Smaller, less-expensive shows still work in concert industry's summer of 'doom and gloom'

Jam ticket revenue is down 8 percent to $29 million, Jam co-owner Jerry Mickelson says. But “we’re doing more shows overall and selling more tickets at lower prices. That’s because there are less arena shows and more theater and club shows.”

In a follow-up email, Mickelson wrote: “I am not saying that you can draw any direct correlation between Jam's results for the first six months of 2010 and Live Nation's since they control the outdoor amphitheater and indoor arena market. But I do see a trend in that there are less performers who can fill an amphitheater or arena and more acts that are performing in theaters and clubs.”

Jordan Kurland, a San Francisco-based artist manager whose acts include Death Cab for Cutie, She & Him and Feist, suggests one reason Chicago is weathering the downturn better than most cities is the level of fan sophistication combined with an active music media.

“Chicago has an educated, diverse audience that goes out to shows,” he says. “The fans are informed and enthusiastic, and that makes it a place that bands like to play.”

Gary Bongiovanni, editor of Pollstar, says the touring story for the summer needs to be read on two levels: “With few exceptions, arena and amphitheater shows are struggling, but the business has held up better at the club level, which is something we’re seeing across the country,” he says. “Tickets are more affordable at the club level, and it helps mitigate the fact that the economy stinks. It’s a lot easier to sell a $15 nightclub ticket verses a $200 Eagles ticket.”

The Eagles were one of several acts that had to cancel tour dates this summer. Live Nation executives Michael Rapino and Irving Azoff blamed the media for “scaring” artists from touring during an investors meeting in July, after Christina Aguilera and Limp Bizkit canceled entire tours and the Eagles, Rihanna, the Jonas Brothers, “American Idol” and Lilith Fair pulled the plug on numerous shows.

But industry observers say high ticket prices rather than news stories are the main culprit for the plunge in business at the arena and amphitheater level. Ticket prices have climbed more than 28 percent since 2005 for the biggest tours, before dropping this year to $60.77 from $64.61.

For smaller-scale bands charging a fraction of that amount, the story is different, says Tom Windish, a Chicago-based booking agent who works primarily with club-level acts such as Caribou, Delorean and Crystal Castles.
       
“The way people consume music these days on the Internet, it’s completely different than before,” Windish says. “Their (concertgoing) decisions are not based on a few huge artists, but a lot of different, smaller artists. The people seeing doom and gloom this summer are all about huge acts playing to 20,000 people a night for a high ticket price. But that industry is fading. There are a lot of acts out there making a great living playing to 500 or 1,000 people a night, for a price that doesn’t force fans to decide between paying for the ticket or paying their rent.”

Though summer is the most active touring season, it’s a complex landscape for promoters and agents to negotiate. Even in the best of economies, the summer touring glut gives consumers almost too much to choose from. For fans in Chicago, there are a bounty of choices, including street festivals and free shows in Millennium Park with national-level acts that cut into club attendance. Pitchfork, which books 45 acts each summer, and Lollapalooza, which hosts more than 100, also eat up a lot of local concert revenue. 

The office of Illinois Atty. Gen. Lisa Madigan has reportedly opened an antitrust investigation over Lollapalooza’s exclusivity clauses in artist contracts, restricting when and where festival bands can play competing shows in the Chicago area.

Lollapalooza promoters will not comment on the investigation, nor will Madigan’s office. But the festival has become a centerpiece of Chicago’s summer concert season. It sold out 225,000 tickets each of the last two years, and this year has expanded capacity to allow for as many as 285,000 fans to fill Grant Park.

The festival is seen as a bargain by many fans who attend, an opportunity to see more than 30 bands a day for $90 (or $215 for three days). This year’s acts range from up-and-comers such as Jukebox the Ghost and Nneka to headliners such as Lady Gaga and Green Day.
       
A few weeks ago, the Pitchfork Music Festival in Union Park sold out for the fifth consecutive year, with more than 50,000 people attending to see 45 bands over three days. Tickets, including single-day passes for $40, sold out weeks in advance.
        
“The economy is in the tank, people don’t have that much money to spend and concerts are overpriced,” says Pitchfork e-zine publisher Ryan Schreiber. “Each year when we do the (Pitchfork) festival, we ask ourselves, ‘What would I pay to see these bands? What seems reasonable?’ It’s not rocket science. It’s just common sense.”
   
To boost sales, Live Nation has cut the price of many of its tours, offering discounts and package deals to put more bodies in seats. Because the promoter owns many of the venues it books, Live Nation makes much of its income from ancillary revenue streams – parking, concessions, merchandise – while the artists keep most of the ticket revenue.

“Where they’ve run into trouble is booking too many shows,” Bongiovanni says. “There is only so much discretionary income to go around, and they’ve crowded the calendar with a lot of things that consumers just aren’t willing to pay that much for. The rampant discounting that’s occurring now is a short-term solution, but not in the long term best interests of the business or the artists involved.”

Live Nation executives told investors a few weeks ago they are looking ahead to a rebound in 2011, with acts such as U2, Kenny Chesney, Neil Diamond and Van Halen on the road. Jason Garner, the company’s CEO for global music, acknowledged that ticket prices must come down, though he put the onus on artists to lower their demands. Flexible pricing of tickets will become a bigger part of the company’s operating plan, with prices for seats fluctuating on an open market based on demand.

But will it be enough?

“We all have to revisit it,” artist-manager Kurland says. “We’re in an evolving economy and our relationship with technology is changing almost every month. The record industry has already changed drastically. The concert industry may not have to adopt a completely different model, but it’s clear that what’s happening now isn’t working anymore.”

greg@gregkot.com