Concerts Becoming a Pricier Affair

Members of the popular heavy-rock band Godsmack say they want to make tickets affordable for their current U.S. tour. But the economics of the concert industry may jar fans harder than the mosh pit at the band’s show.

The face value of a general admission ticket to Godsmack’s concert Wednesday at Verizon Wireless Amphitheater is $20. But no one attending the band’s performance gets to pay that amount.

Instead, fans who purchase tickets on the phone or online are socked with a series of surcharges that boost the price to $35.60. These added costs, tacked on by distribution giant Ticketmaster and concert promotion conglomerate Clear Channel Entertainment, include a convenience fee, a facility fee and a handling charge.

Moreover, a hidden $3.50 parking fee is buried in the price of each ticket by Clear Channel, owner of the Verizon Amphitheater in Irvine. All told, the fees add a 116% markup to the cost of a $16.50 ticket.

These special charges have jumped dramatically since a ticket-price controversy rocked the concert circuit seven years ago. At the same time, the face value of tickets before surcharges also continues to increase--about 7% over the last year and more than 73% since 1995, according to data compiled by Pollstar, the concert industry trade publication.

Concertgoers, artists and booking agents are becoming fed up with a fee system they regard as price gouging.

“It’s starting to spin out of control,” said Tommy Stewart, Godsmack’s drummer. “It’s disheartening to bands like ourselves that are trying to . . . give the kids a good product for not a lot of money.”

Veteran manager Arthur Spivak is concerned that the higher ticket prices will make it even more difficult for developing acts to find an audience.

“I think there are surcharges on surcharges,” said Spivak, who handles the careers of such acts as Tori Amos and Eve 6. “By the time a kid who is working at a restaurant looks at a $25 ticket and it’s 45 bucks, he starts to wonder, ‘How many shows can I really go to?’ ”

Industry experts see signs that rising prices are beginning to turn off music enthusiasts. The number of tickets sold for the top 50 tours in North America is down 15.5% this year after increasing steadily the last three concert seasons, according to Fresno-based Pollstar.

“The concert industry is trying to sell a more expensive product in a down market, and that’s just not going to fly as well as it did a year ago,” said Pollstar editor Gary Bongiovanni.

A spokesman for Ticketmaster said the Los Angeles-based distributor has had to increase fees to recover the cost of credit card processing, bar-code machines and other technology.

Executives at Clear Channel said additional fees are needed to recoup the more than $2 billion the company spent buying and maintaining 135 venues worldwide. They say continued consumer demand indicates that overall prices aren’t unreasonably high.

“I’m not sitting here telling you that we don’t have some tickets that are overpriced, but we also know, based on sales, that we’re seeing positive trending,” said Clear Channel Music Group Chief Executive Rodney Eckerman, who oversees the concert division. “There’s demand way in excess over the number of tickets available.”

Eckerman said concerts by superstar acts such as Madonna ($250 for the best seats) are selling briskly. But he acknowledged that Clear Channel has sold fewer tickets than a year ago. He attributed the drop-off to a 10% decline in the number of concert dates being handled by the company.

“Clearly, so far this year, the total activity is lower year over year, but that is part of how our business cycles and it’s part of the touring pattern.”

In recent years, Clear Channel has emerged as the dominant force in the $1.6-billion concert industry. The firm’s North American tours account for an estimated 35 million tickets a year, of which Ticketmaster sells an estimated 20 million. That represents about 25% of the tickets sold by Ticketmaster last year.

The economic pressure to squeeze profit from Clear Channel concerts is immense. Clear Channel Entertainment (formerly SFX) spent an estimated $2 billion to acquire its portfolio of venues and promoters. And Clear Channel Communications, the San Antonio-based radio giant that bought SFX last year for $4.4 billion, has vowed to increase profit in its concert division by attracting corporate sponsors and additional advertisers.

The company owns about 30 amphitheaters across the country and operates or exclusively books more than a dozen others. It also owns about 1,200 radio stations--more than any other broadcaster--and runs major tours by such popular acts as Destiny’s Child, Janet Jackson, Dave Matthews Band, U2 and ‘N Sync.

“They can pretty much dictate the costs, ad rates and ticket prices,” said Jon Stoll, president of Fantasma Productions, a competing promoter in West Palm Beach, Fla. “If one company controls the live-music industry, there’s nobody that can really bring ticket prices down.”

As a venue owner, Clear Channel is well-positioned to collect added revenue from its concerts. The company establishes and takes in the facility surcharges and per-ticket parking fees. In addition, venue owners typically receive revenue from box-office sales, concessions, a “rebate” from Ticketmaster fees and often a share of band merchandise income. All of the fees result in an income stream for the venue over and above the rent that is paid by the act drawing fans to the building.

