Madonna Ripping You Off Because Of File Sharers?

from the thinking-this-through dept

For years, in discussions over new business models for musicians, we’ve talked about the importance of live performances. The economics of the music industry are pretty well documented in many places — but very few musicians make money from selling albums anyway. The way record labels structure contracts, it’s the labels that get almost all of the money that comes in from album sales. That’s why you see the RIAA — who represents the labels, not the musicians — being more upset about file sharing than any musicians’ groups. Most bands tend to make any real money (if they can) on performances and other things (merchandise, sponsorships, etc.). Slashdot points to an article about the economics of rock music, that focuses on an economist who claims (further down in the article) that file sharing is driving up the price of concerts. This is the type of thing that sounds good, but doesn’t necessarily stand up under scrutiny. The idea is that since musicians can’t make as much money on selling CDs, they push up the price of concerts to compensate for the lost revenue. Except… how does that make sense when musicians tend not to make money from album sales in the first place? The incentives don’t seem to match up. Also, there are any number of other variables that could impact this. It’s something of a “winner takes all” situation — where the biggest name superstars end up charging increasingly high premiums to see them in concert — a trend that started way before file sharing was popular. Also supporting the winner take all viewpoint is the fact that this only seems to be happening with the superstar performers. It doesn’t seem like smaller “club” shows have seen their prices raise nearly as dramatically. And, of course, the biggest argument against the claims of this economist are that he might have the cause and effect backwards. File sharing can increase interest in an artist, driving more people to want to see the musician live. As your basic economics tells you, if you increase the demand while holding the supply steady (or even shrinking it, as more attention focuses on fewer superstars), guess what happens to prices?

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jeff (user link) says:


I live in the SF bay area and we were talking about going to see Madonna yesterday. The nosebleeds are 50-75 dollars and closer in the prices range from 175-350 dollars.

My perception is that the artists are just plain greedy – that is why the prices are going up. Ravenous fans (not me) will pay whatever they can afford.

Seems similar to what is going on in professional Football these days too

mo money, mo money, mo money..

Joe Snuffy says:

When did it turn?

I’m not interested in music where the “artist” cares more about the money instead of what they are actually producing. If you look at Madonna, she stopped making good music (cough) like ten years ago, and that’s being generous. It’s the same way for sports now days. More players are interested in the bottom line then actually working on their talent, which in my opinion doesn’t even come close to players from several years back. When did it turn?

ZOMG CENSORED (user link) says:

Textual Breakdown of Commercial Musicianship

As I reported on slashdot:

Being a musician who makes his money thanks to offerring free music and then selling merch (and signed/ numbered CD’s for collectors) I’ve got a lot of information at my disposal of how corporate commercial music works.

For example:

Tour Costs for an independent band with nothing but a crusty van and old equipment can cost anywhere from $10,000 to $500,000. This includes travel costs, hotels, gas, legal fees, management fees, booking fees, etc.

This is just to travel around, you still have to pay to get your name out there, so advertisement costs can go anywhere from $500 to $5000 per city. Let’s say you hit… 10 cities. That’s $5000 to $50,000 right there.

Now, on top of this, you’d need an album to backup your tour with. Studio fees generally cost $500/ 3 minutes of music. That cost can go up with the length of a song. So, let’s say you have a 60 minute long CD. $500 x 20 (3 minutes x 20 is 60 minutes for those of you not following allong) is $10,000.

Then you gotta drop down another $5000 – $50,000 for CD manufacturing costs. Then there’s publishing and legal fees on top of that, so we’re looking at another $5000 – $10,000.

Add all that up:

$35,000 to $620,000 for an indie band… Sure there’s grants that can cover these expenses. However, if you want to scale that up, it can cost about 6.5 milion to just to get an album out with a tour internationally (The tour returns would cover that easily, album sales would just be a plus)…

Sure I hate Madonna and all her bullshit, but the increased prices aren’t as unreasonable as people think (they’re still a bit high, but she’s a big name, so what do you expect?). There’s a lot more behind the scenes than just money grubbing. Especially if you want to make a profit.

Again, I’m not supporting that, but it’s not cheap to run a large concert. It’s not surprising, and the amount is unreasonable, but it’s something that is to be expected.

