Ticket prices for music festivals skyrocket … and the punters can’t get enough

The crowd enjoy the performance of The Flaming Lips at Splendour in the Grass 2009. Image: Sportsgirl

The announcement this week of the biggest-ever line-up for the Splendour in the Grass music festival underlines one of the most important trends in the music industry of the past few years: the triumph of the gatekeeper.

What do I mean by this? Literally, the importance of high fences and hulking security guards to the future of the music industry. As sales of recorded music have fallen since the late 1990s due to rampant downloading, the music industry has responded by transforming itself into a predominantly live industry. The result is  that music festivals and the live performance circuit have become more important to the economics of music than at any time since Edison invented the phonograph.

A recent article in the Los Angeles Times about California’s Coachella festival confirms the trend:

“We almost didn’t do Coachella this year,” said Paul Tollett, 44, the organizer and founder of the 11-year-old show, which is promoted by concert heavyweight Goldenvoice and owned by AEG in Los Angeles. “We felt the economy wasn’t looking so hot. But festivals seem to be hanging in there, and I’m as surprised as anyone.”

The sellout is all the more noteworthy given a change in pricing this year that does away with single-day $103 tickets in favor of one entry fee for all three days that, with service charges, pushes the cost above $300.

“Coachella has been established as a tribal rite among hipsters who go just so they can say they’ve been there,” independent music industry analyst Bob Lefsetz said of the sellout.

Here in Australia, music festival prices have also spiralled without any apparent effect on demand. Splendour in the Grass is charging close to $500 for 3-day tickets, once camping is taken into account, but the stellar line-up and strong reputation of the festival (once based in Byron Bay, NSW and this year moving to Woodford, QLD) is still luring huge interest.

As the L.A. Times article observes,

Live music is thriving, even as other parts of the music industry are faltering. Recorded music continued its downward spiral, with U.S. album sales falling 8% in the first three months of the year, according to Nielsen SoundScan. Even digital music, which had enjoyed a drumbeat of increasing sales, fell 1% in the first quarter, its first such drop since 2003, when Nielsen began tracking digital downloads.

But worldwide concert ticket sales busted through $1 billion in the same period, up 6.2% over the same quarter of 2009, another surprising first given that the quarter typically is slow for concerts, according to Gary Bongiovanni, editor in chief of Pollstar, a concert industry trade magazine.

The growth of the live performance industry is a vindication of the theories of thinkers such as Corey Doctorow, who wrote in a 2006 article entitled Giving It Away that:

This isn’t the first time creative entrepreneurs have gone through one of these transitions. Vaudeville performers had to transition to radio, an abrupt shift from having perfect control over who could hear a performance (if they don’t buy a ticket, you throw them out) to no control whatsoever (any family whose 12-year-old could build a crystal set, the day’s equivalent of installing file-sharing software, could tune in). There were business models for radio, but predicting them a priori wasn’t easy. Who could have foreseen that radio’s great fortunes would be had through creating a blanket license, securing a Congressional consent decree, chartering a collecting society and inventing a new form of statistical mathematics to fund it?

Who’d have thought the music industry would end up thriving by effectively giving away most of its recorded product for free (albeit illegally) over the internet, and instead returning to the tried-and-tested model of constant touring and performance perfected by medieval troubadours?