Matthew Yglesias (February 24, 2007)

I've wondered about this too, and would love to read a researched account of how this works if anyone knows of one.

Obviously anti-scalping laws reflect the same general interest in keeping ticket prices "fair" but it does seem to be an instance of random progressive-ness in our capitalist society.

Posted by right | February 24, 2007 1:47 PM

Obviously anti-scalping laws reflect the same general interest in keeping ticket prices "fair" but it does seem to be an instance of random progressive-ness in our capitalist society.

Also: Anti-scalping laws are laws. We have lots of business regulations of one sort or another. The initial pricing, however, is just the free market at work. But it doesn't seem to be working in its usual profit-maximizing way.

Posted by Matthew Yglesias | February 24, 2007 1:49 PM

Have you checked out the prices for the big name acts recently? Tickets for these run $150 or so a head. That's where the really big money is being made.

Posted by beckya57 | February 24, 2007 1:54 PM

think of the backlash there'd be if a young, hip band like arcade fire decided to charge $75 for tickets. only artists like the rolling stones and madonna, who don't have to worry about pissing off the people who got them famous in the first place, can get away with charging a ton of money. i'm surprised the arcade fire tickets weren't cheaper, actually.

Posted by anon | February 24, 2007 1:54 PM

in a lot of instances, i'd assume it has to do with the ethics of a lot of artists. tons of bands and performers probably wouldn't stand for huge price increases. music is somewhat unique in our society in that for a lot of indie-ish bands/performers there is definitely an ethic of not wanting to squeeze every dime out of your fans.

Posted by b.schac | February 24, 2007 1:55 PM

There's something more generally here about some sorts of transactions where increased demand leads to greater quantities but little difference in price. So the cute girl goes on more dates, rather than on more expensive dates etc. Think of your own better example if you will. But exactly what it is about the nature of the transaction that produces this sort of behaviour I'm not sure.

Posted by otto | February 24, 2007 1:56 PM

Also: Anti-scalping laws are laws. We have lots of business regulations of one sort or another. The initial pricing, however, is just the free market at work. But it doesn't seem to be working in its usual profit-maximizing way.

Correct -- but the very existence of anti-scalping laws assumes that tickets are going to be priced as they are. If the tickets are sold for fair value (say, through an IPO-like process, or an auction) there would be no real money to be made for scalpers.

Posted by right | February 24, 2007 1:58 PM

Maybe some members of the band would rather give up and stay home than to know they're always going to be playing in front of a crowd exclusively comprised of yuppies and/or rich kids, and they're hoping to price in some of the working class.

Of course they probably still want to make some money for themselves. $30 before the Ticket Master monopoly kicks in seems like an attempt to do that.

Posted by SoCalJustice | February 24, 2007 2:01 PM

think of the backlash there'd be if a young, hip band like arcade fire decided to charge $75 for tickets. only artists like the rolling stones and madonna, who don't have to worry about pissing off the people who got them famous in the first place, can get away with charging a ton of money. i'm surprised the arcade fire tickets weren't cheaper, actually.

There's obviously something to this. But I don't believe that at $43.60 the tickets all sell out in

Posted by Matthew Yglesias | February 24, 2007 2:12 PM

think of the backlash there'd be if a young, hip band like arcade fire decided to charge $75 for tickets.

I think "backlash" is the explanation in a nutshell. If I remember correctly, no one makes much money on concerts (though this may apply only to really big names). Someone may be figuring that every $15 added to the price of a ticket eliminates someone who would otherwise buy a CD but instead believes that band is in it only for the money, rather than the music.

Posted by RSA | February 24, 2007 2:20 PM

Someone somewhere has done the numbers of what the overall entertainment budget for the average music fan and diced and sliced the numbers for the t-shirts and concessions.

They are not leaving any dollars on the table by collecting an extra $25 this time and having you skip some $50 show down the road. Without looking into the details or the splits between the band, the promoter, the concessions and the venue you can't know the precise calculations for why the prices are set at the level they are. I seriously doubt there is much randomness built in to this process.

Posted by Bruce Webb | February 24, 2007 2:21 PM

I can't understand the genesis of this question. Are you really suggesting that limited seats to live music should be sold to only those who can afford them, at whatever the highest price is that one can get? So does this mean that you too have converted to the religion of market economics -- that the serfing of the USA elicits from you no more than a shrug? I find that hard to believe, coming from someone with whom I generally agree. So perhaps you should restate the question/observation.

Just as some people would gladly pay more for the seats if they could get them, lots of people couldn't pay the asking price. Garth Brooks charged a top price of $17 on one of his last tours and just added shows as they sold out. He may be a Republican but at least he has his priorities straight.

Posted by Walter Crockett | February 24, 2007 2:22 PM

Bruce Webb nails it. This isn't the band's generosity kicking in or fear of shame from overcharging, it is the overall market economics. The people who do this are very smart about extracting every dollar they can, and getting it all at once on one act isn't the way to do it.

