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The Costly Concert: Ticket or Leave It

Sprinsteen and Elasticity

By Paul Farhi
Washington Post Staff Writer
Sunday, August 1, 1999; Page G01

Bruce Springsteen, legendary poet of the working stiff, is a flinty-eyed capitalist when it comes
to marketing his live performances. For his three sold-out performances at the MCI Center in
Washington starting later this month, Springsteen didn't leave much on the table: Better tickets
sold out at $67.50 apiece--or about twice what The Boss charged when he last played an arena
show here seven years ago.

Pricey as Springsteen is, he's no Cher. Her show (with Cyndi Lauper) at the Nissan Pavilion
in early July commanded a top price of $77.75. At least, unlike Springsteen, that included
parking.

It's not just beloved baby boomer icons like Springsteen, Cher or Paul Simon who are raking it
in during this, the peak concert season. Ticket prices are soaring for just about every act,
playing just about every kind of venue. Want to see Blondie? The re-tooled '70s pop hipsters
are getting $50 a seat. Boz Scaggs, whose popularity peaked in the Peter Frampton era,
commanded $35.75 for his show at the Warner Theater earlier this summer.

A three-day pass to Woodstock in 1969 cost $18 (though few actually paid anything to get in).
The same pass to last week's extravaganza-cum-riot cost $150, plus $20 in service charges.
That means the price of Woodstock tickets went up 2.5 times faster than everything else over
the past 30 years, as measured by the Consumer Price Index.

Indeed, concert ticket prices are bounding upward at inflationary rates that would seem
shocking even in battered Third World economies. According to a survey by Pollstar, a
magazine that follows the concert business, the average ticket price rose from $25.82 in 1996
to $38.56 during the first half of 1999. That's an increase of nearly 50 percent.

The big upsurge is a result of several immediate factors, say people in the concert business:

* The George Lucas Effect. A generation raised on MTV expects bigger, more elaborate
shows, with more lights, scenery, sophisticated sound systems and special effects. All that
drives up costs. When she was an opening act a few years ago, Reba McIntyre could contain
her entire show in a couple of trucks; now a train of tractor trailers follows McIntyre to her
arena dates, notes Ann McKee, Wolf Trap's vice president of programming. At the same time,
bigger shows mean bigger outlays for insurance, stage hands and radio and newspaper ads,
says Jack Boyle, music chairman of mega-promoter SFX Entertainment.

* Paying the piper. Performers are demanding, and getting, bigger upfront performance fees,
known as "guarantees." Bob Dylan and Paul Simon, for example, are being paid as much as
$500,000 per performance on their national tour, according to Billboard magazine. Part of this
is a result of the performers' rising costs--all those sets and tractor trailers, plus manager's and
agent's fees. And rising guarantees mean higher ticket prices--guarantees, after all, are the key
factor in how an artist (with the promoters' help) sets ticket prices. Little wonder, then, that
tickets to Barbra Streisand's New Year's Eve concert at the MGM Grand in Las Vegas range
from $500 to $2,500; Babs's reported guarantee is an astonishing $13 million.

* Competition among promoters. Independent promoters grumble that they're being outbid for
tour rights by the industry's new giant, SFX Entertainment. The New York-based company
has spent more than $1 billion in the past two years buying up independent promoters,
including Alexandria's Cellar Door Cos. for $105 million last August. SFX also has control of
venues across the country, such as Nissan Pavilion in Prince William County and
Merriweather Post Pavilion in Columbia.

With SFX's vast scale, rivals say the company is able to offer larger guarantees to ensure that
acts will play in its facilities. Wolf Trap's McKee says her facility lost one performer (whom
she won't name) to Merriweather Post because SFX was willing to triple the performer's
guarantee.

"We have ferocious competition because of . . . SFX," says Danny Zelisko, president of
Evening Star Productions, a promoter in the Phoenix area. "They have a battalion of talent
[bookers] for every tour that goes out. They [start] by asking, 'What's the most someone is
willing to pay for a ticket?' "

Not so, replies Boyle, SFX's music chairman. Though he acknowledges that prices have gone
up, he also says SFX has lowered some prices, too. "We've had all kinds of reduced prices,"
he says, citing two-for-one deals on lawn seats for Steve Miller's appearance at Nissan. Boyle
says concert patrons have greater choice since SFX introduced "tiered" pricing--five or six
different price levels, rather than just two or three. "Tiering has been our salvation," he says.

Boyle argues that price increases compensate both artists and promoters for years when prices
were relatively low. "The last few years have made up for all of those when the risk and
reward were so far out of whack," he says. "It was costing artists more to be on the road, and
promoters to promote, than made business sense. For several years, a lot of shows didn't
come to Washington because it cost so much to be here."

There's another, simpler explanation: Ticket prices are going up because people are willing to
pay more.

Concert promoters say that arena and amphitheater shows have been doing solid business this
summer (though typically only one in five shows sells out). That's a pretty good indication of
what economists like to call "price elasticity"--the idea that demand for a product remains
steady even as its price rises.

In addition to a roaring economy, which has created near-full employment and considerable
discretionary income, the pop music concert business is benefiting from some favorable
demographics.

Once, going to rock and pop concerts was a ritualized part of youth, a sociological (and
sometimes political) statement. Ticket prices tended to reflect the limited means of its dominant
customer base--the young and relatively poor.

