Sales & Marketing

Put 25 college students in a room, offer them a quarter for their thoughts (inflation, mind you), and you’ll get more than 25 opinions about any topic that comes up. Ask them to talk about their plans to see a major concert any time soon, however, and you’ll get general agreement: can’t afford it.

I had just such an opportunity in the fall of 2004 when I sat down with a group of Juniors and Seniors at Boston University’s College of Communication where I teach to decide what our survey research projects for the semester would be. The concert business was an easy target; once I brought it up, they jumped at the chance. Seeing their passion, I assigned the students the task of finding the answer to the question: why was the 2004 summer concert season so bad?

Not surprisingly, the students were already aware of the controversy. Though painful, I should refresh our collective memory. Summer 2004 was the year that Lollapalooza was cancelled (I know, you’re saying, “Lollapa-what?” Gratefully humans have short memories), Blues on Tour was shuttered, and several megastars cancelled, reduced, or moved to smaller venues, including Britney Spears, Jessica Simpson, Norah Jones and Christina Aguilera. It was also the year that the Material Girl charged an average of $140 a ticket and the artist formerly known as the artist formerly known as Prince sold more than 1.4 million tickets.

It wasn’t too far into this summer of less than fair weather when it became clear there was a problem. “We can’t really come up with reasons why business is off — and we’re talking 20 to 50 percent,” Gary Bongiovanni, editor-in-chief of Pollstar admitted publicly.

Industry insiders from the venues, the ticketing agencies, and promoters were afraid. About the same time we launched our research, Billboard, together with Promosquad collected data to determine what was wrong. Did people not like concerts anymore? The answer came back: the concerts we like, the price we don’t.

However, as a class, we knew that for price alone to be the driver, prices would have had to rise in inverse proportion to the drop in ticket sales. According to Pollstar’s early estimates, ticket prices were up 13% over 2003, not high enough to account for a drop at least twice that size. We turned to other likely culprits to see what share of the blame they could take: disenchantment with live performances (can anyone say, “lipsync?”), lack of good music out there, and alternative forms of entertainment. Then I sent my students out to build survey questions that would test these possible explanations.

Once we had built and tested our questionnaire, we surveyed 500 18- to 34-year olds in Global Market Insite’s online survey panel during the last week of October. (For those of you keeping score, at n=500, our overall results would have slightly less than a 5% plus or minus margin of error had we surveyed a random sample of the population. We did not, however; we only surveyed online members of GMI’s panel. However, their demographics check out when measured against relevant census data so we can have confidence in the numbers.)

The results told us that concert attendance was alive, if not kicking. Fifty-one percent of these young adults had paid to attend at least one concert in the summer season, most of them seeing at least two. They paid an average of $46 per ticket, spending $110 each during the course of the entire summer. A hardy 14% of our concertgoers had dropped more than $100 on a single ticket at least once.

Looking further, there was no dominant explanation for why concert attendance had suffered in the early summer. Confirming what Billboard had found, 72% of our respondents said ticket prices were too high, but these people paid the same or more on tickets during the summer as those few who didn’t think ticket prices were too high. Only 31% of young adults said that DVDs and CDs make it so they don’t need live concert entertainment. Tellingly, just over half of respondents agreed that, “There are not as many artists I want to see in concert as there used to be.” Ahh, the good old days when Motley Crue and Air Supply were on tour. Oh, wait, they’re touring in 2005 (maybe that’s the secret to an increase in ticket sales: more retro-artists).

TAKE HOME POINTS

• If people respond to promotion
pricing and simultaneously indicate
a willingness to come back
in the future, then you know the
slump will be over soon.
• Nearly 40% of concertgoers
expect to spend more on
tickets in the coming year
than in the previous year,
which could equal a 10%
increase in spending.
• High prices can deter ticket
purchasing, but it doesn’t
generate long-term hostility
toward artists, ticketing agen
cies, and although we didn’t ask
about it, it’s reasonable to extend
that free pass to venues.

Flippancy aside, as a professional researcher I was intrigued. If people can’t articulate a clear, compelling reason why they spent less, it suggests the slump was temporary, a result of external factors that respondents didn’t have control over. Consider these factors: the economy still lags years after the recession was declared over by Greenspan and Co. Rising gas prices and increasing casualties in the Iraq war cast a tangible pall over public gatherings. Add to these problems canceled tours and rising prices and you have a perfect formula for a temporary slump in ticket prices.

There are two ways to test the temporary theory: 1) change the prices and see if people come back (or in other words, promotion); and 2) ask people what they intend to do in the future. If people respond to promotion pricing and simultaneously indicate a willingness to come back in the future, then you know the slump will be over soon. In other words, if the answers fit, we must acquit – the industry, that is.

The answers do fit. In the last half of the summer season promoters and facilities like yours started discounting heavily. Day-of concert discounts and two-for-one lawn tickets brought in a few extra people. It appears it worked, according to year-end numbers compiled by Pollstar. Prices dropped enough that the full-year 2004 prices were only 4% higher than 2003, roughly $6 cheaper per ticket than at the height of the early summer. When all was said and done, the total number of tickets sold was down 2% from 2003 to 2004, yet the increase in average price compensated for the loss, producing a 1% increase (roughly $20 million) in ticket revenues overall.

That the early-2004 slump was temporary is confirmed by my students’ research. They asked people how much money they expected to spend in the 2005 season on concerts and it appears they hold no longterm malice towards the industry. Nearly 40% of concertgoers expect to spend more on tickets in the coming year than in the previous year, which could equal a 10% increase in spending. What’s more, 25% of people who didn’t go to a single concert last year expect to this year, sweetening the pot even more.

That’s good news for Neil Diamond and Barbara Streisand, U2, and Duran Duran. And it’s good news for the facilities that will host them and hundreds of others. However, it doesn’t mean the industry can blithely move forward as if this hiccough never happened. Remember, nearly three-fourths of respondents said price was an issue (even if they still continue to shell out the dollars). Will this matter long term? We tried to measure whether concertgoers resented coughing up a few extra bucks to the ticketing agencies like Ticketmaster. This was my students’ idea since they wince when they see the per-ticket fee they pay each time. Sure enough, 70% of people agree that ticketing agencies “make a fortune.” While that sounds bad for TM, fully 67% of concert attendees prefer to buy their tickets from Ticketmaster, largely for online convenience.

What’s the fallout for the facilities that will host the artists, their fans, and the tour t-shirt vendor stands? None. Evidently high prices, in combination with external events, can deter ticket purchasing, but it doesn’t generate long-term hostility toward artists, ticketing agencies, and although we didn’t ask about it, it’s reasonable to extend that free pass to venues.

The big question now is whether the industry will change. No one party will be motivated to correct the imbalances that are leading to higher and higher prices because no one party has to bear the brunt of consumer anger. Instead, you collectively felt it in the form of a temporary but painful slump in sales. Hopefully the memory of the 2004 season will inject some realism into future discussions of artist guarantees, promoter fees, and ticketing practices. Signs of progress abound. Industry giant Clear Channel has acknowledged price is a problem. Whether it and others will continue to sing that song once they get around the negotiating table behind closed doors remains to be seen.

James McQuivey is assistant professor of the college of communication at Boston University. He may be contacted at james@mcquivey.org.