I'll also point out the absurdity that you can buy all of their CDs and a T-shirt for the price of ONE show ticket, and this is considered a bargain?

Posted by winner | February 24, 2007 2:33 PM

think of the backlash there'd be if a young, hip band like arcade fire decided to charge $75 for tickets. only artists like the rolling stones and madonna, who don't have to worry about pissing off the people who got them famous in the first place, can get away with charging a ton of money. i'm surprised the arcade fire tickets weren't cheaper, actually.

The New York tickets were slightly cheaper, but also impossible to get. People on eBay were willing to pay over $2000 for a pair.

Anyway, the "backlash" argument is exactly right. Band are defined not by their music, but by who listens to them and shows up at their gigs. The Arcade Fire would occupy a completely different cultural position at $75 a ticket, or $250 a ticket (which they could easily get, at least in NY). Charging that much would turn them into a completely different kind of band, even if they didn't change a thing, musically.

The cultural currency they get from having a young, hip, insanely devoted fanbase is far better for their long-term bottom line than the increased revenue they could get from jacking up ticket prices at this point in their career.

Posted by DJA | February 24, 2007 2:33 PM

Keep your eye on the ball. Don't let your savage indignation over underpriced concert tickets divert you from the important issues.

Posted by John Emerson | February 24, 2007 2:35 PM

You are, of course, assuming that demand for the tickets would be the same at $75 versus $30. I, for one, got tickets for Arcade Fire in DC at the $30 (plus fees) cost, but would never have paid $75. Or even $50. Anyway . . .

Posted by Tim | February 24, 2007 2:39 PM

It's not just music, the same thing happens in sports.

Why not charge $1500 a piece for superbowl tickets?

What's the waiting line for seasons tickets to Giants games at right now? 10 years, 20 years? Same goes for other teams and playoff games at a lot of sporting events.

I'm guessing everyone is afraid of bad PR but it does seem odd.

Posted by DJ | February 24, 2007 2:45 PM

The cash angle has always intrigued me - many TicketMaster outlets don't like credit cards, and with the service fees tacked on, that turns into a stream of green flowing...where? Added to the fact that no one - promoters, artists, venue management - knows how many tickets sell at each show (check Spitzer's investigations of the promotions industry), and there's an unauditable trail.

A prime opportunity for money-laundering if you ask me.

Posted by ignoreland | February 24, 2007 2:46 PM

Tim, when people are willing to pay this much for tickets on eBay, I think it's probably a safe bet that most Arcade Fire shows would still sell out even at a higher price point.

Posted by DJA | February 24, 2007 2:46 PM

Why? Because most live acts suck. (Geezer rock reference warning.) I can count on one hand the acts who improved live: The Who, Chris Isaak, and some jazz acts that nobody here would recognize. The Rolling Stones were so incredibly lame live that I couldn't listen to them for years. The Band (!) were thin and dull. Joni Mitchell was annoying. Bonnie Raitt was a wash (so why pony up the $$?) So, if even these musicians with large catalogs of listenable material weren't worth it, how could some of these groups with songs whose material never coaxes another voice to song be worth it?

Posted by Jeffrey Davis | February 24, 2007 2:51 PM

and some jazz acts that nobody here would recognize

Ahem.

Posted by DJA | February 24, 2007 2:52 PM

Isn't it terrible, terrible PR to fail to sell out shows? Like, the rock critic industry will just kill you? So, perhaps pricing is conservative to ensure that all seats are sold.

Posted by Nicholas Beaudrot | February 24, 2007 2:58 PM

Isn't it terrible, terrible PR to fail to sell out shows?

It's not just the PR -- it's also really, really hard to play to a half-empty room. Empty seats suck energy from the band and the audience. So yeah, there's some of that.

Posted by DJA | February 24, 2007 3:02 PM

Part of it is definitely the at-show-merch thing. And part of it is definitely Tim's comment; it's possible that there are a great many people who simply wouldn't think it's worth it to pay double the ticket price. I'm kind of an odd duck, in that I don't like being around large crowds so I have to really have some other incentive to get out to a show (there are three: (1) I really really love the band (2) the band is known to have really energetic concerts, which is how I saw lots of no-name punk bands in high school (3) the band has a reputation for not just trying to replicate the recorded versions of their songs), but there's basically no act currently performing in the corporeal world for whom I'd pay $80 or $100 per ticket, even though I sometimes drop that much on a trip to a CD or book store. At $40 or so, Radiohead put on my favorite rock concert I've ever seen in person, but I wouldn't go see them for $75 or $80.

And Jeffrey Davis' point might be applicable to him, but certainly isn't universal. Most of the rock shows I've been to were worth, to me, the $ I put into them, and none of them were lame live, except the Strokes show I got dragged to five years ago, at my least favorite venue in Chicago. No accounting for taste - mine or yours. And don't be so snotty: which jazz acts?

Posted by Quarterican | February 24, 2007 3:11 PM

Those too cheap to buy tickets on eBay can console themselves by listening to the download of a recent Arcade Fire show at New York's Judson Memorial Church that NPR's All Songs Considered put online last week.

