterday’s action, Peter K (author of the linked article) estimated StubHub’s take to be about $400,000. Now, your venue or organization may not be giving up that kind of coin to the secondary market, but if you are hosting high demand or limited supply events, then you are giving up some.

 

This is why Dynamic Pricing will be important to the future of the ticketing industry. While no computer algorithm could have foreseen this kind of development (with Favre), we can tell with pretty close accuracy what the optimum price of an event should be. We use historical data from ticket sales, type of artist, geographical area, and venue, then we combine that with real time ticket sales. The result is a price that moves fluidly, approaching market willingness to pay. In short, you get to keep more of that profit being lost to ticket scalpers.

 

The Favre situation also illustrates a scenario in which the secondary market will still be necessary - if demand for an event suddenly shifts due to new or additional information surfacing after the sale. An analogous scenario is the escalating price of pre-sold tickets (season tickets) to college or pro football games, which increase in value the better that team does through the season. While computers will be able to predict to some extent this uncertainty, they will never do a perfect job due to the human factor involved.

 

As dynamic pricing becomes the status quo in the future, it will be interesting to see if the secondary market influences after-sale information release for events other than sports in order to preserve its profits.