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Resnikoff's Parting Shot: How Much Is Too Much?

Tuesday, June 29, 2010
by  presnikoff

Once upon a time, labels were great at selling lots of overpriced CDs.  Now, pockets of the industry are successfully selling high-priced concert tickets and premium packages to superfans.  But is there really enough money to go around?  Or is this a game to see who can plunder the wallet first?

At a top level, the broader music industry (whether recording, publishing, or live performance) is suffering.  But certain players are doing great!  Eminem and Jay-Z are struggling to satisfy demand for their combined gigs, where floor seats top out at $298 on ticketmaster.com alone.  Coachella sold out near-$300 three-day-only passes, and Bonnaroo nearly sold out its $275 general admission tickets.  

Of course, not everyone is doing so well. Live Nation is applying CPR with summer discounts and incentives to fill shows.  Lilith was forced to cancel dates, and once-strong attractions like Christina Aguilera did the same.  Sure, some gigs are better than others, and the story on Aguilera is complicated.  But consumers only have so much money, and that means that funds are getting focused on a smaller number of events - not a recurring stream of purchases and experiences.

That helps to explain the success of variety-happy festivals. Sure, ticket prices are huge, but so are the number of great acts.  But this goes far beyond live performance.  Trent Reznor famously made $750,000 overnight on $300 premium box sets.  And other artists got the memo!  

Arcade Fire, just profiled, is pushing a $44.99 combo-pack tied to its upcoming album, and that is mere small potatoes compared to the others.  U2 is offering lithograph posters for $100, the Eagles are hawking signed guitars for $2,500 (and don't even get started on premium concert packages from these guys).  

Other examples are not difficult to find, simply because superfans are often willing buyers.  And of course, far cheaper items exist from all of these groups, but the "super-fan super-price" represents a fresh, direct-to-fan frontier.

And so what?  Willing buyers and sellers, everyone is happy, capitalism at its best.  Except, what happens when a fan blows the wad?  Satisfies the obsession, but has no more left to give?  These are hard times, and the winners now seem fewer and farther between.  In fact, in the live sector, executives have been warning for years that overblown ticket prices are causing far broader issues for the sector itself.  It's killing the ecosystem, especially for smaller and developing acts.

The question is what happens over the longer-term, and how the trend affects up-and-comers.  Smaller gigs may become harder and harder to fill, and labels (and other entities) certainly have less cash to take risks.  Meanwhile, free recording acquisition - in huge quantities - is becoming the norm, while once-hopeful cash generators like subscriptions (Spotify, MOG, Rhapsody, whatever) and paid downloads are struggling to ramp.  

The DIY dream - which is yet to really pan out - is that smaller acts can grab a meaningful piece of the pie by transacting directly with their fans.  But what happens when fans are still hungover from the last spending binge - from months ago?  Or, are simply unwilling to pay even modest amounts for recordings?  Seems like high-priced success is only making a relatively smaller number of artists rich.  And that is a problem for everyone else.

Paul Resnikoff, Publisher

 

 



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