A year and a half after I first blogged about ticket brokers and the free market, the rest of the world is finally catching on to the fact that scalping isn't going away.
A lot has happened in the intervening time--Live Nation emerged as a competitor to Ticketmaster, then agreed to merge with Ticketmaster, and The Wall Street Journal has published a couple of articles exposing the fact that artists and managers often team up with ticket sellers (like Ticketmaster) and brokers (like Ticketmaster subsidiary TicketExchange) to sell their own allotments of tickets for several times their face value.
Eventually, concert tickets will be sold through a dynamic pricing model, just like items in a bazaar.
(Credit: Photo by Babak Gholizadeh, via Wikipedia)Nine Inch Nails' Trent Reznor on Sunday posted a fascinating take on the whole practice of scalping. As he points out, Ticketmaster or Live Nation could have stopped the practice of scalping eons ago--all they'd had to do is print the purchaser's name on the ticket and require a photo ID matching the ticket to get in, as they do with airline tickets. (And hey, some concerts--like the Police tour--have seats that cost more than the average airline ticket.) The reason they don't is because Ticketmaster benefits from the scalper's market through its TicketExchange subsidiary.
More fascinating, however, is Trent's account of how he wrestled with the temptation to sell the band's allotment of tickets--10 percent, in NIN's case--for more than face value. As he rightly points out, as long as there are people willing to pay $1,000 for front-row seats, either the band has to charge that amount and be criticized for looking greedy, or a second market is going to thrive.
In the end, NIN decided to charge only face value for its allotment of presale fan club seats and to put antiscalping provisions in place: buyers' names will be printed on the ticket, and buyers will have to go through a special entrance where IDs will be checked. He believes that forgoing short-term gain in the interest of long-term fan relationships is the right thing to do.
I agree with his prediction of the future: eventually, the Ticketmaster-Live Nation merged company will move to dynamic pricing for all tickets, similar to how airlines price tickets today. If it's a hot ticket, prices could skyrocket even higher than scalpers' prices today. Then again, if tickets aren't selling, there might be a last-minute fire sale--good for fans.
If you're sick of paying exorbitant prices for big-concert arena tickets, I promise you that there are plenty of small bands playing in your town tonight that you'd enjoy, that would love to have you there, and that won't charge you more than $30 for the privilege. You might not get to hear your favorite song, but you'll actually see and hear the band up close, and you won't have to deal with that "down in front" guy who always seems to sit behind you.
It was just two months ago that Nine Inch Nails released its album Ghosts I-IV in multiple formats, from free nine-song download all the way up to a deluxe LP/CD/Blu-ray set. Today, the band started taking orders for free downloads of its next album, The Slip; like Radiohead did with In Rainbows, the band will subsequently release the album on CD and LP format.
The download era may see a return to the kind of prolific output we saw from The Beatles and other artists in the 1960s.
Everybody's interested in the business model--has free-then-fee already gotten old?--but when's the last time you saw a band release two albums in two months? Sure, Trent's interested in making a living, but he's also got lots to say and he wants you to hear it.
And over here in the other corner, we have Beck rumored to be following the Raconteurs and planning to "surprise" release his next album within the next four to six weeks--no advance copies to reviewers, no pre-release radio single, no preparatory wave of marketing hype. Across the pond, The Cure plans to release 13 singles over the next 13 months leading up to its next album release--and some of the B-sides won't appear on any albums.
This all sounds a lot like what the Beatles and other pop musicians and labels used to do in the 1960s--quick-release tons of music, mostly singles, and let the fans decide which sink or swim. Sure, there was a earload of marketing back then as well, but the ratio of hype to music was a lot lower. Perhaps the new model's going to be the same as the old model?
Nine Inch Nails' surprise release of Ghosts I-IV today in five differently priced formats is the perfect example of how recorded music can, should, and inevitably will be sold in a world where free has become the norm.
Would you pay $300 for this? Depends on how big a fan you are.
(Credit: Nine Inch Nails)I suggested several business models for recorded music in my post the other day, which was a response to Chris Anderson's Wired article about "free" as the future of business. Ghosts employs at least two of them.
First and foremost, it's a great example of the "freemium" model, in which the hardcore NIN fans subsidize the cheaper offerings--the highest-priced $300 edition is personally signed by Trent Reznor and includes the regular CDs, a data DVD with the entire album in .wav files, a Blu-ray DVD with a high-definition (24-bit, 96kHz) version and slideshow, four vinyl LPs, and more.
Implicitly, NIN is also using the cross-subsidy model. All the offerings include non-DRM-protected data files, and some even include lossless files, which offer the same quality as a CD. Trent Reznor isn't dumb--he knows that somebody will post these files online within seconds of receiving them. In fact, the band has even posted the first nine tracks (the free MP3 versions) to several BitTorrent trackers. But he hopes that casual listeners or one-time fans who haven't checked out NIN's recent work will be sufficiently attracted by these free files to check the band out when it comes through town, and may eventually become big enough fans to pay for future releases.
It looks foolproof to me. NIN minimizes the risk of unsold physical inventory by taking advance orders, and with downloads, there's almost no incremental cost of distribution. The only potential problem would be if the band doesn't sell enough to cover the cost of recording the album, which seems unlikely. Any label lucky enough to have an artist with a devoted following and decent live show should be paying attention--although they might find that selling a two-CD set for $10 makes it hard to pay for the upkeep on those private jets.
The dam's breaking open: first Prince released a record as an insert in daily newspaper. The Eagles went direct through Wal-Mart. Radiohead announced plans to release its new album without the assistance of a major label, and rumors about Oasis and a couple of other British bands followed.
On Monday, Trent Reznor posted a gleeful announcement that Nine Inch Nails' record contract had ended, and that he would be experimenting with direct distribution to fans in 2008. This isn't surprising, given that Trent recently told fans at an Australian concert to steal his music. Yesterday, the Wall Street Journal reported that Madonna is about to leave Warner Brothers and sign a $120 million deal with Live Nation, the concert promoter and owner of many large venues around the U.S. (Live Nation was spun out of Clear Channel when the radio giant got out of the concert business.)
The Madonna deal would be a little different than the do-it-yourself approaches being taken by Radiohead and NIN. Instead of no label at all, Madonna would actually be signing what's known as a "360 deal," in which her label gets a cut not only of record sales, but of merchandise and concert grosses. Only the "label" isn't a traditional label at all, but rather a company whose specialty is concert promotion. But the business model's probably going to be similar to the label-less acts: sell the album cheap, or give parts of it away, and charge a premium for the concert experience.
As I've said before, this approach might make sense for established artists, but if giving recorded music away becomes the norm, the road from local hero to rock star could be a lot harder. Beginning musicians tend not to have a lot of resources, and need a label (or some other backer) to help fund early tours. If labels have nothing to sell, who picks up the slack? Concert promoters and management agencies? Perhaps, but the economics are different--they can't rely on a highly profitable hit to fund the ten unprofitable artists still under development.
(Side question: can Madonna really play the guitar, as the picture in this article implies? Or does the soundguy turn her channel all the way down?)
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