Scarcity

"When you assemble artisans and create scarcity that results in a supply/demand imbalance, you generate a cash volcano that you can cap the same way you do an oil well — and turn on/off as needed. Businesses are either supply-constrained (e.g., rare earth minerals, 1945 Château Mouton wine, etc.) or demand-constrained (pretty much everything else). The companies that trade at the greatest multiples are those that are artificially supply-constrained, where the supply/demand imbalance puts a dial on the spigot the managers control. Imagine the decision to have more revenue is just a function of when you'd like more revenue (see above: Hermès)."

That's the concert business. It's predicated on not filling demand. Sure, Garth Brooks has gone in the opposite direction, playing in a market until demand is satiated, in the process keeping ticket prices low, but he can only do so in one market at a time, inherently constraining demand.

This is the essence of the big time concert business. You can't get a ticket! What could be better. There are only a limited number available and how are you going to get yours. Are you going to join the fan club, sign up for a credit card, become a verified fan, log on at 10 on Saturday morning... You want to go, you need to go, but the bottom line is everybody can't.

So it must be somebody's fault.

Believe me, concert tickets were always in demand. But like rare records once the internet came along light was shined on the whole process. There was more information. There was StubHub, suddenly you could see that you were competing against professionals, and the odds of you getting a ticket were low. You felt frustrated, it had to be somebody's fault. But certainly not the acts'. The acts were trustworthy and inviolate, someone else must be at fault.

And all the acts complaining about the death of recording royalties... Turns out it was the best thing that could ever happen. Because now your music was freely available to everyone. Literally on YouTube, at a de minimis cost on Spotify, et al. And if you had notice, demand was greater than it had ever been in history. Think about it. For decades there were few stadium shows, the demand was not there. Now there is a plethora of stadium shows, because of overwhelming demand.

Not to mention that there's a slice of acts making a fortune on streaming. Not to mention that many acts complaining couldn't even play, couldn't get their recordings released, couldn't create live demand, in the pre-internet era. As for the endless sea of product, the end result is there is a thin layer of luxury brands that have become ever more desirable, that people will pay a fortune to see. Certainly the oldsters, like the Stones and the Eagles, never mind McCartney, but newbies too, like Beyoncé and Taylor Swift and Bad Bunny. Demand so far exceeds supply that these acts' images are burnished, paying dividends for their entire careers. Come on, how many stories have there been in the press about the inability to get Taylor Swift tickets? It seems to be easier to meet the President!

And then there's Lady Gaga. Who continued to sell tickets without any hits. She had her original slew, but until "A Star is Born" she hadn't had one in years, but people still bought her tickets. What a business!

Even better, if you need some cash, you just put up some shows, demand seems to be endless.

The ticket frenzy is akin to Birkin bags. Or even Rolexes. Rolex limits supply. During the 2008 recession they repurchased watches to ensure they were not sold at a discount, hurting the brand. And now you can't buy a Rolex at retail, unless you're very connected. Third parties buy them and the flip them online, at a premium. Just like ticket scalpers. Are people mad at Rolex? Of course not, they love Rolex. They're mad at the third parties. Meanwhile, in truth Rolex could make more watches, but it doesn't want to! Because the virtuous economic circle would be devastated. If everybody can buy a Rolex what is it worth? It's devalued.

When it comes to concert tickets, the enemies are Ticketmaster and the scalpers. Talk to anybody in the business, the acts love to blame Ticketmaster, that's what the company is paid for. As for acts bitching about the ticketing company, it reminds me of when Jay Leno took over the "Tonight Show." He kept saying he wasn't preventing stars from appearing on competing shows, and then his manager, Helen Kushnick, took him aside and said..,.

"I've been serving you steak dinners for almost eighteen years, I just haven't bothered showing you how I slaughtered the cow."

The acts are ignorant. Get them to talk about publishing and recording royalties, it's laughable, they've got no clue. They're just sure they're being ripped-off and it's somebody else's fault. That's why there's a music business, because without it the acts would never break, and would be broke, all those people behind the curtain actually do something.

And it's not only the acts, some of the managers are clueless too. If your act has been off the road for a year or more, don't negotiate without calling your attorney, your agent, getting up to speed on what is happening in the marketplace, otherwise you're going to negotiate to your detriment.

As for Robert Smith and the fees... That was a screw-up by Live Nation, by labeling the money as fees. AEG just baked the cost into the overall ticket. I mean who can go to see the Cure for twenty bucks, I mean really. If I told you you could buy a Birkin bag for a grand would you believe me? Or a Rolex for the same price? You'd think something shady was going on, and you'd be right.

This is the essence of the music business, supply and demand. This is why we're in the heyday. It's only going to get better, for the act side of it anyway. It's going to get harder and harder to get a ticket, especially as live experiences continue to be treasured, one of the non-digital, non-commoditized items out there.

As for the value...

You're a fan of the Yankees, you watch every game on TV, are you entitled to a cheap ticket? Of course not! It's the same with a band. Just because you stream their music every day ad infinitum, that does not mean you're entitled to get in the building at all, never mind for a cheap price. That doesn't square almost anywhere, certainly not when demand far outstrips supply.

That's the goal of touring, to leave people wanting more. To make sure there are never tickets available, that every gig sells out. This stokes demand down the road. If there are empty seats then the image of the act is impinged, and people think they'll be able to get a ticket in the future, assuming they want one.

So demand keeps going up and ticket prices keep going up and sure, Zach Bryan is keeping prices low, but getting tickets is nearly impossible. And there are always outliers, like Garth Brooks, but they are not the mainstream. Why work that hard and not make the bucks?

And you don't want someone else making the bucks off you, ergo the scalpers. Platinum, etc... They exist because demand is so damn high! The act just wants to capture some of the income that would otherwise go to the aftermarket. At least Bruce Springsteen owned it. And when the Boss does so, it makes it easier for everybody else. Do you see any Taylor Swift fans complaining that tickets are too expensive? No, they're thrilled to be in the building at all, having a once-in-a-lifetime experience.

Go to the grocery store, and buy milk, or chicken, it's there every day, and it's relatively cheap. You don't buy it and thank your lucky stars you could get it and then go home and spend hours savoring it. But if the producers limited supply... Wow, chicken prices would go through the roof!

But they can't get away with it, food is seen as a staple, people need to eat.

But they don't need to go to the concert, they're not entitled to go to the concert, it's a luxury good, and priced accordingly! And the prices are so high only because people want to pay them!

The above quote is from Scott Galloway, you can read the complete screed here: https://www.profgalloway.com/scarcity-2/

In the piece Scott also says:

"This trend highlights what has got to be a first-ballot-hall-of-fame strategic head-up-your-ass decision: Do away with one of the great artisanal brands of the 20th century, HBO."

You see Galloway is in branding 24/7. Zaslav is like an act that goes on the road every three years. He doesn't know the landscape. So he's out of the loop and making a big mistake.

Believe me, the insiders in the touring business know exactly what they're doing. And they don't want you to know how it all works, just like Hermes and Rolex don't want you to know how they limit production to keep prices and image high.

Ultimately, demand outstrips supply, there is mania, people spend time talking and hunting for acquisition. Those who get the product, the tickets, are seen as stars, ultimately making the product even more desirable.

That's the game. Don't think you can break it. Because you want to go to the show...

And so does everybody else.


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