If 2023 was the year of Taylor Swift, 2024 could be the year of the superfan.
While Swift's The Eras tour proved that music fans are willing to spend big and travel far to see their favorite artist, for years promoters have improved their revenue by selling premium concert and festival experiences. Whether it's dynamically priced seats near the stage, VIP access or a revamped cocktail offering, there are more options for fans willing to pay more to enjoy the sights, sounds and hospitality of live music. Expect even more emphasis this new year.
The focus on superfans isn't limited to live music. The CEOs of Universal Music Group and Warner Music Group both started the year emphasizing their desire to better serve superfans. In the recent past, this may have meant NFTs and new web3 offerings. Today, superfans buy many copies of albums (both LP and CD) and merchandise, often directly from the artist's online store. Streaming services could soon get into the game by offering 'superfan clubs', says Spotify CEO Daniel Ek recommended to a January 24 open letter.
However, live music has a unique ability to renew premium experiences — and add to companies' bottom lines in the process. Superstar tickets have proven to be highly resistant to price increases. In 2023, the average price of a Taylor Swift concert ticket on Stubhub was nearly $1,100. Drake, Morgan Wallen and Beyonce's prices averaged around $450, $390 and $324, respectively.
The emphasis on superfans makes sense in an era of higher ticket prices that extract value that would otherwise go to the secondary market. Artists are increasingly willing to charge resellers more money rather than lose money. But the typical secondary ticket is still nearly double the price of a primary ticket, Live Nation president and COO Joe Berchtold he said during the company's earnings call Thursday. Currently, approximately 9% of Live Nation's theater business comes from premium offerings such as VIP boxes, additional president and CEO Michael Rapinoe. He thinks this should be 30% to 35% instead. To get those numbers, Live Nation is upgrading the concert experience.
This year, Live Nation plans to spend $300 million of its $540 million in capital expenditures on revenue-generating projects. The top four projects — including Foro Sol in Mexico City and Northwell Health in Jones Beach on Long Island — will account for $150 million of the $300 million. The other half includes several projects worth tens of millions of dollars, including VIP clubs, viewing decks, rock boxes and new bar designs, Berchtold said. These “regular improvements,” as he called them, can yield an ROI in the 40-50% range.
A greater emphasis on revenue-generating improvements will boost the bottom line in 2024. Following a major stadium tour in 2023, Live Nation will tour more owned and operated auditoriums and arenas that allow the company to capture the costs of fans for parking and hospitality. Stadium shows have higher average ticket prices, Rapino explained, but amphitheater and arena shows generate higher spending per person. In other words, the venues are smaller but have better margins for the organizer. As a result, Live Nation expects higher adjusted operating income in the second and third quarters. “We're going to have a great year,” Rapinoe said.
Dynamic pricing — seats closer to the stage are priced well above seats further away — is just starting outside the United States and presents “a big growth opportunity” as it expands from Europe to South America and Australia, Rapino said. There is room for growth in the United States as well, as dynamic pricing extends beyond the top artists and into auditoriums and other concerts. “We still believe it's a multi-year opportunity to continue to grow our top line [our] conclusion,” he said.
The price-conscious fan is not forgotten as concerts are increasingly aimed at big spenders. Live Nation offers an auditorium lawn pass called Lawnie Pass — the 2024 edition costs $239 each and offers lawn admission to many shows in select auditoriums — and sold an unlimited pass to select clubs called Club Pass in 2022. And company executives have repeatedly said that one advantage of dynamic pricing is that higher prices for in-demand seats allow for lower prices for seats farther from the stage.
But from live music to music streaming, companies are looking for ways to increase their profit margins. Therefore, expect the market to continue to segment into higher and lower value fans.
from our partners at https://www.billboard.com/pro/concert-ticket-prices-increasing-superfan-experiences/
