Clear Channel and Ticket Prices : Monopolistic Forces At Work
"Let’s get real here, when teenagers start coming up to me and talking about the rising cost of Phish tickets something is really wrong."
Senator Russ Feingold, at the Future of Music Coalition Policy Summit, January 2003
Ever wonder why ticket prices are going up well beyond inflation rates? A ticket to see Phish five years ago cost $28. Now with all the charges, not including Ticketmaster, it’ll set you back around $44. Ticket prices to see The Dead this summer are around the same. Things sure ain’t like they used to be.
Are our favorite bands selling out? No. Or at least not exactly. If you want to understand the pressures on ticket prices both up and down you need to understand Clear Channel. To understand where this company came from and what’s going on now, you need to take a walk through concert history.
Back in the day, there were several vibrant promoters that got the whole concert industry rolling. These promoters were regional in nature Bill Graham Presents [BGP] was on the West Coast, for example, and Delsner Slater was on the East Coast. They developed close relationships with the bands they were nurturing. A promoter like Bill Graham really understood the bands he was promoting and the peculiarities of their fans, including the unique peccadilloes of the psychedelic crowd. These promoters developed the concept of the rock ballroom, venues like the Fillmore, as antidotes to the stadiums that had so alienated bands like the Beatles from wanting to play live ever again. Soon after the rock ballroom came the amphitheater, or shed, designed to provide a similar environment in the open air.
Seven years ago a company called SFX was founded by a megalomaniac called Bob Sillerman. He decided to buy up all the regional promoters and create a large national network of amphitheaters. By all accounts he overpaid; DelsnerSlater was bought for $28 million and Bill Graham Presents for $68 million. According to an employee of BGP, "They overpaid for us and they overpaid for everybody."
Delsner notes in an interview with Avner Biblarz, "[Bob Sillerman ]told us what they paid after the fact. We said, ‘How much? You could have got it for half that, you stupid f**k.’" It seems odd that Sillerman and SFX, now Clear Channel, would overpay for these promoters. However, if we understand that this entity was and is seeking a monopoly on the concert industry, the strategy makes sense. They had to pay the amount that would bring rivals together in order to control the business.
All of this has been happening in the very recent past. If you’ve been wondering what happened to Bill Graham Presents, or any other local promoter of weight, here’s your answer. Some of these venues are still managed by the old promoters, but they have been swallowed and are effectively controlled and owned by SFX/Clear Channel.
Clear Channel, which bought out SFX in 2001, is a huge communications company with strong ties to George Bush, and massive interests in radio, billboard advertising, and now, concert venues.
Their promoter/venue division is called Clear Channel Entertainment [recently branded CCX], and if you’re going to see Phish or The Dead this summer you are more than likely going to see them at a Clear Channel venue.
With the exception of the Gorge, which is HOB [House of Blues], and maybe two or three others, every single Phish show and most of the Dead shows, are going to take place at a CCX venue this summer.
Here’s a list, by no means complete, of the venues now owned by Clear Channel:
Alpine Valley, Madison, WI
Verizon Wireless Amphitheater [formerly Deer Creek], IN
The Electric Factory, Philadelphia
The Tommy Hilfiger Center at Jones Beach [formerly Jones Beach] Long Island, NY
Saratoga Center For the Performing Arts, NY
Tweeter Performance Center [formerly Great Woods] Mansfield, MA
Lakewood Amphitheater, Atlanta
Post- Gazette Pavilion [formerly Star Lake] Pittsburgh, PA
The Avalon Clubs, MA
The Orpheum Ballrooms, MA
Allstate Arena [formerly Rosemont Horizon], Chicago
The Tabernacle, Atlanta, GA
You’ll find a complete list of the venues over at www.clearchannel.com/entertainment/venue.php. Their coverage is astounding.
