Tickets to concerts this summer will cost more – not a big surprise to those whose summer rituals are as likely to include outdoor concerts as beachcombing and family vacations.
What that means is fewer people are buying tickets, a sign that superstar acts are now testing the limits of how much consumers will spend to see them perform live.
The concert industry enjoyed a record-breaking 2012 in terms of revenue, bringing in $4.7 billion, according to Pollstar, which tracks the ticketing industry. However, fewer people bought tickets last year than the year before, dipping to 36.7 million and representing a continued decline from the peak sales of 40.5 million tickets sold in 2009.
The effects of the Great Recession are fading, but the general public is still somewhat reticent to lay out big bucks. Somewhat counterintuitively, the concert industry has coped by raising ticket prices, catering primarily to a top tier of consumers willing to pay more for the top concert draws. It is also experimenting with premium packages that entice consumers to spend more on perks such as valet parking, after-show amenities, and merchandise.
AEG Live, the promoter for the Rolling Stones 50th-anniversary tour, is testing the market to find that sweet spot between consumer demand and affordability. The tour plays its third and final night in Chicago Monday, and continues throughout North America and Europe this summer.
The average ticket for the first seven North American Stones shows cost $355.14, a 162 percent leap from the $135.63 average for the band’s last outing in 2006, Pollstar reports. A majority of tickets are priced above $150, with many seats on the lower level priced at $600 (before ticketing surcharges and other fees).
The Rolling Stones tour “absolutely pushed the upper limits of the market,” says Gary Bongiovanni, editor of Pollstar.
The outcome is something that the Stones, billed as “the world’s greatest rock and roll band,” is not accustomed to: empty seats. Early in the Stones' tour, tickets remained available on the day of the concert, Pollstar reported – something industry analyst Bob Lefsetz blames on the high prices. “Prices are so … high, the public is balking, which surprises me because this truly looks like the last tour,” Mr. Lefsetz wrote on his blog in early May.
That has led to some last-minute price-cutting to fill the hall – drawing complaints from some fans who paid the full ride. “They dynamically re-priced the house as needed, so some of the $600 tickets may be downsized … it really varied,” says Mr. Bongiovanni. “It was all done quietly so the public didn’t see most of those adjustments. They just knew that most of the $85 tickets were gone, and all of the sudden another couple thousand appeared and they were happy to buy them.”
Ticket sales are robust, and the tour is on pace to gross about $100 million, reports AEG Live. The company paid the band between $4 million and $5 million per show on the 18-date tour, according to Rolling Stone magazine.
When questioned about escalating ticket prices, concert promoters and artists blame the secondary ticket market, which buys tickets early and then resells them at a higher price point. That secondary market was worth about $4 billion in 2012, according to Pollstar – a generous amount that indicates the market can bear higher prices.
In the case of the Stones, AEG Live made less-expensive seats available in areas of the arenas where brokers had already snapped up the highest-priced seats, which undermined the brokers' chances of reselling their tickets at higher prices.
The company “made whatever adjustments were required to bring that price down to do whatever it took to fill the arenas. In the process of doing that, they eliminated the secondary market profit and kept that for themselves,” Bongiovanni says.
The secondary market includes ticket brokers who resell tickets at inflated prices, as well as exchange sites like StubHub.com, which facilitate fan-to-fan purchasing.
John Meglen, co-president of Concerts West, an AEG Live subsidiary, told Billboard last month that his company had tested selling $600 tickets, to reduce the likelihood of the secondary market selling them for more.
“Did we hit a point where we ran out of people that would buy at $600? Yeah. But why can't we do the ‘market value’ thing? Why do we have to let the market value proposition live with the scalpers? Why should, in my estimation, $3 million go to the brokers, instead of the artists, in every one of these markets [where the Stones will tour]?” he said.
Similarly, Rolling Stones lead singer Mick Jagger told the Associated Press last week that “the artist is totally powerless” when it comes to fighting the secondary market, other than to raise prices.
“People have made a lot of fuss about it before, but on the other side, some people are like, ‘We might as well participate in it.’ And you can’t really blame the artist for participating in it because why shouldn’t they in a way?” he said.
To some, blaming the secondary market is disingenuous given the fact that many of the industry’s primary ticket sellers, and concert promoters, have also established secondary ticket subsidiaries. For example, Ticketmaster, the world’s largest primary ticket agency, also operates Tickets Now, a secondary seller, and TicketExchange, a StubHub competitor that allows paperless tickets to be resold at a higher value.
Some artists are choosing to use paperless ticketing for their tours, a move designed to reduce scalping by making the tickets nontransferable. Kid Rock, the Detroit rapper and singer, said he is prepared to buy premium tickets for his upcoming tour that are sold on the secondary market, and resell them to the public for $20 apiece.
“I’m in the scalping business, but you know what? We told everyone. A lot of artists have been doing this for years behind fans’ backs, taking all these backdoor deals,” he told the Associated Press. “We look at StubHub and other places and see what they’re selling them for and we just undercut them.”
Secondary operators such as StubHub blame primary sellers for allocating the majority of tickets to desirable shows to artists, talent agencies, record labels, tour sponsors, and fan clubs, which makes the market for what is leftover more cutthroat.