Boycott Stubhub - cautionary tales about pricing and capitalism

This week I bought tickets for a Yankees game on Stubhub. I used their online chat service, which resulted in being sent a customer service questionnaire. I am now going to boycott Stubhub unless I have no alternative.

The experience has eerie parallels with an earlier one I had while working for Shell. I think it can reveal a lot about consumer behaviour, pricing strategies, and also about capitalism in general.

So, first the story that leads me to boycott Stubhub. I have been in the habit of using Stubhub every so often, usually for sports tickets. For some Mets games, they are cheaper than buying on the club website or showing up on the day. For places I buy from just once, it is easier to use Stubhub than bothering to navigate a new website. There is no doubt that Stubhub and its competitors have made a brilliant innovation, with a strong business model on the back of a valuable customer service.

But the fees are high. They have always been high, and I have always resented it a bit. The costs of running Stubhub are trivial, so how can they justify 25% margins (10% from the buyer, 15% from the seller)? Someone is getting rich at my expense here.

Still, up until now I just sighed when I saw the bill and moved on, happy to have acquired the tickets and too lazy to shop further. So what happened this time to change my mind?

After I had bought the Yankees tickets, an e-mail arrived as usual. This time, however, I was informed that I couldn’t print the tickets, but instead had to download some app on my mobile phone and then use the phone as the ticket. I am old-fashioned, and don’t bother to download many apps, so was already annoyed when I bothered my son to do it for me, and even more so when he told me that my phone was too old to be compatible with the app.

So I contacted the Stubhub online chat service, and connected with an agent who was friendly and efficient enough. He told me that Stubhub had an “exciting” partnership with the Yankees that meant that all tickets were processed this way with them. My alternative was to print the receipt, bring an ID to the game, and report at a specific will-call box office to collect physical tickets.

So that is what I did. Predictably enough, the box office had a ten-minute line, but otherwise it worked.

This morning I received an online survey request from Stubhub. Usually I ignore such things, but the request prompted me to be angry again about them and to want to vent, so I took the survey. It was ridiculously long and all about the agent, but I was given a chance to vent in writing at the end, so I did.

I told them their fees were extortionate, that it was egregious for them to display their fees only obscurely and at their checkout window, and also that it was discriminatory to offer a reduced service to people without fancy phones. Presumably they do this to reduce their own costs, and perhaps from Stubhub and maybe also the Yankees to make it easier to bombard me with advertising material that I don’t want.

Just filling in the survey made me angrier, so I looked up Stubhub on Wikipedia. I learned that they were a classic startup, had sold to ebay in 2007, and that the founders had now left the business, but ebay still do not report financials.

I also clicked on another link, that helpfully explained the fee structure, the history of rising fees, the fact that the obscuring was an active policy from 2016, and offering me alternative providers and ways to save money. I’ll try these out, and try hard to avoid Stubhub from now on.

So now let us step back, make some parallels and learn some lessons.

First, do not awake the sleeping tiger. If Stubhub had not fed their agent stupid marketing lines about the reduced printing service, sent me the questionnaire, and not designed the questionnaire so badly, I would probably have taken no further steps as usual. They themselves prompted me to think more deeply, and they lost a customer as a result.

Next, price elasticity is complex. Many of us just accept fees or high prices out of laziness. But a trigger may come to think or research further, and then the host of minor overpricing insults becomes a personal sleight, and a customer is lost forever (even if the fees were somehow to come down again).

In the pricing and margin models of Stubhub, they will have measured the business loss immediately after raising and obscuring their fees. They will have concluded that the extra margin was well worth the lost business. But their model will not pick up me, and all the other insulted who will one day walk away when triggered.

This part is where Shell comes in. In my early days at Shell UK, we used to consciously price above the market. We deluded ourselves that our fuel or brand was so much better that customers would be delighted to pay extra. We did surveys that showed that a large percentage of our customers were “loyal” and also that much of the market was not very price sensitive. When we raised prices, the volumes did not suffer much. All of these data encouraged us to continue and even expand the policy. But this created space for hypermarkets, and even without them our volumes would have declined slowly anyway. We ignored the sleeping tigers, and did not realise that elasticity could be a long-term thing, and that “loyalty” was little more than “habit”. Given a trigger to feel insulted, these customers eventually left, and most left forever.

Generally, any business that relies on habit rather than genuine loyalty will lose out, because somehow or other the sleeping tigers will awaken. I advocate competitive pricing in most situations, trying to build a cost advantage through volume rather than margin. The exception is where the sleeping tigers have nowhere to go.

