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by logicallee
3043 days ago
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The other comment by lovich says: >I've worked in that industry as well and I have a very negative view of it still, even discounting the bad actors. Everything you do can be above board and still be douchey. As far as your points, I have this specific question: - Where you write, "For venues and promoters, guaranteed attendance and immediate cashflow." Why is there "guaranteed attendance"? I don't understand what you could have meant by it. |
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> Why is there "guaranteed attendance"? I don't understand what you could have meant by it.
That's an inaccurate description on my part for what I meant. It's not guaranteed attendance, it's guaranteed sales regardless of attendance (although generally the seats are sold, even if at an extreme discount). It's guaranteed money available early on in the event lifetime.
For an example of this, look at this TicketMaster event[1], and the corresponding StubHub page. All reserved seating is $45 on TM, and there's still plenty of tickets available, and the floor tickets are $49.50, and they are still available as well. Now look at the secondary market (StubHub, in this example), and you'll see Floor seats starting at $19, Orchestra seats starting at just under $30, Lower Balcony seats starting at under $11, and Upper Balcony at $29 (I'm not sure why it's higher, I suspect this market isn't very liquid, and/or those are mostly non-brokers selling expecting to get more money back than is likely to happen).
I have a few take-aways from this specific example (and it's by no means my job to make these assessments, I'm a software engineer, I write in-house tools and connect to APIs):
- People expecting to make money on the secondary market here are losing a lot of money. Exchange fees are generally between 7-10% of sale price for brokers, depending on volume, and TicketMaster initial display prices generally are not including all the other fees. A single Floor ticket (listed as $49.50) actually shows a subtotal of $67.45 if you attempt to purchase it through TicketMaster right now.
- The venue, promoters and artist have all that money put down for overbought tickets. Even if all the tickets held by brokers eventually sell, and even if they sold at a profit, those stakeholders have been able to make use of that money in the last three months since the tickets went on sale and most brokers invested, while the brokers have not. The artist and promoters have left money on the table in their pricing (which brokers attempt to capitalize on) but in exchange for that they get less risk (more sales at a low price) and more money at an earlier stage.
This example is fairly generous to brokers in that it's an event where they are subsidizing users, but I think it's an important example to bring up because so many people don't even account for this in their reasoning. Whether brokers make money or not, some of the same things apply, such as stakeholders getting money early and having a fairly good (most the time) accounting of demand for a sale by outsourcing that aspect to the crowd. It's an added benefit that artists and promoters (and venues) they can take large chunks of tickets that were never sold on the primary market and sell on the secondary market for additional profit.
In some aspects of what they do, ticket brokers are like high frequency traders, in other aspects, they perform other market functions (I'm a novice at best in the stock market, so I'd be hard pressed to explain this in detail).
1: https://www1.ticketmaster.com/event/1B005363D07BB554
2: https://www.stubhub.com/queens-of-the-stone-age-tickets-quee...