These are not the words of a psychopath, but lyrics from Taylor Swift’s songs Anti-hero and Fortnight. Swift is a global icon, and her power of influence transcends music into the political domain, where her anti-Trump stance is seen as able to sway young American voters.
Now, tickets for a Swift concert can start from $1,600 in, say, Miami. But in Europe, the equivalent starting price would be $300. A ‘Swiftie’ (fan of the singer) could fly to Europe on a return ticket for $700, spend $300 on a hotel and another $300 on the concert, and be better off!
The question is: How does one price a ticket for a concert?
The two Coldplay shows scheduled in Mumbai that had tickets originally starting from ₹2,500, as announced, sold out in less than an hour when bookings opened at noon on 22 September, and an additional show added to the British rock band’s tour did not last any longer. From 150,000 tickets at first, the total was raised to about 200,000. All were sold out by 3pm.
Soon, reseller websites were displaying these tickets with prices starting at around ₹40,000 and going well beyond a lakh. What is one to make of this?
Did the organizers miss something when they priced their basic-level tickets? Could they not have started with the cheapest being ₹5,000 or ₹10,000 or higher?
Curiously, the first solo artist concert announced for Mumbai was of Bryan Adams, a rock star with a relatively older fan base. It was scheduled in December this year and had tickets starting from ₹3,000 for an open-ground show in a non-prime location.
Shortly after this announcement came one of a Dua Lipa concert this November, but to be held in a prime location. Its cheapest tickets were also priced the same (with a special window for credit card holders). The Coldplay performance will be held in a Navi Mumbai cricket stadium with a capacity of above 60,000.
The pricing of concert tickets is a tricky business even if taxes and local compliances are ignored. The laws of demand and supply do not work the traditional way.
The fact that tickets sold out within a couple of hours would suggest that Jean Baptiste Say’s Law of Markets, which says that supply creates its own demand, holds.
Given the present state of affairs, with restaurants, hotels, air flights, highways, trek paths, religious destinations, etc, overflowing with traffic, there is no shortage of money to be spent on ‘lifestyle’ choices.
Take a closer look, and we can see psychology at play. The Veblen theory that ‘higher price means higher quality’ has taken a modified form.
This is a case of ‘being there, because others are there,’ with the bandwagon effect drawing more and more. There is also the ‘snob effect’ at work, given the prestige of landing a ticket in a situation of excessive demand.
The size of the local market for English music has always been debatable. Interestingly, there is only one English music FM channel in Mumbai. Others that tried it soon found they had sparse listenership and changed track to Bollywood music.
All considered, it is quite likely that some concert patrons are not really fans of the performers, but just want to keep up with the Joneses by being there.
With robust demand for tickets assured, what are the other economic factors that matter?
The first is supply. In this case, scarcity. A Coldplay concert has come to India after nine years. In contrast, Bryan Adams has come four times earlier, though his upcoming concert could be his last in the country.
Contrast this with a Hindustani music concert that has, say, Amjad Ali Khan or Kaushiki Chakraborty. With their concerts being held on a regular basis, this scarcity factor does not exist and hence tickets start at just ₹500.
Second, the target audience is relevant when it comes to pricing. The Mahindra Blues festival held in Mumbai every year has an audience of many with grey or greying hair, and its tickets start at less than ₹4,000.
It is a niche group and even higher prices would be acceptable, but annual price hikes are kept modest. Besides, one could walk to the venue and buy a ticket.
For a Coldplay or Dua Lipa concert, in contrast, it would be a motley crowd of youngsters who have high purchasing power, some of whom would probably pay anything to be there. Trends suggest that shows appealing to youth audiences sell out much faster.
Third, the number of venues on the concert circuit matters. Holding gigs in Mumbai, Pune, Bengaluru, Kolkata, Shillong etc, would ensure localized audiences, with a few visiting these cities from afar for the experience.
A concert with just one or two venues can attract audiences from other places. This was the case with Mark Knopfler, who came to India in 2005 and performed in just two locations.
Fourth, the type and location of the venue is important. A Katy Perry concert held in 2019 in a stadium had 25,000 in attendance, with several vacant spaces. Some groups like UB40, Boney M ane MLTR, which were famous several decades ago, perform at shopping malls, given how much smaller their fan bases are.
Which performer has how many fans and the depth of their enthusiasm seems hard to guess. Some shows generate a buzz and attract far greater crowds than others. Just as stock prices follow a random walk, so it is with concert tickets. The past cannot be a good judge.
From an economic perspective, we can conclude that ticket pricing follows a stochastic process. It is hard to guess what works and no model can predict the right price.
The process of price discovery is bound to be uneven, as past data cannot predict demand. The fact that there is a parallel market that commands far bigger premiums than the original sale price is a sign of that.
These are the author’s personal views. Madan Sabnavis is chief economist, Bank of Baroda, and author of ‘Corporate Quirks: The darker side of the sun’.
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