Posted by ndm | February 24, 2007 3:19 PM

I had a business school professor who studied pricing, and this is one of the puzzles he liked to kick around in the classroom. Somewhat surprisingly, there isn't an academic answer to the question, either because the research hasn't been done or because the behavior truly is inexplicable.

He had one theory, though, that simply by inspiring people to do what Matt did -- wake up early and scramble for scarce tickets -- promoters are able to build up a certain amount of marketing buzz around a show. Another variant of this is the long lines that can form at box offices when tickets are mispriced.

Posted by Adam | February 24, 2007 3:24 PM

the point about at-show-merch (and drinks and food) - which are regularly priced well-above equalibrium levels - is true, but only part of the equation. "artificially" keeping prices low gives more people the opportunity to go to more concerts, so people end up complaining about a ticket over $50, but are perfectly happy to spend $60-75 to go to two concerts. so the concert promoters might actually get more money from consumers by keeping ticket prices for that one individual event lower than demand for that particular event would otherwise dictate. true, Arcade Fire shows have excess demand right now. but not every other show that these venues book sell out. so, by keeping prices low for Arcade Fire, they might be boosting demand for their other shows.

not only that, but there is the question of payment. it depends on the specific arrangements, but ticket prices are often split by the venue, promoter, and band. sometimes this is done in percentages, sometimes it is done by flat fees. but in each case, the venue and band have incentives to keep ticket prices low: the less a consumer has to spend on the ticket, the more merchandise the band gets (and nearly all touring bands need merch sales to make any money at all); the venue will want consumers to have money left over for drinks and other concessions.

then, there's another thing. Arcade Fire will not tour only one more time. by keeping ticket prices affordable, they will ensure demand stays high for their shows at future dates. the Pixies reunion tour from a few years ago speaks to this. their tickets weren't incredibly cheap (i think they were over $50 most places), but demand was so huge that they were able to add many shows to their original tour, and get a lot more people through the doors.

in the end, i very much doubt if these tickets are very much under-priced in the long-run. this *particular* event? maybe. but not when everything else is priced in.

Posted by wkw | February 24, 2007 3:30 PM

I've loved the Arcade Fire since my first day of college in 2002, when my roommate (whose friend used to be a member of the group) turned me onto them. They are one of my favorite bands. But I wouldn't pay $75.

I don't buy backlash as an answer. The bands make their money on the merchandise, it's the promoters and venues who are the most invested in ticket prices (and they wouldn't care about offending the public by raising prices.)

I think they have a good idea what price is optimal.

For example, at the Middle East in Cambridge, indie rock shows are usually 10adv/12 at the door, while underground hip-hop shows are 18/20, while the bizarre, once-monthly "russian rock" shows are 35/40. I think it's simple supply and demand (if you miss the Arcade Fire, you can see a lot of other bands. If you miss Aesop Rock, you can see a few other rappers. If you miss the Muscovites, you're joyless for a month.)

I ended up with $16 in surcharges on my $32 ticket. I think that's the better question, why can't we create a system that's better than Ticketmaster?

Posted by Jerry | February 24, 2007 3:30 PM

Jebus. $43 a show is cheap? And you make this purchase often? And you would continue to do so when prices were $65 a show?

You sir, are just another goddamned Yuppie.

Maybe you should be careful in believing that everyone in the population IS JUST LIKE YOU!

I suspect there are a lot of people that can't afford this show, or can scrape up for this show, but won't be seeing any other shows this year, or can scrape up for this show at $65 but will then definitely not be seeing other shows this year.

And what's your total cost for the night? It's $43 per ticket, plus parking plus your tee-shirt plus your food and beverage plus the trip to the coffee house or bar later on plus your condoms (I am assuming you are going Dutch on the tickets, but paying for your own condoms.) Plus there is dry cleaning your black turtle neck and your black coat and your black levis.

Like I said, yuppie elitist that can't be trusted.

Posted by jerry | February 24, 2007 3:31 PM

i don't have an explanation, but there are parallels. initial public offerings of hot stocks are routinely priced well below their first-day closing price. let's say a search engine firm -- call it Booble -- goes public at $40 a share and closes at $80 on the first day. haven't Booble's investment bankers left $40 on the table? and isn't Booble annoyed that the money is going to stock-flippers rather than Booble? or is there some intangible glamour value that accrues to the company by having its stock pop so high right out of the gate? the same sort of value might accrue to the arcade fire by having tix for the nyc dates changing hands at $2000 apiece on eBay. dunno, he said, sounding uncomfortably lke jonah goldberg, just throwing it out for consideration.

