Is Dynamic Pricing Ruining the World Cup?

In the mid-two-thousands, Barry Kahn was getting a doctorate in economics at the University of Texas at Austin. He also worked part time in the university’s athletics department, home to the Texas Longhorns, then one of the leading teams in college football. People were camping out to buy tickets for Longhorns games, and some tickets ended up on resale sites, like StubHub, where they changed hands at a big premium compared with their face values, Kahn told me when I called him up last week. Other professional sports teams and concert promoters were dealing with the same issue. “The question was should we try to stop this, or get a piece of it,” Kahn said.Scalping tickets wasn’t new, of course, but Kahn believed that its formalization online provided sports teams, and other entertainment businesses, with valuable information about demand that could enable them to make more money without alienating their most loyal fans. He founded a software company, Qcue, to help sports teams exploit this opening. Qcue’s first client was the San Francisco Giants, which began using dynamic pricing in 2009. Rather than setting fixed prices for tickets, Qcue’s software adjusted them over time based on demand and timing. If