I think the problem is allowing people to either buy tickets in advance or reserve them without paying any money. If you leave the unpaid reservations out of the picture, it's simple: you sold people the right to turn up for the gig and occupy a seat, and some people who bought those rights didn't exercise them. If they chose not to attend, that's not your doing; if they couldn't attend, that's not your doing either. You should refund money if you cancel or the artist fails to turn up; if audience members don't turn up that's their own lookout.

As for the free reservations and penalising those who put down money in advance, if there's no difference in practice between reserving a seat (free) and buying a ticket (£) then you're actually giving an unfair advantage to people who choose to 'reserve' rather than 'buy'. Next time, if somebody tells you they'll definitely be there, just tell them to make sure they get a ticket before they sell out.

All this is very cold and mercenary, I know, and it could put some people's noses out of joint. But that's always liable to happen when money gets involved. At least this way, if you bring in some clear policies and stick to them, you'll know there are good reasons for any temporary unpleasantness - and, hopefully, the other people involved will realise that too, once they've calmed down!