Posted by tim serbo | February 24, 2007 3:37 PM

In part it's similar to who gets the biggest cut on a can of beans at a store - definitely the store, not the manufacturer. In this case, the band itself is usually losing money on a tour (hell, they're usually losing money on recording, on the tour, on everything). The label gets most of its money not from the tour, but from CD sales and of course licensing. So if the tickets go up $5, the band and label might see about $1 of that, but then people would spend less in merchandise. So their goodwill is at the expense of the music venue. Also, the demand curve can move quickly down from $45 to $75, and for most bands you're very much better off playing it safe and staying to the left of the curve - once a band finds itself with a 1/3 full arena, word gets out, not exactly good publicity for band, for label, for anyone.

Posted by Desider | February 24, 2007 3:44 PM

The people I go to shows with think a band is too popular if:

- it charges more than $7 for a three-band show,
- it has more than 1000 friends on myspace
- its only CD has more than four songs.

I guess we won't be going to Arcade Fire.

Posted by ndm | February 24, 2007 3:47 PM

Damn glad I live in New Orleans, where I can see a week's worth of jazz (including beer money) for less than your Arcade Fire show...

Posted by alli | February 24, 2007 4:47 PM

Tim Serbo's comment is the only one that gets close to it. The real reason is that at any popular show, large blocks of tickets are controlled by insiders-- promoters, record company executives, agents, and others close to the band. They want a quick sell-out so they can flip their tickets at tremendous profit.

If you don't believe me as to who gets the best tickets, go back and watch Madonna's "Truth or Dare" and check out her comments before the LA Forum show about who sits in the front rows.

Posted by Dilan Esper | February 24, 2007 4:48 PM

Gotta say, Matt, seems like you're trying to do what Buck Henry did as the loser radio talk show host on SNL back in the '80s. "I think the concert-going public should be screwed over even worse than they are now! Also in beating puppies and old people to death! What do YOU think?" Just a slow day, or are you really that cavalier about ticket prices?

The question's been asked and answered. They're sticking it to us as hard as they can. If you'd like to pay more, make out a check to the band.

Posted by entrails | February 24, 2007 5:13 PM

There are a few comments above the lines of this one from Tim:

"You are, of course, assuming that demand for the tickets would be the same at $75 versus $30. I, for one, got tickets for Arcade Fire in DC at the $30 (plus fees) cost, but would never have paid $75. Or even $50"

That, however, is missing the point. With people paying a thousand dollars on ebay for tickets, current prices are almost positively below the market-clearing price. Maybe you wouldn't go to that show if it cost 25 or 50 dollars more, but someone would. In fact, enough people would that it would still sell out. In other words, your particular preferences are not the same thing as demand.

I think there are two explanations of the prices being lower than they theoretically could be. 1) As mentioned above, there is a certain amount of buzz created when venues sell out ridiculously fast, and that buzz keeps bands viable in the long run. 2) It's not just buzz that concert promoters want. They want hip audiences to generate said buzz. And those audiences (apologies to the older folks) tend to be younger. Young concertgoers also, coincidentally, are more willing to buy a CD or tshirt at the merch stand for 40 dollars or something similarly outrageous. Adults are less likely to do this. They're also less likely to camp out overnight for tickets or engage in similar behavior that generates a lot of buzz.

As other people above have suggested, I don't think this is an example of concerts or the people that are in charge of them being secretly or explicitly progressive. They're just as calculating as any other business venture, so I would guess that, given all the externalities of concert ticket-buying, etc, the "low" prices charged actually help to achieve some maximum profit.

Posted by aschupanitz | February 24, 2007 5:27 PM

There's probably very little market behavior and a lot of insidious kickback relationships going on here.

A) Scalpers & management have an unholy alliance--the venue owners get a guaranteed profit by selling out seats at a low price, and then the scalpers perform an auction function and kick back a share of their $ to the owners. The owners treat the scalpers kickbacks as icing.

B) In exchange for letting the acts play the venues, record company owners (& to some extent the acts) demand a share of choice seats. They sell these seats for cold cash, or they exhcange them for influence (give them as gifts to rich/powerful--or their kids--who help them later on).

Probably selling the tickets to the public is something they do as little as possible of, and they just do it in order to avoid criminal charges.

Posted by anonymous | February 24, 2007 5:36 PM

There is a paper by a University of Chicago economist discussing why sports arenas and other live entertainment venues often sell tickets at below-market clearing prices. His conclusion: that the buzz generated by the sold out event and the marketing opportunities that come from making the events widely accessible to a lower-income group more than compensates for the revenue lost from selling only to the high income groups. It is available here, if you're interested.

Posted by No Meat | February 24, 2007 6:07 PM

The more interesting question is why people tolerate a system where the musicians, their road crews, their stage crew, their management, the venue, the event staff, and the promoter get to split $30 among them, while the automated web site that sold you the ticket gets $13.60 all for itself.

Posted by Alan in SF | February 24, 2007 6:21 PM

emo with organs

baroquemo

terrible music.

Posted by clap shitty | February 24, 2007 6:26 PM

Why have a single price for a ticket? If the band/venue/promoter want to maximize their revenue and reduce scalping then they should start with a high price when the ticket first goes on sale, drop the price over time and then start to increase the price as the number of tickets for sale approaches zero. No-frills airlines do this all the time, it surprises me that concert ticket sellers don't, particularly when it to benefit a charity. Though why anyone would pay £200 ($400) to see this load of has-beens is beyond me.

