Week 9 - Live Performance and Recorded Media as Complements Flashcards
Demand complements
if the price goes down for one good, it increases the demand for another good
Loss Leader
a product you sell at cost or less because you expect it to promote sales of the complement
Krueger’s concert analysis main focus
-researched the relationship beween recorded music and performances
-focuses on the shift in 1997 towards higher ticket prices
Threat with underpriced tickets
-created an opportunity for arbitrage by scalpers (people who resell tickets for higher prices)
was a cultural norm to keep ticket prices below market clearning rate
Decscribe the trend in ticket prices
-musicians began adopting revenue maximizing strategies and there was consolidation of the promotion industry
-cheapest concert tickets stayed the same while prices for top artists increased dramatically – incresed dispersion
What was the impact of higher ticket prices?
-quantity demanded decreased, but not enough for the revenue to go down
How did the role of scalpers change with high tickets prices?
-before, scalpers were dependent on shows selling out faster – high tix meant shows stopped seling out as quickly – profit that had been going to scalpers now went to the concert promoters
Relationship between tickets and recorded music before vs after high prices
before: tour cross-promoted record sale
after: recorded music was no longer cross-subsidized by concert tickets
-now bands break even on recorded music to make money on concerts
High ticket prices impact on recorded music revenue
-recorded music revenue dropped because high ticket prices accelerated file sharing
live performances as a complement to recorded media in other industries
highbrow magazines:
-business model where they sell subscripts at below cost
-make money by selling cruises and festivals in which you can interact with your favorite writers (more expenisve)
