Ticketmaster to roll out ‘dynamic pricing’

Battered by an unprecedented downturn in the concert business last year, Live Nation Entertainment Inc.’s Ticketmaster announced it would retool the way it prices tickets based on consumer demand.

The world’s largest purveyor of live-event tickets said Monday that it had partnered with MarketShare to help adjust ticket prices for its shows. Ticketmaster will begin rolling out the “dynamic pricing” sometime this year, initially for major sporting events and concerts, and for arts and theater at a later date.

That means a concert that’s not selling well may get a price cut. If tickets start moving fast, the price could theoretically go back up. Scalpers often take advantage in situations when demand for tickets exceeds the supply, creating a surplus of buyers willing to pay more than face value. Discounters such as Goldstar work the opposite end, when there is a surplus of unsold tickets.

In many retail sectors, such flexible pricing techniques are common. Clothes, shoes, airline tickets and hotel rooms are among the many commodities that adjust according to market demand.

Concerts and many professional sports games, however, are rarely if ever discounted. That’s because discounting can cast a pall over an event by creating the impression that the promoter is desperate.

Such concerns seem to be outweighed by the effect of last year’s disastrous concert season, when promoters were left with too many unsold seats and faced large losses.

Live Nation Entertainment, the Beverly Hills parent company of Ticketmaster, last year saw a 7.6% drop in the number of tickets it sold from the year before. Much of the decline came from theater and concert events. Ticket revenue fell 12.5% in 2010 to $1.04 billion, down from $1.19 billion in 2009.

“Efficient pricing is one of the most important and untapped opportunities,” Ticketmaster Chief Executive Nathan Hubbard said in a statement. “By utilizing MarketShare and Ticketmaster’s technology, our clients will be able to retain economic value that is normally siphoned off by the secondary market, and to sell more of their tickets that go unsold today. Meanwhile, more fans will have more opportunities to enjoy live entertainment events because tickets will be more accessible and pricing options will broaden.”

Ticketmaster is not the first company to explore dynamic ticket pricing. ScoreBig, a Hollywood start-up founded by sports and concert industry veterans, has been testing a proprietary ticketing system that automatically adjusts prices according to how fast they’re selling or how well similar shows have fared, among a host of factors. The service, which has been available to a small, invitation-only audience, is set to launch to the general public this year.

“This year, you’re going to see a lot more concerts priced correctly,” said Jim Guerinot, manager of No Doubt, Nine Inch Nails and other major bands.

Translation: Expect lower prices this year.

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