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Oxford University Press could have crowned “brain rot” the word of the 12 months, but “dynamic pricing” was also a top contender.
Originally coined by economists within the late Nineteen Twenties, dynamic pricing refers to “the practice of various the value for a services or products to reflect changing market conditions. Specifically, the charging of the next price at a time of greater demand,” the publishing house said on its site.
Many individuals associate it with shifting airline ticket prices or how ride-hailing service Uber adjusts fares at busy times. Nevertheless, there was heightened awareness — and controversy — across the practice in 2024, especially when it got here to purchasing highly sought-after event tickets.
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“In some high-profile cases, dynamic pricing was utilized in setting prices for concert tickets, leading to fans [often reluctantly] paying very high prices to see their favourite artists. In some cases, fans were in a virtual queue for hours before realizing how much they’d be asked to pay, resulting in questions on the transparency of dynamic pricing practices, in addition to value for money,” Oxford said.
How and when artists use dynamic pricing
Many Oasis fans took to social media to complain that they ended up paying greater than double the face value of the ticket suddenly. The band said it might abandon the practice for the North American leg of its tour.
Taylor Swift performs at Scottish Gas Murrayfield Stadium on June 07, 2024 in Edinburgh, Scotland. Swift’s Eras World Tour plays 15 dates across Scotland, Wales and England in June and August.
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Taylor Swift reportedly refused to dynamically price her Eras Tour tickets because “she didn’t want to do this to her fans,” Jay Marciano, chairman and CEO of AEG Presents, which promoted the event, told HITS Each day Double in October.
Also in an interview this fall, Robert Smith, the lead vocalist and guitarist for the Cure, said dynamic pricing is “driven by greed,” calling the practice a “scam.”
How and when dynamic pricing is used is on the discretion of the artist or management, in response to Andrew Mall, an associate professor of music at Northeastern University — and it was often determined under the radar.
Nevertheless, with so many recent high-profile tours, “obviously, dynamic pricing has surged to the forefront of concert goers’ attention,” he said.
‘A capitalist inevitability’
“Everyone knows that if you happen to are searching for an Uber or Lyft, there are particular times of night when it’s dearer. The market seems to have adapted to that,” said Joe Bennett, a forensic musicologist at Berklee College of Music. “But concert tickets were generally a set price.”
Slowly, nonetheless, a change was taking hold.
Throughout the 21st century, revenue from recorded music has gone down while revenue from live music events has gone up. By the mid-2000s, live shows “provided a bigger source of income for performers than record sales or publishing royalties,” economist Alan Krueger wrote in a paper on the economic issues and trends within the rock and roll industry. Live music industry revenue jumped 25% in 2023 alone, in response to data from Statista.
In 2011, Ticketmaster first introduced an early version of dynamic ticket pricing, which is now the usual for live music ticketing sales. In newer years, “ticket sales went crazy” driven by post-pandemic pent-up demand and a surge in mega-star stadium tours, Bennett said.
“You may see why it’s tempting,” he said. “The live music industry is consistently leaving money on the table that fans would pay. Dynamic pricing is kind of a capitalist inevitability given the forces at play, but I don’t desire to live in a world where it costs a $1,000 for my daughter to see Taylor Swift.”
Still, it’s now common for ticket-selling platforms to charge more per ticket depending on demand for the event at any given time — whether consumers prefer it or not.
“It is not extremely popular, as you would possibly imagine,” said Matt Schulz, LendingTree’s chief credit analyst. “Businesses and musicians try to see what the market will bear, and it makes things really difficult for the patron.”
Chalk it as much as ‘funflation’
Despite complaints, consumers prove that they’ve a high tolerance for the increasing price tags of live events, also referred to as “funflation.” Younger adults, particularly Generation Z and millennials, have demonstrated they’d even go into debt to pursue a few of these experiences, recent reports show.
Nearly two out of 5 Gen Z and millennial travelers have spent as much as $5,000 on tickets alone for destination live events, one recent study from Bread Financial found.
“Knowing your limits is significant,” Schulz said. “As much as you would possibly love your favorite musician, there needs to be a limit to how much debt you’re willing to enter for them.”
Why dynamic pricing won’t go away
“Consumers don’t love the thought of dynamic pricing, but there may be a renewed ‘YOLO’ [you only live once] attitude over the past few years because the pandemic and, increasingly, that drives a devil-may-care approach with regards to spending on discretionary experiences,” said Greg McBride, chief financial analyst at Bankrate.com.
Even with household budgets strained, “you get to some extent where there are just a few experiences where consumers draw the road and say, that is not something I’m willing to present up,” he said.
Ticket sellers are well aware of this mentality, too.
“Our research consistently tells us that live shows are a top priority for discretionary spending, and one in all the last experiences fans will in the reduction of on,” Live Nation said in a quarterly earnings call in 2023.
But as consumers proceed to spare no expense to see their favorite artist or group, that implies that means dynamic pricing is here to remain, a minimum of for now.
“The live music sector has been leaning into this attitude for a very long time,” Northeastern University’s Mall said.
