Kid Rock banks on $20 tickets to thwart scalpers

By MARK GUARINO | Chicago Sun-Times

August 28, 2013 2:58PM

Kid Rock performed to 15,000 people in Chicago two summers ago. When he arrives at the First Midwest Bank Amphitheatre in Tinley Park Friday, the number is doubled: 28,000 and counting.

No, the artist formerly known as Bob Ritchie is not on the heels of a Top Ten hit, nor is his fame suddenly renewed through a guest spot on reality television or because of a tabloid scandal. Instead, the surge in ticket buyers represents the fruits of a ticketing scenario he is innovating on this current tour that is designed, not just to thwart the secondary ticket market — known as scalpers in olden times — but to invite back a segment of audience that feels alienated by escalating ticket prices.

The scheme, which he is calling the “$20 Best Night Ever Tour,” offers most seats for the rock bottom price of $20 a ticket. Instead of asking for a traditional guarantee, which is his fee negotiated between his management and promoter Live Nation, Rock agreed to split revenues on all the ancillary profits that typically accompany high-profile arena tours: concessions, parking, merchandise and more.

By sharing more of the risk with the promoter, Rock effectively kills the scalper market and he also expands the profit margin by playing to larger houses. If someone pays only $20 for a concert ticket, the thinking goes, they are more likely to purchase a program, a T-shirt, or a meal.

“I’m in the scalping business, but you know what? We told everyone [about it]. A lot of artists have been doing this for years behind fans’ backs, taking all these backdoor deals,” he told the Associated Press in a recent interview. “We look at StubHub and other places and see what they’re selling them for and we just undercut them.”

Rick Franks, a regional president of Live Nation North America Concerts based in Detroit, says the idea originated from Rock himself.

“He approached us and said he thinks the price of concerts is too high and it should be more inclusive. He asked ‘how much would tickets be if I charged you nothing?’ No one ever came to us that way before. We thought it was genius,” says Franks.

“We’re in risk business for most of our clients. He has shared that risk.”

Spikes in ticket prices, especially in an era of recent economic hardship, are largely responsible for keeping people away from the box office. According to Pollstar, a leading media outlet that tracks the ticketing industry, the concert industry enjoyed a record year in revenue last year, earning $4.7 billion in 2012. However, that same year, fewer people purchased tickets — 36.7 million, representing a continued decline from 2009, when ticket sales topped 40.5 million.

Adding to the hardship for fans is the secondary market, which has been under scrutiny in recent years by government legislators who are pushing for stricter regulation, and a closer examination of digital ticketing “bots,” or software that allows for mass ticket buys when tickets are first available online. Ticketmaster, the ticketing giant owned by Live Nation, says that bots are used to buy more than 60 percent of tickets for the most desired shows. Ticket resellers largely say the bot operations originate overseas and they do not use them. They blame primary sellers for raising prices by allocating the majority of premium seats to VIPs, which forces a cutthroat market for whatever tickets are left.

Regardless, the cold war between the primary and secondary ticketing markets has largely squeezed fan pocketbooks. Promoters say resellers are hiking the market value of tickets, which is forcing their hand to raise ticket prices accordingly. In some cases, promoters are put into the awkward position of arguing against their own interests: Ticketmaster also operates TicketsNow, a reseller, and Ticket Exchange, a StubHub competitor.

Promoters also often blame superstar guarantees as forcing their hand at hiking prices. The artists, in turn, blame a familiar culprit: the scalpers

Rolling Stones singer Mick Jagger told the Associated Press earlier this summer that “the artist is totally powerless” when it comes to fighting the secondary market other than to raise prices.

“People have made a lot of fuss about it before, but on the other side, some people are like, ‘We might as well participate in it.’ And you can’t really blame the artist for participating in it because why shouldn’t they in a way?” he said.

Rock’s $20 ticketing scenario provides a possible resolution to the storm cloud price hikes have created, says ticketing experts. “It’s a very thoughtful way to try to resolve this. Fans who can’t afford the show still get great seats. [Live Nation] is doing a decent job of pushing back against the secondary market,” says Dean Budnick, author of “Ticket Masters” (Plume), an authoritative book on the concert industry.

Some tickets are also paperless, a model that is spreading to the wider industry. The tour also separates out at least 1,000 seats Live Nation reserves to sell at a much higher price point that may fluctuate depending on different factors related to supply and demand, much like the model airlines use to sell tickets up to the moment of takeoff. “It’s basically a hedge for us to get enough revenue” says Franks.

Whether or not other A-list artists will build on the model Rock is establishing is yet to be seen. Frank says “a couple of other artists” have made inquires, and the company is waiting for the tour to end before assessing its viability as a future model for ticketing.

“The whole thing has definitely had big momentum. It’s a bit of a reset for the traditional concert dynamic,” he says.

Steve Ma, an entertainment attorney in Los Angeles who works with music artists, says a challenge might be making the model work for lessor-known and emerging artists who depend more on touring and less on other facets of the business, like music sales.

“A lot of these bands are looking at touring to make money. For a guy like Kid Rock, it works because of his built-in audience, which gives him the strength to do that. But there’s not many bands that can do it. Most acts will have a very hard time covering their costs if they’re charging $20 a ticket,” he says.