The Value of Live Entertainment: Still Growing
The value people place on live entertainment continues to rise.
I don’t understand why people in the live entertainment business obsess so much about the increased cost of delivering live entertainment and think so little about the crazy upward trend in the price the market is willing to pay.
By looking back a few years, you can see this change very clearly. My example is always Bruce Springsteen. In 1985, I bought the Born in the U.S.A. album and, at almost the same time, I bought a ticket to the Born in the U.S.A. Tour.
The funny thing was, I paid about the same amount for both items: $17.50. Translate that $17.50 into 2014 dollars, and that’s $39. Now ask yourself: Are you (or is anybody) paying $39 for an “album” in any form at all? You can still buy Born in the U.S.A. today: It’s $5.98 on vinyl on eBay; $9.99 on iTunes; or, of course, free online in millions of places. You don’t even have to break the law to get it free anymore.
Bruce isn’t touring right now, so you can’t exactly buy a ticket, but ask yourself this: Could you get a ticket for $39? Possibly, but according to SeatGeek, the average price paid on the secondary market for Bruce Springsteen in the last 12 months is $202. So even adjusted for inflation, that’s an increase of five times over its value 30 years ago.
What else are people willing to pay five times more for today than they were a generation ago?
That comparison, you could say, is old news. I’ve been talking about it for years, but what if we use a more recent example? The US Open has in the last seven years seen the price it can charge for its tickets rise significantly. Jim Baumbach of Newsday pored over some data the United States Tennis Association (USTA) disclosed about revenue to show that USTA’s average ticket price rose from $110 in the olden days of 2007 to $142 in 2013.
Again, adjusting for inflation, $110 in 2007 equals $123 or so in 2013, so the real increase in value placed on the tickets of the US Open by the market was “just” 15.4%. Baumbach also cites increases in the ticket revenue of other major sports in that time period as being “only” 26, 21, 22 and 7 percent (which would be smaller if adjusted for inflation, but still very solid).
What else are people paying 15% more for than they did in 2007? *
There was a HUGE run-up in prices paid for tickets to live entertainment from the late ’90s to the late 2000s, in part because tickets were underpriced compared to how people valued them. That’s true enough. But I believe strongly, after selling millions of tickets to millions of people, that there’s something else at work here: People value live experiences more than they used to. It could be the simple fact that more and more of life is “mediated” or on a screen, and so by virtue of being scarce, a “real” experience is worth more. That’s a theory.
But if you’re in the business, it’s great news! The alternative is to be in a business where people place less value on what you do every year. How does that sound? If you’re not sure, ask someone in the recorded music business or maybe a travel agent.
Yes, some costs are rising, but that’s not the important part. The important part is that people are more interested, as expressed by their willingness to spend more. If you want more people going to more and better shows and events, that’s what you’ve got to focus on.
* Don’t forget that during the span from 2007 to 2013, we also had a major financial and economic meltdown. This is not typically a boom time for a luxury good like tennis tickets. Even more impressive.