In the case of Wednesday’s Godsmack concert, a portion of the $8.85 convenience fee is paid to Clear Channel to subsidize Ticketmaster’s contract for exclusive ticket distribution rights on the amphitheater. The rest covers Ticketmaster’s credit card processing costs, phone company expenses, anti-counterfeiting measures and profit.

The $3.25 facility fee goes to Clear Channel to cover building maintenance, debt payments and profit. “It’s one of the revenue streams that keeps these multimillion-dollar facilities up and operating,” Eckerman said.

The $3.50-per-order handling charge generates additional profit for Ticketmaster and covers the cost of mailing and processing the tickets.

Clear Channel also adds a $3.50 parking fee to the price of each ticket instead of charging for each car arriving to a venue parking lot. In most cases, Eckerman said, the company doesn’t disclose that fee to the ticket buyer.

“Is there a reason it’s not broken out? No. It’s just simplifying the process,” he said.

Eckerman said having each ticket holder pay a slightly lower fee than the one assessed to each car “works out to the same economics.” Customers who purchase a ticket and then decide to park at a venue’s VIP lots essentially are paying for parking twice.

“You’re paying to upgrade your parking, is how I would put it,” Eckerman said.

The extra fees are imposed on all tickets purchased by telephone or on the Internet. Lower fees are assessed on tickets purchased in person at Ticketmaster outlets, where the $20-face-value ticket is sold for $31.35. Customers can avoid Ticketmaster charges by visiting the amphitheater box office, where Clear Channel charges a $3.50 fee. But the box office is open only on the first day of sales and the day of the show.

Before Clear Channel began buying up promoters and concert venues in dozens of media markets, it was common practice for bands to compare the pricing practices and pay offered by competing promoters in each market. Some agents and managers fear that Clear Channel’s consolidation will lead to even higher fees on the price of each ticket.

This is not the first time concerns have been raised about monopolistic practices within the concert industry. In 1995, the Justice Department considered filing antitrust charges against Ticketmaster. Seattle rock band Pearl Jam had filed a memorandum accusing the company of maintaining a monopoly on ticket distribution by locking up the nation’s venues under exclusive contracts. The department’s antitrust division decided to take no action.

Stephen Brobeck, executive director of the Washington-based Consumer Federation of America, said the decision amounted to a green light to jack up surcharges. The increase in Ticketmaster fees, Brobeck said, is “the inevitable result of an unregulated monopoly. It’s an instance of consumers being nickel-and-dimed to death.”

Ticketmaster’s service fee, which typically added $5 or $6 to the price of a ticket back then, now is often $9 to $11 for popular acts. And the facility fee charged by venue owners has risen just as sharply, from $1 or $2 up to $4.

Artists attempting to hold down the price of tickets to their concerts can haggle with promoters over certain fees. But given Clear Channel’s size and clout, some artist managers say the choice is often to accept the promoter’s decision or stay home.

Dan Fraser, manager of Canadian folk-pop act Barenaked Ladies, said he asked the promoters handling each date of the band’s North American tour to lower the facility fee on the cheapest tickets.

Clear Channel’s tour division refused to budge on lowering the fees at 18 tour dates where the band requested it, Fraser said. House of Blues, which is promoting the band’s appearances at six venues, agreed to trim $2 off the price of the cheapest tickets at five of them, he said.

For the band’s Aug. 14 concert at Clear Channel’s venue in Irvine, a ticket with a face value of $14.25 will cost $29.70 to purchase by phone or online.

“They’re making more money [in fees] than they are on the concert ticket,” Fraser said. “There’s nobody that controls that. I can’t say, ‘Hey, you’re charging too much.’ They won’t even talk to you about it.”

Clear Channel and other concert firms say that, because artists on the tour circuit these days are demanding a bigger slice of concert profits, promoters and building owners have been forced to devise new revenue streams to keep up their profit margins.

Ironically, booking agents and rival promoters say, Clear Channel is largely to blame for rising artist fees. The company offers artists huge premiums, they say, to secure control over an act’s entire tour instead of competing with other firms for individual dates.

“They’ve been the ones propelling the costs upward,” said John Marx, senior vice president of contemporary music at the William Morris agency. “They’ve done so as an attempt to really corner the market, to run out the competition. They just come in with astoundingly big guarantees.”

Eckerman said his company paid bands appropriately considering their increasing production costs.

“We would like to pay the lowest guarantees possible,” he said.

As for ticket prices, Eckerman said, further increases are hard to predict. “We live in a supply-and-demand economy.”

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Ticket Add-Ons

Fans who purchase a $20-face-value ticket by phone or online for Wednesday’s Godsmack concert at the Verizon Wireless Amphitheater pay $35.60. Here’s a breakdown of the surcharges:

* $8.85 convenience fee

* $3.25 facility fee

* $3.50 handling charge

* $3.50 parking fee (included in the $20 price)

All told, the fees represent a 116% markup on the $16.50 base price.

Source: Times research