Tag: concert consumer behavior

The Concert Ticketing Theta Paradox

Jeremy Larochelle

 

When you break them down to their basic economic form, concert tickets are just like stocks – a limited commodity that can be traded based on the perceived worth of the market. This phenomenon has become much more apparent after the industry was shuttered for two years thanks to COVID.  Some fans who had purchased seats for a reasonable price (when the market was flooded with options) and sat on those tickets have watched their values go through the roof.  For example, my mom had purchased three seats in the nosebleeds (200 section) to see Elton John at the Amway Center in Orlando over two years ago for just under $400.  She decided to sit on those tickets and when I wanted to join my family for the show a few months prior to curtains, a single ticket cost more than what she paid for three.  I guess you would say the price – tripled.

 

We all know that because there are only “X” amount of seats for a show demand easily takes over price. Scalpers certainly get it and have made a fortune off that supply/demand misbalance for years. This practice has received a steroid shot thanks to technology.  Today’s scalpers use everything from technology-backed brute force to gobble up blocks of tickets to machine learning algorithms that automatically price, buy, hold, and sell tickets. This has increased the speed at which tickets can be turned over and with that, the price usually goes up.

 

Interestingly, similar technology is used in the stock market. Bots and electronic funds transfers allow companies to price, hold, and sell ownership of publically traded companies at blazing speed. Research into stock pricing will reveal that much of this action is the result of consumer behavior. Digital tools such as the Relative Strength Index (RSI) is used to gauge the momentum of a stock while the MACD tells us in which direction the price is likely to go.  Oscillators, moving averages, and overall technical analysis are all used to tell Skynet when to buy or sell stocks. The one thing nearly all of these equations and the technology that fuels them share is they are built on how consumers collectively behave as the availability (or perceived availability) of a commodity changes. The same thing happens with concerts. Ultimately, the price of an event is dictated by how much a cluster of consumers is willing to pay to get in a show.

 

Unlike traditional stocks which can last into infinity if the company stays afloat. Concerts and events have a limited shelf life and as that performance gets closer time becomes a problem.  Once again, we find a similarity between the stock market and the ticket market. This time it comes in the form of options trading.

 

In its simplest form, options trading gives the buyer the “option” to purchase “X” amount of shares of a company before a pre-determined date. The buyer pays a premium for this benefit. For instance, if John thinks Widget Inc’s stocks, currently trading at $50 per share, will trade at $100 per share in two months. He gives his broker a fee (let’s say $200 in this case) for the “option” to buy those stocks anytime between today and a pre-set day two months from now for $50 per share. If the stocks jump to $100 a share, John can execute his option and double his money. However, if that date arrives and John does not execute his option. He will lose the $200 he paid. The impact of that elapsed time is measured by Theta in options trading and it plays a very important role in how premiums are priced.

 

Theta also exists in the ticketing world but it is widely dependent on consumer demand on a show-by-show basis.  If that demand is huge (say a superstar’s farewell performance), Theta can mean more profit for the re-seller. In some instances, it can even push the demand curve straight up as the strike (event) date approaches. Consequently, if that demand is weak, it can reduce the profit for the re-seller, sometimes to the point of a loss if they are afraid the tickets won’t sell before the date and become worthless. After all, it is best to make some money than no money… right?

 

This can be beneficial for fans who live near a venue. For instance, I live just fifteen minutes from where Elton played here in Orlando and I watched ticket prices daily. Roughly two days before the show, I was able to secure amazing floor seats for the single price of one of my mom’s nosebleed seats when she bought them pre-pandemic.

 

The thing to keep in mind is that just like stocks/ options the concept of time until the show represents an inherent risk to your ticket price. If you want to attend that special event, it is typically best to buy tickets as close to their initial sale date as possible (being a member of a fan club can be worth its weight in gold for times like these). Otherwise, you will likely enter the ticketing options game where Theta could become your best friend or worse enemy.

 

The Amygdala – Fear, Pleasure, and Rock and Roll

Jeremy Larochelle

 

In my post Herd Mentality in Entertainment, I discuss how a small piece of our brain called The amygdala (what some call the old mammalian brain) is responsible for our natural mental reflexes to evade predators. This is a key component to my overall concert consumer behavior thesis as it is my belief that this piece of our brain is hard-wired for us to seek out the pack. Ultimately, leading us to copy their behaviors. Regardless if those behaviors are to group together, disperse, or buy another beer.

 

In his book, This is Your Brain on Music, neuroscientist Daniel J. Levitin, Ph.D. goes into depth regarding how our brain is hardwired with (on average) one hundred billion neurons. Each neuron is connected to other neurons—usually one thousand to ten thousand others. Just four neurons can be connected in sixty-three ways, or not at all, for a total of sixty-four possibilities. As the number of neurons increases, the number of possible connections grows exponentially to the point that we will never fully understand what our brains are truly capable of.

 

For us to process a thought, memory, or even the color red the respective neurons need to fire and create that connection to pull the respective data from other areas of our brain. A great example of how this happens musically is when that song (or more likely just a part of it) gets stuck in your head – aka the “earworm.” Scientists believe this could happen because you hear the song and it triggers a set of neurons that continue to fire and get stuck in playback mode. This demonstrates to us that if a certain part of the brain becomes activated it can lead to repeat fire in the neuro-circuitry of that area, which brings me to our good ol’ friend – the amygdala.

 

You see, the amygdala is not just responsible for those survival instincts. According to Levitin, “it sits adjacent to the hippocampus, long considered the crucial structure for memory storage, if not memory retrieval. And experiments over the past decades have shown that it is highly activated by any experience or memory that has a strong emotional component.” You know…like live music.