Posted by blowback | February 24, 2007 6:38 PM

The Producers on Broadway has recently conceded that scalping is a problem and demand is high, and so they've set aside the first few rows of tickets at $500. The rest of the orchestra is a slightly more plebian $100/ticket!

Of course, Broadway shows don't have to worry about indie cred. :) That's the real reason. You know how quickly the bad vibes would spread through the intertubes if Arcade Fire charged $75 a pop?

Posted by Frank | February 24, 2007 7:35 PM

FWIW, today I bought a ticket to a Cubs game at Wrigley Field that was $24 but went to $32.09 with surcharges, and could have been $2.50 more if I'd wanted to print out tickets instead of having them mailed to me. (I would have thought there would be a surcharge for mailing them instead of printing them, since then it's them and not me doing the work). The surcharges are everywhere.

Posted by Ted | February 24, 2007 9:04 PM

I totally agree with Matt. If they charged more people could just like go to the ATM and take out more money. You know they would.

Posted by Linus | February 24, 2007 9:48 PM

The thing with indie bands is that you are marketing to a very distinct demographic. It isn't 20-32 year olds. It isn't 20-32 year olds with a bit of entertainment cash. It is 20-32 year olds who actually give a crap about indie music who will buy indie records and go to indie shows. Even in DC, a Mecca of the target group, labels aren't really selling The Arcade Fire, they are selling the lifestyle. The point is to foster a repetitive and habitual taste for indie music and records. So the price for the Arcade Fire show is a balanced between making dough for the advertised act and building goodwill for future acts of marginal and ephemeral importance, like The Arcade Fire or whathaveyou. Labels are smartly perpetuating a brand rather than a band.

Posted by MP | February 24, 2007 10:39 PM

At risk of not adding anything to the conversation, I think that most of the explanations postulated here make sense. I'm in my early 20s, and I know a few people who refuse on principle to go to a show if the tickets are more than $35 or so. I think that this kind of outlook comes from a certain indie elitism, but a lot of bands rely on cultivating a fanbase composed of these kind of elitists. The actual musicians, especially, are aware of what can happen when they're labeled sellouts. If indie elitist fans or potential fans get turned off by ticket prices, they will quickly turn away from the band. Even if this wouldn't be an artistic concern for each and every musician, it would certainly be a financial concern, unless the indie fans are replaced with mainstream fans. That said, I've actually lamented that prices for some shows were too low (yes, I suppose this means that I want to be "screwed over even harder") because if you miss out on the initial sale, you're going to end up paying a lot more on Ebay if you want to go.

Still, I can only assume that the seller's behavior is rational. It must be that all the intangibles (buzz for the event, younger audiences have access, easier for kids to afford a "concertgoing lifestyle") and the other profit avenues (merch sales, mostly) make up for whatever is left on the table from the initial ticket sale.

Posted by JKP | February 24, 2007 11:18 PM

most people have focussed on one aspect of matthew's remarks here, but let's turn to another: areas of the economy where this much money is left on the table.

in fact, it happens all the time: why do movie theatres charge the same price for friday night and tuesday night? why do you have to pay as much to see (in matthew's case) the wizards play the celtics as you do to see the wizards play the mavs? why are all CDs priced the same (essentially)?

tim serbo, it's pretty well recognized that the reason that IPOs are priced low is because everyone knows that if you're on the list to get the initial shares, you can flip 'em later that same frickin' day for a very handsome return. so investment banks wield tremendous power because they can reward their "friends" by letting them buy shares, and it's a rare company going public (google, for example) that is willing to say "screw the investment bankers."

No Meat, thanks for the link.

Posted by howard | February 25, 2007 12:57 AM

er, No Meat, i got distracted and hit post too soon: "thanks for the link but it's busted" is what i meant to say.

Posted by howard | February 25, 2007 12:58 AM

Fuck "market clearing price." Are we talking about music or widgets? Jesus christ I would think that question would answer itself. It should never cost that much to listen to music, that's fucking insane. Why not buy the CD for a fraction of $75 and listen to it as many times as you like?

Besides--seeing groups in stadiums and giant ampitheaters named after cell phone companies is not a very good way to enjoy music. Get out to a fucking bar and see the band that lives down the street from you for five bucks. You won't get charged eight bucks a beer and you can even shake the band members' hands afterwards if you really liked it, which trust me they will appreciate.

If tickets are north of fifty bucks, your audience is going to be skewed and you're going to piss off all the people who might be your fans but they only get a $300 paycheck every two weeks.

The more interesting question is why people tolerate a system where the musicians, their road crews, their stage crew, their management, the venue, the event staff, and the promoter get to split $30 among them, while the automated web site that sold you the ticket gets $13.60 all for itself.

That's an awfully interesting question, for sure.

