The UK office of Deloitte published a media predictions report in January 2007 which contained an observation about consumer perceptions of value.

It’s relevant to every business that needs to respond to changing customer perceptions of value and this query by sophisticated customers: “Give me what will deliver value for money!”.

Following are the relevant paragraphs, sans Deloitte’s footnotes:

“[M]usic broadcast by radio stations has typically been free to the consumer. One of the historical benefits of this was to generate demand for albums and singles, particularly among the 16-24 age group. However technology has changed buying behavior, in some markets to a profound extent. As a growing number of broadband-equipped households have the ability to download music illegally, at zero cost, the perceived value of all forms of music for this demographic has plummeted.

But music is still valued, albeit in other forms. For example the price of live performances, which are much harder to pirate, has risen above inflation, particularly for blockbuster acts. The face value of tickets for the hottest acts has risen to over US$300, while the cost of an album has barely changed over the past 20 years. The mobile phone ringtone, another representation of music, has become a US$5 billion global market. Music is even generating value in the dental-care market, courtesy of the $10 MP3 toothbrush.

Bottom line

Determining price in the media sector appears especially challenging. Pricing strategies may need to be tailored to each market, by demographic or by income level, as the price that each of these segments is prepared to pay is driven by a growing array of factors.”

Deloitte is noting that while revenue is declining in some areas (eg people are buying fewer audio CDs) value is perceived by consumers in other areas. Sometimes this involves mining areas previously under-exploited, not just discovering new areas.

Recently the US publication, BusinessWeek, contained a report on Live Nation which illustrates part of the point Deloitte has made so well.

Live Nation is apparently the biggest concert promoter in the US. The way it puts its business model is thus: “It’s about taking that two-hour experience and turning it into a 12-month relationship.” It was launched in May 2006. Live Nation through Musictoday:

  • keeps fans informed about tours,
  • works with artists to come up with merchandise for monthly contests to keep fans returning to their Web sites and shopping, and
  • helps bands create extra perks for fan-club members at concerts, such as “cut passes” for the food line and a peek backstage after the show.

It seems this 2006 and 2007 story is building on rising music concert revenues in the US at least. According to the 2005 book The Future of Music which cites Pollstar magazine,"42nd despite a severe downturn in CD sales over the four years to 2005, the US music concert business soared, rising four years straight, from US$1.3 billion in 1998 to US$2.1 billion in 2003.

Can it be true? Is there (finally) an established trend of people going back to live music performances? Do you nowadays go to more concerts or pay more for them? My family does, at least for kids shows.

At the head of this post is a photo from Flickr care of the photographer  code named Taminator. Thank you.

Also accompanying this post is a photo I took in London in the 1980s. It features what is now named “Theatre Royal in Drury Lane “. It opened in 1674 and its history makes it one of the greatest theatres in the English-speaking world. At the time I took the shot the American musical 42nd Street (based on the 1933 Busby Berkeley movie) was on show.

Music industry folks in the middle of their own depression, wondering what the future holds, should now join with me to sing, and with verve: “Come and meet those dancing feet, On the avenue I’m taking you to, Forty-Second Street.

Noric Dilanchian