Sell Out

I'm sympathetic to some of Dave Roberts' critique of this year's Netroots Nation panels, but I'm not sure that this particular metric quite makes sense:

In some sense all conferences suffer from these same problems, but this one aspires to be a yearly event, so if it's going to continue -- and I heard they had trouble maxing out the 2,000 slots this year -- they need to get creative about offering something worth traveling and paying for.

It's of course flattering for an event to have it sell out quickly. But all selling out really proves is that you haven't priced your event correctly. A venue selling tickets to something wants to maximize revenues not maximize sales and the revenue-maximizing price is rarely going to be the same as the market-clearing price. I've got tickets, for example, to the sold out Rancid show on August 11 at the 9:30 Club. If the tickets had been 20 percent more expensive, I still would have bought one and so would a lot of other people. Maybe the venue wouldn't have sold out at that price, but they still would have made more money even if the place was left only 85 percent full.

Back to Netroots Nation, though, I wouldn't want to see them depart as radically from the bottom-up programming model that the conference currently works with. I think all they really need to do is maybe slightly reduce the number of panels that get approved and work a bit more aggressively to gin up submissions. Given adequate competition, it should be possible to put up a somewhat higher wheat/chaff ratio.

Comments

It just so happens that I'm reading a good economics primer that addresses this very stuff. It says that in fact the 9:30 club would never increase the price by 20% -- even though they could still sell out at that price -- because they have a vested interest in selling out to young people (who are more likely to be able to afford only the cheaper price). The young people, this guy reasons, are the ones likely to buy the Cd's, t-shirts etc, on which the venue really makes a killing.

Posted by portraitoffer | July 22, 2008 9:03 AM

Maybe the venue wouldn't have sold out at that price, but they still would have made more money even if the place was left only 85 percent full.

Well 2% more, all other things being equal. (which they are not)

The most unequal thing being, the risk they are taking that they don't hit that 85% figure. At 84, they get 0.8% more, and at 83 they lose.

The first rule of entertainment is always leave them wanting more. The corollary is always leave more of them wanting.

I would think this applies to politics as well. Last year Obama was playing to 'sold out crowds' and (I think) Hillary wasn't, and well, you see where we are today.

Posted by Math Rocks! | July 22, 2008 9:17 AM

This has been another session of Economics 101 with Matt Yglesias...tune in next week where Matt explains the difference between monopolistic competition and monopoly.

Posted by David | July 22, 2008 9:21 AM

The young people, this guy reasons, are the ones likely to buy the Cd's, t-shirts etc, on which the venue really makes a killing.

The venue may make a small cut of total sales but the almost all of that money goes to the band.

Venues make their money on liquor/beer sales. Now if Matt is there drinking Miller Hi Life (I thought hipsters drank PBR anyway?) and Jim Beam they're going to make less money than they would selling the top shelf liquor and micro-brews.

Posted by Steve Balboni | July 22, 2008 9:24 AM

Speaking of Econ 101, for a monopolist, any price is a market clearing price. At any price there will be additional buyers who would buy if the price was a tick lower. MY might mean the point where marginal cost equals marginal benefit, which for a monopolist typically means a lower price than the revenue maximizing price (abstracting from ancillary sales).

Posted by Miracle Max | July 22, 2008 9:29 AM

What you miss, Matt, is that Netroots Nation is a hot event because the event is hot. It's a virtuous cycle that could turn vicious if events failed to sell out. Actually, it shares that in common with a Rancid tour. In each case, a decent portion of the audience attends not as an individualistic expression of their own idiosyncratic tastes, but because it's the thing to do. So the costs of failing to sell out, of losing that positive buzz, are potentially enormous. The benefits of squeezing marginally more revenue from the audience pale in comparison.

But back to Netroots Nation. What you're suggesting, in essence, is that what works well on the internet doesn't work well at a conference. Blogs thrive in an environment of abundance; readers can freely pick and choose, and the very diversity of offerings reinforces their appeal. In a conference, however, there is definitionally both a finite audience and a finite number of panel presentations. Even worse, the format imposes higher costs on choices. I can flip around a half-dozen blogs, more or less simultaneously, depending on whose posts are most interesting at the moment. But at a conference, I have to make my selections in advance, they entail excluding some potentially interesting options, and it's difficult to change my mind.

