The Market is Telling You Something

Trent Reznor went on the record in a Nine Inch Nails fan forum a week or so ago to suggest to fans that they boycott the secondary market for tickets.  At the conclusion of a long and thoughtful post, Reznor concludes with this:

“Nothing’s going to change until the ticketing entity gets serious about stopping the problem – which of course they don’t see as a problem. The ultimate way to hurt scalpers is to not support them. Leave them holding the merchandise.”

If I correctly understand Reznor’s objections, they revolve around the fact that the presence of the secondary market means that the best seats go to people willing and able to pay high prices for them.  He, by contrast, would like to see the ‘true fans’ get those seats and the face value.

He also says, quite rightly, that since his band get 10% of the house and can sell them however they wish, it would make them more money to sell those at premium prices, but they don’t.  Instead, they hold a kind of lottery for them among those who sign up to be on a list to hear from them about these kinds of offers.

Reznor does do a lot of stone-throwing at people, like artists, Ticketmaster, and scalpers, in the form of criticism for their desire to make money and does do a fair amount of self-congratulation for his own willingness not to maximize his own take.  Still, I think it’s reasonable for us to assume that his motives here are pure:  he makes plenty of money, so it’s more important to him to be seen to be on the side of his fans.

So taking that as a given, here’s a question:  what does his policy do for his fans?  It gives a limited number the ability to get a seat at a price that is almost undoubtedly less than they would be willing to pay.  That’s nice and it excites some of the fan base, but an artificially low price, based on the simple laws of economics, creates something else too:  scarcity.

So most fans don’t get to benefit from his generosity, but to the degree that it reflects well on Reznor and the band and creates a sense of urgency about being on his mailing list, it does benefit him.  Directly and indirectly.

If fans of other artists feel gouged or left out, doesn’t that diminsh their appeal to their fan base?  Reznor says that “most acts/artists don’t want to come off as greedy pricks” by pushing their fans to the wall on price over the ticket allocations they control, but if they did, and their fans perceived that, wouldn’t it just be bad, short term marketing?

In this business, you can’t make anybody pay anything they don’t want to pay.  And if there’s a perception of a “broken contract” between the artist and the fan, it can be lethal to the long term viability of an act, troupe, or venue because now, it’s all about long-term customership.

The other possibility of course is that the real fans don’t mind paying more.  Sure, they’d like a bargain, but who wouldn’t?

This is another example of someone who has a hard time believing what the market is saying about the value of these tickets:  if they’re in enough demand to create a secondary market, it might be a good idea to raise the price at face, at least on some tickets.  That makes it less attractive overall for the secondary market guys and gives the act and the venue more control.