Addicted to novelty since 2001

TicketMaster and the Market Value of Tickets

Over the summer, I read a great article in The New Yorker about TicketMaster, Live Nation and the history of rock concert promotions. It was unavailable online until somebody kindly added it to this Reddit discussion thread in which I was involved. You can view a PDF of the article here, or I’ve also uploaded it here.

It’s a pretty fascinating article, and reveals some surprising (to me, at least) facts about the concert business. One is that TicketMaster and Live Nation have struggled, financially, and lose huge chunks of revenue due to scalping. Another is that, of course, many concert tickets are radically under-priced. From the article:

The phenomenon of below-market value tickets has inspired a cottage industry of economists seeking to explain seemingly illogical pricing in the rock-concert business. Alan Krueger…an economist…is one. “There is still an element of rock concerts that is more like a party than a commodities market,” Kruger told me. A ticket to a rock show, he said, bears elements of a “gift exchange,” in which intangible benefits accrue for the seller. Cheap tickets increase the possibility of a sellout, which augments merchandise and concession sales. Sellouts make the concert experience better for the musicians and audience alike. And, one might add, a cheap ticket is the price the music industry pays to preserve the illusion that the sixties never ended. “In some fashion, I help people hold on to their own humanity–if I’m doing my job right,” Springsteen once said, of his performances. At least, he helps people hold on to their savings.

That’s kind of a provocative idea, isn’t it? While we (myself included) complain about the high cost of concert tickets, they’re actually priced well below market value. This applies much more for the Springsteens and the Madonnas than local bands, obviously, but the former is where TicketMaster and Live Nation make all their money.

I don’t in any way mean to be an apologist for TicketMaster. Their business model is built on controlling the marketplace and delivering shockingly little added value to their customers. It’s only getting easier for venues to handle their own ticket sales. So, it’s my hope that TicketMaster may die off with the generation of rock and rollers they depended upon for their revenue.

3 Responses to “TicketMaster and the Market Value of Tickets”

  1. phil

    Most performing arts orgs are in the same boat, although for different reasons. Most Canadian arts orgs price their tickets at less than half of the true cost of presentation. The goal is not (necessarily) to sell-out a concert so that merch and concession sales are higher, but those intangible benefits might lead someone to donate to the organization. And of course, a good portion of the rest is covered by government support.

  2. Derek K. Miller

    Somehow I imagine Google worming their way into this business with some sort of automated in-context advertising.

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