Which takes us back to Stubhub. Unlike Shell, it is almost a monopoly, and it seeks to become more like one by doing deals to lock out competitors. In common with many internet businesses, barriers to entry are high and incumbency is valuable. Their pricing policy is greedy, but it may be smart.

Increasingly, entrepreneurs are looking to monopoly potential as a key success factors, and avoiding businesses where competition is rife. Valuations reflect this. Ebay will only get a return on its purchase of Stubhub if it can push up margins. The investors demand ever higher returns, and managers have to get greedy to satisfy them. This is not a healthy model for capitalism.

The losers become the customers. Stubhub and its like offer a new service that customers value, but in the end become so greedy that the value is eroded. Watch out for businesses that rely on insult pricing to reach their goals. Unless their monopoly is bullet-proof, they are ripe for a fall. Look for them the seek monopoly advantage via lobbying, that strategy may not work forever either. And as voters, look for policies that promote competition and work to remove monopolies. I see little evidence of that in the US. The EU does a good job of it.

Oh, and one more request. Join me in boycotting the insulting Stubhub.  

The next sexual revolution

Some people, mainly men, seem to think that female emancipation has gone far enough or even too far, and that the sexes are equal now in everything that matters. These people point to high profile cracks in the glass ceiling. While some of these are impressive, and I fancy that maybe five of the most important political posts in the developed world might soon all be held by impressive women (Clinton, Merkel, May, Lagarde and Helen Clark or another woman as UN General secretary), I think we ought to remind ourselves how far gender equality still has to travel, and think of ways the next leaps might be supported.

But let’s start with the good news. The most impressive politicians in the world nowadays are usually female, and increasingly the same holds for top business people. In the developed world, women now predominate on university campuses. Three generations ago women could not vote, two generations ago they could only work in teaching or nursing, and one generation ago they still had to wait for a man to initiate any sexual relationship that might progress towards a longer-term partnership. These taboos have all loosened. Even the Olympics have opened up, slowly challenging old-fashioned ideas about what sports might be suitable for women.

Of course, in the developing world the picture is far less rosy for women. Female genital mutilation is still widespread in some countries. Honour killings betray residual neolithic attitudes towards sexual practices. In some countries girls are still denied schooling. And, worst of all, the two largest countries in the world both suffer from horrific gender-based abortion.

But even in the west we should be far from complacent. True, most occupations are now fully available to women, but in the US they cannot expect the same remuneration, and a pregnancy career break can be harmful to prospects. True, women can vote nowadays, but the most powerful country on earth can somehow still select a naked misogynist as a candidate, his views somehow even supported by some women. True, I have been able to enjoy plenty of women’s sports over recent days, but that only goes to show how marginalised women’s sports are most of the time, and is beach volleyball, with its bikini uniforms seemingly regulated towards soft porn standards, really an example of emancipation?

And the biggest challenges remain where sex or its prospect prevents an equal discourse. Just today, a UK study showed that 50% of all women claimed to have suffered some inappropriate treatment at some point. And it is not just beach volleyball where soft porn mixes with other motives. Why do we still have cheerleaders? Why is it that every male news or sports broadcaster seems to be over fifty while all the women are young and glamorous and wearing short skirts? Why do Hollywood actresses fail to attract roles once they are past thirty- five? Why does every prominent woman have to answer to her weight and her sex life and how she will balance work with home life, while men do not?

It’s complicated. All these things are unacceptable, but somehow they won’t go away. And part of that comes down to fundamental differences between the sexes. The question becomes whether some of those fundamental differences can evolve, and whether their impact can somehow be insulated from other aspects of our lives. These questions are far from simple.

I went through a phase wondering whether boys’ preferences for trains and blue and fighting and girls’ preferences for dolls and pink and sentiment were somehow learned rather than genetic, until I had a child of my own and saw a girl emerge with all the traditional preferences without any influence from me. What is true is that our sexuality is nuanced, that all of us have our own cocktail of masculinity and femininity, and that homosexuality and even transgender feelings are normal within a spectrum. But, generally speaking, most girls will still be (mostly) girl and most boys mostly boy.

So guys think about sex all the time, even if not every ten seconds as studies used to claim. So beach volleyball and ESPN skirts make men more likely to tune in. Most guys are hunters, looking for places to spread their seed, and female physical appeal plays a large part in their mental process. Most women are subconsciously looking to nest and nurture and to find good quality sperm for the lifetime wellbeing of their offspring, so their sex drive is subtly different. There are also the physical facts to consider: women live longer, and it is they who have babies, along with periods and a menopause, while men are physically stronger so more at risk to commit rape or abuse (at least physically).