Somewhat surprisingly, there isn't an academic answer to the question, either because the research hasn't been done or because the behavior truly is inexplicable.

For fuck's sake, you're surprised? Do you know anything about the music business?

Damn glad I live in New Orleans, where I can see a week's worth of jazz (including beer money) for less than your Arcade Fire show...

Amen.

I think that this kind of outlook comes from a certain indie elitism

Fuck you. Elitism my ass. 1) There is such a thing as pricing yourself out of the market and 2) rock and roll should not be so exclusive, which $50+ a ticket definitely is. How many shows at that price are people living paycheck to paycheck going to be able to see?

....but what do I know, I didn't take Econ in school....

Posted by nota bene | February 25, 2007 1:17 AM

If Arcade Fire charges $75/ticket they'd be enjoying their last major tour. The kool kids would dump them. .. some before the shows, and soem after.

Other than sort of a mindless eclecticism and a whole bunch of people on stage I'm not sure what that band has to offer anyway.

Posted by reidmc | February 25, 2007 6:26 AM

The belief that "rock and roll should not be so expensive" is, I'm sorry, exactly that kind of indie elitism I'm talking about. It's one thing if you can't afford to pay more than X for concert tickets, but if you believe that you're too good for a band if they charge more than you think they should, then, yeah, that's elitist. It's not as if concert tickets are a necessity.

We're talking about the music BUSINESS here. Saying that, on priciple, tickets should not cost more than some arbitrary value is sort of like Bush saying that, on principle, nobody should have to pay more than a third of their income in taxes. You may as well say that no car should cost more than $20,000 because they're supposed to promote democracy and egalitarianism.

Actually, it could be that, as reidmc suggests, the issue is that the first band playing mid-level venues that raises their prices will be seen as terrible and horrible because of how much more expensive their shows are than comparative bands'.

Posted by JKP | February 25, 2007 7:18 AM

One rational reason would be that jacking the prices up means that only people who really want to see the band will go, and so already have the albums, whereas a low price will draw in more casual fans or even newcomers and so expand the audience.

Posted by Ginger Yellow | February 25, 2007 10:19 AM

Great post from jkp. What's with all this "music SHOULDNT cost more than $X"? Define shouldn't. We're not talking about milk and bread and state subsidies. Same goes for people saying "i won't spend more than $40 in principle". That's not a principle, that's an arbitrary budgetary threshold that you're trying to pass off as ideology.

also, go easy on the arcade fire. they're a very good band and that's that.

it's a good initial question from matt. can I recap the theories we have so far:

1) positive buzz from selling out quickly
2) they want a certain demographic in the crowd
3) extra profits from tickets detract from merch revenue as overall pool of fan money is finite
4) money laundering
5) insider double-dealing e.g. kickbacks from ticket touts
6) backlash from fans / negative buzz

I think we can discard theories #1 and #2 as being relatively unimportant (no one in the general public pays attention to what the audience looks like, nor do many people say: I'm not interested in this bad because their show took a week to sell out rather than a day)

#3, as a wholly economic argument, is also implausible. if this is indeed about capturing consumer surplus, the most efficient ways to do so would be
-a) hold an auction or some similar method, for example starting with a high price and slowly lowering it, akin to what someone pointed out re: budget airlines or
-b) charge the actual market clearing price (let's say ~$200 in the case of the arcade fire), and then extracting the remaining consumer surplus (those who would've paid even more) via merch sales at the show

#4 is too far-fetched to consider seriously

#5 seems dubious as well -- my impression is that most ticket touts are independent operators with no debts to or arragements with the venue. does anyone have evidence, say an actual study or some data, to suggest otherwise?

This leaves us with #6 although I have to say I'm not totally sold on that one either. I sort of think people choose to listen to and purchase music on the basis of what they like, rather than their impression of say how greedy the artist is. But I could be wrong about this. Plus buzz does affect what bands get written up in articles, and played on the radio, which increases their exposure, so there may be something to this.

Still think these theories fall a bit short; guess I must be missing something.

Posted by sam | February 25, 2007 11:39 AM

Because the band in question is utter crap?

Posted by Lamb Cannon | February 25, 2007 12:14 PM

Sam:

The ticket brokers are independent. But where do you think they get all those floor seats from? And so quickly after the event sells out? And despite the fact that these tickets never seem to go on sale to the public?

Posted by Dilan Esper | February 25, 2007 12:22 PM

so you're saying the venue charges less than the market price, then recoups the money through kickbacks from scalpers. but why not change the full price right away and cut the scalpers out? if it's because they'd have to share the additional revenue with the band then part of your argument is that venues consistently lie to the bands about how popular the shows are. it's hard to believe bands would get duped like this, let alone put up with it time and again.

I won't dispute that for every popular show there are some select tickets that the public never has access to, and on which the venue makes a huge profit - one way or another. but that doesn't answer the question of why the tickets that we do see - eg the one matt bought for $45 - aren't more expensive as well. if matt turns around and sells it for $150 he's keeping the money, surely.

