How to charge for the Big Day Out?

World's tallest buildings in 1884

47,000 tickets for the Big Day Out at Flemington race course sold out within minutes of going on sale at 9am on Friday. Tickets for the Sydney and Gold Coast events also sold out in record time. The organisers have arranged an additional event in Sydney (tickets on sale October 11).

The issue of how to deal with excess demand is a common one in cities, whether it’s concerts, road congestion or the (until recently unfamiliar) problem of public transport congestion.

As I went through the stressful process of buying tickets for the Big Day Out for my son (successfully as it turns out), I got wondering if ‘first-in, first served’ is really the ideal way to go about selling tickets for such a high-demand event. The organisers appear to think it isn’t.

They made a decision on Friday, apparently on the fly, to hold back 3,000 tickets for the Melbourne event. These will now be made available via a randomly drawn online ballot conducted once a week for ten weeks. Prices will be the same as they were for the original sale.

The organisers quite clearly could charge more than $164 per ticket (including booking fee), so why don’t they? It could be that they’re simply not very good at estimating people’s willingness to pay for a particular set of bands, or perhaps it’s such a black art that they’re not prepared to take too many risks. Or it might be that they’re in it for the long haul and don’t want to alienate concert-goers from returning in future years – they might want to protect the “brand”.

On the other hand maybe the rock music industry attracts the sort of laid-back people who are quite happy with just a single squillion – they know when enough is enough. Or it could be that they simply can’t think of a way to set up a multiple tier pricing system within the Big Day Out model which would give more expensive tickets some advantage like they do in a standard concert format e.g. front row seats.

Whatever’s going on in the promoters mind, the flat price first-in, first-served model has some disadvantages for concert goers. Some prospective attendees would undoubtedly have found it very difficult to be online at 9am and apparently even many of those who could still missed out on tickets. Some of those who missed out might’ve been among those who would’ve gotten the most out of attending the event. My son, for example, would’ve been shattered if it he’d not gotten in.

But tickets aren’t sold on the basis of the utility obtained – you pay the same price irrespective of what it means to you and irrespective of your income. So likewise your chances of getting a ticket don’t depend on how keen a fan you are or on how much money you have (although of course you need some money simply to be in the hunt for a ticket in the first place – my 14 y.o. son is buying his ticket from his weekly disposable income of $60, earned by delivering papers).

We’re accustomed to thinking about equity in terms of income or resources. But the value obtained by the user is also a pertinent concern. For example, when we talk about congestion pricing of roads it makes sense to argue some trips are more valuable than others. Most people would regard your trip to a job interview in the morning peak, for example, as a higher value trip than mine if I’m merely dropping the kids off at school when they are quite capable of walking or taking public transport.

Perhaps ticket sales for the Big Day Out could be sold by Dutch auction in order to give those with the most to gain a better chance of attending – they presumably would be prepared to pay a higher price. That’s probably way too hard administratively at the moment, so another approach would be to sell some tickets at a premium price with additional benefits e.g. guaranteed access to some of the performances.

That raises issues of vertical equity. Maybe that’s the benefit of the old fashioned way – queuing overnight outside the ticket seller’s door. Those who value the opportunity the most can enhance their chances of getting a ticket by “camping out” without having to pay a higher (cash) price. However that method of selling tickets seems to be in decline with the advent of exclusively online sales.

I don’t see that a ballot offers much advantage. It’s fairer to those who couldn’t get online at 9 am but that could be addressed by having a more accessible time or times (like 8 pm, say). The ballot still doesn’t give priority to those who value attending the event the most.

Whether it’s the Big Day Out or congestion pricing, increasing the price across-the-board to a clearing level will be more likely to give those who value the event (or the trip) highest, the best chance of gaining admission (or road space). But I’d expect that some form of tiered pricing structure would be better at meeting vertical equity objectives.


2 Comments on “How to charge for the Big Day Out?”

  1. Michael says:

    A lot of interesting questions. I have wondered about it myself, although not for about 15 years. I found this interesting from http://duke.edu/~dandan/Papers/tom.pdf.

    “In a famous passage of Mark Twain’s novel Tom Sawyer, Tom is faced with the unenviable job of whitewashing his aunt’s fence in full view of his friends who will pass by shortly and whose snickering promises to add insult to injury. When his friends do show up, Tom applies himself to the paintbrush with gusto, presenting the tedious chore as a rare opportunity. Tom’s friends wind up not only paying for the privilege of taking their turn at the fence, but deriving real pleasure from the task—a win–win outcome if there ever was one. In Twain’s words, Tom “had discovered a great law of human action, without knowing it—namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain.”

    There is probably a fairly fragile set of conventions that can’t be messed with lest they make people think too much about what it is they are paying for.


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