Friday, February 1, 2008

Rockonomics or Why Does It Cost So Much to Go to a Concert?

Ever wonder why concerts are so darn expensive? I sure do and decided to dig around the Internet and see if I could find some explanations.

I came across an article in my Internet search that seems to make a lot of sense. The Economics of Real Superstars:
The Market for Rock Concerts in the Material World is by Alan B. Krueger of Princeton University. In this paper he points out that concert prices rose 82% from 1996 to 2003 while inflation rose 17% during the same period. Wow!

Mr. Krueger’s tentative conclusion is the price rise is due to the “…erosion of complementarities between concerts and album sales because of file sharing and CD copying”. I guess the hypothesis is that because of digital technology and the Internet, artists (especially the superstars) have been losing revenue and they make it up by boosting ticket prices.

Music is as popular as ever; it is just that technology makes it ubiquitous to the extent nobody feels the need to pay. Concert goers are the ones who have to pay the freight as a result.

2 comments: said...

I'm going to see U2 3D Saturday which most of the critics say is as close to being there as possible.

For a boomer, if I can pay $15 bucks, park close, and be warm and dry, that is better than close for me. That's perfect.

If other bands start following this lead it could bring more revenue to them and keep ticket prices from skyrocketing even more.

VintageP said...

Close, warm, and dry are great points. I noticed an ad for this last time at the theater and didn't really focus on it. It makes sense and will be interesting to see how this pans out.

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