Donkeyqong says:

Insert Band Name Here

[insert band here] is the best and I don’t know why anyone discusses Madonna. There are alot of local artists you can listen too if you like music and they will be giddy happy you even show up to hear them play and dance. You want to support an artist? Buy an album, shirt, or concert ticket. You don’t like someone, walk away.

Ticket prices are what the market will bear.

Whateva says:

the hell with madonna

…and U2 or any other superstar. They can’t possibly be blissfully ignorant of the fact that their fans spend years getting ripped off by each album only to be ripped off by the live show as well. Fuck them all up their stupid asses. Better yet, get their music off P2P if you must, but support the smaller bands.

Backseat Economist says:

Re: Not True

This is by far the dumbest statement I’ve seen in a long time. Even all the political BS out there. Economics 001.5 tells you it’s not price driving demand. Ever not buy gas because it went up in price? No, you curb your demand because of the price. Offer Free Beer and see how much demand you get. I could give you a thousand more examples.

BTW, $350 for a concert is ludicrous, for one or two stars, now that’s the demand overriding the logic/price. $175/hr for a two hour concert. My gosh, get a life

alternatives says:

A fine law, that RIAA media makes.

Bush has Beatles on iPod


The RIAA has filed comments with a federal agency in which they claim that ripping a CD isn’t fair use.

As part of the on-going DMCA rule-making proceedings, the RIAA and other copyright industry associations submitted a filing that included this gem as part of their argument that space-shifting and format-shifting do not count as noninfringing uses, even when you are talking about making copies of your own CDs:

“Nor does the fact that permission to make a copy in particular circumstances is often or even routinely granted, necessarily establish that the copying is a fair use when the copyright owner withholds that authorization. In this regard, the statement attributed to counsel for copyright owners in the MGM v. Grokster case is simply a statement about authorization, not about fair use.”

Mark says:


Most artists argue that they have to pay for all their equipment for their huge shows. And that may be a factor. But for the most part they are seeing huge profits as it is.

The jamband community may not be known by most, but they charge fair prices, and everyone can download every concert on! The hardest working bands deserve high profits. An Umphrey’s Mcgee concert (highly highly recommend them for any serious music fans/musicians) was the best $25 I have ever spent. I didn’t even know them and just wentbecause of a decent price, and now im hooked.

Madonna should be happy to break even, with the uninteresting crap of hers. YOU DON’T HAVE A BRITISH ACCENT! Stop it, please.

Steve says:

piece of the pie

It seems like everyone that can get their hands in the cookie jar will… I was just on vacation to Disneyland and Cheap Trick will be there next week for 2 shows, $50 a ticket at House Of Blues. I do like them, and they used to be huge but yeah, when’s the last time they had a hit? I can see them for FREE here in Milwaukee at the zoo (Zoo Ala Carte) or Summerfest! I pay $5 for a pin that gets me in for free nearly every day (before 3 pm) of the 10 day festival and can see bands like CT, Night Ranger, Heart, REO, Styx, Tesla, Drowning Pool on and on and on… for free. Looks to me like the venues have something to do with the pricing, too. On a much MUCH smaller scale , my band plays at some clubs in town that have no cover charge and 5 miles down the road, the next weekend, we could be playing at a club that charges $6 and we have nothing to do with it.

Duncan says:


File sharing or not, bands will charge as much as they can to maximize revenues. Period. Promoters set prices to solve for Revenues = Tickes sold * Price. This is irrespective of what money bands make in other areas.

The only effect file sharing might have on ticket prices is to push them DOWN, not up. If artists make less from record sales, they they will likely increase the number of live appearances to make up for lost income. This will increase the supply of tickets and push down the price of seats.

Anonymous Coward says:

Re: Anonymous Coward

And so, steve, what do you propose to do once theyre no longer local? Abandon them in favor of other, newer, local bands?

I say youre the one without a clue. Every time someone gripes about an overgrown greedy band, the response is invariably ‘support local bands’. As if theyre better or more worthy or something just for being local. As if good music is a practically infinite resource and it doesnt matter where you get it from.

Here’s the reality: theres good music and sometimes its local and sometimes its not and just because its nonlocal doesnt mean you can dismiss it as not worth paying attention to.

