By Jim McCarthy Feb 26, 2010 7 comments

More Pie Now!

A couple days ago, I participated in a Panel at’s excellent Executive Summit in Long Beach.  This gathering, in its second year, is one of a  kind in that it brings together top executives across the live entertainment business for a brief, but powerful conference on a wide range of issues that affect the whole industry.

I was on a panel with a group of really interesting folks, and the topic was “Innovative Ways to Sell Inventory.”  My prepared notes had me talking about the importance of addressing a female audience, since 85% of all branded products are bought by women in America.  (Frankly, I’m not even sure I believe that stat, but I believe it’s directionally accurate.)  I asked the audience how many people believed women bought 25% or more of all tires in the US and about half or perhaps a little less said they believed that.

But the number’s really 60%.  That one blows me away.  It implies that either women are buying tires for men, men don’t replace their tires, or women have more cars on which tires must be replaced.  But this statistic, I wholeheartedly believe, because it’s true of just about every other segment of the economy.

And that’s how the panel was going until I got sidetracked.

One of the other panelists said a couple things that I felt had to be refuted.  He asserted that discounts are better when the person buying the discount doesn’t know they’re getting a discount and that the challenge of getting people into more shows is that the shows are too expensive.

Let’s take those one at a time.

How much does it cost to fly from wherever you are to Chicago?  Or Miami?

You don’t know.  I don’t know.  If I said I just bought tickets to Miami for $1000, you probably wouldn’t be surprised.  If I also said I bought tickets to Miami for $200, you also probably wouldn’t be surprised.  You have no idea what a ticket to Miami or Chicago costs.  You know what you’d pay and you know what feels expensive, but you have no mental interface into thinking about what these things should or do cost.

Because, really, who doesn't like pie?

Because, really, who doesn't like pie?

This isn’t good for the travel industry.  Despite decades of smart, high-powered dynamic pricing, the industry has done nothing but lose money.  In fact, a few years ago, the airline industry lost more money than the industry has collectively ever made put together.  But the exceptions to this are the airlines (like Southwest) where the pricing is far more transparent.  Sure, there are different prices, but it’s straightforward:  it’s cheaper if you buy early; it’s cheaper if you fly on certain days; but there’s a table and it’s all laid out for you.  I know that flying to the Bay Area on SWA from Burbank should cost me about $180 to $200 round trip if I book for a couple weeks out.  (What do you know?  I just checked and the “internet only” fare for a roundtrip ticket from Burbank to Oakland in two weeks is $180.)

Ask yourself this:  do you think consumers like the fact that it’s impossible to know how much a plane ticket is going to be worth?  My feeling is that they don’t.  They accept it, perhaps, but they don’t like it.  And flights are, often times, necessities.  They’re more or less a commodity that people buy because they either MUST go somewhere or WANT TO go somewhere.  Tickets to live entertainment aren’t that.  The live entertainment is the point.  By blinding people to value, there’s a good chance that the live entertainment industry will step over dollars to pick up dimes, just like the airline industry has done.

Again, except Southwest.

Which brings me to my next point.

I went on a bit of a rant at the panel (which I could tell from body language that about 1/3rd of the crowd really supported) about my belief that the real issue isn’t optimizing what we’ve got.  It’s growing the audience for live entertainment.

It’s growing the audience for live entertainment.

It’s growing the audience for live entertainment.

This is a battle that in many ways, we are losing.  There’s great live content all over the place that is under-enjoyed and undersold.  There are 10 times as many qualified potential live entertainment buyers as there are live entertainment buyers.  It’s well and good to slice the pie more efficiently, but the pie’s not big enough.

And the tragedy of that is that there’s a nation of people who love pie!  Live entertainment is what everyone likes to do, but there are barriers that we need to help them overcome.  We need to give them more reasons to go out, help them understand what’s great and fun about what is happening out there, and of course, design the experience FOR them, rather than just expecting them to cotton on to how great it is.

The fallacy is that every consumer has perfect information, and this is a typical ivory tower fallacy.  Consumers, the assumption goes, make rational decisions based on all their options and primarily decide whether something is worth the offered price.  Well, that’s sorta true at best, but what’s even more true is that for the most part, consumers don’t give a moment’s consideration to going to your event (or the ones that we sell on Goldstar.)  We’re not winning enough of the battles for mindshare to become the first thing that people think of doing.

