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【Transaction Utility Theory】Why are Arashi tickets around 10,000 yen instead of 100,000 yen?
In a nutshell
- Arashi concert tickets are very popular, but that doesn't mean they cost 100,000 yen.
- The price of Arashi can be explained by the internal reference price in Taylor's transaction utility theory, which won the Nobel Prize in Economics in 2017.
- Ayumi Hamasaki's concert introduced dynamic pricing, but can fairness be maintained by AI?
Arashi concerts are very popular
Arashi concerts are very popular, and tickets are always sold out immediately and resold at a premium.
However, the list price of concert tickets is not that high. They could really be sold at a much higher price.
The problem of ticket scalping is a problem that plagues the music industry, but it is also a point of contention.
There is an opinion that tickets should be available at a fixed price so that more fans can come, while on the other hand, there is also the opinion that it is natural for things in high demand to become expensive from an economic rationality perspective, so premium prices are fine. And while both have a point, the debate tends to go in circles.
A professor I took a class from in college has just published an interesting book on marketing. It's "Yabai Marketing Taught by a Todai Professor" (Makoto Abe/KADOKAWA).
I was really surprised that the essence of Professor Abe's class, which I learned a lot from, was packed into a book. It's a very cost-effective book that contains the content of a semester of university at an amazingly low price. But if I have to say one thing, it's a shame that this book itself has failed in its marketing lol. I want more people to know about this book. Like "Competitive Strategy as a Story."
Internal Reference Price
According to Taylor's transaction utility theory, which won the Nobel Prize in Economics in 2017, the satisfaction that people get from goods and services, the "total utility," is the sum of the "acquisition utility," which is the value obtained from the product itself, and the "transaction utility," which is an evaluation of whether it was a good deal.
Consider the example of drinking a beer on a hot beach. In the environment of a hot beach, you can get satisfaction not only from the acquisition utility of drinking the beer itself, but also from the transaction utility that comes from the sense of a bargain in the price of being able to get a beer on a hot beach.
You can probably relate to the fact that the price of beer at a beach house tends to be high. There is a difference in the consumer's own expected price, which is that the price of beer at a beach house will be higher overall than the price the consumer expects when buying beer at a regular supermarket. This consumer's expected price is called the internal reference price, and the difference between the internal reference price and the price actually paid is the transaction utility.
The equivalent price in the figure above refers to the price of beer in a general situation, the payment price refers to the price paid by the consumer, and the internal reference price refers to the price expected by the consumer.
Furthermore, the internal reference price is influenced by other factors. The internal reference price is determined by the external reference price, the context leading up to the payment that arises from the presentation of the external reference price, the consumer's own knowledge, and ethical considerations such as social fairness.
Let's give a specific example. The price of a general seat for an Arashi concert in 2019 is 9,000 yen. This is the external reference price, or the list price.
Arashi fans are influenced by this list price and by the TPO, such as "Arashi is disbanding in 2020, so I have to see them now." This is the context.
Furthermore, it is influenced by knowledge. As I introduced in the Lemon Market article, consumers have knowledge about the product, such as this concert will have a special show, so this list price is a bargain.
Finally, it is influenced by ethical considerations such as social fairness. For example, suppose an Arashi ticket costs 100,000 yen. In this case, fans would see it as "Johnny's is exploiting Arashi fans and making a huge profit." When this happens, you will feel uncomfortable no matter how much you like Arashi. In fact, the reason why the list price of Arashi tickets has not risen much is because Johnny & Associates has taken this social fairness into consideration.
Ayumi Hamasaki's Challenge
No matter how much social fairness there is, concert revenue is the lifeline for artists and agencies, and they want to earn as much as they can. Therefore, dynamic pricing, which is also used by Amazon, is being introduced on a trial basis.
"Ayumi Hamasaki's year-end concert ticket prices to be 'market price' to prevent scalping" (IT Media News)
Dynamic pricing is attracting particular attention from companies because it has the potential to accurately capture the internal reference price based on fan demand and turn it into revenue. There is an algorithm that refers to the dynamic price, and it seems that the price can be changed accurately with AI, but...
From the fan's point of view, it is also conceivable that the fact that the price is not constant creates a sense of unfairness. It may be possible to "provide tickets to customers at a fair price," but I would also like to consider the possibility of side effects (I recommend systems thinking). In any case, the success or failure of this will change the way the music industry makes money.