Philip Morris

CEO of Proctors, Schenectady

On Sale (2)


Responding to my blog Onsale, CPMark asked a great question, “Why are there ANY charges for online sales?”

His thinking is not unlike mine when I consider the fees at ATMs to get my own money as cash.  I am not taking the time of a teller, or in CPMark’s argument, a ticket agent.

Well, I can’t speak for banks, and maybe I can’t even speak for other theaters, but for us at Proctors, I think there is a story to tell to explain.

Here goes: until the middle of this last century, tickets have been sold at box offices.  You, the customer, came to the theater, walked up to the window and bought your tickets.  You paid cash or check.  Printed tickets were racked approximating the theater’s seat layout and you walked away with those tickets.

The first big change in ticketing came with the proliferation of credit cards.  Now, some would say that the first big change was the advent of the telephone and the ability to buy tickets by calling rather than going to the theater, I would argue that the telephone was not much different than running into a friend who worked at the theater while you were grocery shopping.  ”Please hold 4 tickets for me to pickup and pay later.”  Printed tickets were pulled from the rack, put in an envelope and stashed away for later.

The credit card allowed theaters to “close the deal.”  Instead of those tickets, basically valued as cash, sitting waiting for pickup, with a telephone call and a credit card the tickets were mailed to the buyer.  Transaction done.  Ticketbuyer does not have to travel to the theater, wait in line, pay for parking or any other inconvenience.

So, the convenience charge emerged.  Theaters, used to having the traditional hours and staffing of a “come on over to get a ticket” office, now had to add telephone lines (at that time at 40 or 50 dollars a line a month for commercial service), add staff, add credit card equipment and incur the 3 percent or so discount that made credit card companies thrive.  For the convenience of calling, most theaters added a per ticket charge.

The second big change was the computer.  Almost every paper based part of commerce has been affected similarly.  No longer did theaters print all of an evening’s tickets and rack them, instead only those tickets selected and sold were printed.  Visual selection of seats improved the quality of service and the hard ticket, while still valued as cash, lost some of its “script” like value as the box office KNEW who bought a ticket and when.  Replacement tickets, seat adjustments and “I left them at home” excuses could be handled in ways that the old paper ticket system could not.

The cost: computers, wiring, printers, software, training, IT services….suddenly the box office needed not just smart and friendly and customer oriented skills, but engineers, wire guys, backup power and redundancy.

The only way to pay for it was from the convenience fees.  So many places moved those fees up from the telephone and paper ticket days.

The third big change was, clearly, the internet and internet selling.  Eight years ago, when Proctors still used an outside ticket service ( which provided internet sales on our behalf (at pretty stiff per ticket charges), we sold a percentage point or two of our tickets that way.  Since then our internet sales have exploded to 35 percent of our sales.  That’s a revolution.

The ticketbuyer now has the convenience of 24 hour, 7 day a week access to information, seating, pricing and buying.  Now, even print at home ticketing that eliminates the risk or delay of mailing hard tickets.

The cost?  Frankly, amazing.  Now ticket sellers needed 24/7 support for our systems, scanners for our doors (to read the print at home tickets), huge bandwidth, marketing people with web savvy and more IT than ever to not just keep the systems going but to support customers with problems and to interface with software designers and service providers.  In essence, internet ticketing took tickets away from the box office (as CPMark noted) and put it in the hands of techies.  No, not less expense, but more.

The way to pay for it at least was new: a convenience fee for internet sales.  Most places (and all the big national ticket purveyors) chose per ticket fees.  In our case, we chose per order.

Does our 6 dollar per order fee pay our costs?  No.  ALL of our fees (telephone and web) do not cover our box office and internet costs.  That’s why those larger providers charge so much more.  We just trust that how we charge induces our patrons to come back again and again.

It reminds me of the crack:  we lose 25 cents on every ticket we sell, but we make up for it in volume!

For us, we are not a business simply of selling someone else’s tickets.  If we were, we would be failing.  We are a business of bringing people together and making them happy.  The ticketing part does get subsidized by the presumed volume of sales to the shows themselves, which largely are our own.

If all our competitors/peers suddenly did not charge for internet sales, would we do the same?  Probably.  Is it likely that Ticketmaster or will do such a thing?  Of course not.  They are not selling their own tickets but someone else’s.  The fees for the convenience of phone and internet sales are how they stay in business.  Should we make it free?  Frankly…..why would we?  We have real costs that are substantial, and we can beat the pants off the other guys for those who are counting!!

Categories: General
Philip Morris

4 Responses

  1. Chris says:

    Sounds like Ticketmaster and are ripe for competition. The IT costs for a highly automated high volume system should drop precipitously — since it’s more a question of scale. The capital investment to sell tickets for a single venue are fairly steep — but to do it for 1,000 venues aren’t significantly cheaper (economies of scale).

    For Proctors — have you thought about using cloud services to host your ticketing site? Very little/no capital expense, extreme scalability and you pay for only what you use — in many cases at a fee of about ten cents per minute of real use. If your site faces a huge spike in users the cloud can expand dynamically. Very handy for a site that is medium/low utilization for most of the year but spikes to extremely high utilization when Wicked comes to town. Cloud approaches don’t solve the phone issues — but they do smooth out the web ones.

  2. Philip Morris says:

    In response to number 2. Chris, yes, we DO use the cloud for our web serving. In fact, it got overwhelmed today at aboiut 10 after 10 and by 10:40 was expanded both in CPU capacity and number of servers to respond.

    Hosting the ticketing like that is more problematic, though our system allows us to easily scale for a day like today by simply turning more and more computers on to “listen” to the internet requests (once they get through the web site itself).

  3. CPMark says:

    Dear Philip — thanks for taking the time to explain; I appreciate it. Looking forward to seeing Wicked there.

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