We are learning as humans, but these fundamentals still get in the way. It is most obvious in the dating game, for centuries rigged by dogma from the Church and power retention by wealthy men. The sixties, then social media and dating apps, have challenged the dogma. But it is still seen as a social plus for boys to have many partners and a social minus for girls. It is boys who must propose, at each step, and girls who are supposed to be coy.

The result is anxiety. Half of the girls in my daughter’s class were at one point getting medical help for anxiety relating to their sexual esteem – looks, attractiveness, weight, worth and so on. The girls still fret, nowadays at a faster tempo and on their phones. Perceived rejection comes ever stronger and more publicly. As for boys, they are still supposed to play the game, so some forms of no mean maybe or try harder, until finally no really does mean no and shame results, or worse if there is a misinterpretation.

Most kids seem to come through it, and by the time they reach their twenties most seem at ease in their skin and their sexuality. But the journey can be tough, and some are scarred. If we really want to fight ISIS, this is a good place to start – most of these young kids are confused by the new rules and conflicting advice and shameful feelings. And for some girls, their response is also extreme, ostensibly in the name of liberation, as they demean themselves on selfies or more publicly.

So this is the space where the retreating old rules meet the ever-present fundamentals, with a messy outcome. Surely we should desire for more feminine progress and equality? As a simple example, shouldn’t high heels, painful and damaging as they are, be somehow consigned to history? Why do women still spend an hour or more of their day dressing and making themselves up as peahens, and subject themselves to ever more extreme diets?

The next stage of progress can only come by further separating the norms from the fundamentals. We must recognise the fundamentals are there, but design the rules so they avoid the worst outcomes. What would this look like? We would further separate sex from its consequences, encouraging open and transparent discussion of sex with none of the code and coyness. Perhaps science can make pregnancy an impossible outcome of sex unless somehow both partners had consented some physical way to its desirability. Then any baby could be more obviously the lifetime responsibility of both parents. Also, perhaps marriage can be complemented by other partnership contracts that can be shorter, renewed every ten years or so.

I am not yet advocating all of this, as much of it challenges my values. More important still, humans would once again being declaring power over evolution, with consequences potentially just as damaging as climate change. Sweden is the society where the women are most obviously dominant, and we can already see an effect on male self-esteem – widespread infertility may follow. We challenge nature at our peril.

But I am also challenged by unnecessary anxiety and by persistent inequality in the world. The developed world is still not fair to women, and the developing world even less so. There are many leaps forward to be made, and some of the next ones will require us to challenge some core values.  

1843 and Escaping the Rat Race

The Economist has relaunched its lifestyle magazine. Previously called Intelligent Life, the new name is 1843, which is apparently the year that the Economist was founded. As a subscriber, I’ve already received three issues of the newly branded magazine, but I have only just got around to reading the first of these, dated April/May 2016. I tend to try to keep up to date with my reading of the Economist itself and the Guardian Weekly, then catch up on Time when I have spare time and 1843 only when that backlog is eliminated too, generally on long holidays or during mid-summer.

Apart from the rather silly new name, I did not notice much difference between Intelligent Life, a name which at least gave some clues about its content and targeted audience, and 1843. Gone were a few standard features that I rather liked, liked Seven Wonders, and several others that I didn’t, like the Wine List Inspector. Most of the sections remain, albeit in a slightly revised order and sometimes altered names, like travel instead of places. The centerpiece are still feature articles of a satisfying length, and I was pleased to see that 1843 had six of these, because Intelligent Life had been paring down their number to four or five, with one of those little more than a series of photos.

So, a little confused as to the need or purpose of the rebranding, I read the editorial pages and also scoured the web a bit. The culprit, as usual, is marketing. I guess Intelligent Life did not make much money, with its high editorial and printing costs and a limited readership – I noticed that I wasn’t able to buy it on newsstands in the US, I guess to keep down costs, but the target audience in England and English-speaking Europe must have been rather small and unattractive to advertisers and limiting for growth prospects.

So the starting point for the relaunch was to make the magazine more global, and to make it more widely available in the US and elsewhere and also online. They want to link it more to the mother magazine too, probably to make it more widely known, which would explain (though not excuse) the new name. That makes sense, as does the intention to make use of the Economist staffers stationed around the world.

But finding globally interesting content for many of the sections is tough, and I’m not sure that either Intelligent Life or its successor has got it right yet. Examples are the reviews of current exhibitions and plays. Even if I had got around to reading these before the events had actually closed, the chances of me being able to take advantage of such events would be miniscule, and surely that must apply to almost all readers. At least I’m in the cultural metropolis of New York, where one or two of the reviewed events tend to be staged, but is that enough to justify the section? Are there really all that many people straddling the globe sufficiently to be able to enjoy more than a small proportion of the events? Wouldn’t it be better to focus on films and books? Or to go to the added expense of regional content?

