Beware the unintended consequences of messing with the secondary ticketing market
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There are few things in life that command unanimous agreement. One is that everyone is delighted that the UK events industry will be starting to return to normal this summer. The return of theatres, concerts, and live events of all kinds will be welcomed by fans.
This return is also desperately needed with the entire entertainment and events industry devastated by the pandemic and the resulting lockdowns. As things return to normal there is something that must be recognised, even if many reject it.
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Right now, secondary ticket markets and sellers are needed more than ever. If the industry is to recover without too much permanent or long-term damage and loss of livelihood, collaboration and cooperation between ticket originators, promoters, venues, secondary resellers and customers is vital.
The secondary ticket market and the people involved in it play a crucial role in ensuring the larger ticketing market works effectively. That is, to allocate resources (tickets and spaces) efficiently, so they reach the people who want and value them the most while ensuring that artists, institutions and venues get the revenue they so desperately need.
This will avoid the consequences of a dysfunctional market, which could lead to shortages and queues, or gluts and unsold tickets. You could always rely on rationing, but previous evidence of this shows it does not work and creates intense frustration.
A key point is that our return to normal is bound to be filled with hesitancy and uncertainty. We are not out of the woods yet, as news from India and parts of Europe shows. Venues, promoters and sports authorities remain anxious and cautious and until the pandemic is definitively over there will be the constant threat of short notice cancellations or, alterations and changes to dates, times, and locations.
All this makes life very difficult for buyers. In addition, even though most will be desperate to return to live experiences, buyers themselves are going to be hesitant to purchase, scarred by the impact of the last year. Timetables for events and the actual use of purchased tickets will be uncertain for some considerable time, even more so than usual. In this situation, there need to be secure platforms and markets with transparency where people can sell or acquire tickets when circumstances change.
The industry, gutted by the events of the last year, desperately needs to maximise its revenue and can only do this by ensuring that all tickets are sold and used. A major challenge for smaller venues, events and issuers is knowledge – making people aware of the event and its details while also establishing what they are prepared to pay. The resale platforms can play a central part in amplifying sales and selling out venues– which will be the difference between survival and going under.
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Many will reject this and react with hostility, that reaction is sincere but misguided. Competitive markets with flexible pricing are even more necessary in the immediate aftermath of natural disasters such as the one we have all gone through, because it is at these points we most need the efficient allocation of resources.
There is a real pressing need to educate both consumers and originators of the benefits of dynamic pricing, as used in markets like hotel bookings and airline tickets. It brings enormous benefits to both producers and consumers.
So, for example, the use of dynamic pricing by hotels is found to bring a 50 per cent increase in occupancy and a 22 per cent increase in revenues. Another survey, at RateGain showed dynamic pricing brought cost savings, greater access to rooms for customers and greater transparency of rates. A paper by Kevin R Williams, of Yale University showed significant increases in both revenue for airlines and consumer surplus, mostly due to better access to seats at the price people were prepared to pay.
The pandemic offered an opportunity to reform the seriously dysfunctional primary ticket market and address its problems, such as unsold tickets. Globally, over 40% of tickets put on sale go unsold, with only 20% of events ‘sold out’ and the other 80% having tickets available, while the 20% often have many disappointed customers. We need secondary markets to help address these issues.
There is a real risk that in this ticketing confusion the black market will capitalise, which is why legitimate platforms with transparency and consumer protection are so important. There is a way to make this go much more smoothly and to keep the industry in a flourishing state, if we will take it. As seen in the US, strengthening collaboration between the primary and secondary markets can help reduce ticket fraud, significantly increase revenue in both markets and improve overall fan experience.