IF its good AND they make you mad THEN you gripe. IF its bad AND they make you mad THEN you dont bother to gripe. What does where they come from have to do with this? Its only relevant if local music is likely to be better. Or, more to the point, if the belief held by most “omg local bands” folks is true: because it is local it is INTRINSICALLY better.

I cant even analyze that claim except to say that it is positively the case that some people’s perceptions of music is warped by such things as whether its live, where the band came from, and how well you can dance to it. I just object to folks hurling the proposition at everyone else that hey! your problems will be solved if only you would accept my asinine system of evaluation of music

Dan Super says:

Production Values and Filesharings effect on music

There are more probable factors of the general increase in the ticket price of large productions like Madonna than her losses to filesharing. Her live performances are elaborate spectacles involving many changes of expensive elaborate set pieces and costumes.

Increasing energy costs have a greater effect on productions of this size than on a small scale show. The price of diesel affects the fleet of trucks and busses that make up Madonna’s entourage far more than couple of fade aways firing up the old 70’s tour bus that they just managed to keep despite their habits so they can go relive their glory days in the glory day’s circut. The price of electricity pushes up venue costs as well which also gets passed along to the musicians.

Small acts also have other ways to defer costs that large stage shows cannot easily utilize. Multiple corporate sponsorships often cover the cost of the venues usually in conjunction with beverage companies and radio stations. This is even true with very small acts. Jagermeister is a big supporter of local heavy metal music and often pays the acts just to gather together the kind of people who can drink something that tastes so aweful. While Madonna could just as easily do a commercial for pepsi to promote her tour, the money it generates is more likely to just go into her pocket than cut the costs of the show which still needs to turn a profit.

However, I still think she’s greedy.

MusicalJustice (user link) says:

It's not about file sharing... it's about Ebay

The issue here isn’t file sharing. Not even close. That’s sloppy analysis by the professor of rockonomics. Just because two metrics move in a similar direction doesn’t mean there’s really cause and effect there.

What’s happening is that all those tickets that used to be scalped outside arenas are now being sold online and every one can see what prices they went for. Instead of having to guess how many tickets are being sold in the parking lot of the venue and for what price, tour managers now have loads of actual data to see exactly what the secondary market for tickets looks like. This allows them to raise the prices on tickets to what they’d likely sell for in the secondary market. The scalpers get squeezed or take on a lot more risk in order to have tickets to sell. So they mark up the tickets for the big tours even higher and that drives the next cycle of price escalation.

Artists have long hated the idea that a scalper could make multiples of a ticket’s face value. They’ve got every incentive to try to channel the money that would have gone to the secondary market into their pockets and so they’re raising prices. That’s why you see the impact mostly on ticket prices for superstar acts… because there is no real secondary market for the indie act that plays a small club show.

It’s really just that simple.

Anonymous Coward says:


I’m sure there are some artists who, to some degree, keep the price of their tickets below the revenue-maximizing level simply for the sake of allowing for their fans to ration the tickets themselves by demonstrating their fanaticism by waiting in lines or buying tickets at midnight–which would be an artistic and possibly far-sightedly economic thing to do, as your younger, more rabid fans might have way more money to spend on you over the years and secondarily in t-shirts etc.

That is the only way you can say ‘push up the price of tickets to compensate for lost revenue’.

But then it doesnt make much logical sense to me. Such an artist probably wouldn’t mind music downloads. Because it will help make fans. Which will profit them in the long run, possibly, by their reasoning.

But I am not an artist and don’t understand how they think.

August West says:

Mark is right on target

I agree with Mark. I like jam bands.Order tix directly from the band, seats are cheap, and they play constantly, so they vary the set lists. I don’t care how many times someone changes clothes, especially if it means another 20 bucks a 13 dollar “convenience fee” that Ticketbastard rapes us with. Although I personally think that officially released music ought not to be downloaded, if someone else wants to do that, I’ve got no issues. I just download the live stuff. But the RIAA has pissed me off to the point that I have refused to buy the few decent releases I have heard lately, because those bastards are NOT going to get my money. I’ll wait till the band comes around and try to get tickets directly from the venue if the prices are fair.

rfw1028 says:

Voo Doo Economics

I appalled that Slash Dot would even repeat the flawed assertion by a Psuedo-Economist that would have us believe

1. The superstar recording artists were previously charging less than the market would bear.– Is that because of their tremendously charitable nature?

