Motörhead's concert take
September 10, 2009 1:45 PM Subscribe
How much did Motörhead make last night?
The world's greatest rock 'n' roll band played the Roseland in New York City last night. The venue holds about 3,500, and I'm guessing it was close to capacity—say 3,000 paying customers. Tickets were $38 in advance, $48 at the door. So figure an average of $40, making the gate $120,000. There were also three other bands on the bill of varying prominence. T-shirts were also on sale for $30-40. Beer was $6. Figure they sold 300 shirts—call it $10,000, and, conservatively, one beer for each customer, or about $20,000 at the bar.
So, folks with some music business know-how: What would the headliner's take be? Who else is taking a cut of that cash?
The world's greatest rock 'n' roll band played the Roseland in New York City last night. The venue holds about 3,500, and I'm guessing it was close to capacity—say 3,000 paying customers. Tickets were $38 in advance, $48 at the door. So figure an average of $40, making the gate $120,000. There were also three other bands on the bill of varying prominence. T-shirts were also on sale for $30-40. Beer was $6. Figure they sold 300 shirts—call it $10,000, and, conservatively, one beer for each customer, or about $20,000 at the bar.
So, folks with some music business know-how: What would the headliner's take be? Who else is taking a cut of that cash?
God, I saw them night before last in D.C. My ears stopped ringing this morning.
anyway, here's an explanation:
Marie Connolly and Alan B. Krueger, "Rockonomics: The Economics of Popular Music," Handbook of the Economics of Art and Culture, Vol. 1, eds. V.A. Ginsburgh and D. Throsby (Elsevier B.V., 2006).
Contractual arrangements between bands, promoters and record labels are heterogenous, but the typical contract resembles a book contract, with an initial advance and then royalties if sales exceed a certain level. The typical contract between a band and a concert promoter is most easily illustrated with a hypothetical example. Consider an agreement covering a single concert.* The band receives a "guaranteed advance" -- e.g., equal to the first $100,000 of ticket sales, and then, before additional revenue is distributed, the promoter recovers his expenses and a "guaranteed profit" -- say $50,000 for expenses and $22,500 for profit. The expenses could include advertising, rent for the venue, costs of unloading the equipment, etc. The band also has expenses (e.g., travel), which it pays for out of its income. The promoter and the band split any ticket revenue above the guarantee plus expenses and minimum profit (above $172,500 in this case), usually with the band receiving 85 percent and the promoter receiving 15 percent of these revenues. The band's guaranteed advance and percent of revenue after expenses is higher for bands with greater bargaining power.
In its negotiation with the promoter, the band (or its manager on the band's behalf) agrees to the concert price, which naturally affects the amount of revenue collected. In addition, the band usually receives 100 percent of merchandise sales (e.g., T-shirts) that take place at the concert.** The venue usually receives the beer and parking revenue. An interesting economic question is why contracts for concerts take this form. Because the parties receive revenue from the sources for which they are most responsible -- the band and promoter from ticket sales, the band from merchandise sales, and the venue for parking and food -- it is possible that this division of revenue streams provide optimal incentives for efficient provision.
Promoters contract with a ticket distributor to distribute tickets. Tickets may also be distributed directly by the venue box office and by the band to its fan club. By far the largest ticket distributor is Ticketmaster. Ticketmaster also has exclusive arrangements to distribute tickets for some venues. Ticketmaster fees are usually around 10 percent of the list price. Unknown to the consumer, in some cases the venue, promoter or performers receive a portion of this fee, depending on their contract.
* It is interesting to note that as promoters have become more consolidated, more bands have signed nationwide tours with a single promoter.
** In some cases, the band will be required to give a proportion (e.g., 30 percent) of the merchandise sales to the venue for the right to sell there, however.
But I think Krusty has the best explanation:
Krusty the Clown: I don't how to thank you kids.
Bart: That's okay, Krusty.
Lisa Simpson: We're getting fifty percent of the t-shirt sales.
