The Sky Is Falling – Ticket Prices Go Up, Ticket Sales Go Down

Photograph taken by Mattia Luigi Nappi

Photograph taken by Mattia Luigi Nappi

One of the latest bits of excitement is an article at Atlantic Wire titled Ticket Sales Plunge for Struggling Music Industry, which has caused a lot of excitement, and screams that once again the sky is falling. The only problem is that the numbers don’t add up.

Atlantic references four other articles, and links to them. One of the links is dead already, but Google is your friend.

The first article Atlantic Wire references is New Blow to Music as Concerts Fizzle in the Wall Street Journal. The Wall Street Journal references a report by Pollstar, but doesn’t link to it. It does mention the following:

The head of Live Nation’s concert business, Jason Garner, stepped down in November, amid a reorganization that is intended to revamp how the promoter pays artists—a step toward lowering ticket prices.

Right. They intend to cut payments to artists. Remember this.

The second article Atlantic Wire references is in the LA Times, is a dead link, however Google provides, and another copy is available at Yahoo News, titled Cheap concert seats due after cruel summer of 2010. The reporter interviewed some artists and managers, this is actually the best reporting on the issue, and I highly recommend it.

The third article is NPR’s How The Disastrous 2010 Concert Season Could Work In Your Favor, speculating that ticket prices could fall. Pollstar is the source for most of the NPR article as well.

The fourth article is Rolling Stone’s Cheaper Concerts Coming in 2011, which curiously references Yahoo News, but has one paragraph that stands out:

The drop in prices may indicate that the concert industry is learning some lessons in a harsh economy. When the average ticket price went down by a dollar in 2009 as a response to the recession, sales went up by 12 percent. However, when optimistic promoters raised prices in 2010, sales crashed. Until the economy picks up significantly, promoters may need to be content with lower prices and smaller profit margins in order to maintain a healthy market.

In other words Rolling Stone, one of the biggest and most respected sources in the industry thinks that promoters got greedy, and mucked up the market.

Unfortunately Pollstar has a lousy website, and if there’s a search function, I couldn’t find it. Google helped a bit, but I suspect that there are things that I missed.

2010 By The Numbers (So Far) covers the first six months of 2010. Top Tours 2010 was published December 29, 2010, and is a placeholder until Pollstar has the final figures for the year, which they plan to publish some time this month. Since the month is half over, we should see the final figures from them any time now. From Top Tours 2010, two paragraphs stand out:

The Top 50 Tours Worldwide grossed a combined $2.93 billion which was down about 12% from last year’s $3.34 billion. Total tickets sold was 38.3 million which was down about 15% or 7 million from 2009′s 45.3 million. Total show count was down about 8% to 2,650. The only number to increase was the average ticket price which went up $2.86 or about 4%.

Note – prices are up. Generally when costs rise, customers cut purchases, so a drop in ticket sales isn’t surprising. Curiously the music industry seems to think that the rules that apply to gasoline prices, don’t apply to them.

The Top 50 Tours North America grossed a combined $1.69 billion which was down about 15% from last year’s $1.99 billion. Total tickets sold was 26.2 million which was down about 12% from 2009′s 29.9 million. Total show count was down about 3% to 2,114. Unlike the Worldwide chart, the average ticket price in North America dropped $1.55 or about 2%.

Note that here, prices are down. The North American market is heavily biased towards the United States, which has ten times Canada’s population. The United States is deep in a Recession, which based on the plans of the Republican Congress, will soon be a full-blown Depression. Since concert ticket sales are a luxury, and people who are out of work, or under employed avoid luxuries, a drop in ticket sales isn’t surprising.

But what’s actually happening?

When numbers are in play, my first impulse with American companies is to check the players out at the Securities and Exchanges Commission. The SEC has various rules, which makes lying to the SEC a dangerous move. Companies that fall under the SEC’s umbrella must file reports, and company directors are responsible for the accuracy of the reports.

Live Nation’s report shows that profits are up, due to cost cutting.

Oodle is small enough to fall under the reporting limit.

Seat Wave is also small enough to fall under the reporting limit.

Web Tickets is also small enough to fall under the reporting limit.

Prime Seat Tickets is also small enough to fall under the reporting limit.

Coast to Coast Tickets is also small enough to fall under the reporting limit.

Those I found using Google, which also lead me to the National Association of Ticket Brokers. None of the Association members that I checked were big enough to trigger the SEC reporting requirements.

So we have one giant, with revenues in the quarter ending September 30, 2010 of over $1.8 Billion, and a bunch of midgets, a typical monopoly situation. When the monopoly had a sales drop, it cut expenses by cutting the amount paid out to artists. You can see this in their SEC filing.

In simple terms, LiveNation decided to try to charge the maximum the market would bear, realized that they’d screwed up, and then cut the amount paid to the bands to keep their profits from falling. Then they started whining through the media that the terrible concert goers weren’t willing to pay for concerts, rather than blaming their own lame brained decision, and the terrible economic climate.

After all, it couldn’t be their fault could it?

Regards

Wayne Borean

Wednesday January 19, 2011

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