Some Economic Facts of Pop Concert Life
October 17, 2002
From 1996 to 2001, the average cost of a concert ticket rose 62 percent, while the Consumer Price Index increased only 13 percent.
Is that the result of a near-monopoly in concert promotion? Clear Channel Communications, the giant multimedia conglomerate, now promotes two-thirds of all concerts -- by dollar sales. While concert prices are up, ticket sales are down. Yet economic analysts find little evidence of monopoly pricing.
Is it the result of greed among performers? Again, the evidence is slim.
Are ticket scalpers to blame? Research conducted by Princeton economist Alan B. Krueger establishes that only 27 percent of tickets to a recent Bruce Springsteen concert were purchased through a scalper or ticket broker, or over the Web. So that doesn't appear to be the cause.
Krueger suggests the cause lies in the growing ability of fans to download music from the Web -- legally or illegally -- which has cut into artists' revenues.
- That has resulted in fewer records sold and, consequently, lower recording income to performers.
- In the old days, concert prices were kept below their market rate to help sell albums.
- Now concert prices are set with an eye to maximizing concert revenues -- thereby making up for the fall-off in recording revenues.
"There is some empirical support for this hypothesis," Krueger writes. Jazz and blues fans are probably less likely to download music from the Web than are fans of rock or pop. Since 1996, prices for jazz and blues concerts rose 20 percent -- but 74 percent for rock and pop performances.
Source: Alan B. Krueger (Princeton University), "Economic Scene: Music Sales Slump, Concert Ticket Costs Jump and Rock Fans Pay the Price," New York Times, October 17, 2002.
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