Winners take all in rockonomics By Robert Plummer
BBC business reporter
As Madonna fans in the UK know to their cost, tickets for rock and pop concerts keep getting more expensive.
The price of a seat for the London gigs in the singer's forthcoming Confessions On A Dancefloor tour ranges from £80 to £160, with an additional £13 booking fee.
Judging from e-mails received by the BBC News website, there are plenty of people who are prepared to pay. For every person denouncing the ticket costs as an "outrage", there is a fan who feels the show is "worth every penny".
Of course, veteran Madonna-watchers will be used to such high prices by now.
It's been just two years since her Re-Invention tour, which saw UK tickets selling for up to £150 and grossed $125m (£71m) worldwide - more than any other star's concerts that year.
In fact, Madonna is one of the key beneficiaries of some powerful economic forces that have re-shaped the world of live music - for better or for worse.
Since the start of the 1980s, the superstar effect has become more pronounced in rock and pop, with a small number of performers taking an ever larger share of the spoils.
Research into the market in the US, where the trend started, has found that in 1982, the top 1% of artists received 26% of concert revenue. By 2003, that figure had gone up to 56%.
Rock professor
Over the same period of time, the cost of US concert tickets has been outpacing the country's inflation rate.
From 1981 to 1996, gig-goers found prices going up by 4.6% a year, while the consumer price index increased by 3.7% annually.
Since then, ticket prices have soared. From 1996 to 2003, they rose by 8.9% a year, as against inflation of just 2.3%. Similar sharp increases have been noted in Europe, including the UK.
These insights come from the work of an economist at Princeton University in the US, Alan Krueger, who has been described as "the world's first and foremost professor of rockonomics".
He based his conclusions on an analysis of information provided by US trade publication Pollstar, which has collected data from venue managers since 1981.
In a paper he wrote with Princeton graduate student Marie Connolly, he says concerts are now a much bigger source of income for major-league stars than CD sales.
"Only four of the top 35 income-earners made more money from recordings than live concerts," the paper says. "For the top 35 artists as a whole, income from touring exceeded income from record sales by a ratio of 7.5 to one in 2002."
Businesslike
Professor Krueger told the BBC his interest in the subject began when he took his father to the US Superbowl in 2001 after buying tickets on the "secondary market," as he put it.
"I had to pay $2,500 a ticket, but the list price was just $325," he said.
A newspaper article that he wrote about his experience brought him to the attention of Pollstar, which gave him access to its database.
He soon found out that rock concerts and American football games were subject to the same market forces. Both had become more businesslike over the years, he said.
"Early on in the entertainment industry, it's in the interest of the business to think of themselves as throwing a party, not selling a product. I think they attract more of a following that way," he said.
"But over time, the industry takes more the form of a market and is driven by market forces. The Superbowl initially felt like it was rewarding its fans. But then it becomes established and the League finds it in its interest to push up prices."
'Bowie Theory'
But why has the rise in ticket prices been so sudden? Professor Krueger says there is no simple answer - but one explanation could be what he calls "Bowie Theory".
He points out that sales of recorded music fell from 1999 to 2002, causing artists' income to decline. He believes record sales are down because many potential customers frequently download music free from the Web or copy CDs, either legally or illegally.
Professor Krueger said his view had prompted a mixed reaction. "I got some critical e-mails. There are some people who are big defenders of the free availability of the internet. But the general reaction that I got has been agreement."
Before the advent of illegal downloads, artists had an incentive to underprice their concerts, because bigger audiences translated into higher record sales, Professor Krueger argues.
But now, he says, the link between the two products has been severed, meaning that artists and their managers need to make more money from concerts and feel less constrained in setting ticket prices.
Professor Krueger says this tendency was spotted by David Bowie, who told the New York Times in 2002 that "music itself is going to become like running water or electricity".
Bowie has advised his fellow performers: "You'd better be prepared for doing a lot of touring, because that's really the only unique situation that's going to be left."
Creativity
These days, the biggest concert draws tend to be performers such as Bowie, the Rolling Stones and Paul McCartney - artists whose latest albums are often greeted with indifference, but who can still make money by singing their greatest hits.
Does that mean an end to creativity in popular music? Not necessarily, says Professor Krueger.
"It should lead to more creativity in terms of live performances," he says. "A concert is more than just an artist at a microphone. Look at all the light shows at a U2 concert."
And, of course, the increasing sophistication of such shows is another factor putting upward pressure on concert ticket prices.
But as Professor Krueger points out, the internet is ultimately going to lead to even bigger economic changes in the music industry.
"There will be a good deal of shaking out. There will be new modes of distributing music - more diversity and more competition. But technological innovations continually cause change, ever since Edison. The industry has to change and it is changing."
