By now most people are familiar with the concept of “the long tail” — Wired magazine editor Chris Anderson’s digital-era economics theory that busi-nesses with significant distribution capability — like online businesses — can sell a greater number of items at small volumes than of popular items at large volumes. Anderson argues — and not many people have argued back — that products that are in low demand or have low sales volume can collec-tively make up a market share that rivals or exceeds that of the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough.
Online, of course, distribution channels are potentially infinite. But what about on stage? Anderson, via his blog (www.longtail.com), has applied his theory (which, ironically, has turned into a kind of blockbuster itself) to live music. And he makes a cogent argument.
“Music as a digital product enjoys near-zero costs of production and distribution — classic abundance economics,” Anderson writes. “When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out. Meanwhile, the one thing that you can’t digitize and distribute with full fidelity is a live show. That’s scarcity economics. No wonder the average price for a ticket was $61 last year, up 8 percent in an era when digital products are commodities…. No surprise that bands are increasingly giving away their recorded music as marketing for their concerts, which offer something no MP3 can match.”
Just as Web sites like MP3.com and Napster proliferated in the 1990s, the live music industry is spawning its own versions of online access to music. However, the critical difference is that these sites, like SonicLiving.com and TourFilter.com, are like Pollstar for the masses — input your favorites, and the sites will notify you when they’ll be coming to your town, as well as providing collaborative filtering features also found on music download sites, along the lines of “if you liked this band, you’ll also probably like….”
Get Ready to Rumble This bodes well for the music touring business, and it augurs best from the bottom up. With collaborative filtering, you don’t have to be a tribute band to fill in the gaps between headliner visits — club patrons seem happy enough to try out acts that these Web sites tell them are close in genre and type.
This is fueling what New York magazine in May described as a slugfest between show promoters and a bevy of new rock clubs in the city that are spending large sums on sound systems, lights and staging. Andrew Rasiej, founder of Irving Plaza, one of the bastions of the last generation of Manhattan clubs along with CBGB’s, the Bottom Line, the Cat Club, the Mud Club, the Wetlands — all gone — commented in the article that “There’s a full-scale concert promoter war going on.”
What’s also going on is that corporatization is at work here. Instead of simply bannering the clubs, the multinationals own them this time around. Live Nation, the Clear Channel spin-off, owns the Roseland Ballroom and the Fillmore New York (actually the old Irving Plaza rebranded and refurbished), as well as the 600-seat Blender Theater on East 23rd Street and the Luna Lounge in suddenly-you-can’t-find-parking Williamsburg, Brooklyn. If the Fillmore name is familiar, so are Bowery Ballroom and Mercury Lounge, more once-grungy/hip names that have been resurrected as brands as the live music industry begins to look and smell more and more like the record business once did. Not to be outdone in Manhattan’s rock race, competitor AEG Live recently inked a deal to co-promote shows at the HighLine in the far West Side, which is coincidentally owned by the owners of B.B King Blues Club chain and the Blue Note.
Live Performance as King Live Nation and AEG competing in 600-seaters? This could turn the long tail on its head: while long-toothers the Rolling Stones and Barbra Streisand booked a collective $247 million in total revenues last year, according to Pollstar, they’re selling fewer and fewer albums. ABC News reports that of the Stones’ $150.6 million, $136.5 million came from concert tickets; for Streisand, the disparity was even bigger: her records sold a total of $4 million — that’s dollars, not units.
It’s possible that live performances will become the benchmark of success, rather than record sales, and this could happen sooner than later, given the corporate heavyweights getting into the business down to a very granular level. Now, combine this with the growing “on demand” phenomenon in enter-tainment content. Consumers are no longer willing to wait to get the movies, shows and music they want. There’s no reason to think they’ll continue to wait until days after a show to buy a CD — they’ll want it then and there at the show. This turns the venue into more than a teaser for a recording — it transforms it into the retail outlet.
The implications are considerable, especially for vertically capable technology developers. Imagine outfitting the performer, the venue and the mer-chandising in the form of on-demand post-show products. Suddenly, the consolidation of the last decade takes on new meaning. If the live performance venue becomes the new center of the entertainment content universe, the fulcrum of the long tail is going to shift. Get ready to work the front end.
Contact Dan at ddaley@fohonline.com.
