Friday, August 8, 2008

The Fans Want Cheaper Concert Tickets

I enjoy attending rock concerts very much and try to see as many shows that my time and wallet permit. Over the last couple years I have noticed that arenas have been far, and I mean far, from sold-out at many shows.

I see this as a response to very high ticket prices and absurd Ticketmaster service charges. When 30-50% of the seats are empty [a surplus], shouldn't that send a signal to Ticketmaster to cut prices? I believe the demand for most concerts are relatively price elastic (there are exceptions like a Led Zeppelin reunion show) therefore lower prices should only increase revenue.

Ticket promoters seem to be in the process of researching this idea. After a handful of shows failed to sell many tickets at regular prices, LiveNation devoted July 29 to $10 tickets for select shows. Sounds good to me, but what about all the people that paid over $70 with service charges for the same ticket? Here, I am reminded of the textbook example of a price discriminating monopolist.

3 comments:

Mike Fladlien said...

I think the concert demand is inelastic so raising the price raises total revenue. Of course, the musicians want to pack the concert hall and want a lower price. I think you'd find that the higher price maximizes revenues. I spent two years researching musicians and spoke at the AP National convention in 2007. Now, labels make money off the everything the band does like the tshirts, posters, CDs, autographs. Really enjoy your thoughts...

Meds said...

Yeah, I was thinking along the lines that not all performances are equal. I know Billy Joel can sell out Madison Square Garden 8 consecutive nights, an inelastic show. The sell-out crowd tells us that ticket prices can be even higher than the $100 charged. While, a performance by Poison [Glam Metal band from the 80s] sells less than 50% of the seats has overpriced tickets, an elastic show. I don't think most people were willing to pay $60+ to see Poison. But, I am still unsure of the entire concert market's elasticity of demand.

Meds said...

Recently, some artists, like Nine Inch Nails have experimented by giving away their music for free using digital downloads. They want them to put that money towards merchandise and concert tickets. The NY Times ran an article back in May discussing the shake-up and diminished influence of record labels. We had a fun time with this article in class.

http://www.nytimes.com/2007/05/28/arts/music/28musi.html?_r=1&fta=y&oref=slogin