Talk to me about discount tickets

Each week, I’ll post an interview
with someone far more knowledgeable than myself on specific
marketing and publicity subjects. This week, Goldstar CEO and co-founder Jim McCarthy on sitting in half-full audiences, going genre-less and why you don’t actually gotta having a gimmick.

Jim McCarthy is the CEO and co-founder of Goldstar and the Editor of Live 2.0. He’s a decade-long veteran of the Internet and e-commerce business, starting with GeoCities way back when “myspace” was something you told somebody you needed when you wanted to break up with them.  This winter and spring, Jim will be speaking on the subject of Live 2.0 and the future of the live entertainment business at the TED conference and at SXSW.  He lives in Pasadena, California and can be easily enticed to happy hour.

Why the broad focus? Sports, comedy, classical, dance, museums… Do
you find that if someone is always looking for, say, comedy shows on
the weekends, he/she might see a classical listing on your site and be
intrigued, or do people mostly stay within their, let’s say
“pre-determined” genres of interest?
 
I think it’s easy
when you’re on the inside of creating the shows to think in genres, but
consumers don’t think that way to nearly the degree some people
imagine.  Consumers don’t typically ask “What comedy show should I go
see?”  Instead, they ask “What should I do on Saturday night?”  Also,
people switch back and forth among category types all the time.  Just
because someone is a fan of, say, ballet, it doesn’t mean they wouldn’t
want to see the Yankees. The probably do have an interest in that. Because
we came to this business as consumers rather than as producers of
shows, that’s just the way we did it.  It only seemed natural to us to
give people the broadest selection we could.

Do you work exclusively with venues/promoters, or can individual performers create accounts?
 
In
some cases, performers work with us directly, but of course, they have
to have the ability to authorize the sale of tickets on behalf of the
show.  Sometimes, the performer and “the show” are one and the same, so
that makes it easy!

The copy on the site seems to be in a consistent voice. Does Goldstar edit listings?
 
Yes,
we do, and thank you for noticing the consistency in the voice!  We
have an editorial staff who writes the copy with input from our
venue/producer partners, and its goal is to communicate to Goldstar
members in a way that works for them, and I think they’re pretty good
at it.

Generally speaking, we’re trying to talk to our members
as we would if we were a friend of theirs who was telling them about a
show.  Sometimes, again, when you’re on the inside of developing a
show, you tend to forget what’s really going to ring a ticket buyer’s
bell.  They may not care, for example, that it’s the West Coast
premiere of your play, which is something that actually gets suggested
sometimes as a selling point.  In fact, I can tell you with certainty
that consumers care very little about that kind of thing.  You, as the
producer, might care, but for the most part, it’s irrelevant to the
ticket buyer. On the other hand, if the show has a cast member
with a familiar face from “Frasier” or “Crash”, telling people that is
very helpful.  Or if the title doesn’t reveal much about the content,
it helps to explain that it’s the story of when Einstein met Picasso in
a bar.  It gives the customer something to begin to form an idea
around.  Movies do that with trailers; live shows need as much help as
possible in this area.

Fairly recently, I noted on this
blog that Joe’s Pub in NYC had added comment fields to their event
listings. Have the Goldstar comments sections gotten good responses?
Helped sales? Are you ultimately hoping to replace or at least
seriously compete with sites like Yelp or CitySearch, or is that apples
and oranges?

We were the first company in the world to have
online reviews for live entertainment, and we have far more than anyone
else.  We have hundreds of thousands of reviews and ratings, just for
shows on our site and just by people who actually went. As a
comparison, search for reviews of “Fuerzabruta” on Yelp and then search
on Goldstar.  There are 49 reviews on Yelp and and 541 on ours.  Not
only that, but we have reviews on hundreds of shows that don’t hit
their radar screen.

So Goldstar is the worldwide leader in
real-time, unedited user reviews and ratings for live entertainment,
and it’s one of the things our members like most about the site. Having
said that, we’re not trying to do what Yelp or Citysearch are doing. 
We’re about helping our members get out to live entertainment more;
they are media companies with an advertising-based business model.  It
is true, though, that a lot of people use Goldstar as a guide in a
simliar way, but I’m not going to compete with Yelp and Citysearch for
the restaurant biz or in the business of selling banners to advertisers
at $1 CPM.  They can have that to themselves!

