Industry Roundup

Nowhere is the inflationary cycle spinning faster than in concert ticket prices. The best tickets for performances by major pop and rock stars this summer will be priced in the low-to-mid hundreds. No, that's not a misprint, and it doesn't include "service charges" and other bogus fees tacked on by ticket agencies. Good seats for Eric Clapton's summer tour will be more than $250 each; similar seating at Simon and Garfunkel's "Old Friends" show at the Hollywood Bowl will go for $700, according to "Parsley, Sage and $350 Seats," a revealing look at skyrocketing ticket prices by Ethan Smith in the May 7 issue of The Wall Street Journal.

Smith points out that rock concert tickets last year cost "more than double 1996 prices," and in some cases 10 times what they cost in 1990, but neglects to note that they are approximately 100 times more expensive than they were three decades ago. Is there anything else that consumers can buy that has gone up at that rate? Smith attributes the escalation to "tiered rates"—the huge disparity between prices for the best seats and the cheapest ones, which exploits the willingness of affluent baby boomers to shell out big bucks to see their nostalgic favorites; to the fact that concert tours are one of the last remaining profit streams for the music industry; and to consolidation in the concert industry by heavyweights such as Clear Channel Entertainment, a division of the San Antonio–based radio powerhouse.

Rock concert revenue totaled $2.5 billion last year, a 19% rise from 2002, but the average number of fans per show is declining, down 8% year-over-year from 2002, according to Billboard. Combined, those two trends indicate that concerts for major acts are increasingly entertainment for the very well off, and not for those with practical caps on their disposable incomes. Clear Channel Communications, Inc., parent company of the concert division, posted an 11% rise in revenue and 64% rise in net income for the fiscal first quarter, according to a May 5 report by Dow Jones Newswires. Revenue was $1.97 billion and net income $116.5 million, compared to $1.78 billion and $71 million, respectively, for the same period a year earlier. A primary driving force for the gain was "double-digit growth in the company's outdoor advertising and live entertainment units."

Music unit lifts Bertelsmann's bottom line: Improved music sales by Bertelsmann Music Group (BMG) brightened the financial picture for Bertelsmann AG, the German media conglomerate. On Wednesday, May 5, the corporation reported profits of $37 million (€31 million) for the first quarter, a sharp reversal of the $473.8 million (€397 million) loss incurred in the same period a year ago. BMG and Sony Music have proposed a merger, now awaiting approval by the European Commission.

Connect takes off: On Tuesday, May 4, Sony launched "Connect," its online music service company, with a unique public relations stunt: an in-flight concert by Sheryl Crow on a United Airlines flight out of Chicago's O'Hare International Airport. The service claims more than a half million licensed recordings, available for download at 99 cents each or $9.99 for most full albums. Some critics have complained about Sony's choice of the "ATRAC3" audio compression scheme, which, in typical Sony fashion, is incompatible with most portable music players from other companies, including Apple's iPods. Sony's scheme allows downloads to be burned to CD a maximum of ten times, including five in the "Red Book" format, readable by all CD players.

Samsung flash players: On May 6, Samsung Electronics America, Inc. announced the introduction of the "world's smallest digital audio players," the YP-T5H and the YP-T5V. The new models have inboard FM tuners and few moving parts, using flash memory instead of miniature hard drives—128MB for the YP-T5H and 256MB for the YP-T5V. The players are said to be compatible with multiple audio formats, including MP3, WMA, and WAV. They also double as removable/transportable data storage devices that offer fast file transfer with a direct USB adapter. Power source is one AAA battery, sufficient to provide up to 15 hours of playback, according to a company press release. Suggested retail prices are $129 for the YP-T5H and $179 for the YP-T5V.

Satellite radio rolls on: Claiming 83% of all satellite radio subscribers, XM Radio predicts that it will have two million subscribers by the end of June, doubling the one million milestone reached in December 2003. XM also projects that it should have 2.8 million subscribers by the end of the year. Competitor Sirius Satellite Radio recently announced a change in its management team, separating the posts of president and CEO. Joe Clayton will remain as CEO, with two new presidents reporting to him: James Meyer, running operations and sales; and Scott Greenstein, in charge of entertainment and sports. Meyer formerly held senior management positions at Thomson Multimedia, RCA, and General Electric; Greenstein was chairman of USA Films, the movie production, marketing, and distribution company.

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