Ticketmaster's CEO Nathan Hubbard knows he's got a major problem. Ticket sales were down by double digits, and 40 percent of seats went unsold last year.
Now, he has a solution, one he unveiled on CNBC's "Power Lunch" today. It's 'dynamic' ticket pricing, a technology developed with a company called MarketShare.
Instead of locking in a single price for tickets, the company is rolling out an approach similar to the airline industry's strategy to make every seat on the plane is full. The new variable pricing system will let artists and sports teams raise and lower ticket prices to reflect demand, while they're being sold.
If this strategy works, more of the seats that have been sitting empty will sell and promoters will be able to drop prices if they're not selling. If ticket prices more accurately represent their value to consumers, that could mean fewer tickets being sold at sky-high prices on the secondary market.
If tickets for a particular sporting event or concert are selling like hotcakes, the band or team can raise ticket prices—preventing them from selling for sky-high prices on Stubhub later.
And perhaps most importantly, it could mean consumers are more satisfied and less frustrated. And since Ticketmaster is a brand consumers love to hate, it could use the help!
Hubbard, a former musician himself, has been working on a number of key initiatives to make consumers happier and drive ticket sales. One tactic is to make ticket-buying social. Hubbard has integrated Ticketmaster into Facebook, so buyers can tell friends they've bought tickets to an event.
This helps spread the word—free marketing—and gets groups of friends to mobilize. Another strategy is interactive seat maps.
Now Ticketmasters gives consumers far more control over choosing seats in an auditorium.
And it's working. The conversion rates—number of people who actually buy seats after looking at them—has grown by over 25 percent.
Consumers will never want to pay fees for tickets, the question is whether Ticketmaster can be upfront about those fees, and make ticket pricing fair enough that it can keep music and sports fans from jumping ship to the competition.
And there's plenty of competition to go around: a range of companies are trying to take a bite out of Ticketmaster's business, from AEG, to Ticketfly, to a new startup Brown Paper Tickets. But Hubbard seems to get the threat these companies pose, and is trying to turn Ticketmaster into a kinder, gentler brand.
By: Julia Boorstin