We have some irons in the fire and are planning some exclusive content over the next few issues. But first, here’s Issue 7, another short issue about the so-called winners and unspoken losers within the music and technology industry machines; players that consumers either don’t know about or became accustomed to quickly. We extend our ticketing piece from last time to discuss where your money goes when buying a concert ticket. We also continue our portable audio series with the MP3 player you knew and loved.
Last time Issue 6 covered current ticketing legislation, and took a look at fan data with the Metrics of Music.
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Breaking down ticketing: Splitting the stub
Continuing our series on live event ticketing, we’re going to pull apart the cost of a concert ticket and shed light on where the money goes. As the entertainment industry is not keen on being transparent, this piece leverages information from a (somewhat aged) article from the Guardian and help from anonymous entertainment professionals.
When a concert goer pays for a ticket, the value is divided among various stakeholders involved in the live event.
Tour-side
Let’s start with what the tour (the artist and promoter) will take home for a given event. When booking a show, the venue’s talent buyer negotiates an offer with the tour’s promoter. The offer takes into account past ticket sales in a given market to determine a reasonable deal. The venue might use Pollstar, a trade publication that functions as a consumer reporting database for ticket sales. A common deal structure is called a versus deal, which would be written as $2,500 versus 80% for example. The $2,500 is called the guarantee, this is a flat fee that will be paid to the tour regardless of how much money the show makes. If a show hits points, an industry term for making more money than the guarantee, the tour will receive 80% of the gross ticket sales after expenses. In this versus deal of $2,500 versus 80%, the tour would receive $2,500 or 80% after expenses, whichever is greater. Of that offer, the promoter may take up to 15% as part of a contract with the artist. The remainder for the artist may have an additional percentage allocated for their manager, and possibly other varying costs associated with the tour.
Venue-side
On the venue’s side, standard fees are allocated to performer’s rights organizations (PROs) like ASCAP, BMI, or SESAC, as well as state or local taxes which vary by region. Expenses, ranging from 25-30% of the show’s gross, include any and all resources needed for the show to come together. These include stagehands, lighting, rigging, backline equipment, facility fee, venue staff, artist hospitality, parking, etc. After fees, expenses, and settling the tour’s offer, the remainder goes to the venue. Note that this does not account for the venue’s other revenue streams like food and beverage, venue merchandise (and often a portion of the artist’s merchandise), or memberships.
Additional costs
Certain ticketing systems, such as Ticketmaster, may add additional processing or service fees per ticket sale. As the Guardian suggests, these obscure fees could be the result of “charging you for the ‘privilege’ of printing [tickets] at home.” The other perspective from Dan Wall of Live Nation is that venues set service charges because “two important players in the concert ecosystem – venues and primary ticketing companies – get little or nothing out of the revenues derived from the ticket’s face value.” While the source we spoke to didn’t indicate this is true, we have not uncovered how tickets are priced for every type of venue or show.
Another added cost could represent the added profit for resellers (or bots, automated scalpers) that upsell ticket prices on platforms like Ticketmaster or StubHub are hidden from artists, venues, and, most critically, consumers.
A possible cost breakdown
As an illustrative example, a $50 ticket, for instance, may be divided between venue-side and tour-side stakeholders as shown below. Here it looks like the artist is taking the biggest cut.
As we know from topics in the news discussed in Issue 6, ticket prices have jumped astronomically from their previous values, an article from Loudwire shows how bands like Foo Fighters had tickets multiply more than 10x from 1996 to 2022. So, why have ticket prices increased so dramatically over the past decades? One aspect could be that margins are set higher, inflation has risen, more stakeholders or technology providers have gotten involved brought in their associated costs. Live Nation supplants that ticket prices have risen because touring has become more central to artists’ income, tickets are initially underpriced and the increase in costs as they sell reflect the accurate price, and that demand for concerts has been a key driving force.
Another aspect not covered by Live Nation that’s becoming more visible to consumers is that not every ticket is created equal. There are other factors at play that are not easily discoverable outside of the industry. One driver is dynamic pricing which accounts for both tiered prices based on location in the venue, as well as a tactic to “deter resellers” who overcharge. Suffice to say, dynamic pricing benefits the ticket seller (whether a 3rd party system or venue) the most.
Tracing the history of portable audio
A Thousand Songs in Your Pocket: The iPod and the Digital Music Revolution
The mp3 revolutionized music, but it wasn't until the arrival of a user-friendly portable player that digital music truly took hold. Enter the iPod: Apple's iconic device that, alongside iTunes, transformed how we listen to and manage music.
While MP3 players existed before the iPod, most were clunky, had limited storage, and offered confusing interfaces. In 2000, Steve Jobs tasked a team at Apple, led by Jon Rubinstein, Tony Fadell, and Jonathan Ive, with creating a better solution. In less than a year, they unveiled the first iPod – a sleek, 5GB device capable of holding around 1,000 songs.
However, the iPod wasn't just about hardware. Apple had already launched iTunes in January 2001, providing a user-friendly platform for managing digital music libraries. Two years later, the iTunes Store arrived, creating a legal marketplace for downloading individual songs and albums. This trio – the iPod, iTunes player, and iTunes Store – revolutionized the music industry.
Prior to the iPod, music consumption was dominated by physical formats like CDs. The iPod, with its portability and vast storage capacity, allowed users to carry their entire music collection in their pocket. iTunes, meanwhile, streamlined music organization and transfer to the device. Finally, the iTunes Store offered a convenient and legal alternative to the rampant file-sharing of the Napster era.
The rise of mp3 players wasn't met with open arms by the music industry. Initially, record companies viewed them with suspicion, fearing rampant piracy and lost revenue. They lobbied for mp3 players to be subject to a "blank media levy," essentially a tax on the devices themselves, and even sued early mp3 player manufacturers like Rio in an attempt to collect royalties on every device sold.
These efforts proved unsuccessful. The music industry eventually realized that collaborating with device makers, rather than fighting them, was a more sustainable strategy. By the time the iPod debuted in 2001, the industry was facing a perfect storm: CD sales were declining, and online piracy was rampant. Apple's iPod, with its user-friendly approach and legal music marketplace, offered a lifeline. The record labels, recognizing this shift, began working with Apple and other digital music platforms to find new revenue streams in the digital age.
The iPod's impact extended far beyond its technical capabilities. Its sleek design and intuitive interface made it a cultural phenomenon, a symbol of a generation's connection to technology and personalized music experiences. Later models like the iPod mini, shuffle, nano, and touch expanded the lineup, catering to different needs and styles, and encouraged users to listen to music in new and more fluid ways—the shuffle essentially created a mini radio station with your own pre-loaded songs (Pandora anyone?), the ipod color introduced having photos on your device, and itunes changed how users discovered and shared music. By the end of its lifecycle, 32 models of the iPod had been released.
By 2007, the iPhone's arrival offered similar music capabilities alongside a range of other features, diminishing the need for a separate music player. The rise of streaming services like Spotify in the later part of the 2000s further eroded the need for downloaded music and dedicated players. Finally, in 2022, Apple discontinued the iPod.
Despite its end, the iPod's legacy lives on. It played a pivotal role in popularizing digital music and influencing how we interact with audio today on our smartphones. Other competitors, like Microsoft’s Zune, never meaningfully competed against the iPod, making it a central part of the industry’s transition from physical to digital formats. The iPod's story is one of innovation, convenience, and a new way to experience music – a thousand songs, quite literally, in your pocket.