Sure, today saw quite a few highly anticipated concerts in the news. But Forbes.com is seeing through those lineup announcements and sellout crowds and forecasting nothing but gloom and doom, thanks to—what else?—recent global economic woes. Layaway plans for pricey festival tickets are just the beginning!
Coachella, the annual rock festival near Palm Springs, Calif. produced by AEG Worldwide, recently announced it would offer a layaway plan for fans who want to spread out the $269 it will cost for a three-day pass. Like a department store pushing hard to sell furniture, the festival will let fans pay half now and the rest by April 1, or put 10% down with equal installments of $121.05 in March and April.
The business model has worked for StageCoach, the country companion to Coachella. Layaway tickets made up a quarter of all sales, promoters say.
Other festivals that offer layaway plans include the All Points West Festival in New Jersey, the Bonnaroo Music and Arts Festival in Tennessee, and the Rothbury Festival in Michigan.
None of it bodes well for the live music industry. Even if customers are able to purchase tickets, they may not be able to purchase high-margin items like beer and T-shirts at the venue. For example, Live Nation, the world’s largest promoter, loses 4% on each ticket sold, but makes 43% of its overall revenue from extra charges like parking and food.
That puts the company in a precarious place, analysts say. “Tickets are a luxury item that people cut back on,” said Alan Gould, an analyst at Natixis Bleichroeder in New York. David Kerstenbaum, an analyst at Morgan Joseph, agreed, saying, “The company is going to have to be very careful about its price points. They won’t be able to raise prices as much as they probably would have liked.”
Live Nation maintains customers are continuing to buy tickets because their typical consumer goes to just one or two concerts a year. The company says they saw little difference in ticket sales between 2007 and 2008, when the recession kicked in.
Artists, meanwhile, may be hit especially hard by any dip in ticket sales or prices. The upper tier of performers make 7.5 times more money from touring than from recorded music sales, according to a study by Marie Connolly and Alan B. Krueger at Princeton University.
Musicians have leeway in setting ticket prices but are often reluctant to cut prices. “They think ‘Well, so and so got that much, so I’m worth at least that,’ ” Bongiovanni says. “Until the public proves them wrong by not buying tickets, you’re not going to see an adjustment.”
So, public… are you planning on proving anyone wrong this summer? Or taking advantage of the (admittedly convenient) lay-away plans? I suspect that the low Albarn/Coxon quotient of the Coachella lineup will result in more than a few people suddenly realizing that they need to be a bit more budget-conscious about future trips to the desert, but I may be wrong, what with the Beatles Factor coming into play and all.
Concert Industry May Be A Bust This Summer [Forbes via TDS]
I couldn’t afford to fly to California for a music festival most years, but I do plan on buying tickets for the Merge festival in July immediately after they go on sale, no matter the cost. The fact that CH is a 2.5 hour drive is very alluring. Well, that and Superchunk.
It is nice that Coachella is setting up a layaway plan, but my un-employed self still cannot afford to go. I have to cut back on shows in general. I’ll most likely miss Bamboozle Left and I am definitely missing non-festival shows due to my own personal economic crisis.
“I suspect that the low Albarn/Coxon quotient of the Coachella lineup will result in more than a few people suddenly realizing that they need to be a bit more budget-conscious about future trips to the desert”
I comment way too much about Blur/Albarn on here don’t I?
Yeah, it’s a slight relief that Coachella isn’t what I thought it would be this year. I have zero self control when a band I really love is playing, so if Blur (or Bowie) was going to be there I was definitely going. It would have been great to go but if I was thinking responsibly it’s best to save the money.
That being said, I don’t really plan on cutting back my concert going too much (barring any change in my employment situation). I’ve already got tickets for Morrissey, Primal Scream, and Antony And The Johnsons. I’m also probably going to go to Lollapalooza again this year (since it’s down the street).
I think that the problem is going to be the lack of shows to go to. I’ve noticed a lighter live music scene here in Chicago, bands are going through money problems too and touring is expensive.
I will be setting aside a chunk of my tax refund for ‘09 concerts. I’ll be traveling for one or two I assume. These shitty times are no moment to stop throwing caution to the wind and enjoying oneself.
I do find big fests a bit of a rip off though…
Despite being unemployed, I plan to go to… well, every concert I feel like going to. Though I have no current income, I am aided by the fact that I have almost no material possessions- they’ve never been my thing- and the only purchases I ever make are games for my Xbox 360 (which I got for my birthday, and which I don’t buy games for until the games have been out for a while and dropped to $20) and concerts. So while not having a job completely sucks, I’m lucky that I can still keep my habits for the only two things- music and games- that I enjoy enough to actually spend money on them.
I plan on covering my Coachella costs by selling Ecstasy to raver kids on site. Can’t knock tha hustle!
It seems that most of the live music I see is of the much smaller scale; I probably haven’t had more than a half dozen actual paper tickets in my hand in the past year. Maybe more, I forget. Anyway, I’ve noticed that recently I’ve been seeing a lot, an awful lot, of last minute notices of cancellation, or venues looking for a band for tomorrow. Um, not sure if I’m still on topic, or why I’m up this early.
I probably won’t see as many shows as usual this year, but it’s only partly about money - we’ll be moving from the Seattle area to Eastern Washington (about 3 hours east of Seattle) in about a month, so unless it’s someone I’ve absolutely GOT to see (Prince, Van Morrison, a magically-out-of-retirement Bowie, or possibly U2 if the new material is worthy), I’ll be skipping most of the Seattle concert schedule. On the plus side, I’ll be much closer to the Gorge…
I am sticking closer to home, no trips to festivals across the country from me. I am in Tampa, so Miami’s WMC/Ultra will have to do along with a supplement of touring shows that will visit the bay area.
Even if the economy weren’t bad, I already blew most of my money on tuition and textbooks. Traveling to shows has never really been an option with my budget. And it’s not like this summer Chicago will be completely lacking in music options (even if, as Moomintroll notes, there may not quite as many these days).
So I guess I really don’t prove anyone wrong, unless somebody actually thinks broke college students aren’t cheap.
Wow?! Layaway for concert tickets?!
Yes, this is just the beginning from a fan/consumer side.
But what about the whole real estate side of things for the festivals?
With the whole Rothbury 2009 continuing to unfold, I wonder when more festivals will be running into the same issue.
[www.mlive.com]
@ owenmeany: I’m not even sure Ecstasy dealers will be making a profit at festivals this year. sorry dude :(