Why Live Event Venues Are Never Full for Long, and Why That’s OK

Fifty percent of seats for live entertainment go unsold. Or is it 40 percent, or maybe 35? Different analysts and executives from major ticketing organizations have been quoted over the years at different numbers, but let’s just agree that it’s a substantial percentage, and a staggering raw number.

But it’s also a classic “glass (or venue) half-full or half-empty” kind of question. Is the unsold seat total a bad thing, or is it more complex than that?

Let’s work through it. Suppose you were in a 200 seat venue and you could easily sell 130 seats per night at a price that worked for you, though you’re obviously not selling out. What would be the most certain way of selling out in this instance?

Move to a much smaller venue, say a 100 seater. If nothing else changes, you’re sold out — and beyond — every night!

Success, right?

Of course not. We call this site “Selling Out” because “Selling More” just isn’t as snappy, but the reason you’re in that 200 seat venue is probably because at some point, the smaller venue wasn’t big enough to serve your needs. If you keep growing and succeeding, you’ll eventually oversell the 200 seat venue and feel a very powerful urge to move into a bigger venue.

Where you won’t sell out, at least for a while.

And in the marketplace, when other people see an opportunity to create some kind of organization that can draw an audience, they need space too. If the number of these organizations grows, more space tends to become available. And if this larger number of organizations flourishes, they look for still larger spaces.

But at all times, organizations tend to be stretching into the biggest viable venue for them. Why? Because live entertainment is a business of fixed costs, so it makes sense to play to the largest possible audience that makes sense for you. And because not every show, game, or event is created equal, you want the capacity to benefit from a big hit.

And all of this means that overall, venues are not full.

This isn’t true everywhere, of course. On Broadway, for example, it’s not really possible. The venues, and to a great degree their capacity, are locked in, so as interest increases and when the organizations prosper, there’s nowhere to grow locally. Only one thing can happen: prices go up.

It’s true in some instances in sports too. The Boston Red Sox sold 101.4 percent of their available seats in 2012, and short of renovating Fenway Park or building a bigger park, all that can happen to accommodate continued over-demand is raising prices. In the short term, the Red Sox don’t have a lot of options. In the long term, though, if all baseball teams sold as well as the Bosox did in 2012, prices wouldn’t just go up, stadiums would get bigger. This would continue until they reached the size that the experience was actually worse and then people stopped going as often.

In other words, it’s an equilibrium, with organizations pushing it as far as possible and ticket-buyers resisting or not showing up in greater numbers when their interest is satisfied.

So is it about filling the venue? In the short and maybe even mid-term, yes, absolutely. Sell it right to the walls. In the long term, though, selling it to the walls means the next step is bigger walls!

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