The Economics of Real Superstars: The Market for Rock Concerts in the Material World

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Abstract

Beginning in 1997, the price of concert tickets took off, and ticket sales and the number
of concerts performed by top artists declined. From 1996 to 2003, for example, the
average concert price increased by 82 percent while the CPI increased by just 17 percent.
This paper summarizes and seeks to understand trends in the concert industry from 1981
to 2003. Explanations that are examined include: 1) the possible crowding out of the
secondary ticket market; 2) rising superstar effects; 3) Baumol and Bowen’s disease; 4)
increased concentration of concert promoters; and 5) the erosion of complementarities
between concerts and album sales because of file sharing and CD copying. The paper
tentatively concludes that the decline in complementarities between concerts and album
sales is the main cause of the recent surge in concert prices and decline in ticket sales.

Year of Publication
2004
Number
484
Date Published
04/2004
Publication Language
eng
Citation Key
8149
URL
Working Papers