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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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July 18, 2007

Mental Accounting: Paying for Live vs. Recorded Music
by David Harrell

the Police tour

It was the first of many appearances made by the singer's most annoying vocal tic: "Eeeee-yo!" -- Greg Kot, in his Chicago Tribune review of the Police at Wrigley Field.

I'm pretty much in agreement with Kot's take on the July 5th Police show I attended. It seems like half the songs in the Police catalog have some sort of "day-oo," "eeeee-yo," or "eee-aaa-ooo" vocal part in the recorded version of the song. But Sting seemed determined to inject one into EVERY tune in the set.

To me, the worst was the "Roxanne-ooo" he introduced in the jam section of what could've been the evening's highlight. Thankfully, we were spared the "every-breath-you-take-ooooo's" that I predicted after Sting unleashed the "Roxanee-ooo's."

Anyway, concert reviews are beyond the scope of this blog, but the whole thing got me thinking about the money people are willing to spend for live concerts relative to their willingness (or lack thereof) to pay for recorded music. Our mid-tier seats were about $110 each with the various surcharges and that doesn't include the $100 my friend paid to join the Police fan club, which was pretty much the only way we were going to get tickets. (Though, as Kot noted in his review, there were plenty of tickets selling for face value or less outside the venue that night.) And plenty of folks there obviously paid a lot more than that for the seats closest to the stage. But as I noted in this post, you can buy the entire Police catalog on CD or from iTunes for a fraction of the cost of a single concert ticket. Yet I'd bet that a large percentage of the concertgoers haven't done so. (That includes me -- I have Reggatta de Blanc on CD and there's a vinyl copy of Synchronicity I bought as youngster floating around my parents' attic, but that's the only recorded Police music I own.)

Of course, some music fans are spending big bucks for both. But I'd guess that casual music fans and concertgoers are likely to spend more attending a single big concert each year than they're spending on recorded music.

Maybe it isn't a fair comparison. Live music and recorded music are in many ways apples and oranges and I can think of quite a few reasons to explain the difference in willingness to pay for concert tickets vs. recorded music. (See Bob Lefsetz's latest screed for a few more examples of recent ticket prices.)

The main one is scarcity. There are only so many tickets to any show and there's no way of knowing if/when a particular act might tour again. Also, live music is a social/communal experience -- you can go with friends, bring a date, brag to your friends that you saw a particular show -- and there's obviously an economic value to that component.

Listening to recorded music, however, has become an increasingly solitary activity, especially as music is consumed via iPods and computers. And -- with rare exceptions -- there's no scarcity of supply for recorded music. Those albums will be around forever, there's no real pressure to buy them today. Plus, I'm completely ignoring the fact that almost all recorded music can be obtained without paying for it.

Of course, none of this is news, as we've been hearing for at least a couple of years now that the future to the music industry is giving away the content and making money from live shows, merchandising, and licensing. But it does seem to be something of a quirk in our collective buying habits that music fans don't think twice about paying big bucks for the ephemeral concert experience, yet they are -- on average -- parsimonious when it comes to purchasing the music that forms the foundation of those concerts.

I'm not quite sure if this qualifies as an example of mental accounting, the tendency for consumers to allocate their funds to different mental buckets in sometimes illogical divisions (more examples here). If not, I think it comes close...

But in terms of sheer personal satisfaction and enjoyment, I'd argue that recorded music often provides a better value for dollar spent. Don't get me wrong -- the very best concerts I've attended (Guided By Voices, Aztec Camera, the pre-reunion Pixies, and the re-united Big Star) are all experiences I'd never trade. Yet those were all relatively inexpensive tickets for shows in smaller venues. The big-ticket concerts I've seen in the past few years (R.E.M., Paul McCartney, and the Police) have all been enjoyable but somewhat disappointing.

My own musical tastes probably have something to do with this disappointment in these larger shows -- I'm going to concerts where I basically expect to hear an amped-up reenactment of a studio performance, in venues where the sound quality is generally poor. If I were a huge jazz fan, maybe I'd place a higher premium on the value of hearing live improvisations, perhaps even the vocalizations of a man recently referred to as the "new-wave Harry Belafonte."

Listen at 4:48 from the end for the "Roxanne-ooo's" in this audience video from the July 5th Police show:


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