Planet Money - Two music indicators

Episode Date: December 11, 2021

Ticket scalping frustrates fans, but it fascinates economists. It's been a favorite topic of ours in the past. This time, Darian turns to friends and experts to navigate the world of concert tickets like an economist who is also a music fan. Then we find out just how big Adele is on vinyl. So big her latest album disrupted the whole market for vinyl, the material itself. | These stories come from our daily podcast The Indicator. Go subscribe if you haven't already.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. So I recently learned that reporter Darian Woods is a huge fan of the singer Charlie with an I-X-C-X. That's right. Yeah, I'm a big fan. And we were talking about this because she's going on tour. She's coming to New York. And a couple of weeks ago, you and I got together to buy me tickets. You were helping me, moral support and a bit of logistical support, when these tickets went on sale at 10 a.m. Are you online? I'm online.

I've got my debit card out. Okay, okay. I mean, this is like an Olympic sport, right? Like these tickets go on sale, you have seconds to buy one. Yeah. We recruited Indicator intern Taylor Washington to help us through the Byzantine process of ticket buying. Yes. Taylor is like this ticket buying wizard.

She knows all the ins and outs. And she's gotten tickets to like some pretty big concerts in the past. Yeah. This isn't my first Voleo. Do you have like tips for Darian? Like, can you walk him through this? Okay. The first thing you said, I heard a red flag when you said, I have to get my debit card out.

You should have already had your debit card in the Ticketmaster account. You should have already had a card on file. You said that was the first red flag. What were the others? He only said like five words. As we were waiting for the tickets to drop, Taylor's other advice, get all three of us logged in to try to buy tickets. When I buy tickets, sometimes with my friends in person in high school,

everybody would have a computer out. So that's a good tip. It was stressful. And as live music starts up again, we wanted to know, is all this high blood pressure and adrenaline really the best way to run the market for tickets? Hello and welcome to Planet Money. I'm Stacey Vanek-Smith.

What do Charlie XCX and Adele have in common? They both teach us about the forces of our economy, obviously. Today on the show, we have two episodes from our daily podcast, The Indicator from Planet Money, about the economics of the music industry. We figure out what is going on with the bizarre ticket market, and we try to outsmart the scalpers. And then Adele's new album breaks our hearts and also the vinyl supply chain. That's coming up after the break. Live music is back, and so is the scramble for tickets. Now, we knew Charli XCX was going to sell out within minutes of going on sale,

and Ellen Sorensen, an economist at the University of Wisconsin-Madison, says that this suggests that the $54 that she was charging was way too low. Well, obviously, because she left a lot of money on the table. Ellen says this is very common in the music industry, concert tickets that are much lower than what people would be willing to pay for them. And Allen says there are two main explanations. One, artists really don't want to risk playing to a half-empty room because their tickets were too expensive.

And secondly, the artist doesn't want to be seen as ripping off the fans. For some fans like you, they are doing a favor, right? $50 instead of having to pay $80 or $100. But they're also doing a big favor to scalpers. Scalpers. Those ticket resellers are the sworn enemy of the music fan waiting in line to buy tickets. Fans like me waiting in this virtual line for those Charli XCX tickets. Okay, it's already 10. Okay. I'm going to buy some tickets. Fans like me waiting in this virtual line for those Charlie XCX tickets. Okay, it's already 10. Okay, I'm gonna buy some tickets. Join the queue. Oh no, it's a queue already. What? Ticketmaster

put Darian in a virtual line on their website. Oh, 494 people ahead of me. Oh my goodness. It's not even, it's just 10. It? Just at 10, just now? I don't know. I think you should start praying to somebody. We were not happy about this, and we just knew there would be scalpers and their bots waiting to sweep up those tickets and put them straight into the resale market. Unable to proceed. This may be a flop. I think they're gone. What?

Wow. We went right at 10. Oh my God. I'm so sorry. That's fine. That's fine. So the only option now is to like pay $400 or so to scalpers. Actually, it was more like $100, but still. Yeah. The Charlie XCX fan in me was seething at the scalpers, but you know, my economics mind was still curious about whether the scalpers were performing a useful function here. Like, how did they shape this weird market? And this is something Allen and his co-author Philip Leslie tried to answer when they got their hands on some ticket data. Data on over a million ticket sales from 56 concerts in the mid 2000s. Dave Matthews Band, Eric Clapton, Jimmy Buffett, oh Madonna was in there,

Prince, Rest in Peace, Rush, Shania Twain, and more. Allen and his co-author poured over this ticket data and they looked at how many tickets were being resold on what's called the secondary market. And the first finding was that anywhere between about 5 to 20 percent of tickets were resold on StubHub or eBay. And there's a reason why scalpers actually target some concerts more than others. This was correlated with how underpriced the tickets appeared to be. So it was the tickets that were most underpriced that were most likely to be resold in the secondary market. to be resold in the secondary market.

But the person who most wants that ticket, a superfan, might not be the person who has time to go online for a half an hour at 10 a.m. to get it. But then there's this other type of ticket buyer. Maybe they're a 30-something who vaguely remembers the song I Love It from 10 years ago. Let's call her Dorothy. An economist would call Dorothy a low-value audience member and the superfan, i.e. me, a high-value audience member.

