Vox article: The real reason it costs so much to go to a concert (BAD article!)

[AndrewMeronek]

https://www.vox.com/money/24159044/conc ... -expensive

Out of frustration, I want to vent a bit with this criticism:

Though there are a number of factors involved in this price creep (including high fees, which a 2018 Government Accountability Office report says make up an average of 27 percent of the ticket’s total cost), the heart of the matter is simple: demand. People all over the world are clamoring to go to just a handful of the most popular artists’ concerts.

This is a pretty common misunderstanding of very basic "supply and demand" modeling. Increased demand does not automatically result in inflated pricing. The following can happen when demand increases:

Price inflation.
Supply inflation.
Supply shortages.

To simplify, assume that there aren't governmental price controls that cause shortages in the music concert industry. Picture a graph: the cost to increase supply. Sometimes this graph is a very simple linear ascending line. More often, it is a complex shape with peaks and troughs. Current supply is some point in this graph. Increasing demand is equivalent to putting increasing supply pressure on this graph. Price increases until the supply pressure can cover the cost of increasing the supply at the present point in this graph, then supply increases and prices stop increasing. Sometimes, prices even drop with supply increases, depending on the shape of this graph. We can see this in real life with an example: Burger King Whoppers are in pretty high demand, yet they're relatively cheap. Why? The cost to increase the supply is cheap, and there are effects of large-scale logistics that make it even cheaper that might not be possible at small scales.

What is different about the music concert industry? The TicketMaster/LiveNation monopoly has made increasing the supply of available concerts extremely expensive.

It's actually pretty simple, I think. But this whole way of ignoring ACTUAL supply and demand mechanics in favor of focusing only on demand to justify monopolistic price gouging is pretty common in current punditry. And more often than not, people eat the bullshit.

[AndrewMeronek]

https://en.wikipedia.org/wiki/Supply_and_demand



To help visualize what I said above:

Although this example on Wikipedia is a very simple curve and doesn't necessarily reflect real life, what monopolies do is to severely increase the slope of the "supply" curve (that's a visualization in this context of making increasing supply more expensive), which moves the "equilibrium" to higher price and lower quantity.

[AtomicClock]

Supply inflation.

The article seems focused on the "top" of the popular music hierarchy. For that supply to inflate, either the current acts need to tour more (impossible?), or more acts need to be considered "top". I don't know how that latter happens. If it's even possible, then surely it would be a slow process. Slower than the apparently abrupt increase in demand, anyway.

Honestly, I don't know how anyone learns about the current acts anymore. Do people still listen to radio? MTV famously doesn't show music videos. I suppose they listen to whomever their online influencers (ugh!) like.

[ghmerrill]

Out of frustration, I want to vent a bit with this criticism:

Yeah, but given the background and experience of the writer, it's not realistic to expect anything better: brief and thoughtless fluff for those focused on consuming brief and thoughtless fluff. Pretty much industry standard -- especially for that portion of the "industry" from which this emanated.

From her Linked-In page: "I cover all things big money." Oh, yeah.

[JohnL]

Do people still listen to radio?

Of a sort. Lots of streaming.

Honestly, I don't know how anyone learns about the current acts anymore.

Algorithms. The system looks at your listening history and shows you stuff from other artists that it thinks you will like.

It's not just concerts that are expensive. Disney keeps raising admission prices to their theme parks and the crowds just keep coming.

[Posaunus]

Out of frustration, I want to vent a bit with this criticism:

Yeah, but given the background and experience of the writer, it's not realistic to expect anything better: brief and thoughtless fluff for those focused on consuming brief and thoughtless fluff. Pretty much industry standard -- especially for that portion of the "industry" from which this emanated.

From her Linked-In page: "I cover all things big money." Oh, yeah.

Author:
Whizy Kim was a reporter covering how the world’s wealthiest people wield influence, including the policies and cultural norms they help forge. Before joining Vox, she was a senior writer at Refinery29.

[Posaunus]

Do people still listen to radio?

Of a sort. Lots of streaming.

Honestly, I don't know how anyone learns about the current acts anymore.

Algorithms. The system looks at your listening history and shows you stuff from other artists that it thinks you will like.

It's not just concerts that are expensive. Disney keeps raising admission prices to their theme parks and the crowds just keep coming.

Price inflation, anyone? Attended a "major league" athletic event (NBA, NFL, ...) lately?

[ghmerrill]

Author:
Whizy Kim was a reporter covering how the world’s wealthiest people wield influence, including the policies and cultural norms they help forge. Before joining Vox, she was a senior writer at Refinery29.

I'll grant you that I'm really old, but that's the sort of thing I remember happening in cultural anthropology courses rather than economics courses. Of course, the one doesn't preclude the other -- but it does imply a certain perspective that might not focus on issues of economic theory and practice.

[AndrewMeronek]

The article seems focused on the "top" of the popular music hierarchy. For that supply to inflate, either the current acts need to tour more (impossible?), or more acts need to be considered "top". I don't know how that latter happens. If it's even possible, then surely it would be a slow process. Slower than the apparently abrupt increase in demand, anyway.

To increase supply, it's simple: add more venues where not just "top" acts but all levels can have more opportunity, and make it so the venues keep and use more of the revenue from those acts (instead of having LiveNation funnel it away to shareholders).