This gets to the heart of my main problem with the magazine, before and after relaunch. I am not all that sure that the target audience is very large, and I’m even less sure that I want to be associated with them anyway. The Wine List Inspector seemed to be focused on people ready and able to travel across a continent to a posh restaurant with a posher and more expensive wine list. Even if I used to be close to that category when I did a lot of business travel, it does not describe a very attractive me, one I want to be reminded of or associated with. The first 1843 highlighted a set of travel destinations that were so exotic and expensive and hard to reach that anyone wanting to read about them wouldn’t be someone I’d want to meet, in the unlikely event that I ever made it to such a location. These people might be an attractive group to certain advertisers, but how large is that group, and does anyone else want to be associated with them?

Still, the features are always interesting, and I also generally welcome the content from regular Economist writers. If they can emulate the material they produce for the annual Christmas magazine that would be great. In the first 1843, I did notice a slight change of style, away from elegant poetic language towards the more punchy data-driven style I am familiar with, always with wit, but sometimes not completely suitable for much longer articles. Many of my favourites contributed well – Schumpeter and Bello among them. I hope they keep doing so.

An example was “Why do we work so hard?” by Ryan Avent, an American economics correspondent based in London, seemingly an author of the rather nerdy Free Exchange column. He tackled a question dear to my heart and informed by my experience, questioning why so many people work such long hours and sacrifice so much yet seem unable to slow down.

Typical of an Economist writer, he starts with interesting statistics showing trends in working hours, confirming indeed that a long trend towards shorter working weeks was reversed about fifty years ago, at least for anyone in full-time work. Then he focuses on his own experience with admirable vulnerability, but maybe glossing over the point that, as one of the elite, at least he has the luxury of some choice of working pattern, whereas many others are locked into punitive hours by corporate expectations and wages that offer nothing beyond survival.

He tells us about his own frenetic life, with family time squeezed uncomfortably around work, and muses about alternatives. He refers to a couple he is friends with who resigned their jobs and decamped to somewhere rural, only to find their new life dull and return to the bustle a year later, gaining some macabre comfort from the tale to convince himself that perhaps he wasn’t being such a blind fool after all.

He is honestly refreshing about his motivation for working such long hours. A lot of it is about the thrill of competition and ego. He craves winning – whether against others or against his own limitations, and loves the perpetual challenge to improve, as well as the recognition that comes with success. He even likes to encourage more recognition by falling into the habits of excessive acquisition, designed more to pique the envy of others than anything else.

Where Avent has not perhaps examined himself as deeply is in what he really wants and what he lacks. His description of family activities smack of routine rather than immersion or even love.

This is all eerily familiar to me. If I had had the courage and vulnerability to see it, he could have been describing me in my late thirties. Then I had a stroke of luck. I started to fail, to stop winning, and had a minor breakdown when the years of exhaustion suddenly caught up with me as the adrenaline rush of success stopped. I was lucky enough to have a family, an employer and just enough humility to come through this experience and out the other side not quite broken. As a result I think I can add some insights to the article.

Firstly, it is great to be honest about ego driven motivations, and it is the first step towards finding alternative ways to achieving them. Work is one way to find competition, challenge, recognition and growth. But there are many others too. Don’t wait too long before finding some that can work for you and laying down the groundwork for them and even starting them while in work. Be aware that earning money is a very poor proxy for all these motivations, indeed often gets in the way of them. Most of us are not so shallow as to have money itself, and its visible signs, as necessary for recognition – and if we are like that, we can wean ourselves away from it over time. Clearly Avent’s friends who sold out did not have good alternative ways in place to satisfy their hunger. The things that seem appealing while working, such as peace or nature, will probably not be enough when time suddenly becomes plentiful.

Next, the search for alternatives may seem voluntary now, or even academic or a challenge for the distant future, but be ready anyway. As I found out, ego driven motivations can become a curse when you stop winning those challenges and feel disdain instead of recognition. That change can come suddenly, and it can owe as much to chance as anything else.

Finally, pay special attention to family. Really understand the needs of your life partner as well as your own. It can be a shock suddenly having more time together, and not always a pleasant one, especially where there is unfinished understanding or other external pressures to deal with. By the way, Avent’s whole mindset strikes me as quite a masculine one – most women seem to find balancing ego with other priorities much more difficult and seem to suffer more guilt in their compromises, so transitions might be especially hard for women as well.

Perhaps Avent is a microcosm of 1843 in some small ways. The magazine might do better to think through its target readers’ alternative ways of reaching satisfaction, or even to help them find them. Bragging rights on yet another global exhibition or exotic but fleeting travel experience might be what the advertisers think they want to see, but I am not so sure.