Posted by sam | February 25, 2007 1:18 PM

Just a few comments:

"I know a few people who refuse on principle to go to a show if the tickets are more than $35 or so. I think that this kind of outlook comes from a certain indie elitism, but a lot of bands rely on cultivating a fanbase composed of these kind of elitists."

Exactly how did the English language get so mangled by right-wing spin doctors that the refusal to pay vast sums of money for entertainment is considered "elitist?" What would you call the folks paying $300 a pop to see a sold-out Rolling Stones show? Common people?

I can't speak for anyone else, but I never pay more than about $30 for live music because I'm on a tight budget. Crazy, I know.

We're not talking about milk and bread and state subsidies. Same goes for people saying "i won't spend more than $40 in principle". That's not a principle, that's an arbitrary budgetary threshold that you're trying to pass off as ideology.

The specific dollar value might be arbitrary, but the rationale isn't. Some people, on principle, refuse to spend more than a certain percentage of their budget on two hours' worth of entertainment, for the sake of delivering profits to millionaire musicians and corporate executives, when there are plenty of other good musical acts that can be seen for a fraction of the cost. That's what would once have been called an "anti-elitist" political principle, back when words had meanings.

Still think these theories fall a bit short; guess I must be missing something.

I think what you're missing is that not every business decision is made in accordance with the generic principles they teach you in Econ 101. A rock band isn't a brand of dishwasher detergent. A band has tremendous upside potential in term of profits for their record label, but their future value has very little to do with how much money they earn in the short term. It has to do with such variables as hype, critical judgment, and customer satisfaction. Record labels tend to sacrifice some short-term profits in the interest of developing a long-term cash cow that can go on a reunion tour in 2030 and charge $300/ticket. Keeping prices low helps maintain fan loyalty, and the artificial price constraints that cause demand to outstrip supply lead to people waking up early on Saturday to battle for tickets, which generates media attention, as evidenced by this very blog thread.

Posted by LaFollette Progressive | February 25, 2007 2:41 PM

Ignoreland's suggestion is a good one. After a bad run-in with a ticket scalper I wanted to get a better idea of how the ticket business functions. The Spitzer reports are a good place to start.

Posted by transplant | February 25, 2007 3:27 PM

I am not defining elitism the way the last poster has suggested I am. The belief that one is above being a fan because they've gotten mainstream recognition, or signed to a major label, or toured with an act you don't like, or charge more than you think they should for concert tickets--and not because you don't like their music--is certainly a form of elitism. Please note that the first time I mentioned elitism it was basically in the context of the ideas that the past poster just passed off as his own in the last few sentences he wrote. Because of some fans' indie elitism, bands can't afford to be seen as having sold out. Setting ticket prices higher than similar bands would certainly lead to cries of "sellout," so that's one way to explain why tickets are priced below market value.

I in no way am advocating pricing people out of concerts because I think that only rich people should be able to go them. I think that I was pretty unambiguous in this respect ("It's one thing if you can't afford to pay more than X for concert tickets, but if you believe that you're too good...") and I can't help but think that ignoring this element of what I said is very much in something that the aforementioned right wing spin doctors would approve of.

However, I _would_ be wiling to pay a bit more (say $40 instead of $20, or so forth) for a show that sells out in 10 minutes. The current scenario allows you to pay the below market value price if you're lucky and get tickets the moment they go on sale, or, if you're not so lucky, pay the way-above-market-value Ebay price. Or miss out on the show.

Posted by JKP | February 25, 2007 3:32 PM

People, people...the insiders ARE the scalpers. They get big blocks of tickets for themselves, then they can sell them or "give them away" in exchange for favors from other people. Many, sometimes even most tickets never even go on sale at the "reduced" prices Matt is quoting. How hard is this to understand?

Combine that with the indie cred / accessibility to hipster tastemaking base argument and you have an airtight argument for keeping the "public" ticket price low.

The major case in which ticket prices get really high are older bands near the end of their career selling stadiums or arenas. The size of the venue means that insiders don't lock up most of the tickets, and the older band means that they are cashing out and no longer investing in building up a future base of fans.

Posted by MQ | February 25, 2007 4:55 PM

Amen MQ, amen. It's all a matter of worth to me-- I really like Bloc Party, but it's not worth it to me to plunk down $60 (after charges) to see them perform for, what an hour and fifteen minutes at the Wiltern in LA. Plus parking, plus...

If you've got the money, fine. But not all of us do. Matt is probably of the ilk who doesn't see the problem in record companies gouging consumers with a $19 list price CD and wonders why places like Tower go bankrupt as a result (and why P2P downloading has boomed as a result).

Posted by Vic Arpeggio | February 25, 2007 5:40 PM

Most sports teams run their own charitable foundations and many bands have their pet causes. They have to know that the tickets are being sold at market price (on eBay, by people on the street who are called "scalpers," or by the same people sitting in offices, who based on some distinction without a difference are called "ticket brokers.") Why don't the bands/promoters and sports teams sell the seats (or at least the highly desired seats) at the actual market price, and donate the extra cash to their charitable efforts?

