↬ Non-fungible customers
2012-04-30Disclaimer : I am not versed enough in economics to speak authoritatively.
Last week, two popular events in different markets sold out quite fast. Apple’s yearly Worldwide Developpers Conference and Québec’s Festival d’Été both sold all the tickets they had on sale in minutes, hours at most.
The traditional economist answer to this, as seen for both cases (but John Siracusa’s discussion of this was good), would be to raise the price of the tickets in order to get rid of the queues and therefore allocate the resources more efficiently.
Would you allow me to add a few concepts to this? Maybe consumers/attendees/crowds are not fungible (interchangeable, if you wish). If that were the case, it would make sense to raise the price, as you would have the same number of customers but more money in your pockets. But if Customer A != Customer B, which one would you like to get your precious ticket?
The fact that consumers cannot be seen as fungible brings the possibility that they may be sorted, if you wish, according to another factor than “ability and willingness to pay money”, but “ability and willingness to stand for hours in a queue” or “ability and willingness to agonize over the exact second when WWDC tickets will become available”. Maybe these queue further reinforce the sunk cost in the customers’ minds and, by doing do, engage them more (and then, have better number to show advertisers, which will translate to better numbers on the invoice you can send them).
To better evaluate this hypothesis, we have to take a look at the incentives the events’ organizers have :
- Do they have to maximize sales? For WWDC, the answer is “no”.
- Can they make more money with engaged people who pay less or with less engaged people who pay more? I would bet that the answer, in the case of Québec’s Festival d’Été is “the more engaged people will allow us to reap more money from advertisers and sponsors”.
- This being said, should we care a lot about allocating the tickets?
With this point of view, I would not be suprised that the calculations that were done imply a few more economic concepts than just shortage and the law of supply and demand.