Tickets

Why Are Concert Tickets So Fucking Expensive?

Believe it or not, even at $100+ bucks, you’re actually getting a bargain

You probably wince every time you buy tickets to a big concert, right? It’s amazing that it costs all that money just to stand next to a bunch of drunk strangers and gaze at a famous stick figure in the distance, who’ll hopefully sing all the songs you’ve spent so much to hear in person. Why does this experience cost so much? And why are scalped tickets even worse? 

We crunched the numbers with the help of two experts: Gigi Johnson, executive director of the Center for Music Innovation at UCLA’s Herb Alpert School of Music, who teaches a music industry fundamentals class and a class on how to create a great live experience; and Ralph Jaccodine, assistant professor of music business and management at Berklee College of Music. Down in front!

Okay, why is the price of a concert ticket so extortionate?

It’s not, actually.

Er… what?

Economists don’t agree with you!

How can they possibly not be considered expensive? It costs $69 (nice) to squint at Taylor Swift from the back of the arena, or hundreds of dollars to go to Coachella.

Are you sitting down? No, really, are you? Brace yourself: Economists actually think they’re vastly underpriced.

Stop it.

Seriously. Freakonomics did a story about this in 2017, but here’s the gist: Ever notice that tickets on the “secondary market” (meaning scalped tickets) are usually much more expensive than the ticket’s face value? That’s a bad sign. In economic terms, we’re talking about the difference between the selling price (face value) vs. the market-clearing price (the actual value of the ticket, when sold by a scalper). This discrepancy is the fertile ground in which scalpers operate — profiting off an inefficient economic system in this way is what’s known as “rent-seeking behavior.”

It all cuts to the heart of the sacred economic laws of supply and demand: When demand exceeds supply, people will pay a lot more for something. And people vastly underestimate, in many cases, the demand for a concert experience. The scalped tickets generally represent the true amount that people will pay; if they didn’t, scalpers would find something else to do!

Why is there such a huge difference?

“Many artists would like to seem egalitarian,” Johnson says. “So in agreeing to do a show, they will agree on a price structure. They don’t want their fans to feel ripped off, so oftentimes the ticket prices are established at what an economist might see as below-market.” 

The problem is that someone else swoops up all the discrepancy in value when tickets are priced artificially low. Many artists have tried to combat this: Taylor Swift simply tried to price hers at a market rate to begin with ($900 for VIP tickets). Garth Brooks and Ed Sheeran just play a lot of dates. Adele tried selling hers only to real fans. Chance The Rapper bought back tickets from scalpers himself a few years ago.

So artists get a say in how their concerts are priced?

Yes — they tend to set the terms with the promoter (via the artist’s agent) and then they get paid either an up-front fee, or depending on the deal, maybe they agree to take in, say, 85 percent of the revenue. “But then the artist would take on the risk of the event,” Johnson says.

It’s all negotiable, and these days, Johnson says, part of the allure and the challenge of the streaming era is that all sorts of data about who is listening to a certain artist is available, depending on who owns the data. Turning streamers into fans who will pay for a ticket to see a show is the next big trick for artists, and to that end, there are all sorts of VIP experiences nowadays that go way beyond the meet-and-greet — oyster bars, pre-show receptions, goodie bags, even seats in hot tubs near the stage.

Alright, fine, tickets are underpriced. But they’re still expensive. How come?

Because people (especially profligate Baby Boomers) will seemingly pay any price to witness dinosaurs play the same songs they got high to and had sex to as teenagers or whatever. Particularly for top artists, touring is now their main source of revenue. Look at basically everyone on Billboard’s annual Money Makers list: At No. 1, Taylor Swift earned $99.6 million in 2018, of which $90.5 million came from touring (pretty easy to do the math on that one). To a lesser extent, Twenty One Pilots, at No. 31, made $14.7 million in total, of which touring earned them more than half of that: $8.6 million. At this end of the music business, touring is by far an artist’s main source of income. 

But touring is crucial for most every artist in general. “In most cases with the artists I manage and work with, performing live is what keeps artists in the game, making money and spreading their music,” Jaccodine says. “Playing live enables most artists to monetize and share their music in an effective way. Live performance fees and merchandise from those performances is usually 80 to 90 percent of my artists’ income.”

Is this reliance on touring income due to record sales being in the toilet?

Kinda, yeah. Johnson cites a survey of 5,000 musicians done in 2012 by the Future of Music Coalition: only six percent of their income came from recorded music. But even in the pre-Napster days of peak CD sales, artists only made a couple bucks from the sales of each CD — approximately 5 to 10 percent of each sale. Not a dramatic change! The difference, of course, comes from the fact that artists made much more money overall because they were selling many more CDs than bands do now. 

