so much demand

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Hey! It’s wild that Bob Iger is returning to Disney as CEO. I’ve seen people compare it to Tom Brady’s short-lived retirement, or Michael Jordan’s NBA retirements. But Jay Z is the better comparison.

Iger’s first farewell tour was like Jay’s lengthy goodbye leading up to The Black Album. The Bob Chapek era of Disney, which Iger partially oversaw, was like Kingdom Come. Now it’s on Iger to comeback with Blueprint 3 and pass the torch to his successor with Watch The Throne.

Today’s memo is about how demand for concert tickets has grown sky high. The Taylor Swift - Ticketmaster situation is a symptom of a dynamic that’s been brewing for a while. Let’s dive in.

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how concert demand has skyrocketed

Mariah Carey was one of the best-selling artists of the 1990s. She had one of the all-time runs. Her music was everywhere… except for the live stage.

That decade, she only performed seven U.S. shows as part of her 1993 Music Box Tour. Seven! There are plenty of reasons for her limited showing. She had a controlling and abusive ex-husband, concerns over vocal strain, and a bit of stage fright in those early years. But the music industry was focused on album sales, which made it easier for a star of her magnitude to limit time on the road.

When she finally toured again in the U.S. in 2000, the average ticket price was less than $60 for a 19-show tour that sold just over 100,000 tickets.

Fast forward to 2022. Taylor Swift crashed Ticketmaster’s website for an upcoming tour that will be attended by 30 times as many fans as Mariah’s 2000 tour. Those fans will pay up to three times more on average for their tickets.

The Taylor and Ticketmaster debacle has been broken down at great length. But how did we get here in the first place?

The decline of CDs drove more attention to the stage

In the 90s, the music industry’s main goal was to sell more CDs. Those hefty marketing budgets for MTV-era music videos were a sign of the times. Concerts were also seen as a way to push album sales, but those budgets didn’t rise until CD sales declined, piracy grew, and the live entertainment sector consolidated.

Concert promotions were run by local businesses until the mid-90s when SFX Entertainment rose to power, bought 80% of the regional promoters by the year 2000, sold its business to Clear Channel, then spun off the promotion business as Live Nation in 2005.

At this point, a few trends converged:

• Artists wanted to make money again given the decline in CD revenue
• Live Nation wanted to be more profitable (before the 2009 Ticketmaster merger)
• Secondary market data showed that consumers were willing to pay more for concerts
• A cultural shift to valuing experiences over material items (accelerated by social media)

This laid the groundwork for artists and promoters to spend more on their shows to justify higher price points.

The grand upscale to meet the demand

Today’s shows have better lighting, grander stages, more wardrobes, and better production than in the 90s. Mariah Carey’s recent Christmas specials make the video footage of her 90s tours look like a high school recital.

But even if an artist wants to keep their concert low stakes, they may feel pressure from fans due to heightened expectations of other flashy shows from top artists. Cardi B has talked at length about her decision to put off touring. The production needs to look right on that Instagram clip of the first show. Otherwise, a less-than-stellar video uploaded by a fan will hurt ticket sales. And to justify an expensive production, Cardi would need to sell a lot of tickets at a high price.

It’s similar to how the wedding photography business transformed before and after social media. Before, a well-skilled photographer with modest equipment could make a great living. But in the Instagram era, many customers are willing to spend more money to have their special day look like Nick Jonas and Priyanka Chopra’s wedding.

Sure, not every artist has to follow this. As former Billboard editor Bill Werde points out, Pearl Jam has set its own prices at affordable rates. But Pearl Jam is a legacy Gen X rock band with a majority male audience in their 40s and 50s. Those fans don’t care how impressive Dua Lipa’s Future Nostalgia tour looked in comparison. The bare-bones concert stage is harder to pull off for a woman artist with a majority millennial fanbase.

As Bloomberg’s Lucas Shaw said, Taylor Swift is “selling you a cashmere sweater, not a Gap hoodie.” It’s her right to offer a high-end experience. From her public disputes with Spotify, Scooter Braun, and record labels, she has set out to earn top dollar from her music, especially if bigger companies would otherwise earn money that she helps generate. Her capitalist position is understandable, especially in music. If artists don’t push for what’s theirs, no one else will. But like any decision, it comes with tradeoffs.

The decision that most artists need to make

If artists keep ticket prices lower, then more of their superfans who aren’t as rich can attend. With the verified presale technology available, resale opportunities can be limited. But the drawbacks are that lower revenue will put pressure on the artist to keep production costs low. That means that the artist’s show may not keep up with peer artists who still have lavish productions and may make more revenue as a result and capture more headlines. It may be a tough pill to swallow if the artist knows they left money on the table. That pop star ego is real.

Alternatively, if artists keep prices higher to match demand, then the artist can maximize their profit per show, spend less time on the road, earn more money to put toward other interests-- and address all the downsides listed above. But this creates a concert experience for the fans most willing to pay, not necessarily the most passionate fans. I bet there are many Swifties who are in the 0.5% of her Spotify listeners, who have already memorized every lyric to Midnights, but couldn’t snag a ticket.

Demand will continue to exceed supply

Adele did not set her Las Vegas residency ticket prices to start at $750, but that’s where the secondary market has priced it to match demand. Plus, residencies are already destination events that most attendees will likely pay several thousands of dollars for the entire weekend’s cost.

Unless the most popular artists in the world are willing to spend their lives on the road (which they wouldn’t want to do), then demand will continue to exceed supply. Even if Taylor Swift did a 10-show stadium residency in 10 different cities, there would still be a gap. The demand won’t change whether they are sold on StubHub, or if the artist does dynamic pricing. People will still want more regardless of which party captures the value.

The Taylor Swift and Ticketmaster fiasco was bound to happen. Would more competition in ticketing improve it? Maybe. But SeatGeek also had issues with the shows it had direct sales for. Would Taylor Swift charging less limiting resale have helped? Perhaps. But she seemed set to break records with this tour, and that’s hard to do that if she leaves money on the table.

It’s an imperfect market. Artists will always want to do it big. Fans want to feel special by being part of a unique experience that not everyone can attend. This isn’t an NBA game where fans have 41 opportunities to see their favorite team play. Your favorite artist may not be back in your home city for another four years.

A lot of folks in the sector are working on improvements to handle the demand for future shows. But the underlying issues of supply and demand aren’t changing anytime soon. Especially if artists and promoters keep investing more into the live experience.

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