Dynamic pricing and market segmentation at the theatre (and the hospital)

how much for a bed with a view?

This post is about theatre pricing, from a unlikely source. Today's New York Times has a piece by Austin Frakt on hospital pricing, and whether and how changes in funding of patients through public sector programs might change hospital charges to privately insured patients. Mid-way through, the article looks for an analogy from the arts: The theory that hospitals charge private insurers more because public programs pay less is known as cost shifting. What underlies this theory is that a hospital’s costs — those for staff, equipment, supplies, … [Read more...]

Pay-what-you-decide at the theatre

The Stage News reports on a trial run of pay-what-you-decide pricing at the regional theatre in Stockton, UK: The Pay What You Decide system is now in effect for all theatre productions at the arts centre for six months, following a trial on a one-man show at the venue. Too Much, Too Young, starring Jack Bennett in January, took nearly 50% more than the theatre expected, with almost one third of the audience new to theatre performances at the ARC. Although the theatre would usually charge £10 for a show such as Too Much, Too Young, … [Read more...]

Efficiency in Fund Raising – A Technical Note


The National Center for Arts Research has released its report on The State of the Arts - a compendium of data and what I call 'kitchen sink' regressions (i.e. looking for statistical relationships by including all data that might conceivably matter and seeing what comes out the other end, rather than generating the regressions through a more formal model of firm behavior. Not that there is anything wrong with that - I've done it myself in research papers). In their section on fundraising, they find: The average organization brought in … [Read more...]

Price discrimination and timing

this is going to cost you

Publishers delay the release of paperback versions of books as a means of price discrimination. 'Strong' customer markets pay the premium price for the immediately available hardcover, while 'weak' customer markets pay the lower price for the paperback, which is inferior in two ways: less sturdy binding, and you have to wait a year or so to obtain it. This earns more for the publisher than releasing all versions at one time. This strategy is only used where there is a premium attached to immediate access, such as the most popular fiction and … [Read more...]

The superstar economy

no flat screen for you

The distribution of artists' earnings is heavily skewed, much more unequal than in the population as a whole, between some who earn very, very much and those whose earnings are negligible (if not zero, in their search for free exposure). The economic analysis of 'superstars', pioneered by Sherwin Rosen, finds that when given a choice audiences will, by a great majority, buy from what is considered to be the very best, and so the very best capture the lion's share of the earnings. When are earnings likely to be most skewed? There are two main … [Read more...]

Sir Alan Peacock


I was saddened to read of the death of Sir Alan Peacock, a most influential figure in the scholarship, and application, of economic analysis of the arts. The Daily Telegraph's obituary is here. I remember back to when I first began exploring the field of cultural economics, and his (then recent) book Paying the Piper was one of the first I picked up on the subject. Years later when the International Journal of Cultural Policy invited a group of us to write a short essay on the book that had most influenced us, that was my choice. … [Read more...]

Summer books: Brad Stone’s ‘The Everything Store’

a difficult case

In the past few months there are few businesses that have come in for such vilification as Amazon.com - including in many of the stories and blogs here at artsjournal.com - and so Brad Stone's book, subtitled 'Jeff Bezos and the Age of Amazon', is timely, to say the least. It has been the subject of deep reviews by George Packer at The New Yorker, and Steve Coll in The New York Review of Books, and I recommend each of those. It is hard in this case to separate a review of the book and a review of Amazon itself (I don't think I'm the only … [Read more...]

The future of nonprofits?

zero marginal cost?

Commercial or nonprofit? In studying the cultural sector one of the key questions asked is why we see both kinds of firms in the arts, where nonprofits are more concentrated in some sub-sectors than in others, and I pose the question to my students: how does an entrepreneur choose the organizational form for her new enterprise? Today in the Times we have an opinion piece by Jeremy Rifkin, 'The Rise of Anti-Capitalism', who posits that the nonprofit sector is bound to rise in importance over the next few decades, not because of long-running … [Read more...]

Is Amazon good for readers?

good for this reader

I enjoyed George Packer's New Yorker article on Amazon, and recommend it. ArtsJournal's link to the story has the heading "Is Amazon good for books? Not just publishers, but books themselves?" The New Yorker's own sub-heading is "Amazon is good for customers. But is it good for books?" I find the question a bit puzzling. I can understand asking whether the rise of a particular corporation is good for buyers, publishers, authors, or other types of person. But what does it mean to ask, as a separate question, whether Amazon is "good for … [Read more...]

Pricing to fill the house

not fun

ArtsJournal links to this piece from Britain's Guardian on pricing at the Met (see here for an earlier post of mine on the subject). Tom Service writes: They filled just 79% of the seats in that huge, red-velvet covered house, and made only 69% of their projected box-office revenue. For all the millions who watched the cinema broadcasts, those are astonishingly low figures for the world's most expensive opera house. The Met's general manager, Peter Gelb, admits an experimentation with a more flexible pricing structure, borrowed from Broadway, … [Read more...]