Obviously, every venue is different, but in your opinion, at what point should a presenter discount their tickets?
 
Here’s what I suggest to every venue partner who will put up with listening to me on this topic: From
a sales point of view, there’s only one number you should be concerned
with –  revenue per seat.  That is, take all the money you make from a
given show and divide it by the number of seats you have available to
sell.

So for example, and to keep the math easy so I don’t mess
up, imagine you have 100 seats in your venue.  Imagine that you sell 50
of them at $20 each.  That’s $1000, or $1000 divided by $100 or $10 per
seat. Now, if you sold another 50 at $10 per seat, you’d have $1500 in total revenue divided by the same 100 seats or $15 per seat.  Some
people go by average ticket sold, so they’d see that as a drop because
now they have all these $10 seats mixed in with the $20, but in
reality, what they’ve forgotten to do is add in all the $0 seats for
the ones they didn’t sell. 

So my advice is to evaluate how you’re going to maximize revenue per seat and raise or lower prices accordingly. Having
said that, if you’re going to discount, you should do it through a
channel, like Goldstar or others because it protects the integrity of
your prices to your core buyers.  In Goldstar’s case, not only is it a
channel, but it’s a channel that is overwhelmingly people who are new
to what you’re doing.  Last year, we learned that 85% of the time,
Goldstar members do not have a specific show in mind when they come to
the site, so if you are a venue or producer are on the site, you’re
going to be reaching a new customer in all likelihood.

To shift
the subject slightly, sometimes I’m amazed that people who hesitate to
discount in channels are the very first ones to blast their core buyers
with a  discount. If you’re giving your core buyers discounts often
enough, that’s not a discount; it’s a reduction in your price.

Finally,
I’d say don’t be shy about having a strategy that includes discounts as
early as possible because the effect of not having people come to your
venue is tremendous.  If we were in the business of selling iPods, we
could take whatever we don’t sell today and sell it tomorrow, but our
inventory is expiring.  You can’t sell Tuesday’s ticket on Wednesday. Not
only that, but the benefits of having somebody there as opposed to not
there are obvious: word of mouth, secondary sources of revenue like
food and beverage or merchandise, not to mention simply the opportunity
to reach that person with what you’re doing and draw them into your
permanent fan base.

By the way, I give a 90 minute seminar on
that Revenue Per Seat thing, and if any of our venue partners or
organizations they belong to would like to hear it, all I ask in
exchange if that you take me to dinner afterwards. 🙂  Seriously, they
should contact us about that and we can work out a date because this is
very important for people in the industry to understand.
 
 
There’s
this purse store in Tribeca – Cleo & Patek – in which the bags
are always 60% off. You walk in and the woman says, “The price on the
tag is not the price. Everything is on sale.” I fall for it time and
time again, and I’m starting to suspect that the “real” prices are
actually the “sale” prices…or vice versa.  Psychologically speaking,
do you think presenters should mark up and then “discount” tickets as
soon as they go on sale?
 
For my taste, that example is a little gimmicky.  Actually, it’s a lot gimmicky.  Consumers are smarter than ever [Not me! I’ve bought two clutches and a wallet from that store.] and so when you tell them what something’s “real” value is, they’re not just going to take it as gospel because you said it.

I
can’t tell you how much time we spend making sure that the “full” price
we put on our site is the legitimate full price that people are really
paying at the venue for a ticket.  It’s a bad idea to try those kinds
of shenanigans with consumers because it erodes their trust in you very
quickly, and I wouldn’t recommend it at all. Going back to
what I said earlier, venues need to manage their Revenue per Seat, so
they should be looking for the combination of prices that does that. 

I’ll
tell you another thing that I’m not a fan of:  pretending things are
sold out that aren’t sold out.  At a conference in NYC last year that I
will not name, one of the keynote speakers was a “marketing expert” on
Broadway and touring Broadway shows.  The thrust of his whole
presentation, believe it or not, was that your goal as a marketer was
to create “perceived demand”. In other words, if you make people think
somebody wants your tickets, then those people will want your tickets.

