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If you've been following the industry wires this past week, you've undoubtedly heard of the new ticketing venture between Live Nation and Groupon, the online discount and coupon site. The deal, the value of which has yet to be disclosed, will create a subsidiary of Groupon called "GrouponLive!", that will offer fans access to discounted tickets for Live Nation concerts, sports, and other live events. According to Live Nation, the intent of the Groupon partnership is to "sell the last 10 rows" by reaching out to those customers who are unaware of an event or don't decide to buy a ticket until the last minute. All spin aside, however, the real intent is obvious to anyone within the industry - deeply discount and dump as many unsold tickets as possible prior to the event, in the hopes of filling the house and making a bit back on food and beverage.
On the surface, there's nothing inherently wrong with this concept. In fact, "papering" the house as it's commonly called has been done since the beginning of the modern concert industry. Traditionally, a promoter faced with a lightly or unevenly sold house would release limited amount of free tickets to radio stations, record stores, or community groups for distribution shortly before the event. When done right, it's a mutually beneficial situation - a few more guests get to see a show for free, the venue makes some money on concessions, and the artist performs for a larger audience.
However, the problem with the Live Nation/Groupon deal is not the intent. After all, an unfilled seat is lost revenue, which hurts everyone involved. It's that in their attempt to reach an admittedly small portion of the ticket buying public (the casual buyer), they risk alienating their core (regular) ticket buyers while simultaneously triggering a downward spiral in advance ticket sales that will ultimately hurt the promoter. It comes down to what Groupon does best - deep, widely distributed discounting.
Unlike most other consumer goods, event tickets do not lend themselves to discounting. As much as Live Nation would like to believe otherwise, concert tickets are not like clothing or foodstuffs, where the perceived value of the item drops as the time goes on. The value of a concert is "fixed" from the moment the deal is inked and the ticket prices are released to the public. Although the "street value" of a ticket may appreciate when they become scarce (witness the burgeoning secondary ticket market), there is no large-scale depreciation in the face value of a concert based upon time. However, this deal with Groupon does just that - designates the shelf-life of a concert ticket, where it's cheapest just before it turns sour. This sends two unmistakable messages. The first is that being a loyal customer who purchases their tickets early and often isn't worth the the extra effort and expense, especially when the guy next to you paid half as much the day before the concert. Likewise, It tells the public that it's better to wait until the last minute before purchasing their tickets, lest you miss out on a discount.
I speak of both consequences from experience. Several summers back, my former venue enacted a fairly heavy voucher program to move some unsold lawn tickets on several shows. For the cost of parking, voucher holders would get a "free" concert ticket, and the venue would boost our F&B numbers. In the beginning, the program was a huge success. Within a few weeks, however, lawn sales for most of our shows began to drop markedly. Concurrently, we began receiving daily inquiries from the public asking if we had vouchers for a particular show. Word had gotten out about the program, and the public responded as we had inadvertently "trained" them to do - hold off on purchasing and wait for the handout. Likewise, we began receiving complaints (both via phone and during the shows) from customers fuming that they had paid full price for their ticket while the guest beside them paid "nothing". For all our gains in our food and beverage numbers, we lost tremendously in potential ticket revenue and the goodwill of our paying customers.
One could argue that since these are "discounted" tickets (as opposed to free tickets distributed through papering), the backlash will be negligible. However, two things work against that notion - the number of tickets being released, and the highly visible marketing of these discounted tickets. It would be one thing if Live Nation and Groupon simply developed a discount program, and quietly activated it on select shows through Groupon's primary distribution channel. Although this might lack the public relations benefit the companies are hoping for, it would achieve roughly the same ends while sheltering them from some of the inevitable fallout. However, by executing the discounting program through "GrouponLive!" and promoting it so heavily, they're creating an expectation in the public that will either disappoint Live Nation (by causing the public to delay purchasing tickets), those who sign up for the service (when the deals prove to be scare, difficult to get, or otherwise disappointing), or those who have already purchased tickets (if we're to take Live Nation at its word, everyone EXCEPT those in "the last 10 rows"). Likely all three to varying degrees. In truth, the only party I see fully benefiting with this deal is Groupon.
Given the current state of the live music industry, I can't fault Live Nation for hitching their cart to this new distribution model in an attempt to move more tickets. After all, there are few companies out there as fast-growing and buzzworthy as Groupon, and concert promoters can use all the help they can get. However, I can't help but feel that the blow-back from the deal is going to cause more problems than any additional revenue is worth.
(Full disclosure - Although I am a former employee of Live Nation, I have no particular axe to grind with the company. Quite the contrary, I count my experience with the company to be some of the best of my professional career. This is a conceptual argument, not personal.)
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