My Thoughts On Music (continued)

Steve Jobs isn't the only one pointing out what's wrong with the music business. Bob Lefsetz nailed the live music problem yesterday at the end of his End Of Innocence post.

Ever since I was in high school, concerts would be announced, tickets would go on sale, and the ones I wanted to go to would be sold out within minutes. This is the most frustrating experience and it continues to this day. Andrew and I were shut out of the Arcade Fire/Judson shows even though we were at our computers at 9am the day and minute the tickets went on sale.

So no big deal, go to StubHub or eBay and get them in the secondary market, right? Well that's not so easy because they've made the Judson tickets non-transferable. DRM for tickets now. Fuckheads.

So back to Bob who calls out this issue in the post I linked to at the top:

The LEGITIMATE ticket sales are DWARFED by the secondary market.  So now the agents are declaring war.  They want ALL the money, EVERYBODY’S money.  How dare these interlopers in the secondary market come and steal what’s theirs (and it’s a thuggish business, read this with all the wild west overtones you can.)

The reason that the legitimate tickets sales are dwarfed by the secondary market is you have to be in the ticket business for a living to get a legitimate ticket to the best shows these days. The average fan like me doesn't have a chance. So we go to StubHub and participate in an auction. This screws the artist who is like the company in the 90s that sold stock in the IPO at $10/share only to watch it trade instantly to $50/share, just because the bankers were in cahoots with their hedge fund clients.

It's time to make all concert tickets priced with an auction mechanism so that the artists get the benefit of market rate ticket prices and fans can buy the tickets directly. It's time to take the margin out of the secondary market by pricing tickets correctly at the initial sale.

Here's how Bob finishes his thought on the ticket problem:

While the concert business was arguing over guarantees, it lost touch with the true value of a ticket.  When shows became events instead of habitual activities, when superstars, mostly old and gray, ruled, when that’s all people wanted to see, those comprising the infrastructure didn’t realize the price of the ticket was secondary to access.  That a fan would pay WHATEVER IT TAKES to be inside the building, UP CLOSE AND PERSONAL!  Two thousand bucks to sit in the front row?  A blue collar employee called my radio show to say he’d paid $2500 apiece for Paul McCartney seats, to be within feet of the stage.  He didn’t own a home, he was still paying for his car, but he had to BE THERE!  Whereas whenever anybody sits in the way back, in the rafters, paying fifty bucks, they’re happy they’re there, but they’re PISSED OFF!  In other words, tickets need to be auctioned.  But this isn’t politically correct in the industry.  So, StubHub comes in to bridge the gap, giving people what they want.  The concert business hasn’t specialized in giving people what they want for years, is it any wonder that someone else swooped down and did?

The music business is so screwed up. They overcharge for music and undercharge for tickets. They handicap the sale of online music (the future) to protect the CD (the past). Thank god some artists have rejected the whole music business and are going it alone. That's our way out of this mess for sure.

Here's some hate mail to Bob Lefsetz from Clap Your Hands Say Yeah that shows the way forward:

Hi Bob,

As usual, I'm shocked by your attitude towards Clap Your Hands Say Yeah.  I'm convinced you haven't listened to their new record, and I'm saddened that the model created with this band isn't given more recognition by the one person who has called for all the changes we've actually put into practice.  To call what we're doing "IRRELEVANT" undermines every single email you send out.

"There's no buzz here, nobody cares."

I don't know what world you're living in, but I think selling 19,000 records in a week means lots of people care.  Maybe you're talking about that traditional buzz you're used to, the barrage of radio and video, snipes and singles, playing the game.  This is a band that's never made a video, never played with Nickelback at a radio show, never done all those things every other band is forced to do. The marketing/publicity/radio/video budget for this record is under $15,000.  They made a record, they put it out.  And they live much better than 95% of all bands I've worked with, including the vast majority of acts I worked with during my time at a major - all this while owning their masters and publishing, touring in a bus, and not being forced to do anything they don't want to.

http://www.youtube.com/watch?v=xUIsP23LTk0

You're so fond of using Pollstar numbers to prove people don't care about bands - go check out ours, from around the world.  You'll see the band has been headlining shows for a year now, and maybe 5 or so haven't sold out.  Check the numbers from last time they were in LA, two sold out nights at the Fonda.  Check out the numbers in Tokyo, London, Paris, Hamburg, Minneapolis, Boston, Chicago, Seattle....go look Bob, you'll see that people do actually care ALOT about this band.

Last year you made some list of 25 things that band's should or shouldn't do.  CYHSY had followed 24 of them, the one exception being that they played Letterman.  I can never fault a band for wanting to play that show.  It's fun playing on the same stage the Beatles played on.  But seeing as how we're pretty much your poster children, I'm amazed you don't show us more respect.

And go listen to their music.  You might actually like it.


Nick Stern
Manager, Clap Your Hands Say Yeah

I hope CYHSY starts auctioning off tickets to their shows. That would be great.

Comments

[CoryS]

What Prince did in his tour to essentially sell an album to every concert attendee made a lot of ripples, but hits at your point. If people that see a concert essentially have the right to own the album's music and the two are linked together - then there's at least compensation going for both parts of an artists efforts. That's what made the Dead and sharing their music great, right?

