I hate Clear Channel, I hate Ticketmaster...

Not true. Since 1990, concert attendance has dropped steadily every year. The rising cost of tickets is one of the major culprits. In the 80's, a band that sold half a million records could play the Compaq Center and draw enough attendance to warrant the rental. Today, a band that sells 2 million CD's may not be able to sell out Cynthia Woods Mitchell Pavillion - a difference of over 6,000 in capacity.

Increasingly, bands are playing smaller venues which has dramatically increased ticket prices. In 1987, you could buy floor seats for a good concert for about $25. Today, those same seats will run you closer to $75.

Remember that record companies hold little if any stake in touring. Most record companies only care that CD sales are high. The money made from tourning goes to the band and the promoter. The label sees none of it.

As a result, Clear Channel and Ticketmaster have cornered the market by putting bands into smaller venues (enticing them with higher revenues driven by sponsorships rather than ticket sales) and driving up the cost of tickets. The band loses money on their percentage of ticket sales and some on merchandising (even though they are encouraged to hike up the cost of t-shirts, etc because the promoter gets a cut of that too) but they make it back from the tour sponsor AND they know that they can look good by "selling out" venues even though selling out a theater is quite different from selling out an arena.

The end result is a net loss for the consumer and music fan. The demand for tickets has decreased and so has the supply, yet the cost has increased.

 

So the band is part of the problem. They want to get paid too.

People also like going to a smaller, more intimate environment. I have had several friends say they'd much rather see a show at Verizon Wireless Theater than the Compaq Center. Part of the venue selection is reaction to the market.

 

Yes, the band is part of the problem. No question, however, they are less a part of the problem because their cut is so much smaller.

True, a lot of people do like smaller venues, but they didn't move to smaller venues at the behest of the fans. They moved there because they could charge much higher prices, cut costs and guarantee sellouts which look good to other bands looking for a promoter and, for the bands, looks good in marketing and promotion. No consumers demanded smaller venues.

The truth is that they can cut the cost of tours in half, produce nearly twice the revenue while servicing a much smaller group of people.

A small venue reduces costs dramatically. Things like sound and lighting, crew, venue rental, staffing for the venue, etc. are usually cut in half. So, even if you cut the number of tickets sold in half, you can still make about the same amount of profit per show assuming ticket costs remain the same.

The problem is that, with smaller, more intimate venues, the demand for tickets doesn't really increase but the supply most certainly does. As a result, they can charge more for the tickets because their are fewer available - basic supply and demand, guns and butter type stuff.

So, if they increase ticket prices to an average of $60 dollars, that is doubling profit by reducing the number of seats available. For the consumer, that means less opportunity to see the band you want AND the cost is higher when you do.

 

Jeff--

I don't deny any of what you are saying, but you really kind of proved my point. The band, promoter, ticket seller...everybody wants to make as much money as possible. That is why tickets cost so much is that everybody wants a cut. It isn't just Ticketmaster (which was the point of this thread).

Given that everybody is looking for as much money as possible it supports my point that all will accept less and prices will drop when demand drops to a cretain level. The market is out of equilibrium. Given proper time supply and demand will always meet creating market equilibrium.

 

I don't necessarily think that is true. That may be true if you are talking about apples to apples comparisons. If given the opportunity, most people look for the best, least expensive option when buying a car, cheese, satellite television, plumbing, etc.

The problem is that Clear Channel and Ticketmaster own basically the entire segment of the market. No one has a choice. They can't choose where or from whom they buy tickets. The market is rigged in favor of the companies.

As a result, your choices are go or don't go. If it was only one artist, it would be one thing. But they are hitting all artists in every demographic. As a result, they always find people who will spend the money.

Thing is, it is getting worse. They now own more than 4 times the number of radio stations as their nearest rival, they own the largest segment of the outdoor advertising business and they own the only nationwide ticket broker. Put these businesses together and you effectively close down the free market to anyone who would attempt to enter.

All competition either gets bought or run out of business and CC swallows up their market share.

That isn't capitalism. That's an ologarchy.

 

Then provide an alternative. Build the better mousetrap. Pace Entertainment did it years ago...and now Clear Channel has done it.

 

That's right. The choices are go or don't go. If it is consistently getting worse, then at some point, people won't go. At that point prices will drop in an attempt to get people out to the shows. The market will find a way back to equilibrium.

 

Isn't there a point, though, that the market becomes so far out of balance and the company controlling that market so large that it is anti-capitalistic in nature?

If Ticketmaster were selling tickets to ONLY the circus, for example, I could understand. People get tired of paying high prices for the circus and stop going. However, this is a constantly changing product. If tickets don't sell to one artist, they have 30 others they will be able to profit from. If this company controlls the ticket sales to every single market - concerts, the circus, theater events, musicals, sporting events, etc, that is WAY out of balance.

In addition, they own nearly all of the vehicles of promotion for these concerts. Need a radio station to promote it or a billboard? They own them. This goes well beyond consumers simply declaring they won't pay any longer.

What you are suggesting is that consumers never go to another event promoted by Ticketmaster. You would have to wipe out practically the entire sports and entertainment industry to do that. At some point, the burden on consumers to fix an industry that has gone way out of whack is simply too large and the lack of competition in that industry is so bad that someone has to cry foul and call Ticketmaster what it is - a monopoly.

 

I see that this is a problem. But isn't the FCC the proper governmental entity to deal with it? I don't think that antitrust is the way to go here.

Assuming that this is true, it will be met with a resounding so what. There are many monopolies which exist legally in the US. In most markets, cable TV is a government franchised monopoly. Regardless of where you live you have ONE cable company you may do business with. The city seels them a franchise and BOOM...instant monopoly. You can bring up DirecTV, etc, but really...they're not in direct competition. If you want the service (haha) and clarity regardless of weather you must go with that ONE cable provider. It's the same thing.

What we are talking about is entertainment. While I am pro-competition, it is very difficult to feel a real sense of urgency because somebody doesn't want to spend another $7 on concert tix. I understand that it is important to some people. I understand that it seems unfair. What I am not sure of is whether or not Ticketmaster has ACTUALLY violated any of the express terms of the Sherman antitrust act. If they have, then a prosecution can, and should lie. If not, then they have really broken no law and there is little that can, or should be done about it.

 

The United states Department of Justice can take action of its own volition on these issues. It did with Microsoft.

 

True, but in a monopoly, the supplier has ultimate control over the supply curve. Generally speaking, it is in a monopolist's best interest to limit the supply and keep prices high.

I am not denying that Ticketmaster or CC have the right to make a profit, but a monopoly, especially one with such overwhelming vertical integration is not going to work.

I don't see your point - as far as I am concerned, they are in direct competition. If my cable bill goes up by 10-15%, I will switch to satellite - that keeps my cable provider in check and he has to remain competitive. If I want to buy Rockets tickets I can only use Ticketmaster.

 

I wish they would...I paid $66 for $40 worth of tickets to a spring training game. Legalized scalping - plain and simple.

 

Even in that situation . . i have other options. . . sports bars. . . .group of friends pitch in . . .concerts are very different.

Rocket River

 

Well. . . not true. . because the monopoly stays intacted. They decide whether to lower or not. . . they will do it for a moment then they will raise them back up.


Equilibrium would be a competitor. ./ . not the monopoly still in control.

Rocket River

 

It is simply amazing to see the twisted economics in this thread. People...economics 101 tells us that even in a monopoly situation with luxury goods that the market WILL find its way to equilibrium. Where monopolies are especially deleterious is in necessities (food, etc). Will a monopoly cause finding equilibrium to take longer? Yes...but it will happen. It's simple economics folks.