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MEDIA & MARKETING DECEMBER 29, 2010, 6:06 P.M. ET
Concert-Ticket Revenue Takes a Dive
Fewer Shows and High Ticket Prices Lead to 12% Global Sales Decline, 15% Drop in North America
by ETHAN SMITH
Revenue from concert tours declined by double-digits in 2010, the latest sign of trouble for a business that until recently had been touted as the music industry's last bastion of economic stability.
Amid weak consumer demand, a soft lineup of headliners and fewer shows, the box-office take for the 50 biggest grossing tours in the world declined 12% to $2.93 billion, from $3.34 billion in 2009, according to Pollstar, a trade magazine considered the bible of ticket sales. In North America, the drop was even more pronounced, with a 15% decline to $1.69 billion, from $1.99 billion in 2009.
Bon Jovi's 53-city tour was the biggest in the world this year, grossing $201.1 million. By comparison, a 31-city tour by U2 topped the list for 2009, with a haul of $311 million.
Overall, the acts making up the top 50 played 8% fewer shows, or 2,650. In North America, the show count dropped 3%, to 2,114.
The declines arrived amid disparate trends in pricing. World-wide, average ticket prices increased 3.9% to $76.69, up from $73.83 in 2009. In North America, the average price declined $1.55, or 2%, as concert promotion giant Live Nation Entertainment Inc. engaged in widespread last-minute discounting.
Despite those efforts, the number of tickets sold declined both world-wide and in North America—and even more steeply than the number of shows did, suggesting weak interest among fans. Throughout the world, concert-goers bought 38.3 million tickets, 7% fewer than 2009's 45.3 million. The 26.2 million tickets sold in North America represented a 12% drop from the 2009 level of 29.9 million.
AC/DC's concert tour was the second-biggest of the year, taking in $177 million in 32 cities. U2 was No. 3, despite postponing numerous dates after lead singer Bono underwent surgery for a back injury. Lady Gaga and Metallica rounded out the top five. U2's rescheduled dates could boost next year's results.
The 2010 results underscored trends that had been apparent throughout much of the year. Over the summer, Live Nation executives warned shareholders that operating income for the year was likely to decline to $405 million, from $445 million in 2009, then again in the fall lowered its guidance, to $385 million as sales weakened further.
Even before this year, signs of trouble had been brewing. Though industrywide total grosses had increased in eight of the previous nine years, that growth had largely been driven by rising ticket prices, even as the number of tickets sold held roughly even. That led many in the industry to warn that if fans' tolerance for rising prices were to hit a wall, the gravy train could grind to a halt. That appeared to be part of the equation in 2010, even as promoters scrambled to offer last-minute discounts, slashing prices for some underperforming shows to $10 or $20 a ticket. Among the acts whose tickets were discounted were The Jonas Brothers, Rihanna, Santana with Steve Winwood, Creed, Maroon 5 and The "American Idol" live tour 2010.
The head of Live Nation's concert business, Jason Garner, stepped down in November, amid a reorganization that is intended to lower the costs the promoter pays artists—a step toward lowering ticket prices.
The ongoing slump in recorded music sales has been a major hurdle to getting top acts to accept less money for concerts, which have become an important financial cushion. Some in the concert industry had argued that because a live concert is a unique experience that can't be duplicated digitally and downloaded, their business would be immune to the problems that have pushed down recorded music.