By Jim McCarthy Apr 7, 2010 6 comments

Why Are Tickets More Expensive? Because It’s All About Being There

A few days ago, Duke Law professor Richard Schmalbeck wrote an op-ed for the New York Times whose central thesis I would paraphrase as this:  in the past, tickets were much cheaper and the most important reason they are now expensive is that high-priced skybox tickets are partially deductible by businesses as tax write-offs.

As uninterested as I am in debating whether all, part of none of certain kinds of tickets should be tax deductible (ugh.  I’m glad there are people who are interested in debating this stuff and equally glad I don’t have to be one of them), it’s the larger point where I have a quibble.

Well, perhaps more than a quibble.

The professor starts by saying that in the past, bleacher seats for a baseball game cost as little as a dollar, and undoubtedly it is the case that at SOME POINT in the past, that was the price, but I would like to know the last date at which a bleacher seat for a major league baseball game cost $1 as an everyday price. If it was as late as the 1980s, I would be mildly surprised.

But speaking of bleacher seats, many major league parks have them for $10 to $15, and if you buy season packages, I have seen them for as little as $4 to $6 per game.  In terms of entertainment value per dollar, these are still pretty darn good.

Professor Schmalbeck also makes the point that the average ticket price for a Chicago Cubs game has increased 265% in the last twenty years, and I don’t doubt it.  It comports with every other piece of data I’ve seen across the live entertainment industry that suggests that the value of live entertainment is increasing.

And that’s where I take issue with the good professor’s analysis here.  He has more or less ignored the marketplace and the cultural shift that has occurred which is the real driver of the change in prices: people want live entertainment more than they used to.  They value it more because it is has more cultural significance to them than it used to, relative to other forms of entertainment.

Records used to be expensive to buy.  Now recorded music is cheap and free if you want to steal it.  Television programming used to be scarce and difficult to access; now it’s abundant and available on-demand in a dozen different ways.  Radio broadcasts used to be limited to what you could get locally, but nearly all the limits on the amount of available content has been blown away.  These things, by being cheap and ubiquitous, have become less valuable.  Not that people enjoy them less; they just place a lower monetary value on them.

By contrast, live entertainment has become the mark of quality.  Ethan Stock from Zvents says “reality is the ultimate luxury good,” and he’s right.  You’re not a Radiohead fan because you downloaded the mp3s.  You’re a fan because you went to the show.  That’s the mark of distinction.  Anybody can turn the Lakers game on; but only some people actually make it to Staples Center.

And do you think “Rent Heads” get excited about listening to the original cast recording?  No, it’s about being at the show.  Again.  And Again.  And again.

It’s about being there.

Here’s a short four minute video that walks through what’s happened to the relative value of live entertainment over the last few years.  I’ve shown it before, but sometimes it bears repeating:

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Reddit
  • Twitter
  • Yahoo! Buzz

6 Comments

  • Tweets that mention Live 2.0 » Why Are Tickets More Expensive? Because It’s All About Being There -- Topsy.com
    April 7th, 2010

    [...] This post was mentioned on Twitter by Jim McCarthy. Jim McCarthy said: Tickets to live entertainment are more expensive than in the past in large part because now, we all value "being there" http://bit.ly/acX0C7 [...]

  • John Loken
    April 8th, 2010

    Wall Street clearly agrees with you on the increasing willingness of consumers to pay a premium to consume unique live experiences. The post-merger Live Nation Entertainment is currently enjoying a P/E ratio of 86.44. At current share price north of $15, this means buyers are paying a 100% markup over book value. Clearly there is something at play here beyond cost synergies.

  • greg
    April 9th, 2010

    I couldn’t find your presentation on Ted.

    And your premise is unsupported by any data I have seen. According to the NEA, attendance at all arts events is down and other sources point out that sports attendance is also down over the last 10 years.

    Where would I find your precentation on Ted.com?

  • Jim McCarthy
    April 12th, 2010

    Greg, the talk’s not on the TED.com site, since not all talks go up, unfortunately. This is especially true of the TED-U talks, which is where I gave mine.

    They do roll out talks gradually though, so my fingers are crossed they’ll eventually put that one up there.

    A couple things about your comment. It’s certainly true that attendance in certain genres is in sharp retreat for reasons that we talk about here all the time, but your assertion that sports attendance is down is simply untrue. From ’93 to ’08, for instance, MLB saw average team attendance go up from 2.5 mm per year to 2.61 mm per year despite two things:

    1. A strong trend in the direction of smaller stadiums and
    2. A dramatic increase in prices.

    But to clarify, I’m not actually saying attendance is way up; I’m saying the value of tickets is up because it’s what people want to do. The NEA’s numbers to me reflect a really old-fashioned view of the world, specifically one that is centered on the traditional definitions of “the arts.” Cirque Du Soleil, for example, fits in nowhere as far as I can tell in their scheme of things.

    I’m also making a point about RELATIVE value. In the last decade, we’ve seen the live product overtake the recorded/broadcast product in value, as evidenced by things like Live Nation being far more powerful than record companies or the fact that PRS for Music identified last year as the crossover point where musicians in the UK (which is where PRS operates) make more money from live than from recorded, with the trend going strongly in one direction.

    I understand the confusion though…there’s a lot of bellyaching about people not going to classical music and other forms that used to be more widely attended, but that’s a function of those industries not keeping up with the consumer as much as anything. It’s certainly incumbent upon the live entertainment industry to capitalize on the fact that if given a choice, people want the live experience if they can get it.

    So I guess what I’m saying is that we’re at the cusp of an opportunity for the live entertainment business to take a leadership position because the desire is there in the marketplace, but it’s by no means a given that the industry will respond properly. I certainly hope it does.

  • greg
    April 16th, 2010

    Thanks for clarifying the TED presentation.

    I actually got my notions about sports attendance from an article on mlive.com, the first sentences of which I have copied below. I have no idea whether the author based her statements on fact. I also agree that the NEA numbers do not reflect the for profit arts world (for a broader view, I would refer you to “Research into Action”, a report from the Greater Philadelphia Cultural Alliance (http://www.philaculture.org/research/reports/research-into-action).

    And while orchestras are faring badly, the number of people who listen to classical music is up. I think the trends point to more people staying at home, partaking of entertainment in formats (usually electronic) that are more convenient and cheaper. In some cases “being there” is about being trapped in uncomfortable clothes, or in bad seats, or hearing music that is too loud or seeing work that is lackluster. It will be the venues and performers, companies, etc. that are producing at a very high level that will survive. For the others the temptations of the easy chair/tv remote will be their undoing.

    The economy, sports attendance and contracts
    By Sue Ellen Christian
    January 28, 2009, 11:05AM
    Attendance is down in every professional sport. Yet player’s contracts aren’t exactly contracting – in fact they’re growing larger than ever.

    During the NHL playoffs last year the Detroit Red Wings struggled to sell tickets. How can “Hockey town” in the playoffs not sell out every game? Why, now that I think of it, aren’t they sold out way in advance?

  • Jim McCarthy
    April 16th, 2010

    Greg, for every story of a team that struggles to sell out playoff tickets, there are a 1000 stories of bands and movie producers who can’t sell their electronic product.

    When live entertainment producers say they disagree that the industry isn’t well positioned, I ask them how they’d like to be in the record sales business or the commercial advertising business, and they change their tune.

    The thing is that I mostly agree with what you’re saying…it’s a heck of a lot easier to sit at home. But the point I’m making is that that’s something people accept as a poor substitute for the live experience.

    (and yes, sometimes the live experience isn’t good enough, and that is absolutely a challenge that the industry has to rise to. You’re completely right.)