Image Source: The Age.com.au
Over the last 10 years the music business has resembled the “boy” in lyrics from any of the countless number of songs written over the years about “boy meets girl,” “boy loses girl,” and/or ”boys falls back in love with girl.” The music industry has been in a tailspin since 1999 (coincidentally the same year Napster was spawned). The advent of peer-to-peer services caused massive music piracy and, with free music just a click away, proved to be the direct blow that would send CD sales plummeting and ultimately crippling a once very profitable industry.
However, the music business seems to have bottomed out and actually managed to grow over the last two years (the entire British music business grew 5 percent from 2008 -2009). One way it has managed this is by returning to its roots – live performances. When I attended my first concert, (Ozzie Osborne – What was I thinking?), I had no idea at the time Mr. Osborne, for the most part, was touring as a way to market his new album. Although I would like to think the bands I saw back in the day were there because they truly enjoyed playing live (I’m sure some did), the concert was more of a live commercial to promote their new albums and get people to buy them.
These days’ bands are touring again to cash in on booming ticket sales (with top acts commanding over 100 dollars) and are laughing all the way to the bank as they play in front of sold out crowds. “Many of the acts selling out stadiums are old,” says Rob Hallet, the president of international touring at AEG Live. The top three American touring acts last year were U2 (average age: 49), Bruce Springsteen (61) and a double bill of Billy Joel (61) and Elton John (63). All have contributed to a surge in ticket prices – tripling from $1.5 billion in 1999 to $4.6 billion in 2009. It’s not that more people are going to live performances, but rather paying more per ticket. According to Pollstar, a research firm that tracks the market, the average ticket price should be $35.30 today if they increased in line with inflation. Instead the average price of a ticket costs a whopping $62.57.
Bands not only are relying on live performances. They also are looking to alternative revenue streams to help mitigate the drop in CD sales, such as merchandising, sponsorships, online streaming and emerging markets. One area that is booming is publishing. Music’s best customer is television “Watch any evening’s worth of TV and count how many times you hear music in the background,” says Jeremy Lascellas, chief executive of Chrysalis.
If the music business could figure out a way to share a synergistic relationship with the Internet, other forms of media and entertainment can surely learn from their long strange trip. Although the music industry is relying less on CD sales and more on alternative revenue streams – one thing is certain: people continue to pay a premium for quality content regardless of whether it’s coming from a 3-D movie screen ($20 average price per ticket in New York) or Mick Jagger’s 67 year old vocal pipes.