I agree that the model for live concerts and albums seems out of whack. I find as unfortunate that I can't watch my favorite bands perform live more often now that the internet is here. Why can't I get real-time entertainment at least on my PC in low quality form for a fee? Makes more for a venue, connects loyal fans with their bands and keeps the experience fresh rewarding the artists that do it.

[Jon Smirl]

In my world recorded music would be free for non-commercial use and artists would auction tickets for their concerts to maximize their income. If the artist wants more money, release some good music onto the Internet and let the informal buzz machine make it popular. Ignore the fact that the buzz machine is a commercial use and let it capture the Internet ad revenue. Then get out on the road and do some concerts while the people want to hear you.

The model of CDs at Walmart is dead.

[David G]

I think your criticism is on the wrong side of this issue (as it was with DRM). The fact that secondary markets are legal and that their bidding mechanisms are so effective is the problem here, it's not a solution.

Under your proposal, the secondary market would just bid the public out of the majority of the initial offering and further inflate prices on the secondary markets.

I also have a huge moral issue with a pricing philosophy on "the arts" that says "just let 'em bid it up". Under your proposal, only the wealthiest fans of each artist would attend their live performances. How elitist.

Rather, concert economics should work on a fixed price basis where the production of the show is optimized in the dimensions of total expenses, venue capacity, total run capacity and ticket price. Concerts should seek to attract their maximum audience at an optimum return, not their maximum price. Taking this back to capitalism for a moment, the additional branding benefits of maximizing your audience size instead of your ticket price should be obvious.

Please rethink this.

[jeremy]

fred,

ticketmaster released an auction mechanism a few years ago. unfortunately its not used by major artists.

[Ken Berger]

The comparison between the stiffed bands and the stiffed IPO'ers is beautiful, and in theory a Dutch auction, etc, might well be the way to better serve the band side of the equation a la ticket revenue.

But it doesn't seem to best help the fanbase.

An auction solution will favor the more moneyed and the older fans (not to mention the more Net- and Ebay-tactic-savvy), not necessarily the "best" or "truest" fans, every time.

A solution would seem to be for the band management and bookers to develop a better sense of demand and book bigger venues or more dates, right? You think it's bad in NYC, try living as an alt music fan in San Francisco, a major music town known for such fickle tastes that promoters are reluctant to take a risk, and therefore generally under-book (undersold concert losses can kill revs from multiple soldout shows). If a cool band plays 4-5 nights in NY and LA, SF might get them for a night or 2 at Slim's or cafe du nord.

Also, re DRM'ed ticket policy, benefit of the doubt could be given that the motivation is a contra-scalper attempt. I could see smart people making that choice w/ good intentions. BUT the more informed (readers of this blog, for example) know it's a flawed model along the miscalculations of music DRM. Hopefully the powers that be will draw the same conclusion as Jobs and realize the same lesson.

[Jon Smirl]

I think the auction model would serve fans just fine. If the concerts keep selling out and the tickets get bid up, increase supply. Simply have move concerts until the price drops to where the band wants it to be.

Who is restricting the supply of live concerts? The bands or their management?

[John Dodds]

The fact that "The LEGITIMATE ticket sales are DWARFED by the secondary market" does not legitimise the secondary market. It is the problem - if scalping is eliminated then the distribution of tickets becomes far more equitable.

[jackson]

Here's your cake, wait, I know I've got a fork for you somewhere, I know you'll want to eat it too.....

[Greg Cohn]

Having looked at the concert & venue ticketing industry a bit, I think you're absolutely right - flat pricing screws the artist by leaving enough money on the table to fund an entire secondary industry. On the other hand, managing auction-model pricing and distribution isn't as simple as it sounds for all but the hottest of artists (for example, at a large venue that would typically sell tickets at a rate of sale per week). Airline-style yield management might be unpalatable to consumers - imagine paying double what the guy moshing next to you paid, from the same official source?

One specific problem is that certain tickets never seem to hit the market. Supposedly all 30,000 seats at a stadium venue come online at the same time, but nobody I know ever gets the really good ones. The assumption shared with me by people inside the industry is that brokers have offshore bot buyers that soak up so much of the inventory so instantaneously that mortals never have a chance, and that they also have access to privileged information about when certain blocks of tickets are released.

The way these deals are currently structured, there's no real incentive to wipe out this kind of fraud. More transparency in this process would be a really helpful start.

[Mitchell]

blah blah blah....no commas allowed.

more money than good ideas.

Got Idea?

[Sean]

Jackson, re: your comment: "One specific problem is that certain tickets never seem to hit the market. Supposedly all 30,000 seats at a stadium venue come online at the same time, but nobody I know ever gets the really good ones." You have nailed the real issue here. All the good tickets are already gone before the public onsale. But it is not the "bots." That is just BS spread by managers and promoters and Ticketmaster to direct you away from the fact they are dealing all the best tickets to sponsors, friends of the band, the fan club, the venue suite holders, the radio station, American Express, iTunes, etc. Saturday morning 15 minute presales are just to sell the leftovers to the masses. That this is happening is obvious when you connect the dots. It's just a more interesting story for the industry to spread urban legends about brokers hiring homeless people to sit in line instead.