Not any more. Baby boomers, the group that fueled the giant arena and stadium concerts
starting in the 1970s, are now in their prime earning years. They've got more to spend and
don't mind spending it to relive a little bit of their vanished youth.

It's thus hardly a surprise that among the highest grossing concert tours of the past five years
have been massive stadium shows featuring rock's dinosaurs--the Rolling Stones, Pink Floyd,
the Grateful Dead, Elton John and Billy Joel (co-billed), and the Eagles. The last group may
have broken through some invisible price ceiling by charging $85 for the best seats during its
1994-95 stadium tour, its first in 16 years. That now seems quaint. On their arena tour earlier
this year, the Stones charged an average price of $109.62, according to Pollstar.

What's more, the boomers seem eager--or at least willing--to indulge their children. It doesn't
particularly matter that most of the passionate fans of N'Sync aren't old enough to drive to the
group's shows; the quintet got a very grown-up $40.50 for good seats at its show at Nissan
last Wednesday. At Wolf Trap's souvenir booths, young people "buy everything," says
McKee. "The number of $50 and $100 bills that come out of teenagers pockets is just
astonishing."

With the market this good, some popular musicians have shown remarkable self-restraint.

Bonnie Raitt, Mary Chapin Carpenter, Annie DiFranco, and Peter, Paul and Mary are among
those who consciously set ticket prices below market value, say promoters. Offspring, the hot,
neo-punk band, has charged its youthful fans an average of $18.45 per ticket on its tour this
year. Tickets to the summer "Warped" tour, which features more than a dozen punk and rap
acts, go for around $25 each, though most of the tour's performers are lesser-known
ensembles (Dropkick Murphys, Black Eyed Peas, Lunachicks, etc.) who are working cheap.
Similarly, headliners at shows sponsored by radio stations, such as Baltimore's HFStival, also
work at below-market rates, counting on airplay to make up for lost fees.

Garth Brooks concerts are practically charity events. He charged $18 per ticket on his 1992
tour; on last year's worldwide swing, the price had risen to just $21. "They're $21 because
Garth Brooks wants them to be $21," says Gary Bongiovanni, the editor of Pollstar.

Which begs a question: If Brooks can charge $21 for his elaborately staged shows and still
keep himself in cowboy hats, how much good old-fashioned greed is built into, say, a $90
ticket?

Undoubtedly some, says Bongiovanni, who points out the here-today, gone-tomorrow
insecurity of the music business, and the desire of some performers to make as much money as
possible before that tomorrow comes.

"I think Garth views his concerts as a personal connection with his fans," says Bongiovanni.
"By forging a strong bond, he believes it will pay dividends for years to come, which will
translate into record sales long after radio abandons him. And I bet he's right."

Bongiovanni and others assert that musicians are also raising prices now to recapture revenue
lost over the years to scalpers and other "after-market" ticket "brokers." "The artists ended up
feeling like schmucks because some guy in the front row had paid $150 [to a ticket broker] for
a $30 ticket," he says. "That tells you that the public deemed the true market value was higher"
than the price the performer set.

However, ticket brokers have simply raised their prices, too. At the box office price of $67.50,
Springsteen tickets are a relative bargain compared with what professional brokers are getting.
The Top Centre Ticket Service in the District says its Springsteen tickets are priced from $150
to $500; Stagefront Tickets in suburban Maryland quotes Springsteen prices as high as $600
and as low as $85 for an upper-level seat that originally sold for $42.

Steep as the price spiral may be, SFX's Boyle suggests it's all relative. He argues that tickets
to other kinds of live entertainment have been inflating, too.

While that's generally true, nothing's going up as fast as concert prices. For example, a club
box seat to a Baltimore Orioles game has shot up from $25 to $35 in the past three years.
That's a solid 40 percent increase, but in percentage terms it's still less than what's happened to
the average concert. The top ticket to a big musical at the Kennedy Center has jumped a mere
11 percent, from $65 (for "Beauty and the Beast" in 1996) to $72.50 (for the current
production, "Titanic"). At a top price of $239, a ticket to the Washington Opera is indeed
expensive, but not much more so than in 1996, when it cost $225.

Ultimately, promoter Zelisko says, an unabated rise could be harmful to the music business, as
the fan base for live shows becomes limited to the well heeled and wealthy. Soon, he and
others say, a backlash will set in.

"Personally, I find it astonishing," to spend more than $100 for a pair of concert tickets, says
McKee of Wolf Trap, a nonprofit institution that has attempted to restrain its prices. "There
isn't that much I'm willing to spend that much money on. You add in the parking, the
babysitter, maybe dinner, and it turns into a major commitment. At some point, people will
say, 'I'll pay it this time. But if you're coming back next year, forget it.' "

Ticket Price

House Nut 38%

(amount that goes to the venue)

The Artist 34%

Ticketmaster 10%

Facility Fee 8%

(added onto ticket price)

Opening Act 7%

Taxes 3%

*Rounded numbers

The above example is from a Hootie and the Blowfish date at an amphi theater. The numbers
are percentages claimed of the $39 paid by

consumers: $32 for the ticket plus a $4 Ticketmaster fee and a $3

facility fee.