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Concert attendance and ticket pricing

Posted By Barry Ritholtz On May 20, 2005 @ 7:07 am In Finance,Music | Comments Disabled

Although we sometimes lump them together, we really shouldn’t:  The "Recording Industry" is a very different beast from the "Music Industry." One is relatively healthy, the other is in bad disrepair [1], primarily due to self-inflicted wounds [2] and awful mismanagement over the years.  The latter is responsive, the former desperately stubborn.

The latest example: Concert attendance and ticket pricing [3]:

"Many in the music business called 2004 the worst summer concert season in memory: fans were stuck with high prices and promoters lost money and canceled shows.

With this year’s season about to kick off, event promoters and artist representatives have vowed to turn things around. So, they are offering a variety of inducements, including lower prices and offering more bands for the money by packaging big acts together at one show. Promoters are also blitzing fans with emails and text messages to try and generate interest in coming shows."

Wow. Where did they ever get the crazy idea that you could respond to decreasing demand for a product by lowering prices; Shouldn’t they be conspiring [4] to illegally fix prices [5], or lobbying Congress [6] for some protective legislation?

This isn’t saying that prcies have become cheap — they are just lower than last year, by about 10%. "A big priority this year is making sure that the cheap seats are actually cheap. Last year, the inability to put fans in those back-of-the-house seats contributed mightily to a string of underperforming tours and concert cancellations. So this year, for example, the Eagles have aggressively promoted $25 seats at some stops on their coming tour; top-priced tickets are selling for $175."

The WSJ [3] further notes that:

"Punk-pop trio Green Day — one of the few young bands that can fill a stadium — are seeing strong sales with ticket prices mostly held to less than $50. The Dave Matthews Band is charging less than $60 at most shows on its summer trek. Among the other big acts on the road this summer: Coldplay, Avril Lavigne, Nine Inch Nails and Alicia Keys.

The emphasis on affordable tickets is a big change from last season. Last year, according to Pollstar, a trade magazine that follows the concert business, the average ticket price for the 100 top-grossing tours hit a record high of $52.39, more than double the average seat in 1996. Even mediocre seats for acts like Van Halen and Cher were on sale for up to $80 a ticket. Unfortunately for the industry, the fans balked at the spiralling prices. Weak sales forced the cancellation of show by artists including Christina Aguilera and Marc Anthony."

Imagine that: Responding to your customers, pricing your product competitively [7], maximizing revenues. 

Where do these people ever get their wacky ideas from? Perhaps they accidentally stumbled across an Economic 101 textbook somewhere . . .

Summer Concerts Try New Tactics to Fill Seats [3]
After a Dismal Last Season, Industry Lowers Some Prices;
Seeing the Eagles for $25
May 19, 2005; Page D1

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/05/concert-attendance-and-ticket-pricing/

URLs in this post:

[1] disrepair: http://bigpicture.typepad.com/comments/2004/05/the_music_indus.html

[2] self-inflicted wounds: http://slate.msn.com/id/2069732/

[3] Concert attendance and ticket pricing: http://online.wsj.com/article/0,,SB111646244383537628,00.html

[4] conspiring: http://www.google.com/search?num=100&hl=en&ie=UTF-8&safe=off&q=music+industry+price+fixing+settlement

[5] illegally fix prices: http://www.usatoday.com/life/music/news/2002-09-30-cd-settlement_x.htm

[6] lobbying Congress: http://www.theregister.co.uk/2003/09/10/music_lobby_frightens_congress/

[7] competitively: http://bigpicture.typepad.com/comments/2003/12/music_sales_ris.html

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