Yesterday Britney Spears kicked off her "Circus" concert tour in New Orleans Louisiana with ticket prices so high it seems the pop star and her managers have no sense that we're in a recession. For a good seat at most of Britney's 33 North America concerts, expect to shell out about $550 per ticket, plus service charges. But Ticketmaster, a company music fans love to hate, only sells tickets in pairs, so you're looking at $1,100 plus all those Ticketmaster extras.
These sky high prices—higher than Madonna's recent concert tour—raise real questions about the survival of the concert business through this downturn.
Can Britney command those prices in this economy?
Can the companies behind her, like Ticketmaster (TKTM), justify their fees?
And with these high prices can the two largest companies in the concert industry, Live Nation (NYSE:LYV) and Ticketmaster convince regulators that their merger wouldn't raise prices and put consumers in a position of weakness?
Live Nation's quarterly earnings, out Monday night, are telling about the industry's strengths and weaknesses. The world's largest concert promoter posted a $338 million loss, dragged down by a $270 million write down. Without the charges losses would have totaled $67.6 million on revenue that was basically flat for the quarter, down less than one percent. Here are the really juicy numbers: attendance at Live Nation concerts in the fourth quarter grew 14 percent, but revenue per fan dropped 13 percent — which means more people are going to concerts, but they're spending less on merchandise and extras. Despite the fact that the number of sponsors fell nine percent, the company grew total sponsorship revenue 14 percent — surprising in this economic environment.
Live Nation and Ticketmaster have both told me that people go to so few concerts a year-- about one and a half on average, that they're likely to continue their annual indulgence for their favorite musician. That would be great news for the industry, the question is whether that average number of annual tickets will drop and how much all those ancillary revenues will plummet.
And now the real question is whether the two companies can convince lawmakers that together they wouldn't control too much of the industry. Hearings began February 26. Small venue owners and fans of smaller bands are worried they'll be shut out of a monopolistic system. Some players are already preparing for a merger. ShowClix, a two-year-old ticketing competitor is creating the "Fair Ticketing Fund" while TicketBiscuit is creating a $10 million fund, to help lure consumers away from the merged company. Both TicketBiscuit and ShowClix will be advertising the fact that they charge lower fees. One thing's for sure, the recession will put pressure on all the players to keep prices down. It'll be interesting to see how that affects the potential merger and the competition that ensues.