Krusty the Clown: WHAT? That's the sweetest plum! You little...!
posted by Ironmouth at 1:57 PM on September 10, 2009 [6 favorites]
anyway, here's an explanation:
Marie Connolly and Alan B. Krueger, "Rockonomics: The Economics of Popular Music," Handbook of the Economics of Art and Culture, Vol. 1, eds. V.A. Ginsburgh and D. Throsby (Elsevier B.V., 2006).
Contractual arrangements between bands, promoters and record labels are heterogenous, but the typical contract resembles a book contract, with an initial advance and then royalties if sales exceed a certain level. The typical contract between a band and a concert promoter is most easily illustrated with a hypothetical example. Consider an agreement covering a single concert.* The band receives a "guaranteed advance" -- e.g., equal to the first $100,000 of ticket sales, and then, before additional revenue is distributed, the promoter recovers his expenses and a "guaranteed profit" -- say $50,000 for expenses and $22,500 for profit. The expenses could include advertising, rent for the venue, costs of unloading the equipment, etc. The band also has expenses (e.g., travel), which it pays for out of its income. The promoter and the band split any ticket revenue above the guarantee plus expenses and minimum profit (above $172,500 in this case), usually with the band receiving 85 percent and the promoter receiving 15 percent of these revenues. The band's guaranteed advance and percent of revenue after expenses is higher for bands with greater bargaining power.
In its negotiation with the promoter, the band (or its manager on the band's behalf) agrees to the concert price, which naturally affects the amount of revenue collected. In addition, the band usually receives 100 percent of merchandise sales (e.g., T-shirts) that take place at the concert.** The venue usually receives the beer and parking revenue. An interesting economic question is why contracts for concerts take this form. Because the parties receive revenue from the sources for which they are most responsible -- the band and promoter from ticket sales, the band from merchandise sales, and the venue for parking and food -- it is possible that this division of revenue streams provide optimal incentives for efficient provision.
Promoters contract with a ticket distributor to distribute tickets. Tickets may also be distributed directly by the venue box office and by the band to its fan club. By far the largest ticket distributor is Ticketmaster. Ticketmaster also has exclusive arrangements to distribute tickets for some venues. Ticketmaster fees are usually around 10 percent of the list price. Unknown to the consumer, in some cases the venue, promoter or performers receive a portion of this fee, depending on their contract.
* It is interesting to note that as promoters have become more consolidated, more bands have signed nationwide tours with a single promoter.
** In some cases, the band will be required to give a proportion (e.g., 30 percent) of the merchandise sales to the venue for the right to sell there, however.
But I think Krusty has the best explanation:
Krusty the Clown: I don't how to thank you kids.
Bart: That's okay, Krusty.
Lisa Simpson: We're getting fifty percent of the t-shirt sales.
Krusty the Clown: WHAT? That's the sweetest plum! You little...!
posted by Ironmouth at 1:57 PM on September 10, 2009 [6 favorites]
Response by poster: Ironmouth, great info. So what would Motörhead's advance be at a place like the Roseland? $30,000? $50,000? And then possibly they'd get a percentage of any revenue beyond the promoter (Live Nation)'s expenses? I've always been curious about how lucrative it is for these bands who don't sell tons of records (the Ramones were another) to tour constantly.
posted by stargell at 6:01 PM on September 10, 2009
posted by stargell at 6:01 PM on September 10, 2009
Generally speaking, most bands don't make a lot from music sales. The money has always been in touring and t-shirts for everybody except the handful of bands that can sign huge guaranteed deals with the record companies.
posted by COD at 6:09 PM on September 10, 2009
posted by COD at 6:09 PM on September 10, 2009
This thread is closed to new comments.
Bar money would go to the venue most likely, and the merch sales would go to whoever is selling stuff, minus a fee to the venue (most of the places I have done this in charge 10%).
posted by markblasco at 1:51 PM on September 10, 2009