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Why Empty Seats at Taylor Swift's Concerts Are Good for Business

May 15,2018 15:14

The biggest pop star's current concert tour isn't a sellout. And that's a good thing, according to some in the concert industry. Taylor Swift's “Reputation” tour, which kicked off last week in Glendale, Ariz., is a test case in squeezing out scalpers ...and more »

The biggest pop star’s current concert tour isn’t a sellout. And that’s a good thing, according to some in the concert industry.Taylor Swift’s “Reputation” tour, which kicked off last week in Glendale, Ariz., is a test case in squeezing out scalpers and capturing more profits from ticket sales.
The strategy, which could reset how tickets to high-profile tours are sold, is to use aggressive pricing to limit the ability of scalpers to purchase tickets and later sell them at higher prices. In addition, a program from Ticketmaster is aimed at giving passionate fans earlier access to tickets at discounted prices.
One downside to the plan: empty seats at some of the roughly 36 stadiums on Ms. Swift’s 53-date tour.
However, even if those seats remain unsold, the “Reputation” tour already has grossed more on its North American leg than Ms. Swift’s previous tour in 2015, which brought in more than $250 million world-wide. Across the 17 stadiums Ms. Swift will have played on both tours, she has already grossed 15% more for “Reputation,” with some of those shows still months away.
For decades, artists and their teams have claimed “sold out” shows as a badge of honor showing the high demand for their music. The new approach is raising questions in the music industry about whether an end is nearing for the days of instant sellouts. In the roughly two decades since online ticketing became commonplace, fans have engaged in the same ritual: using a computer or phone to buy tickets as soon as they go on sale before a show sells out, often because of scalpers with technology that can snap up reams of tickets when they become available.
For the current Taylor Swift tour, would-be concertgoers were encouraged to register for Ticketmaster’s Verified Fan program months before tickets went on sale. They could boost their standing in the ticket queue by watching music videos and purchasing the “Reputation” album or merchandise. Users then received codes that allowed them the chance to purchase discounted tickets over a six-day presale period.
The best seats—some with added VIP perks—cost $800 to $1,500 at face value for a given show, with those immediately behind them at $250 each. Spots in the back of the house go for about $50. Regular tickets for Ms. Swift’s tour three years ago cost about $40 to $225, according to Pollstar data. The Verified Fan presale tickets were each sold for about 25% below the price of face-value tickets sold during the public sale.
Verified Fan was rolled out in scale last year and used for hot-ticket events such as Bruce Springsteen’s solo residency on Broadway and Ed Sheeran’s most recent tour. The program is supposed to identify “real” fans and give them a chance to buy tickets without having to compete with scalpers.
Half of Ms. Swift’s tickets were allocated to the Verified Fan presale. Ticketmaster said soon after the presale that only 3% of those tickets had made their way to secondary websites such as StubHub, compared with an average of 30% to 50% of tickets for high-demand artists. It is unclear whether that statistic has held up; several of the dates now have upward of 3,000 tickets listed on StubHub.


It is also unclear exactly what was expected for the pace of sales. “Slow ticketing,” a buzzy term for the new sales approach, gained momentum when Ms. Swift’s tour didn’t sell out immediately after tickets were opened up to the public. Some close to the tour say a longer sales curve was expected with the higher prices, but the tour’s promoters were publicly predicting sold-out concerts during the presale period.
For years, Ticketmaster and other ticketing providers have been contending with scalpers who harvest tickets in the first minutes of an event sale and list them on the secondary market at a premium. Scalpers say they are simply playing by the rules of the free market, while many artists have been hesitant to raise prices for fear of appearing greedy.
With tickets priced closer to their market value, scalpers—who not only profit but also absorb the risk on tickets that go unsold—have less incentive to try to flip them.
“The primary market has been ceding pricing control to secondary markets,” said David Goldberg, a former senior Ticketmaster executive.
Mr. Goldberg contends that there haven’t been any true sellouts—at least from customers’ perspective—since the rise of online resale marketplaces, where tickets are nearly always available, for the right price. And with artists pricing closer to market value, he said, the fan experience is little changed compared with what it might have been buying tickets on the secondary market.
“From the consumer perspective it’s not different, but it’s a very big difference if an artist is able to capture that,” he said.
Sarah Rosonke, who was priced out of Ms. Swift’s 2015 tour by scalpers, said she scored a pair of “Reputation” seats in Minneapolis for $200 each after registering with Verified Fan.
“It has always really frustrated me when a concert sells out in two seconds and then you go on StubHub and they’re outrageously priced and you can’t even go,” the 24-year-old said.
She said she expected the prices this time to be even higher and applauds Ms. Swift’s approach. “I think she’s being smart,” Ms. Rosonke said. Plus, “with Taylor I was willing to pay a little bit more.”
Write to Anne Steele at Anne.Steele@wsj.com

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