Jaccodine says that “without a doubt,” artists rely on performing more than ever to earn a living. It’s hard to pinpoint what size venue or how big you have to get to earn a living (and it’s practically a cliche that scoring a record deal can sometimes lead to financial ruin), but there are many other ways that small or midsize musicians can add to their income: Jaccodine points to publishing, songwriting, instructions/lessons/workshops, video monetization and branding and sponsorship opportunities as examples.

It feels like concert tickets are getting more expensive all the time, too.

Yes, concert ticket prices are rising. According to the Fader, they’re outpacing inflation by a lot — that’s because shows are getting elaborate and there are tons of vendors to pay, but even with the price of tickets, sometimes, really big artists don’t break even! Kid Rock took a pay cut. Muse loses money on tour. We hear crazy stories about how much U2 makes from every interminable tour they embark on, but that’s not always the reality for artists. 

It all sounds like a terrible business model.

You have no idea.

Go on…?

Basically, what the artist wants is very different from what’s best, economically. Every artist wants to sell out a venue — it’s an obvious mark of success, there’s more energy, yadda yadda yadda. But if a show sells out in, like, 10 minutes, that’s a clear sign that demand far exceeds supply. So either the price was way too low, or the venue is way too small. An economist would have a fit over this.

Where do Ticketmaster and other ticket vendors fit into this? They seem like pure evil, with the service fees and all.

Yeah, about that. Not to leap to the defense of a company as monopolistic as Ticketmaster here, but they play an important role in all of this, to everyone: Ticketmaster is the flak-catcher. In other words, part of their actual responsibility is to absorb the slings and arrows of y’all. They’ve testified about this publicly.

Christ.

It’s true! Those administrative fees? Ticketmaster doesn’t hog it all for themselves. They can go to anyone — the promoter, maybe even (whisper it) the artist. It’s a sneaky, backdoor way for everyone to make the numbers work and a great way for the artist to have their cake and eat it, too: They get to set a low initial price for their fans’ perception, then blame the big, bad corporation when their fans complain about the service-fee markup.

Johnson won’t say too much about this, due to the fact that her knowledge on this topic is both secondary and unofficial. “There’s many things going on,” she says with regard to service fees. “My understanding is that quite a few people have different opportunities with the ticketing prices, and I cannot say anything else on the record.” Jaccodine adds, “Every tour, every venue has their own deals with ticketing companies. These are often confidential situations that try to spread the love to the venues, promoters and oftentimes the artists.”

Where do scalped tickets come from?

Bots are a huge problem, obviously. Ticketmaster has tried to combat this with Verified Fan, where you have to prove your identity when you purchase. But according to experts, everyone is making money off the secondary market. You realize that promoters and artists usually get their own ticket allotments, right? After all, everything is negotiable in these matters. 

So do promoters and artists sometimes quietly reap the benefits of the secondary market? 

“Yes, this is known to be true,” Jaccodine says. Let’s also be clear, though: Scalpers don’t always make a killing. Sometimes they lose money: Remember Desert Trip, aka OldChella? Tickets with face values of about $350 to $400 were marked down by more than 50 percent on StubHub at one point. It’s a case in which the initial price was more in line with demand, which probably made economists everywhere smile. 

Just so I get this straight: Those expensive concert tickets are undervalued?

Yes — and they might even cost more, Johnson points out, if it weren’t for the increasing presence of corporate sponsors: the brand of airline, bank, beer or vodka that wants to be seen as cool to a large, highly targeted, engaged and captive audience. They help defray a lot of the cost of a show or festival. 

Here’s something else you can do if you’re not up for paying a lot of money to go to a concert: See another show for a lot less money. There are many local concerts going on wherever you live, most nights of the week. Maybe you haven’t even heard of the artists playing, but that’s okay — try broadening your Goddamn tastes a little, wouldja? 

According to Johnson, live music, outside of certain areas like L.A., is actually dying. “In other cities, the number of venues is dropping gigantically,” she says. Part of her job involves working with cities to find ways to get people off their sofas and out into their own community to see live music. The average person, she says, only sees three concerts a year (it’s only a small proportion of the population who buys most of the tickets), and if everyone just saw one more per year, it’d have a huge effect on the music business, which these days is largely made up of average folks scratching out a living.

So if price is confining you to your sofa and your streaming service of choice is keeping you from getting out of the house and experiencing more live music, just remember that concert tickets are actually a bargain, all things considered.