Deflation Hits US Summer Pop Concert Ticket Prices Hard

For those who wonder why, all of a sudden, the Federal Reserve is starting to talk about deflation, as we have been for MONTHS 😉 ,

look no further than the financial disaster the American pop concert scene confronts this VERY hot summer.

It has been a summer of hard sells and empty seats.

Despite sellouts for Lady Gaga, Justin Bieber and some other hot acts,

For those who wonder why, all of a sudden, the Federal Reserve is starting to talk about deflation, as we have been for MONTHS 😉 ,

look no further than the financial disaster the American pop concert scene confronts this VERY hot summer.

It has been a summer of hard sells and empty seats.

Despite sellouts for Lady Gaga, Justin Bieber and some other hot acts,

overall sales have been suffering, with prominent tours like the Eagles and “American Idols Live!” canceling dates.

Live Nation Entertainment, the leading promoter, has been trying to fill seats with fire-sale prices,

and in a recent presentation to analysts its executives promised that

grosses in 2011 — when stars like U2 and Christina Aguilera are scheduled to make up shows they postponed this year — would improve.

But while superstar acts draw headlines, the fortunes of the wider business are just as reliant on the steady drawing power of a much longer list of midlevel performers.

And interviews with fans at two summer concerts at New Jersey amphitheaters —

the Lilith Fair, a revival of Sarah McLachlan’s woman-centric package tour from the 1990s, in Camden, and the Goo Goo Dolls, at the PNC Bank Arts Center in Holmdel —

revealed some of the industry’s fundamental problems, including the basic head-scratcher of $10 tickets and $13 beers.

As with many of its shows this summer, Live Nation offered a range of discounts for the Goo Goo Dolls.

In June it waived most (but not all) of the surcharges for its amphitheater seats.

When large numbers of tickets were still left unsold, it began offering $10 tickets for shows on some Wednesdays.

Those promotions are expected to continue, but some in the business question

whether the pattern of high initial ticket prices falling to loss-leader levels in the days before a show

is training some consumers to avoid full-price tickets altogether.

Which is, of course, EXACTLY what is meant by a downward deflationary spiral:

If people think prices are going to fall, they hold off buying – either temporarily or permanently.

And that tempts sellers to drop prices even further –

a dynamic that may be great for consumers, IF they have cash to spend, but is bad for sellers AND the economy as a whole,

since it means that there is less overall economic activity occurring.

“How are we going to get people to buy tickets ahead of time next year when there’s so much deep discounting going on right now?” said Kevin Lyman, promoter of the Vans Warped Tour.

“At the venues they’re hawking $10, $20 tickets, and you see the kids saying, ‘Wait, I paid $40 for that ticket.’ They’ve lost the trust of the fan.”

For big tours, most of the money earned through the base price of a ticket — before surcharges — goes to the artist.

So Live Nation can afford to discount its tickets because it makes far more money through parking, food and other concessions, and through those fees.

At the Goo Goo Dolls show, beers were $11 and $13.

In a survey of a few dozen fans, most were unaware of the ticket discounts.

But Jay Milos, a corrections officer from Randolph, N.J., said he had made sure to wait for the right day to avoid paying a $12.50 fee on his $43.25 ticket.

“It’s a scam, the service charges and the fees,” Mr. Milos said.

“It would be smarter for them if they always sold them without those fees and then supplemented their income with advertising on the site.”

Pollstar, an industry trade magazine that reports ticket grosses from promoters, said

sales for the Top 100 tours were down by about 17 percent so far this year from the same period last year.

Attendance at the Goo Goo Dolls show was about 75 percent of the 16,000-person capacity.

But at Lilith Fair, which has canceled 10 of its originally scheduled dates, the turnout appeared to be far lower,

with about half of the inner theater’s seats and much of the lawn unoccupied, with capacity of approximately 25,000;

Live Nation has not yet disclosed grosses or attendance figures for those shows.

The weak economy is widely cited as a likely cause of poor ticket sales; base ticket prices as high as $200 don’t help.

But many agents, managers and promoters, as well as Wall Street analysts, also worry that

an overcrowding of talent in the marketplace and extreme changes in pricing can alienate consumers in the long run.

For lawn tickets to the next Lilith Fair stop, at PNC Bank Arts Center on Saturday, for example, the regular price is $37.75.

Live Nation was also offering a special deal of a pack of four lawn tickets for $75; with service charges they cost a total of $112.20.

But on Wednesday, when the company’s latest sale took effect, those same four lawn tickets were $40 flat.

With record sales down by more than half over the last 10 years,

artists have increasingly turned to touring for their income, leading many to tour too often, some say.

That wasn’t the problem with the Goo Goo Dolls, who are on their first wide tour in three years, or with Lilith.

But it is the case with many artists this summer, according to this article in the New York Times.

The band Creed, for example, is returning to many of the same amphitheaters where last summer it played to crowds as low as 27 percent capacity.

“The problem is that artists have been incentivized to tour more often, and they lost that scarcity factor that had been supporting ticket price increases,”

said David C. Joyce, a media analyst with the firm Miller Tabak.