Well,
guess what.  That only works if people really do want your tickets! 
You might manage to stimulate your already-committed base to action by
putting part of the house on sale and then “selling out” and then
putting another part on sale, but that’s it. My counterpoint to
this whole way of thinking is that if everyone took the energy they put
into trying to generate this phony-baloney “perceived demand” and tried
instead to generate ACTUAL demand, everyone would be much better off. 
This involves getting to know your customers better, innovating to
serve their needs and generally quite a bit of blood, sweat and tears,
so often, people don’t do it enough. 
 

Papering houses: sometimes necessity or avoidable circumstance?
 
I
suppose it’s a necessity at some point if you haven’t prepared from a
marketing point of view or if there’s simply no interest in the
marketplace in what you’re doing.

We have an interesting
strategy in this area.  We have a program called Quick Start, which is
a way for shows in the first couple weeks of their run to put lots of
comp tickets on our site.  Our members love it, and they pay a small
fee per ticket for these ‘comps.’  Because they have a small
investment, about 85% of people who buy comps on our site show up,
whereas the traditional ratio of papering is just the inverse of that: 
you give away 10 tickets in Times Square for every one person who walks
through the door. Not just that, but by packing your preview or
first couple weeks, you activate word of mouth and end up with lots of
reviews and ratings on the Goldstar site.  Good reviews tend to help
sell the show and raise the profile of the event on our site. Then, hopefully, we’ve helped create a market for the rest of that show’s run and comps aren’t necessary anymore.
 
 
When
you go to performances and see half-empty houses, does it just annoy
the heck out of you? Last time you sat in the audience of a half-empty
show, what was the first thing that came to your mind?

Yes, it does.  How’d you guess?

The
last time I was in a place like that, the first thing that I thought
was, “they didn’t manage their revenue per seat very well on this one,
did they?”  The second thing I thought was “We could probably have sold
half of that mezzanine for them.”

The third thing I thought is
that I should probably learn to compartmentalize my work life and my
personal life a little better.
 

In your opinion, what
are the three biggest mistakes performing arts organizations make in
marketing (or not marketing) their performances?

1.  They
don’t take into account the way marketing has changed.  I’ve literally
heard people say they were about to send out 5000 post cards for their
show and so they were going to wait to see what happened after those
hit before they figured out the rest of their marketing plan.  Well,
let’s do the math on that:  5000 post cards get delivered, but maybe
20% get read.  That’s 1000 post cards.  If 10% of the people who read
it are interested, that’s 100 post cards, and if 10% of those people
actually remember how to buy the tickets and actually go through with a
purchase, that’s 10 customers buying a couple tickets each.

The
simple fact is that most traditional advertising is overwhelmingly
ineffective now.   Even “traditional” web advertising has dropped to
levels of responsiveness (or unresponsiveness) that we would have been
startled by back in ’98 or ’99.  If you’re counting on some kind of
media buy to solve your marketing problems, you’re going to have a hard
time hitting your goals, so you have to do something else. 
 
2.
They separate the art from the marketing.  In the past, it might have
been ok to have the “art” over here and the “marketing” over there, but
in  a Live 2.0 world, You Are Your Marketing.  To say that differently,
since advertising really doesn’t work anymore, the show itself has to
communicate what makes it special and worth seeing and what was once
the marketing department is now responsible for running the
conversation about the show.  You can’t do that in silos the way you
could when marketing’s job was to create pretty postcards or print ads
or web banners about whatever show the creative people happened to come
up with.
 
3. They worry about the wrong things from a business
point of view. Ultimately, any performing arts organization should care
about two things when it comes to selling tickets:  getting as many
people as possible to see the show and getting as much money as
possible.  All too often, though, they get wrapped up in issues that
are secondary or even counter-productive like average ticket price. 
Well, you don’t put average ticket price in the bank; you put dollars
in the bank.  Not only that, but when keeping your average ticket price
up* also keeps people out of your venue, you have to stop and ask
yourself why you’re doing it.

*BTW, people who manage average ticket price almost never count the zeroes from unsold seats, which makes it inaccurate anyway.
 
 
Final question: Can you please put Billy Elliot on Broadway up on Goldstar so I can afford to go see it?

It’s already been moved to the top of my priority list!