Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers / How Dynamic Pricing Raised Concert Ticket Margins
Transcript
- Lucas: So last week, a friend of mine tried to buy floor seats for the Taylor Swift Eternity Tour stop in Chicago. She logged in at ten AM sharp, waited in a virtual queue with half a million other people, and by the time she got through, the face value for a single seat was already four hundred and ninety-nine dollars. Luna: Wait — that's the official price from Ticketmaster, not a resale markup? Lucas: Correct. That was the dynamic list price. Ticketmaster uses what they call 'market-adjusted pricing' — basically, as demand spikes, the base price goes up in real time. That floor seat started at three hundred dollars in the presale, but by general on-sale, it had jumped nearly two hundred dollars. Luna: And fans were furious. I remember the headlines — 'Price Gouging' in all caps. But isn't this just… supply and demand? Lucas: It is, but there's a twist. Airlines have used dynamic pricing for decades — you book a flight to Miami in February versus spring break, you expect the price to be different. But concert tickets have historically been sold at a fixed face value, with the secondary market capturing the true market price. What Ticketmaster did starting around 2022 — and what the Swift tour really mainstreamed — was to bring that secondary-market logic into the primary sale. The artist and the promoter capture the upside instead of scalpers. Luna: So the argument is that dynamic pricing actually reduces scalping, because the price is already high enough that resellers can't flip for a huge profit? Lucas: Exactly. In theory. In practice, a lot of fans still felt priced out. But the data is pretty clear: on the 2025 concert circuit, tours that used dynamic pricing saw an average revenue increase of eighteen percent compared to tours that kept fixed prices. That's from Pollstar's year-end report. For a major stadium tour, that can mean an extra fifty to a hundred million dollars. Luna: And artists have noticed. I saw that even smaller acts — mid-tier indie bands playing two-thousand-capacity venues — are starting to experiment with it. The band Boygenius used a mild version last year, where prices fluctuated by maybe twenty percent based on demand. Lucas: Right. And the key is how you set the algorithm. Ticketmaster's system is basically a yield management model very similar to what airlines use. They segment inventory — floor, lower bowl, upper bowl — and then adjust prices dynamically based on how fast each section sells. If the lower bowl is selling out in ten minutes, the remaining seats in that section get a price bump. If upper bowl is selling slowly, it might actually drop slightly. Luna: But there's a fairness question here. Is it fair that the person who logs in at ten AM pays four hundred ninety-nine, and the person who happens to check at noon pays six hundred? Lucas: That's the core criticism. And it's real. The counterargument from the industry is that before dynamic pricing, the fair price wasn't face value — it was whatever the scalper charged. And the scalper's price could be two thousand dollars. So dynamic pricing, at least, puts that revenue in the hands of the artist and the venue, not the bot operator with a hundred ticket-buying scripts. Luna: But artists like Robert Smith from The Cure have publicly rejected dynamic pricing, insisting on fixed low prices and then fighting bots with verified fan systems. He argued that music should be accessible, not auctioned off to the highest bidder. Lucas: And that's a legitimate alternative model. The Cure's 2023 tour had face values as low as twenty dollars, and they used a system where tickets were nontransferable — you couldn't resell them at all except at face value through Ticketmaster's own exchange. That killed the secondary market. But it also meant the band left a lot of money on the table. For an artist like Swift, who is already enormously wealthy, the choice is ideological. For a mid-tier artist trying to fund their next album, dynamic pricing might be the difference between breaking even and making a profit. Luna: So where does regulation fit? There's a bill in Congress — the TICKET Act — that would require all-in pricing upfront and ban hidden fees, but it doesn't ban dynamic pricing itself. Lucas: Right. The TICKET Act, if it passes, would make transparency mandatory. So you'd see the total price before you enter the queue, not after you've spent fifteen minutes selecting seats. But dynamic pricing would still be allowed. And I think that's probably the right balance — let the market set the price, but make sure the consumer knows what they're agreeing to. Luna: It reminds me of the Uber