After reading an article on Digital Music News online about the law suit against Clear Channel and its alleged monopoly which must have contributed to the rise in concert tickets, I begin to realize the importance of economics in every business sector. Below is a graph showing the rise in concert tickets from 1981 to 2005.
The issue at hand, as indicated by the article, is that Clear Channel, one of the largest players in the media communications field with ownership of multiple radio channels and parent company to Live Nation (an entertainment company based in Beverly Hills, CA) has been the cause of hiking concert ticket prices. This notion was supported by academicians such as Economics professor Owen Philips from the University of Wyoming.
As a consumer of music and average concert goer, I have realized a soar in concert ticket prices. However, I will not attribute this increase in concert ticket prices to monopoly alone. I totally agree with the author of the article that if Live Nation keeps lining up incredible artists, for concerts, they their increase in ticket prices can be justified by increase in demand. This is a basic rule of Economics (demand & supply). Increase demand in watching an artist in concert will definitely result to increase in charges to watch the artist in concert which could in turn result to artificial scarcity created by the ticketing companies such as Ticketmaster in order to profit from premium and priority ticketing. To a company such as Live Nation, this is just economies of scale where their cost per unit is reducing as more items of the product (such as tickets) are produced.
Considering the fact that the music industry is still experimenting with business models, I will not suggest hiking of concert ticket prices to be a good solution to long term profitability. Although the average ticket prices to attend a concert have been steadily rising, there is no equivalent performance of increase in concert attendance to substantiate the sustainability of such a business practice. Music consumers have since had multiple options to consume their favorite songs through platforms ranging from mp3 downloads social media sites such as YouTube, Vimeo and internet radios such as Pandora, LastFM, Spotify, etc. will concert ticket prices continue to rise? Probably so but I can foresee a continuous reduction in concert attendance in regions with high internet, TV and online media consumption. If I were in an executive’s position, I will focus the touring of an artist in locations that are not heavily connected to the internet.
By Gerard Ngwang
Reference: Digital Music News: http://www.digitalmusicnews.com/permalink/2012/120525tickets#H-KSzJLKgiWXOv8wzNUB2g