Developing this monopoly is an ongoing expense for CCX. As they continue to snap up these venues nationwide, they have to pay very competitive guarantees to the artists to muscle out the independent promoters, and in many cases to force them to sell out. So over the last few years, they have begun to offer the big touring acts as much money as possible. Guarantees [the fixed rate paid to artists for a show in lieu of door proceeds, and the customary way of paying artists for these large events] have often doubled in the last five years. This in itself is indirectly related to ticket prices, and it’s an example of why the costs went up for CCX.
Market demand has also been pushing ticket prices up, particularly in the front rows. In general the tickets for the front few rows of any concert are sold by scalpers at several times face value. We are all familiar with this phenomenon. Even for The Dead and Phish, the scalper market has been successful for many years. So why does CCX price their tickets below market value? Why not allow the prices to reflect both the demand by the consumers, and the rising costs incurred by the promoters? Why aren’t prices much higher?
The answer lies in the kinds of different revenues that the promoters get from shows, beyond tickets sales.. Clear Channel is a media company first and foremost. They sell advertising space on their thousands of radio stations and billboards, and as such their biggest clients are advertisers, or corporate sponsors. This is why you will see so many of these amphitheaters with new corporate names Tweeter Center, Verizon Wireless . They get huge sums to sell those sponsorships, and the sponsors want to see a ton of people passing through. Lower prices mean more bodies passing through the branded venue each year.
CCX also makes a lot of their money through the sale of concessions. They know that the higher the ticket prices, the less people will spend on the concessions. This is another force pushing prices down. Finally, the promoters know that if the ticket prices are too high, and attendance is low, they risk losing money on the event. Low ticket prices help them avert risk.
Additionally and most perhaps most importantly, artists are able to set the prices low. Phish and The Dead are not the only ones who want their ticket prices low in order to accommodate their fans. Garth Brooks and many other top tier artists from diverse genres feel the same way.
Having said that, CCX is still a monopoly-seeking entity with a desire to raise prices and to cover increasing costs, and obviously, maximize revenues.. In order to accommodate those bands that want to keep their prices low enough to satisfy the fan base, CCX’ solution is to apply hidden charges on top of scaled increases in the price of the ticket. On your statement, then, you will see the higher prices stated as $43.50 total, part of which includes a $4.50 facility fee and a $2.75 parking fee. That’s $7 extra.
So why do the bands perform at Clear Channel venues, if they don’t like the direction the ticket prices are going in? Increasingly, CCX makes it too attractive to go elsewhere. They provide these acts with the venues that the fans [and the bands] historically love, and they provide extremely attractive guarantees and one-stop shopping for the entire tour.
What about smaller jam bands? They are not big enough to be affected by CCX directly, but the emergence of the jam band and electronica as vital and growing forms of music means that the shape of the industry may be changing in ways that CCX does not and cannot yet understand. Corporations do not "get" raves and jam bands.
This is a huge risk issue for CCX over the long run. In order to please their corporate sponsors, CCX has been trying to promise higher attendance figures across the board. However, huge acts like Rod Stewart and Tina Turner are diminishing in impact as they and their Boomer fan base grow older. The recording industry is arguably losing its ability to create newer, younger stars with longevity, [through record sales] because of the rise of the Internet. As a result CCX is unsure whom to bank upon for the long term. They do not control the commodity they profit from, that is, the artists themselves.
The Internet has a big hand in all this change. Artists like DJs and jam bands are connecting with listeners and audiences through word of mouth and portals of interest such as jambands.com and jambase.com. Technology providers like Musictoday have emerged which allow artists to distribute some or all of their tickets through branded sites that bypass Ticketmaster altogether, and connect artists and smaller promoters directly to their constituents without surcharges. So it appears that the younger, more vibrant constituents of the industry are self-organizing in spite of Clear Channel.
While it seems that for the time being, CCX has a monopolistic handle on the larger touring acts in the concert industry, it is the very organic nature of music and art, and the power of youth, that ultimately subverts corporate strangleholds on music. In the meantime, ticket prices at your favorite sheds are likely to rise somewhat, but it’s important to understand that the bands themselves are not really to blame, but rather monopolies that run unchecked by responsible government.
Kate Holloway is a mother and technologist living in Toronto, Canada