5 Reasons Concert Tickets Are So Expensive

In recent decades the music industry has gone from a business focused on selling records and CDs, to one of less expensive digital downloads, to today's biz that is centered around streaming music. Consider that sales of top-selling albums have dropped 17 percent since in 2017, according to Billboard. And if you compare top-streaming song artists with top-selling album artists, you have to scroll pretty far to find an artist on both lists. Big streaming platforms like Spotify pay less than a penny per stream, so with a million streams, a song could bring in about $7,000. And not all of that money goes to the artist.

Now that the music industry provides less likelihood for even the most popular artists to make money from their song and album sales, concerts have become a vital source of income. Even top-streaming artists like The Weeknd turn to touring to bring in the real money. In addition to the potential for massive ticket sales revenue — consider Taylor Swift's record-breaking Reputation Stadium Tour (it's grossed more than $100 million in ticket sales in North America alone) or Bruno Mars' 24K Magic Tour (it grossed well over $240 million) — concerts provide the opportunity to earn huge sums from merchandise and interestingly, album sales. Some tours now bundle a CD with the ticket, and each fulfilled CD counts toward album numbers, according to Iain Bluett, co-founder of Ticket Alternative.

If Taylor Swift's $200 million-plus grossing tour sounds impressive, and cause for the artist to provide the fans she appreciates with a break in the ticket price, it's important to note that gross and net revenue are altogether different. The cost of putting on a show, from stage production to backup dancers to indoor pyrotechnics and even holograms, has skyrocketed along with the price of concert tickets.

"There is a lot more production that goes into [concert production these days]," Ticket Alternative Bluett says. "Everybody's trying to put on the most elaborate show they can." For Swift, that meant giant inflatable snakes, mega screens, a fountain, fireworks and a plethora of dancers. For Coldplay's A Head Full of Dreams Tour, which grossed $523 million in 2017, a stadium performance called for multiple stages and Xylobands, interactive LED wristbands the band introduced during its Mylo Xyloto Tour.

Behind the show audiences experience is the cost of what goes into making it possible, like bringing in the "steel," the sound and the lighting. Putting on the production requires unseen expenses, such as the cost of getting equipment from city to city and labor to unload the trucks. Shows also have to be promoted and advertised. The price of the venue plays a part too, and for a large concert at a stadium, the total production cost quickly reaches seven figures.

"You're building a $3 million home for a night and tearing it down," says Ross Schilling, artist manager with Vector Management, who has worked with big names like Lynyrd Skynyrd, Kid Rock and Toto. The cost of creating these ephemeral wonderlands has to get passed on to the consumer via the ticket price.

Despite high production costs, the concert business is booming. While it might seem like the increased competition of more bands touring and touring more often should make concert attendance more affordable, consumer demand has kept pace, which drives up the price. Even multiple-artist shows that seem like a good deal offer room for profit.

"The appetite for live music is increasing year over year," Bluett says. He points to the expanding festival market as an example. With multiple bands performing and one ticket price to pay, "festivals are probably still the best value for the money." Nevertheless, 2019 Bonnaroo general admission tickets start at $279, and VIP tickets are $825.

The Bonnaroo tickets show evidence of another phenomenon — graduated ticket sales. Bonnaroo's ticketing page shows that prices go up as each tier sells out. Late purchasers will pay $70 more per ticket than fans who didn't need to wait for the lineup announcement. The use of dynamic pricing, similar to what the airlines offer, is increasing in the concert world, according to Schilling. When you buy your ticket and where you sit affect the price you pay.

Gone are the days when the only way to get up close and personal with your favorite performers was to wait outside the back door of a venue hoping to catch a glimpse as they hurried into their tour bus. Music fans today will find plenty of opportunities to attend special events like meet and greets, photo ops and soundchecks. There are multiple pricing levels that offer exclusive experiences and interactions with the artists.

Ticket sellers now have the ability to "service the 'super fan,'" Bluett says. The more merchandise you buy or the more you interact with the artist, on social media, for example, the better your status and ability to score early tickets to a show that might sell out or gain access to special offerings. Just take a look at some of the packages offered by VIP Nation. These concert upgrades can make any fan feel like a VIP — for a price.

Not that this list was in order of least to most important, but one of the biggest changes in the price of concert tickets has come from the digital world — in the form of the secondary market. Yes, scalpers have stood outside of venues — or as close as they could legally get — for decades holding up tickets for sale. But with the advent of the internet, online ticket exchange companies like StubHub (get StubHub coupons) and Verified Tickets by Ticketmaster made selling, upselling and purchasing tickets easy and reliable. Realizing that fans purchased tickets on the secondary market for much more than the original price, concert promoters started boosting ticket prices. Technology made it possible for the secondary ticket market to take off.

"If there is somebody willing to pay $1,000 for a front row ticket, shouldn't [the artist] be allowed to sell them that ticket for $1,000?" Schilling says. "Why not try to capture some of that money? Otherwise, the fan is going to pay it, and the only person who wins is the scalper."

Yet, even in a secondary market, prices reach a natural cap. For now.

"What you are trying to do is price them at the price the most people are willing to pay, so it doesn't go up exponentially," Bluett says. "The market will only bear what it will bear."