That's what they call concert tickets. You put up a show, and the tickets are inventory. And all summer the talk has been about Springsteen tickets, flex-priced, going for four figures, but the rest of the shows?
Live Nation, a public company, has produced fantastic figures. Business has been beyond healthy, but going forward?
My eye caught this article on the front page of today's "Wall Street Journal":
"From Shortage to Glut: Scotts Miracle-Gro Is Buried in Fertilizer - Scotts ramped up production during the pandemic, then consumers shifted and retailers slashed orders, leaving a pile of inventory. It’s now trying to dig its way out.":
on.wsj.com/3RRr3fI This story has been in the business press for a couple of months now. How these companies produced so much product and the public didn't want to buy it.
There are various factors. People were stuck at home during the pandemic and now they're not. I'm sure you've read about the disaster Peleton has become. Not that it wasn't predictable. If you don't have an idle exercise machine in your house you've never bought one, and many haven't! People are excited at first, then their interest wanes, and then they don't even realize they've stopped. They take a day off, and then two, and then they're out of the routine and they've got a new clothes rack. I mean how big a market was there for Peleton to begin with? Look at all the publicity about GoPro. Like everybody needed one. Now the stock is off 90%. Give the company credit, it's moving into services, but...it'll never reach the heights of the dreams of investors. Then again, professional investors get in on the ground floor and can make a profit on the spread long before the hoi polloi realize their mistake.
So, there's too much clothing, there seems to be too much of everything but cars. The companies couldn't meet demand, they ramped up production and then found out people were no longer interested. Is the same thing going to happen in the concert business?
Here's the relevant passage from the WSJ article:
"Versions of this story are playing out across business sectors, where makers of everything from clothing to kitchen appliances have gone from trying to catch up to demand to buckling under the weight of their own inventory, in a matter of weeks. Now many companies are cutting jobs, idling plants and working to undo many of the other steps they took to ensure they would have enough products to sell."
In a matter of weeks!
If you're an insider, you know that the past year has been an up and down one in terms of ticket sales. What I mean is they're moving, then they're not, then they are again... Are we ready for a slowdown?
There's another article I read today:
"Is there room for yet another major music festival in SoCal? Primavera Sound is about to find out":
lat.ms/3qH8aQK The "Los Angeles Times" is famous for switching headlines, if you Google, the headline is: "Primavera Sound debuts in L.A. amid shaky festival market - Launching any music festival is risky, but between inflation and an oversaturated market, the upcoming L.A. edition of Primavera Sound faces..."
Headwinds, because I wasn't even aware of it! And awareness is the first hurdle.
Then there's the bill, the price and the location.
If you read this story, you'll find the true story insiders also know, that a lot of festivals canceled for stated reasons were really pulled down because they couldn't move tickets. A festival is an investment, for both the promoter and the attendee. Not only is the question how many we need, but the price. Festival costs are high for the public, even ones that don't require lodging and long distance transportation, I mean how much are you going to pay to stand with the unwashed for days?
Historically, certain acts are recession-proof. Most definitely the ones who have hot records right now. Then you've got the superstars... But the superstars have been around, many people have seen them already. As for the smaller acts, moving up to larger buildings, who are not guaranteed sellouts...their hard core fans need to see them, but everybody else can pass when it's deemed too expensive.
And like with the products the WSJ is talking about, there was an absence, now there's a glut. There were no shows, now there are too many. And many of the tickets were sold before the pandemic, those shows are playing now, so the future?
Does not look so bright, you do not have to wear shades.
As for prices... In the LAT article it references that people are waiting for costs to come down! Below face value, when scalpers, whether they're professional or amateur, need to get rid of THEIR inventory!
Concerts are all about disposable income. Concert prices keep going up, if for no other reason than costs are going up. Is there a point at which people stay home? I think there is. I'm not saying the business becomes a dumpster fire, I'm just saying some people will be hurt.
And the concert business is opaque, almost all show business is. They don't want you to know, because it's all about image with talent.
And there are no guarantees, concert promoters don't know, they're always taking risk. And they certainly don't know what is going to happen after the first of the year.
And the response to the LAT writer is L.A. is a walkup town. No, historically that is not true. However, urban acts historically do more walkup business. In truth, the public is guarded. The mania is gone. People have blown their wad, they've got no idea what's down the pike for them either. Inflation bounced back, mortgages went to 6%. If you have any money, you're scared, if you've got none...
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