 

So when you are at a concert your amygdala is fully powered up. Its circuits are firing and with it the likelihood that your need to connect with the pack is increased. You are biologically primed to fit into the crowd and more likely to follow their cues. This is a great plus for ancillary sales such as alcohol and food and probably explains why we all accept the overpriced beer and food while at a concert – especially if those in our row have a beer in hand.

 

However, the neuro-firing of the amygdala doesn’t stop with ancillary sales. Sponsorships benefit from this priming as well. For one, that charged-up amygdala rests near your memory storage so you are more likely to store and later recall brands you see while at a show. Second, as our earworm scenario showed us, all it takes is a piece of one song from that event to trigger those neurons and create an infinite feedback loop that could easily trigger memories of that night including the weather, smells, and advertisements you came across. Furthermore, your brain will likely categorize those brands with the positive emotions that are generated from music consumption – a huge win for advertisers.

 

Live music ignites nearly all areas of our brain. However, the amygdala carries special weight because it also drives us to instinctively follow the pack. In addition, its location near our hippocampus aids memory storage and recall, which is powerful biology that fuels concert consumer behavior.

 

Judge Judy – A Demo in Audience Compounding

Jeremy Larochelle

 

My mom is a HUGE Judge Judy fan and I will admit it, so am I.  However, we are fans for different reasons. My mom likes seeing someone her height take control of a situation. While I admire what the 5′ 1″ judge has done in creating a powerful global brand through the concept of audience compounding.

 

In fact, I admire her so much that I have created the Judge Judy Principle in regard to how venues can craft a loyal customer following. It works like this.

 

People are creatures of habit. Our brains have to process so much data each day, that the organ is constantly looking for things it can place on autopilot. This is where habits kick in. We habitually take the same route to work. We instinctively pick-up the same toothpaste without considering dozens of other brands. And for many of us, like Pavlov’s dog, we instantly check our messages when we hear that “ding” from our phones. This is a core part of consumer behavior and many of the top brands seek to utilize it to get their products and services into our auto-consumption routines.

 

Basically, brands need two things to break into our habits. One, they must always be where we would expect them to be and two, they need to give us the same quality product every time. Judge Judy has been doing this since 1996 and is reaping the rewards.

 

She has been on the air for 23 seasons and has remained in the same afternoon slot (roughly 3 pm – 5 pm) for that entire time. This is key to habit-forming because her fans know where they can get their Judy fix anywhere in the country with little effort. Second, her product is always the same. Her intro music and logo don’t change. She wears the same robe. The program is always filmed in the same courtroom – they never go anywhere special. Her bailiff, Byrd, always announces her and the case before jumping into a crossword puzzle. This is the second key to her success – she gives her audience the same quality product at each interaction. This prevents people from becoming confused and continually reinforces their positive stimuli response, which strengthens their tie to the habit and feeds the viewership cycle. It also explains why Judge Judy has a fan base of 10 million-plus every weekday and has been the number one syndicated daytime show since 1998. So, how does this apply to the booking of entertainment venues?

 

Judge Judy’s success is a testament to the importance of establishing a long-term booking strategy and sticking with it. Before the internet, iPhones, social media and streaming, entertainment consumers had fewer options so the onus was on them to seek out their choice of leisure. Technology has shifted this behavior. Consumers now have access to countless opportunities with little cost of engagement such as streaming music on Spotify, viewing videos on TikTok, or binging a whole TV season on Netflix.

 

Talent buyers and venue bookers must consider consistency in their programming as a way to counteract this challenge. Since the consumer’s cost to see live entertainment is more than, say, streaming Hulu at home, they are in a vulnerable position. And if you operate in a highly competitive live market these “on the fence” consumers have a multitude of options at their disposal as well. This means that anything you do that confuses them could become detrimental to your operations.

 

This doesn’t mean you need to book the same act each night, but your calendar should be consistent in one way or another. You can hold tight to theme nights such as Latin on Sundays, Karaoke on Wednesdays, and Pop on Fridays. Or you can book one style of entertainment such as an open format DJ regularly. The key is sticking with your decision once your A/B booking testing is complete (more on that later). This will mitigate the fan’s choice apprehension.

 

It will also fuel an audience compounding strategy that works like this. A customer arrives and digs your vibe, so they come back. If you are consistent and reinforce their stimuli response, they will stay along with the next patron who visits, likes what they see, and decides to come back a second time as well. Over time you will build a core group of promoters for the brand. This will lead to an adoption tipping point that is regularly hit, which will speed the time it takes to fill the venue.

 

However, if you change your entertainment too often you risk confusing and alienating the customers you have gained. In essence, you will start the whole process over and it will take longer for you to pack the house. Think of it like your 401(k). You put in money consistently every month. Later, you reap rewards with very little effort on your part. However, if you pull money out early it takes longer for those checks to cash. This is why Judge Judy is so successful. She has a solid brand that has delivered a similar quality product consistently for 23 seasons and has reaped the benefits of audience compounding in the process.

 

If you would like to learn more please reach out to me at [email protected] or call me at ‭(602) 842-2050‬.

 

 

 

 

Using Venue Math to Find Your Baseline

Jeremy Larochelle

I wanted to demonstrate how data, research, and math can help venue managers and marketers book concerts.

 

 

To do that, I took research on music adoption from The Verge and consumer behavior experts. Then, applied some rudimentary math skills to demonstrate how one could likely pinpoint eras of music that would better align with a concert venue’s marketing strategy.

 

Works Cited:

Ong, T. (2018, February 12). Our musical tastes peak as teens, says study. Retrieved from https://www.theverge.com/2018/2/12/17003076/spotify-data-shows-songs-teens-adult-taste-music

Solomon, M. R. (2019). Consumer Behavior: Buying, Having, and Being (12th ed.). Hoboken, NJ: Pearson.