Latest / Stagflation Conversations with Fexingo: High Inflation, Slow Growth, and 1970s Echoes / How Stagflation Is Reshaping the Live Event Ticketing Industry
Transcript
- Lucas: So ticket prices for live events have been climbing for years, but what's interesting right now is that consumers are starting to push back in a way we haven't seen since the early 2000s. Luna: You mean the post-dot-com recession era? I remember reading that concert attendance actually dipped pretty sharply then. Lucas: Exactly. And we might be heading into a similar environment. The latest Fed Beige Book, released last week, noted that discretionary spending on entertainment is softening. Bars and restaurants got a boost from the World Cup, but broader demand for ticketed events is showing cracks. Luna: What does the data look like specifically? I know average hourly earnings just ticked up to $37.60, but that's only about a 0.2 percent month-over-month gain. Lucas: Right, wage growth is barely keeping up with inflation. Core PCE is still at 130.1, and while headline CPI dipped slightly to 332.6 in June, the ten-year breakeven inflation rate actually ticked up to 2.24 percent. So the market is betting inflation stays sticky. That puts pressure on anything discretionary, and live events are about as discretionary as it gets. Luna: So what's happening to ticket pricing models? Are we seeing a shift away from the dynamic pricing that became standard over the last decade? Lucas: In some ways, yes. Dynamic pricing algorithms are still in place, but they're being adjusted for lower demand elasticity. For instance, Ticketmaster and other primary sellers are rolling out more tiered pricing with clearly defined buckets — floor seats at one price, upper bowl at another — rather than letting prices float up in real time as demand spikes. It's a response to consumer fatigue. Luna: And the secondary market? StubHub and SeatGeek have been huge beneficiaries of that model. Lucas: The secondary market is actually playing a bigger role in price discovery now. When primary prices are too high, resale prices can act as a check — if you can't unload tickets at face value, it signals that demand isn't there. We're seeing more sellers listing below face value for events that aren't sold out, which is rare in a normal economic environment. Luna: That's got to hurt the artists and venues that rely on premium pricing. Are they adjusting? Lucas: Some are. A major arena chain I looked into recently started offering installment payment plans — four equal payments over six weeks — for season tickets and premium packages. That's a direct response to consumers saying, 'I can't drop five hundred dollars all at once.' Also, more artists are booking smaller venues and doing multiple nights instead of one huge stadium show. Luna: So it's a kind of fractionalization of the live event experience. Smaller shows, more dates, pay over time. Lucas: Exactly. And the economics work if you have the right cost structure. Smaller venues mean lower overhead, and fans are still willing to pay a premium for a more intimate experience. The trade-off is that the artist's per-show revenue drops, but they can make it up with volume and merch. Luna: Quick honest thing — this show is ad-free and listener-supported. A small group of listeners chips in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many episodes. If walking through the economy with us has made something click, that's where you can help keep it going. Lucas: Yeah, it's a model that lets us dig into industries like this without chasing clicks. So back to the economics — one data point that really stood out to me is the JOLTS job openings number, which rose slightly to 7.594 million in May. That's still above pre-pandemic levels, but the trend is flattening. When the labor market softens, discretionary spending is usually the first thing to go. Luna: And unemployment is still low at 4.2 percent, but initial jobless claims dropped to 208,000 last week. So the labor market is still pretty tight, but wage growth isn't keeping up with inflation. That's a classic stagflationary mix. Lucas: Right. And that mix is hitting the live event industry in a specific way. People still want to go out, but they're more price-sensitive. So the industry's challenge is to find the right price point that fills seats without alienating fans. It's a delicate balancing act. Luna: And if the Fed holds rates higher for longer, which seems likely given the inflation data, that could slow the economy further. Real GDP growth is already just 2.1 percent annualized. That's not recession territory, but it's not robust either. Lucas: Exactly. So we're in this in-between space where the industry can't rely on a booming economy to fill seats, but it's not in crisis mode either. The smart operators are the ones that are adapting their pricing and venue strategies now. Luna: What about the resale market? Are there any signs of consolidation or new entrants? Lucas: Resale is actually becoming more competitive. We've seen StubHub and Vivid Seats both launch lower-fee tiers to attract budget-conscious buyers. And Ticketmaster's own resale platform is trying to capture more of that secondary volume. But the key trend is that resale prices are increasingly acting as a leading indicator for primary pricing — if resale prices are falling for a particular event, primary sellers are adjusting their algorithms faster than they used to. Luna: So the whole ecosystem is becoming more responsive to demand signals in real time. That's a big shift from even five years ago. Lucas: Yeah, and it's partly driven by data analytics and partly by economic necessity. When the economy is strong, you can be sloppy with pricing because people will pay. But in a stagflationary environment, every dollar counts. Luna: I want to come back to something you mentioned earlier — the trend toward smaller venues. Is that something that's happening across genres, or is it specific to certain types of events? Lucas: It's most pronounced in the concert space, especially for mid-tier artists who used to play arenas. They're finding that they can sell out two or three nights at a two-thousand-seat theater more easily than one night at a ten thousand seat arena. And the economics work better because the venue costs are lower and the ticket prices can be higher relative to the experience. Luna: And for fans, it's arguably a better experience. Closer to the stage, better sound, more intimate. So it's a win-win if the pricing is right. Lucas: Exactly. The risk is that if too many artists downsize, the supply of arena-sized shows drops, and that could push arena ticket prices even higher for the few big acts that still play them. But for now, the trend is clearly toward right-sizing. Luna: What about sports? Are we seeing similar trends there? Lucas: Sports are a bit different because of season tickets and long-term commitments. But even there, teams are offering more flexible packages and payment plans. The days of requiring a full-season commitment upfront are fading. Teams want to keep butts in seats, and if that means selling partial plans and single-game tickets with financing, they'll do it. Luna: So the overall picture is an industry that's having to become more consumer-friendly out of economic necessity, not out of some sudden burst of altruism. Lucas: Right. Stagflation is forcing efficiency and innovation in pricing and venue strategy. It's not a bad thing for consumers, but it's a real challenge for operators who are used to steady growth. Luna: And that's the story we'll be following. Thanks for digging into the numbers with me.