Thursday, April 2, 2009

Musicology 300: The cost of ticket prices

***Before you read this, please KNOW that I don't intend to be all-knowing and don't want to get pinned for libel. This is my soapbox and I'll present some ideas for you to consider. Some ideas are parallels based on facts, some are only meant to provoke further thoughts, and some may be solely personal opinions.***


I have been a booker for nationally touring bands. I have worked with promoters and venues both large and small, and know the basic (if there is such a thing) run-down for ticket prices vs. venue takes vs. promoter takes vs. a performers paycheck. Being involved in another side of the biz and watching politics play out can turn your stomach, as it does mine quite often. It's business though. Don't believe me?Keep in mind that Disney On Ice, The Wiggles, and Hannah Montana...they're businesses, not just performers aimed to make you smile.

It was three weeks ago and I bought a concert ticket to the Bluebird Theater in Denver for $10. Why did my bill come $19? Nearly another 100% markup in fees after the initial cost. I also bought a Bruce Springsteen ticket for over $100. This time, I paid only $25 (hey genius, that's 25% in extra fees). Why? Again, no two concerts you may go to have the exact same payment agreement between the several parties possibly involved. But let's take a look at a few scenarios as to where your money may be going when watching The Jonas Brothers rock your soul (God forbid).

The possible players in the game or combinations thereof:
The performer (band members/artists, manager, label, business team)
The Promoter (think Live Nation, AEG Live or maybe an in-house person that works for the venue)
The Venue (Staples Center, Fillmore, Moe's the bar around the corner)
The Ticket seller (Ticketmaster, IronHorse, Live Nation, venue doorman)

-First, the easy scenario-
Scenario 1: You go down the street, enter a 21+ pub and pay a $10 cover to hear your local jam band cover Phish's "Bouncing Around The Room." The venue holds 200 patrons. If this show sells out, someone is going to have to distribute $2000 in door sales. Pending the agreement between the booker/promoter, the band and the venue, the money can be split several different ways. Sometimes, the band will take ALL of the door money, the full $2000. The bar owner may love this as the band can be happy and sell out his bar/venue for the night and the bar owner can take home all bar sales. 200 people x 2 drinks each = nearly $2000 for the small bar owner. Out of the $2000 the band takes home, maybe 3%-10% will go back to the original booker who landed them the gig. The remaining amount in the band's pocket still has to cover their manager's fee, gas, hotel, travel, etc. Hmmm. Other times, their may be an incentive for the band to round up people to come if the bar owner doesn't think they can sell the place out. Maybe this time the bar owner tells the band they can have a guarantee of $500 vs. the till (till = bar sales). Meaning, the band gets their $500 even if three people show up - OR - they get the total bar sales if it is over the $500 mark. This scenario would probably assume that the bar owner has control over ticket/door sales, right? Or maybe the owner gives them door sales vs till. Why would the bar/venue owner choose to do one of these scenarios? Well, when it's a guarantee/door sales vs. till, it seems that the weight of driving fans into the venue shifts between the owner/promoter/band/ticket price, right?

Ok, that's a lot to think about. Let's get to the big players like Elton John, U2, Celin Dion, Bruce, Miley Cyrus and thei big promoters like AEG Live and Live Nation.

-Second, the rough scenario-Again, this is just an example of what MAY OR MAY NOT take place on a given concert performance deal given the parties and combinations involved.
Scenario 2: (actual concert stats courtesy of Billboard, issue: March 7, 2009) Elton John performs at Caesars Palace for 10 shows. Promoter: AEG Live/Concerts West. 8 of the 10 shows sell out. The capacity of the venue is 37,538. Tickets range in price at three levels: $250/$175/$100. The GROSS income of those 10 shows (8 sellouts) is $5,365,772. 10 days, $5 Million = good business plan...maybe.

OK, Ok. You let's JUST SAY you bought your ticket for $100 and let's say that you bought it from Ticketmaster who charged you another $25 in convenience charges. Not too "convenient" huh? How is this huge sum split up? Maybe I have no clue. But let's roll with my lack of brain...

ACDC - Money Talks

A/typically, the promoter (AEG Live) will enter the agreement with a 90/10 breakdown with the artist and venue. This common industry practice tells us that 90% of the box-office gross goes directly to the artist and their team. The other 10% comes back to the promoter (AEG or Live Nation or whomever). Ok, ok, that's cool...$500k for the promoter and $4.5+ Million for Elton John for a tough 10 nights of performances. Now what? Well, there are lots of practices that can take place here. Often, it is Live Nation or AEG Live that has to take the big gamble or monetary swing on whether the show is a success (pulls in enough $$$). Huh? Well, what if a huge snowstorm hits? What if the band leader gets caught selling cocaine a few days before the show and no one shows up in protest? Enter insurance fees that the promoter often pays. The promoter also helps dictate ticket prices. They know how popular the band is and how deep our pockets/love is. They also are the ones that choose and rent the venue, security, and personnel for the show. Sometimes, and yes, they're sneaky - promoters own their own venues (Fillmore/Live Nation). The promoters often front all fees wtih any given concert which even include advertising the show via radio, print, etc. So...just so you don't HATE promoters, they are damn important and have to be on their A-game in order to pull a successful show off. Plus, the artists NEED them too.

You see, promoters have a lot of weight and front a hell of a lot of cash to make a show. They need to re-coup this money. How? Sometimes, the promoter may enter into the agreement with the artist saying that they'll retain a certain percentage of all band t-shirts sold. AEG Live or Live Nation may also tell the arena/venue they'd like '__%' of all food and beverage sales. Hell, AEG Live or Live Nation MAY tell the venue they'd even like a percentage of the parking fees associated with the venue. In fact, promoters make most of their dough off of getting the masses through the door and banking on the fact that they/I/we buy food, merchandise, beer and parking. Where does the venue make their money? Well, on the percentage of the food/beer/parking they chose to keep AND their intial price that the promoter pays them to rent their establishment for the event.

Where does Ticketmaster and their convenient backrub of surplus charges fit in? Well, Ticketmaster can take care of all the ticket sales and present it to the promoter and tour manager nicely...with a huge check too. Ticketmaster has to make some money too here folks. They'll add a nice convenience backrub charge of $25/ticket. We already know the band will take 90% of each ticket sold and the promoter will take the last 10% of FACE value. Why didn't Live Nation or AEG Live sell the tickets and not add a surcharge/convenience fee? Well, that's another topic altogether which is changing right now...Ticketmaster and Live Nation are in a pending merger. But, hold your horses. Ticketmaster will keep part of that $25 convenience fee for their pocket and keeping track of all ticket inventory and the monetary transactions. The other part of the convenience fee goes right back to the promoter as a way of saying thanks for letting us handle the transactions for your event.

Ok, and again, just to stay NOT count these as absolute facts. What I've explained are practiced in combinations with several external factors and parties involved in each performance transaction. And...who the hell am I anyways...just a lonely blog writer. We DO know this: The Band needs a good promoter/booker and manager to get the right crowd in. And yes, we need the promoter and (oh God, shoot me) Ticketmaster to get into our beloved shows.

Is that enough?

Ok, one more thought. Back in the day, Live Nation (the promoter) was owned by Clear Channel, who owns thousands of radio stations. As we said, Live Nation also owns their own venues (so do other promoters, mind you). Do you think any political elbows rubbed closely or lines were crossed when a HUGE band let Live Nation/Clear Channel promote their show, dictate the arena and maybe, just maybe only let certain radio stations sponsor the show and receive in-studio promotional band performances?
Talk amongst yourselves.

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