Those are conditions that call for - gasp! - editorial control. For a guiding intelligence that screens content, and pre-selects the most compelling uses of my time. Can Netroots Nation pull that off? Would the anarchic world of bloggers and readers be willing to submit itself to that degree of hierarchical control? I wouldn't hold your breath.

Posted by Cynic | July 22, 2008 9:41 AM

Matt, is this intended to be snark? You can be so dry sometimes that it's hard to tell.

The point in both these cases (Rancid and NN) is to maximize attendance, not revenue. Rancid wants a large fanbase. NN wants activist participation. Revenue is necessary, but only one part of th equation.

Posted by Shaz | July 22, 2008 9:49 AM

For "the rest of us", who aren't professional bloggers, the price of the Netroots conference was too high. It's not a question of the conference organizers making money, is it? It's more about the conference covering it's costs.

Anyway, I don't see how I'd have gotten value out of attending for myself, and I live in Austin. If it was my day job however, I would see the fee as a small price to pay for access to the community, sharing of best practices, etc... and there's a perceived return on investment there that makes the whole thing worthwhile.

Posted by Stevious | July 22, 2008 9:51 AM

I'd also like to point out that as far as I could tell, there were no panels on economic policy that included economists. Two economists -- Atrios (lapsed economist) and Krugman -- were on a panel about punditry).

Posted by Miracle Max | July 22, 2008 9:53 AM

Er, I'm confused. Is the objective of Netroots Nation to maximize revenues, or to bring people together and pay expenses? I've organized conferences myself, and maximizing revenues hasn't been a priority; getting people to show and staying solvent has. Or are you revealing a dirty little secret--that all Kos is about is to make a buck off his fellow bloggers, and that politics stuff is just the come-on?

Posted by David in Nashville | July 22, 2008 9:56 AM

I'd also like to point out that as far as I could tell, there were no panels on economic policy that included economists. Two economists -- Atrios (lapsed economist) and Krugman -- were on a panel about punditry).

Posted by Miracle Max | July 22, 2008 9:57 AM

I'm surprised that no one has yet taken advantage of a post titled "Sell Out" to make fun of Rancid.

I'm not gonna -- I like Rancid. Just figured someone would, since Matt served it up like that.

Posted by Tom | July 22, 2008 10:24 AM

One of my best show memories was seeing Tilt, Rancid, and Green Day in Berkeley in the summer of '93 at the now-defunct Berkeley Square. I went mainly to see Tilt, but was happy to get to see Rancid (whom I'd seen before) and Green Day. Rumors had just hit about Green Day signing with a major, but the scene hadn't yet decided that they were corporate sell-outs. The cover was probably around $8. Of course, that probably would have bought me 6 gallons of gas at the time.

Posted by Pesto | July 22, 2008 10:37 AM

getting people to show

Watching blogfolk staring at their navels? Boring. Scheduling it in Pittsburgh is event suicide.

It's no different that the Tub & Shower Expo. Potential attendees want an expensable mini-vacation in a city where the S.O. won't be bored to death.

That's the reason the same cities are at the top of the convention lists every year.

Posted by Hustler | July 22, 2008 10:58 AM

I'm always mystified by your regrettably appalling musical taste...

Posted by goodepic | July 22, 2008 11:52 AM

The 9:30 Club wants the show to sell out because they make their money on alcohol sales (and a small cut of merchandise and maybe an even smaller cut of the ticket sales).

The band wants to maximize the amount of money that comes in from tickets because that is how they get paid.

Two different priorities from two different players even though they have a symbiotic relationship.

So, the 9:30 Club and Rancid's agent negotiate the ticket price ahead of time. Often with the club trying for a lower price as that leaves more money in the concert-goer's pocket for drinks.

Posted by Stephen | July 22, 2008 1:30 PM

"
Watching blogfolk staring at their navels? Boring. Scheduling it in Pittsburgh is event suicide.

It's no different that the Tub & Shower Expo. Potential attendees want an expensable mini-vacation in a city where the S.O. won't be bored to death."
If your S.O would be bored to death in Pittsburgh, you really need to consider getting a new S.O. because they clearly suck.

Posted by pittanylion | July 22, 2008 2:39 PM