surge pricing debate. People hate it in the moment, but it efficiently allocates scarce supply. If there's a concert with fifty thousand seats and a million people who want them, something has to give. Lucas: Exactly. And interestingly, the secondary market itself has also evolved. Platforms like StubHub now use their own dynamic pricing tools to help sellers set optimal prices in real time. So even if the primary market stays fixed, the resale market will still fluctuate. The question is just who gets the revenue. Luna: One thing I want to circle back to — the artist's share. When a ticket sells for five hundred dollars, how much actually goes to the artist? Because the common fan perception is that Ticketmaster and Live Nation take a huge cut. Lucas: It varies wildly, but a typical breakdown for a stadium show: about fifteen percent goes to the venue, ten to fifteen percent to the promoter — which is often Live Nation — and then Ticketmaster takes a service fee that averages around fifteen to twenty percent of the ticket price. The artist nets somewhere between fifty and sixty percent of the gross ticket revenue, before their own expenses like production, travel, and crew. So if that floor seat is five hundred, the artist might see two fifty to three hundred dollars. Luna: And dynamic pricing doesn't change those percentages — it just makes the pie bigger. So the artist's absolute dollar take goes up. Lucas: Exactly. And that's why more and more artists are adopting it, even quietly. I saw a report from Billboard that in 2025, roughly forty percent of major tours used some form of dynamic pricing, compared to maybe fifteen percent in 2019. Luna: So the trend is clear. And for a business audience, the lesson isn't just about tickets — it's about the broader principle that pricing can be a strategic lever, not just a cost-plus number. Lucas: Absolutely. If you run any business with constrained supply and variable demand — hotels, airlines, even consulting firms — dynamic pricing is worth studying. The concert industry is just a very visible, emotional laboratory for it. Luna: And if this episode gave you a new way to think about your own pricing — or even just made you feel a little better the next time you pay surge pricing for a ticket — that's the kind of thing we hear from listeners. Lucas: Yeah, and we love hearing it. If you've gotten real value from these conversations — maybe you've applied an idea to your own work — the way these stay ad-free is listener support. It's buy me a coffee dot com slash fexingo. That's it. No tiers, no perks, just keeping the show independent. Luna: And it genuinely helps. So back to the economics: one more factor I want to throw in — the role of platinum seats. Ticketmaster designates certain seats as 'platinum' and prices them dynamically, often at much higher levels than standard seats in the same section. How does that work? Lucas: Platinum seats are essentially the best available seats in a given section, priced to reflect real-time demand. They're not resale — they're primary inventory that the artist and promoter choose to price at market-clearing levels. For the Swift tour, some platinum floor seats hit two thousand dollars at face value. And they sold. Quickly. Luna: So it's a form of price discrimination — fans with higher willingness to pay self-select into those seats. Lucas: Exactly. And it's more transparent than the old system where those same seats would have been bought by brokers and resold for three thousand dollars. At least now the artist gets the revenue. Luna: What about the risk of backlash? If fans feel exploited, does that hurt the brand long-term? Lucas: It's a real concern. Taylor Swift took a lot of heat for the dynamic pricing on her 2023 tour, and her team adjusted — they added more shows and did additional presales. But the tour still grossed over a billion dollars. So the backlash didn't seem to hurt demand. For a brand with as much loyalty as Swift, fans grumble but still pay. Luna: But for a less beloved artist, the calculus might be different. If your fanbase is more price-sensitive, dynamic pricing could backfire — you might price out your core audience and end up with empty seats. Lucas: That's the nuanced take. Dynamic pricing isn't a one-size-fits-all lever. It works best when demand far outstrips supply and the brand has strong loyalty. For a niche band playing a club, fixed pricing with a quick sellout might be better for fan relations. Luna: So the key is knowing your audience — and your data. Which is really the theme of this whole show. Lucas: Right. Pricing is a data science as much as an art. And the concert industry is giving us a real-time case study in how powerful — and polarizing — that can be.