From Champagne Problems to Champagne Supernova
From Champagne
Problems to
Champagne
Supernova
Given the phenomenal success of Taylor Swift's Eras Tour, it is reasonable to speculate that the UK economy may once again experience a supersonic boost from concert-related tourism following the announcement of an Oasis reunion. Anecdotally, this news is particularly noteworthy here at Artorius, as our Manchester office was previously known as the iconic music venue The Boardwalk, where Oasis performed their inaugural gig in 1991.
The unexpected news of the Oasis reunion led 14 million dedicated fans to queue for up to 10 hours in the hope of bagging one of the 1.4 million tickets. However, the process of obtaining the sought after tickets has left many fans indeed looking back in anger following the use of dynamic pricing.
Dynamic pricing is a strategy where prices are adjusted in real-time based on factors such as demand, supply, and market conditions. The concept is deeply rooted in economic theory, particularly in the laws of supply and demand. As the demand for the tickets increased and more fans joined the queue, the prices rose to match the higher demand. This meant that the cost of some tickets rose to more than £450, up from £135 when the sale began on Saturday.
Static Pricing
Dynamic Pricing
The backlash received following the ticket sales has been quite prominent mainly due to ethical concerns around price gouging and the exacerbation of existing inequalities, which appears to have caught the attention of members of parliament.
Despite this, dynamic pricing is not a new phenomenon and is frequently employed by companies such as Uber, who add a surcharge during peak travel time to optimise revenue. In the case of the Oasis tickets, the pricing strategy allowed Ticketmaster to match the tickets with those who appreciate them most in monetary terms. Static pricing, on the other hand, means that prices may be set too high or too low. This approach risks exploitation by resellers, who may acquire the tickets at low prices and resell them at a premium. As a result, the resellers capture excess returns rather than the artist.
In this instance, the disconnect appears to be in the communication regarding the strategy’s implementation, or lack thereof. Consumers often prefer transparency in pricing, and businesses using dynamic pricing should be clear about how prices are determined and adjusted.
Despite the controversy, the Oasis reunion tour still holds the potential for a modest economic boost, which would be welcomed given the negative political sentiment around the upcoming October Budget. This gloomy narrative appears to be in contrast with the prevailing economic backdrop.
Gross Domestic Product (GDP) Growth Expectations 2024
Source: Bloomberg, Artorius
GDP growth expectations for 2024 for the UK have been improving and now lie around 1% which may be supported by the combination of falling inflation, strong labour markets and healthy private sector balance sheets. Additionally, the decision to cut rates at the start of August supports the expectations for continued monetary easing.
Elsewhere, momentum for global disinflation is slowing. European Central Bank members have warned that the last mile of disinflation is likely to be the hardest to achieve given the diminishing impact of easy wins. While challenges persist, “Some Might Say” there are grounds to remain cautiously optimistic regarding the outlook.
Rachael Faint
Portfolio Analyst
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Important Information
All expressions of opinion reflect the judgment of Artorius at 6th September 2024 and are subject to change, without notice. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete; we do not accept any liability for any errors or omissions, nor for any actions taken based on its content. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. Past performance is not a reliable indicator of future results. Nothing in this document is intended to be, or should be construed as, regulated advice. Artorius provides this document in good faith and for information purposes only. Reliance should not be placed on the information contained within this document when taking individual investments or strategic decisions.
Artorius Wealth Management Limited is authorised and regulated by the Financial Conduct Authority. Artorius is a trading name of Artorius Wealth Management Limited.
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