2. Somehow the laws of supply and demand apply to the music business in a mystical way that only the RIAA fully understands. eg. Market forces work to ensure the RIAA sense of justice is upheld.

What dumbass board of regeants gave that “economist” his diploma?

Axe says:

Superstars are prodigies of the record companies..

… So, of course, they will say what’s necessary to draw sympathy. As long as they price themselves out of the range of what a normal person can afford, the more they will get ripped off. A vicious circle you may think, but…

This kind of behavior has precedence in many other industries where an outdated business models were pounded out of existence by technology. It’s a natural process where the consumer wins in the long run.

In a previous article I read that artists are expendable and interchangeable and they are and will remain to be. This applies to superstars as well. I never was one for Madonna; the Eagles are more my type, but I would never even think about shelling out $700-$900 for a ticket to one of their shows. I get more out of a copy band for $40-$50 down at the local club. Bragging rights aside, I’m usually disappointed at Superstar live shows anyways, because I usually find out the artist is really not that great (i.e. Toby Keith). Better to pay the cheaper price for mediocrity.

But I digress… I’m a proponent for anything, short of anything socially radical, that pushes the recording and movie industries, in their current form, closer to the edge of demise. They are as outdated as unions in America and when they go over I’ll be in the frontline with my arms in the air waving and cheering.

Oh. By the way, I’m not alone. Why else would the industry resort to legal tactics to gain control over something they never had control of in the first place. So sit back and enjoy the ride. The people have spoken.

DWBjr says:

People Suck

Man… you people that say, “Oh, the musicians make their money at the concerts, stop complaining about piracy hurting sales…!” –And then you see higher ticket costs and say, “Why those money grubbing musicians!” This is just getting pathetic. You can rationalize why the sky should be GREEN if you want. The NEED to rationalize piracy over P2P is amazing. –Hey, what if everything currently on the market was FREELY distributable, as long as no one was “making money” from it that re-distribution?

What if? Hm. Yes, my answer is that it would be the end of capitalism. Why do quality work if whiners are going to keep looking for ways to get your stuff for free, and every attempt you make to stop the hemorrage is spit on. People go into business with certain clear expectations… there are the reasonable ones… “Don’t steal my stuff. If you want it, pay me.” and the unreasonable ones, “Yes, I offered this service, and didn’t explicitly set guidelines against this thing you’re doing, but I didn’t mean you could do that!”

This is like Atlas Shrugged all over again. It’s disgusting. The Looters are on the move, and talented people everywhere are required to perform and turn over rights to all the deserving people in the world for a song… and be HAPPY about it! God forbid someone be compesated fairly for their talent without people feeling entitled to twist the meaning of “fair market value”, simply because they experts at rationalizing “free”.


Mr Rat says:

collective licensing

this endless moaning about file sharing costing money is giving me the sh*ts – they can make money out of it if they collectively license it – they can also monetize the distribution with advertisements – the cost of the ticket is nothing more than milking the public for all its worth – and like she’s short of a penny – greedy slag. And she’s not the only one, check out the list of money made by top touring US artists last year:

ARTIST Ticket Price Ticket Sales Millions

The Rolling Stones 133.98 162.0

U2 96.92 138.9

Celine Dion 136.04 81.3

Paul McCartney 135.46 77.3

Eagles 104.17 76.8

Elton John 102.46 65.8

Kenny Chesney 54.63 61.8

Dave Matthews Band 47.09 57.0

Neil Diamond 63.02 47.3

Jimmy Buffett 76.49 41.0

Motley Crue 46.48 39.9

Green Day 38.07 34.8

Toby Keith 46.11 31.6

Rascal Flatts 34.92 28.2

Bruce Springsteen 81.00 26.3

Gwen Stefani 54.46 24.2

Coldplay 40.80 24.1

Tom Petty & The Heartbreakers 38.05 23.6

Barry Manillow 153.93 22.7

‘Anger Management Tour’ 64.03 21.6

taken from: Pollstar, Stones Score 2005’s Top Tour (30 December 2005)

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