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21
April 2006
Winners
Take All In
Rockonomics
As
Madonna
fans in the UK know to
their cost, tickets for
rock and pop concerts
keep getting more
expensive.
The
price of a seat for the
London gigs in the
singer's forthcoming
Confessions On A
Dancefloor tour ranges
from £80 to
£160, with an
additional £13
booking fee.
There
are plenty of people who
are prepared to pay. For
every person denouncing
the ticket costs as an
"outrage", there is a
fan who feels the show
is "worth every
penny".
Of
course, veteran
Madonna-watchers will be
used to such high prices
by now.
It's
been just two years
since her Re-Invention
tour, which saw UK
tickets selling for up
to £150 and grossed
$125m (£71m)
worldwide - more than
any other star's
concerts that
year.
In
fact, Madonna is one of
the key beneficiaries of
some powerful economic
forces that have
re-shaped the world of
live music - for better
or for worse.
Since
the start of the 1980s,
the superstar effect has
become more pronounced
in rock and pop, with a
small number of
performers taking an
ever larger share of the
spoils.
Research
into the market in the
US, where the trend
started, has found that
in 1982, the top 1% of
artists received 26% of
concert revenue. By
2003, that figure had
gone up to
56%.
Rock
Professor
Over
the same period of time,
the cost of US concert
tickets has been
outpacing the country's
inflation
rate.
From
1981 to 1996, gig-goers
found prices going up by
4.6% a year, while the
consumer price index
increased by 3.7%
annually.
Since
then, ticket prices have
soared. From 1996 to
2003, they rose by 8.9%
a year, as against
inflation of just 2.3%.
Similar sharp increases
have been noted in
Europe, including the
UK.
These
insights come from the
work of an economist at
Princeton University in
the US, Alan Krueger,
who has been described
as "the world's first
and foremost professor
of
rockonomics."
He
based his conclusions on
an analysis of
information provided by
US trade publication
Pollstar, which has
collected data from
venue managers since
1981.
In
a paper he wrote with
Princeton graduate
student Marie Connolly,
he says concerts are now
a much bigger source of
income for major-league
stars than CD
sales.
"Only
four of the top 35
income-earners made more
money from recordings
than live concerts," the
paper says. "For the top
35 artists as a whole,
income from touring
exceeded income from
record sales by a ratio
of 7.5 to one in
2002."
Professor
Krueger said his
interest in the subject
began when he took his
father to the US
Superbowl in 2001 after
buying tickets on the
"secondary market," as
he put it.
"I
had to pay $2,500 a
ticket, but the list
price was just $325," he
said.
A
newspaper article that
he wrote about his
experience brought him
to the attention of
Pollstar, which gave him
access to its
database.
He
soon found out that rock
concerts and American
football games were
subject to the same
market forces. Both had
become more businesslike
over the years, he
said.
"Early
on in the entertainment
industry, it's in the
interest of the business
to think of themselves
as throwing a party, not
selling a product. I
think they attract more
of a following that
way," he
said.
"But
over time, the industry
takes more the form of a
market and is driven by
market forces. The
Superbowl initially felt
like it was rewarding
its fans. But then it
becomes established and
the League finds it in
its interest to push up
prices."
Bowie
Theory
But
why has the rise in
ticket prices been so
sudden? Professor
Krueger says there is no
simple answer - but one
explanation could be
what he calls "Bowie
Theory".
He
points out that sales of
recorded music fell from
1999 to 2002, causing
artists' income to
decline. He believes
record sales are down
because many potential
customers frequently
download music free from
the Web or copy CDs,
either legally or
illegally.
Professor
Krueger said his view
had prompted a mixed
reaction. "I got some
critical e-mails. There
are some people who are
big defenders of the
free availability of the
internet. But the
general reaction that I
got has been
agreement.
"Before
the advent of illegal
downloads, artists had
an incentive to
underprice their
concerts, because bigger
audiences translated
into higher record
sales, Professor Krueger
argues.
But
now, he says, the link
between the two products
has been severed,
meaning that artists and
their managers need to
make more money from
concerts and feel less
constrained in setting
ticket
prices.
Professor
Krueger says this
tendency was spotted by
David Bowie, who told
the New York Times in
2002 that "music itself
is going to become like
running water or
electricity".
Bowie
has advised his fellow
performers: "You'd
better be prepared for
doing a lot of touring,
because that's really
the only unique
situation that's going
to be left."
Creativity
These
days, the biggest
concert draws tend to be
performers such as
Bowie, the Rolling
Stones and Paul
McCartney - artists
whose latest albums are
often greeted with
indifference, but who
can still make money by
singing their greatest
hits.
Does
that mean an end to
creativity in popular
music? Not necessarily,
says Professor
Krueger.
"It
should lead to more
creativity in terms of
live performances," he
says. "A concert is more
than just an artist at a
microphone. Look at all
the light shows at a U2
concert."
And,
of course, the
increasing
sophistication of such
shows is another factor
putting upward pressure
on concert ticket
prices.
But
as Professor Krueger
points out, the internet
is ultimately going to
lead to even bigger
economic changes in the
music
industry.
"There
will be a good deal of
shaking out. There will
be new modes of
distributing music -
more diversity and more
competition. But
technological
innovations continually
cause change, ever since
Edison. The industry has
to change and it is
changing."
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