Concert Industry Bucks the Recessionary Trend
Tickets Sold Slip, but Higher Prices Fuel an Increase in Revenue; Madonna, Celine Dion Lead the PackArticle
By ETHAN SMITH
The concert industry has so far bucked the recession, according to year-end data from trade magazine Pollstar, but promoters are bracing for a bumpy 2009.
Box-office receipts from North American concerts through December were $4.2 billion, up 7.8% from 2007. But the total number of tickets sold for the 100 top-grossing shows fell 3%, to 35.6 million, the second consecutive year of declines. The growth in revenue was the result of rising ticket prices. The average ticket to one of the 100 top-grossing shows cost $66.90, up $4.83, or 8%, from 2007 and more than double the average price in 1998.
That could spell trouble in 2009.
"At some point, this rampant unemployment is going to hit the concert industry," said Randy Phillips, chief executive of Anschutz Corp.'s AEG Live, the world's second-largest concert promoter by revenue, behind Live Nation Inc.
Madonna, shown performing in Miami last month, had the top-selling tour of the year, grossing $105.3 million.
Concert-ticket sales are an increasingly important source of revenue for musicians, as recorded music sales continue to plummet.
Mr. Phillips, like others in the concert business, said he had been surprised by how strong demand remained through 2008 for most major tours, even after October's stock-market meltdown. But he also noted that fans had become wary of increasingly costly "cheap seats."
"We had no problem selling out the most expensive seats," Mr. Phillips said. "There was more price sensitivity on cheap seats than I've seen in the past." For instance, Mr. Phillips said, the $66 lowest-priced tickets on one tour, which he declined to identify, stopped selling in late October. When the company lowered their prices to $49, sales picked up again.
Nonetheless, it isn't clear that fans will see an across-the-board cut in prices in 2009. Michael Rapino, chief executive at Live Nation, said his company is trying to become more flexible in how it "scales" ticket prices -- making cheap seats cheaper and perhaps dividing them into more than the usual two or three price levels.
"I'm not sure the net ticket price will change," Mr. Rapino said. "But bands are making sure they have more tickets in their inventory priced lower."
Both executives said despite the uneven outlook, the biggest stars seem likely to weather the economic storm, based on early sales. Even in recent weeks, tickets have been selling briskly for 2009 dates by AC/DC, Britney Spears and Metallica.
"I was expecting Britney Spears to be the biggest test of my career," said Mr. Phillips, whose company is promoting the pop singer's first major tour since 2004. "But [the tour] was so hot, it just blew out."
Mr. Rapino said his company's projections for 2009 are strong across the board, from club dates to arena shows.
Some promoters are taking novel steps to ensure their events remain affordable. The promoters of the Stagecoach country-music festival, which takes place in April near Palm Springs, Calif., reduced prices on their general-admission tickets to $99 for a two-day pass, down from $175 last year. They are also offering a layaway plan, under which fans can make a 10% down payment and then spread the rest of the cost over several months.
Paul Tollett, president of Goldenvoice, the promoter behind Stagecoach, said: "With the economy the way it is, people want to go to the show. We want to make sure that they're able to."
Mr. Tollett's company also produces the alternative-rock Coachella Valley Music & Arts Festival on the same site as Stagecoach. He said prices aren't likely to be cut for that event.
Madonna had the top-selling tour of the year, grossing $105.3 million. Celine Dion was next ($94 million), followed by the Eagles ($73.4 million), Kenny Chesney ($72.2 million) and Bon Jovi ($70.4 million).
Madonna was also the biggest draw on the secondary market, in which fans and brokers resell tickets via Web sites like eBay Inc.'s StubHub. StubHub said the average price for a Madonna ticket on its site was $306, followed by the Eagles ($234), Billy Joel ($224), Bon Jovi ($217) and AC/DC ($210).
Write to Ethan Smith at email@example.com