Earlier this month, pop fans were delighted to see Ariana Grande had chosen not to use dynamic pricing in concert ticket sales for her upcoming tour, thereby keeping tickets more affordable for the hundreds of thousands of fans hoping to attend. Dynamic pricing, also known as surge pricing or market pricing, is when prices adjust based on real-time demand – meaning prices can quickly skyrocket when, for example, fans are in the waiting queue for presale concert tickets.
Today, let’s discuss the practice of dynamic pricing and how it’s used.
Your concert tickets are getting more expensive…
And it’s not just because of inflation. Although the cost of concert tickets has been consistently increasing over the years just like many other goods and services, the price of the average ticket rose by nearly 400 percent from 1981 to 2012, far above the 150 percent rise in overall inflation, making concerts feel more like a luxury item, especially as wages struggle to keep up with inflation.
The average price of a concert ticket for the top 100 tours last year was $135.92 – a 41% increase from the average ticket price just five years earlier ($96.17). Dynamic pricing has played a role in that increase, and artists suspected of utilizing the pricing method have faced serious public backlash. A recent example is when Lady Gaga fans reported seeing a minimum ticket price of over $600 for nosebleed seats earlier this year, just 15 minutes into ticket sales (the advertised minimum price was $113.06). Even so, Michael Rapino, CEO and president of Live Nation Entertainment (the parent company of Ticketmaster), has said that tickets are still “massively underpriced”.
Ticketmaster – which was the sole ticketing provider for 82% of the top-grossing amphitheaters and 78% of the top-grossing arenas in the U.S. in 2022 – began utilizing dynamic pricing as early as 2011. A more holistic rollout came in 2022 as the industry worked to regain momentum after COVID-19. Although the practice was said to be intended to discourage the practice of ticket reselling and scalping, critics have viewed it as another example of modern-day corporate greed.
Despite the fact that it’s also possible for prices to decrease based on low demand, the increased costs caused by dynamic pricing have been egregious enough to spur action. In response to high concert ticket pricing, the Australian government said last year they plan to ban the practice of dynamic pricing, and similar statements have come from the Republic of Ireland. In the U.S, the Justice Department filed an antitrust lawsuit against Live Nation-Ticketmaster in 2024 that is still ongoing.
Dynamic pricing of past, present and future
While dynamic pricing has received a lot of attention in recent years, it’s nothing new and it’s certainly not rare.
American Airlines was one of the first companies to use dynamic pricing back in the 1980s to help stay on top of the competition, and it has since become quite common in the travel and tourism industry. Delivery apps and rideshare companies regularly use it – Uber rolled out surge pricing back in 2011. You can find the same pricing model being used by apartments, hotels, utility companies, and, perhaps more noticeably, e-commerce sites like Amazon. More recently, Disney announced plans earlier this year to roll out a dynamic pricing strategy for its theme parks, and FIFA announced this month that it will use dynamic pricing when tickets for next year’s World Cup go on sale.
Dynamic pricing has even made it to some grocery stores in other countries, with digital shelving labels that can be changed based on real-time supply and demand for certain products. Kroger has recently implemented similar technology in the U.S, and lawmakers are highlighting the potential risk of “discriminatory price gouging.”
As AI continues to advance, there is growing concern over how the technology will be incorporated into current or future dynamic pricing models. Some fear that an individual’s digital footprint could lead to dynamic pricing that fluctuates based on not just overall demand, but also intimate details about a particular person’s needs and financial situation, leading to bespoke pricing. Delta Airlines is currently piloting using AI in its dynamic pricing model and has faced some backlash, leading the company to release a statement that “There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized prices based on personal data.”
