According to statistics, the cost of a music concert tickets has increased by 400% since 1980, rising much faster than inflation. This is mainly because record sales have dropped significantly, and artists now rely on income generated from tours to make the bulk of their profit.
Promoters for large tours have been able to get away with this significant price increase mainly because the general public has shown no decline in their interest to watch live music. This is called an inelastic demand by economists, which means general demand is not sensitive to cost.
This strategy, however, may not be the best solution for artists that are just starting out. Artists that haven’t generated an audience through recorded media (radio hits), are not yet in a position to earn the same type of revenue from playing live.
When bands still made the bulk of their profit from recorded media, tickets were purposely priced at very good prices in order to reward fans for their loyalty and to make sure that the show was properly sold out. In 1966, it would cost you a total of $6 to see the Beatles play live.
By charging excessive rates for your live shows, you may end up deterring your audience base in the long term. This is because you haven’t generated a following based on recorded media and a radio presence.
There are a handful of benefits for offering cheap concert tickets.
- By focusing on building a strong audience base from playing live you open yourself up to better financial opportunities;
- Consistent performances will generate a fan base much quicker;
- Tours usually lose money at first, and some musicians never turn a profit from playing live.
When people pay a lot of money to go and see a concert, they expect to see some kind of return of value on their investment in the form of a good production. Reputable artists are in the fortunate position of being able to invest more money back in the production of their show, for example lighting, stage production, sound engineers, dancers etc. The ticket price has to justify a good show.
Artists that focus entirely on making a profit are eventually viewed as disloyal by their fans. Once you hit a certain price point, you’ve soaked up all the excess demand and your entertainment becomes subject to competitive alternatives like video games and alcohol. Taylor Swift fans were upset when ticket prices increased from $150 in 2015 to $500 for her most recent “Reputation” tour. Apparently, there are hundreds (if not thousands) of tickets left unsold for every show in comparison to her “1989” tour in 2015 which sold out within minutes.
