Taylor Swift is arguably one of the top recording artists in the world currently. With over 50 million album sales and even more singles, the 29-year-old American top artist is among the all-time selling artists in the world. She also boasts a big fan base with over 100 million followers on social media, something that few celebrities have achieved so far. Taylor in 2017 signed up for the verified fan system that enables her fans to register ahead of time and those who get verified get a chance to purchase tickets to her tours. Fan verification, however, doesn't guarantee somebody a chance of purchasing Taylor's tours tickets but rather unlocks the opportunity for fans to buy the tickets (2019). The main aim of the system is to protect her fans from scalpers who get hold of tickets and then sell them at extremely high prices a case that was so familiar in the previous ticket sale system.
When scrutinized with an economic lens, it is clear that the verified fan system is opportunistic helping Taylor Swift earn more revenue. The idea is, there are lots of people in America who want to attend Swift’s tours, but unfortunately, not everyone can be accommodated in her entertainment arenas. The Verified fan system by Ticket masters is designed to make sure that only her dedicated fans get to purchase the tickets for the tours and not touts and scalpers. The system thus sets algorithms for coming up with this 'dedicated fan.'
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In the reputation tour, to prove dedication and loyalty, a fan had to watch Swift’s videos, tag her on social media and preorder the CD of her reputation album. (Scott, 2019) This CD on preorder costs the fan $68.03, but on download, the CD costs $15, and for the fan to increase his chances of verification had to purchase the CD 13 times. On simple calculations swift earned an extra 58.07 on every CD, multiplying by the 13 purchases a fan had to buy to increase chances of verification equals $689.39. And that from just one fan. Take into consideration that Swift boasts over 50 million die-hard fans in America and other parts of the world who would rather die than fail to attend her concerts.
Tickets are sold through the verified fan system however on the bright side sell at 25% less than the previous tour's prices. The main reason for this strategy is to ensure that tickets to her tours only fall in the hands of her fans even when returns come at 25% less as compared to the previous years' tour revenue (Brooks 2017). Her idea and that of the ticket master was to protect her real fans from thousands of scalpers and bots who in previous tours bought tickets and then resold them at incredibly high prices. The high prices from scalpers closed the real fans of Taylor Swift and who couldn’t afford the high prices of her tours. It is for this reason that Swift and ticket master launched the Verified fan system during the reputation tour which sets an algorithm of differentiating a real fan from bad actors that are in the business of taking tickets away from fans to resell them for their benefit.
To improve profits, I would advise Taylor swift to avoid high price discrimination in her tours. Yes, it may be said that Swift made more cash out of the reputation tour even when the trip was not sold out. The expensive verification procedures had already compensated for the empty seats. But I find this risky because fans in the future may opt not to try the verification process because after all, most of the fans don’t get through the verification process. I would recommend that the prices be made moderate not too low to earn nothing for Swift and not too high to gorge many fans out of her tours. This will make Taylor not lose her fans to some other artists who are willing to accommodate and care for their fans. When fans trust you for the right things, profits always suffice.
In a situation where no scalpers exist in Taylor Swift’s ticket sale, and after perfect price discrimination the concert still remains unsold, the reason behind it might be the fan's willingness to pay. Willingness to pay is the amount of money an individual is willing to pay to get a service, in this case, entertainment. Regular costs at Swifts tours three years ago were selling between $40-$225 while the best seats for the VIP were going at between $250 - $1500. Now, some fans can't afford $1500 or else if they can afford it, they aren’t willing to pay the huge price. When the regular seats are at full capacity, the fans due to their unwillingness to pay for the expensive seats end up missing the concert. This is a case of high demand as fans are willing to attend the concert but due to the nature of pricing, the concert will end up having empty seats.
In case of no price discrimination and Taylor Swift’s concert remains unsold out, then this indicates absolutely low demand for the concert. With no price discrimination, every fan will have an opportunity of getting to the concert as the price will be absolutely affordable. But if empty seats were to exist after the slashing of prices to accommodate everyone, it will be high time that Taylor Swift realizes that she is no longer the fan's favorite.
The above linear demand curve indicates a negative relationship between demand and price. When prices increase, the demand reduces, and vice versa. Let's take the prices at Taylors Swift’s concert to be both P0 and P1 due to price discrimination. Many people will purchase tickets at price P0 (regular at $40-$225), and these slots will get full in an instant. At P1 ($250-$1500), most fans can’t either afford or are unwilling to pay the high price. This will leave some empty seats in the concerts as some people argue why they should pay high to enjoy the same service as a person who has spent less. (Tompkins $ Terry, 2018) In this case, no price discrimination exists in Taylor Swift's concert, and still, the show never sells out, then that's a case of low demand for her music. The price is no longer the factor but rather the taste of her music.
In conclusion, I find the claim that empty seats are good for business skewed. Empty seats at Taylor Swift’s concerts are an indication of a problem in either pricing or demand. The most probable reason for such a renowned singer like Taylor Swift is pricing. As much as Swift may be making lots of money even when her shows are not sold out, she risks her fans feeling deserted and unconsidered by their idol. Music is about fans, and with no fans, it ceases to be business as usual.
References:
- Scott Donnelly, M. (2019). Is Taylor Swift’s ‘Reputation’ World Tour Bombing? Pop Crush: Pricing News. [online] Pricing-news.com. Available at: http://popcrush.com/taylor-swift-reputation-world-tour-bombing-sales
- Brooks, D. (2017). Taylor Swift Has Concert Industry Embracing 'Slow Ticketing' Model. [online] Billboard. Available at:https://www.billboard.com/articles/business/8070644/taylor-swift-concert-industry-slow-ticketin
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