"We're charing you the same $200 you'd be paying anyway but we're screwing the ticket brokers and saving the [rainforest, inner-city kids, abused animals, etc.] instead" seems like a PR opportunity to me.

Posted by Wu | February 25, 2007 6:52 PM

Exactly how did the English language get so mangled by right-wing spin doctors that the refusal to pay vast sums of money for entertainment is considered "elitist?" What would you call the folks paying $300 a pop to see a sold-out Rolling Stones show? Common people?

*clap clap clap clap clap*

If you've got the money, fine. But not all of us do. Matt is probably of the ilk who doesn't see the problem in record companies gouging consumers with a $19 list price CD and wonders why places like Tower go bankrupt as a result (and why P2P downloading has boomed as a result).

Here's one for the Econ majors--how come CDs cost more than cassettes did, even though CDs cost a fraction to make (no moving parts)?

P2P has erupted because the economics of the music industry do not make any fucking sense. Recorded music is in such huge supply that it's become nearly worthless, but without profit from sales of physical units, the record companies' nuts are in a vice. This has the nice (depending on your POV) side effect of not really doing much to the amount of money musicians are making, because 99% of musicians aren't making shit from CD sales anyway.

The 20th century record industry's collapse in the 21st century is going to be a case study in how to run an entire industry into the ground.

Posted by nota bene | February 25, 2007 8:10 PM

"Here's one for the Econ majors--how come CDs cost more than cassettes did, even though CDs cost a fraction to make (no moving parts)?"

This would actually be an excellent question for an intro econ final. The answer is that in a monopoly market -- which is what copyright / intellectual property laws in the music market create -- price is determined less by the cost of production than by consumer valuation. In other words, the producer can use his monopoly power to try to extract as much as the customer is willing to pay. People value CDs more than cassette tapes (for good reason -- a more reliable and better quality media), hence they cost more.

In a perfectly competitive market, the price of CDs would be driven down to almost zero.

Posted by MQ | February 25, 2007 9:07 PM

P2P has erupted because the economics of the music industry do not make any fucking sense. Recorded music is in such huge supply that it's become nearly worthless....

But recorded music is only in huge supply because of P2P. You've got the cause and effect backwards -- P2P has destroyed the economics of the music industry.

Posted by AlanC9 | February 26, 2007 7:57 AM

Anyone else surprised by the amount of vitriol this topic inspired?

Posted by AlanC9 | February 26, 2007 8:00 AM

just one last little salvo...

i'm not fan of Ticketmaster, but it is more than likely that after-fee prices for tickets would go up if Ticketmaster weren't around. the ticket processing industry seems to have economies or scale, as Pearl Jam quickly found out (ha!), so eliminating Ticketmaster would boost fixed costs for each promoter/venue. these costs would be passed on to consumers. if a venue could bring in remote ticket processing for less than Ticketmaster was, they'd do it and keep the profits for themselves instead of letting Ticketmaster take them.

the fact is, Ticketmaster has probably *lowered* ticket prices a little bit.

and nota - i've enjoyed your "principled" stand against "millionaire" low-level indie rock acts such as Arcade Fire. this shit ain't the same as Madonna... the people who are going to these shows are not generally corporate guests. but even if that were so, don't you think Arcade Fire should be able to sell their (luxury) good for whatever they please? do you think the rich would have any less access (or the poor any more) if the prices were lower? no. even more profits would be taken from the band and the venue, who have clear property rights here, and be granted to black-market scalpers or speculators. the tickets will be no more available to the poor, downtrodden common man who doesn't get to see some Canadians whine for an hour under the current system. get down off your cross, man. it ain't that bad.

Posted by wkw | February 26, 2007 2:43 PM

You really believe it costs, like, 30+% of the price of a ticket, per ticket, to sell that ticket remotely over the internet? Can you name even one other commodity or service where it costs 30+% of the price of the good just to process an order for it over the internet? Not including delivery? (Since tickets do not have to be delivered).

Seems fishy to me.

Posted by MQ | February 26, 2007 3:55 PM

i'm not saying they aren't taking monopoly profits. i'm sure they are. what i'm saying is that alternatives are probably worse, as they often are when dealing with monopolies. again, if XYZ club could do their own ticket processing, and take that 30% extra profit for themselves, don't you think they'd do it?

the truth is that alternatives to Ticketmaster are probably *more* expensive, not less. this doesn't even bring into the discussion the efficiency concerns (i.e. you can buy a ticket to almost any major entertainment event in the U.S. from Ticketmaster. if they went away, we'd all have to go to dozens of different sources for online access to tickets). if independent record labels, independent musicians, and independent venues could save money for themselves and their customers by ditching Ticketmaster, they surely would. once again, Pearl Jam tried this, and it didn't work.

Posted by wkw | February 26, 2007 11:45 PM

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