That’s the real issue.  Price optimization is a nice tool, but it’s inherently inward-focused.  The gold mine is beyond the people who are already there, although of course, they are very important too.

Which brings me back to Southwest Airlines.  This is a company worth more than the traditional major American airlines put together, and why?

Because “you’re now free to move about the country.”  The whole founding idea of Southwest is this:  people should fly more.  They should fly to more places more of the time.

Has it worked?  I think the question answers itself.  Southwest hasn’t had an unprofitable year in decades, even after 9/11.

Was it pricing?  It was in the sense that in order for people to fly more, it had to be something they could afford to do more, but more than that, it was making it easier, quicker, friendlier, as reliable as the Japanese  Rail, and letting them know that it could be done.

So the choice is pretty straightforward: Southwest Airlines or Delta?  Micro-optimization on the existing pie or a much bigger pie?

Share and Enjoy


    • Steve Ochs

      Hey Jim,
      I would have been among the 1/3 of the group agreeing with you. My wife and I frequently attend all kinds of live entertainment and I worked as an entertainer for many years.
      In as much as ticket pricing and marketing have a great deal to do with attendance, I think that there is another component to the live entertainment experience that goes largely under-considered.
      For us convenience is king. When we’re in Las Vegas, for instance, we see to it that we are staying in the hotel that houses the show we are seeing one of the nights of our stay. When possible we keep the other in walking distance. In LA, the Staples Center and surrounding venues do themselves a disservice with their costly, inconveniently located parking. The smaller theaters in LA require even more incentive to attend as the traffic and parking availability is miserable.
      I believe this goes a long way toward explaining why someone with, say, $12.00 for a ticket is more apt to hit a movie than a show; you know you’ll have convenient free parking and a reasonably effortless drive in and out.
      I know that when I have been involved with the production of live theater, my focus is actually more on the accessibility of the theater than the seats or available lighting.
      I don’t know what that theory does for you, but there you are.
      Nice article.

    • Elizabeth Mendana

      Thank you for sharing your reflections here. I agree with your sentiment about growing audiences. I would love to hear more discussion about HOW to grow audiences.

    • Chrysta

      I think that you’re exactly right, Jim.

      I own a bakery and I’ve diversified from just selling delicious cakes to teaching people how to make delicious cakes from scratch.

      Let’s consider my baking classes as “live entertainment” in this example.

      Because I believe in the importance teaching others where there food comes from and the skill of baking from scratch. To, to acheive this goal, I needed to, then, increase the number of people learning how to bake and the number of people taking my classes. Essentially, help people bake more and find a class that they could afford, just like Southwest did for airline travel.

      I made the decision that it was better to have 10 people at $32 ($320) than 4 people at $50 ($200). So, in order to grow my baking academy, I started offering discounted tickets on as well as certain offers through our bakery’s customer newsletter.

      People who were interested in learning how to bake began to learn that if they were the among the first few to buy their tickets (about 3 weeks in advance) they would get a 50% discount. If they waited, they would have to pay the regular price.

      Though they knew of the discount, they also knew what the value of the class was (the regular price).

      I was able to create a sense of value, but also create a discount opportunity.

      This baking academy started with about 3 classes a month, and now offers closer to 26 classes each month. And though half of our tickets are offered at a discounted price, we still regularly sell out the other 50% of tickets to people paying regular price.

      I’ve created a demand for “live entertainment”, e.g. hands-on baking classes in my case. And, offering a discount, a discount that customers were aware of up front, is to thank.

      What I’ve effectively done is create bigger pie, and my business is all the better for it.

      Glad you diverged from the pre-package presentation and that you shared here.


      Chrysta Wilson
      Kiss My Bundt Bakery

    • Donna Kalez

      As a goldstar vendor – i love this story , thanks for being such a great company and for staying true to who you are!

    • Jim McCarthy

      Elizabeth, stay tuned! We talk about how to grow audience here all the time!

    • Jim McCarthy

      Chrysta, that’s a great story, and yes, I do consider those kinds of classes to be entertainment. In fact, I wrote about you here:

    • Jamison Jessop

      excessive log you get