And I would be paying a lot of money for that Charlie XCX ticket. And that is where, says Alan, scalpers can actually help the market because they can move tickets from people like Dorothy to fans like you, Darian. Yeah, so Dorothy can find something else to do. Like maybe she can go see the Lehman Brothers play on Broadway, which, by the way, is fantastic. find something else to do. Like maybe she can go see the Lehman Brothers play on Broadway, which by the way, is fantastic. Scalpers do create value, but some people are worse off because of resale. And the thing that's sort of ironic is the people who lose are the people who end up going to the concert. By that, Alan means the scalpers extract all the money they can from the super fans. And that could squeeze the joy out of a concert they've really been looking forward

to. And of course, none of the markup is going to go to the artist or the venue. The only real winner is the scalper. And yeah, in any market, there are winners and losers. But Helen says it's more complicated than that. The problem with scalpers is that it's the prospect of making this money that induces them to do all kinds of inefficient things to get those tickets, right? So they're the ones that jam up the website at exactly 10 a.m. Or in the old days, they're the ones that have hired people to stand in line at the box office. And so the line's really long. So given how much energy is expended from the scalpers,

Allen is pretty skeptical whether scalpers make the world better off, even from a dry analytical viewpoint that likes to see Dorothy watching Broadway plays and you, Darian, seeing your favorite pop star. You have these presumably smart people that are spending their time just sort of scrambling to write bots so that they can buy up tickets and profit from that, right? Like that's not a particularly productive thing for people to be doing. It's just skimming cream off a market.

Ticket companies have tried mostly half-heartedly to limit scalpers. They've restricted the number of tickets that you can buy at any one time. They sometimes make you show ID at a show. And some have apps where you can only transfer tickets to other people with the same app. But big ticket companies like Ticketmaster haven't really gone hardline. Like they haven't tried to ban the resale market,

for example. As for the Charlie XCX concert you wanted to go to after almost giving up when it looked like all the tickets were gone, we refreshed and refreshed and refreshed the pages. Taylor was jumping in, clicking buy, buy, buy. I was trying to click bye bye bye and then something happened. I think it might be one ticket. That's fine. I can have fun. Among the Charlie XX angels, I'm never alone. Yeah. Yeah, that's true. Then after an agonizing 10 more minutes of refreshing. Oh, actually sit tight. We're securing your verified tickets. We are currently working on your request. I'm actually shaking. I've got your back. I've got your back. You got him!

Woo! Yay! We got you in! We got you in! Oh, my God. Dream team, Ticketmaster buying team. It was a bloodbath. It obviously was a bloodbath. Coming up after the break, Adele's new album doesn't exactly go easy on the vinyl supply chain.

Adele's new album, 30, dropped last month. By now, you've probably heard her hit single, Easy On Me. And of course, you can get the album in what has become the typical fashion, digitally. But there's also this very special deluxe double LP that you can buy. Vinyl. Yep. So vinyl records have been having a mega comeback. Sales have been rising pretty steadily for about a decade now.

And they surpassed CD sales last year for the first time. And Darian, you know, Adele was not playing around with her LP release. She apparently pressed more than 500,000 copies of her album. That is a million single records. And this was just like a mega order for the little vinyl supply chain. I mean, supply chain issues had already been delaying a lot of vinyl. And now, Darian, they're basically saying that Adele broke the vinyl supply chain. That's awkward. It is awkward. But go easy on her, Darian, they're basically saying that Adele broke the vinyl supply chain. That's awkward.

It is awkward. But go easy on her, Darian. Go easy on her. Brandon Siebers owns Memphis Record Pressing, and his company's been making vinyl since 2014. Before that, the company was making CDs. And CD sales had been declining for years because music sales, they were all moving towards digital. And Brandon was watching this happen and he knew he had to make some kind of move. So he moved from CDs back to vinyl. We brought in a bunch of rusty old machines and we found some guys that had been in the industry decades ago. They helped us get it up and running. So Brandon realized that vinyl had this kind of superpower that CDs didn't. So

initially people opted for CDs over vinyl because CDs offered this really clean, consistent sound and they were more convenient. You could play them in your car, your Discman. But digital music trumped CDs on both of those counts, and CDs just couldn't compete with digital. Vinyl, though, could, because it offered something that CDs and digital music didn't. I mean, I love it. I mean, I always love anything that kind of sounds old. I think there's just that warmth and the crackle and everything. This is Shamir, an artist and musician from Philadelphia. Shamir has a couple of albums out in vinyl. This is like something you're hearing from fans.

They want this. Oh, absolutely. Absolutely. It's like, it's such a sought-after medium now at this point. Shamir says fans, they feel very emotionally attached to their favorite musicians. And they want like a physical object to connect with. And like the big photo spreads and liner notes and all the extras on an LP, they really fill that desire. And so young fans especially have started buying record players and snapping up LPs.

It's like really intimate. You're putting a needle on and like you're making a moment of it. Record labels and musicians love this too because LPs are a lot more profitable than digital music. Adele's double LP, for example, that costs $40 in stores compared to $10 for the digital album and $12 for the CD. Yeah, vinyl sales, they started rising around 2008. But things really took off when the stores jumped on board. Urban Outfitters was a pioneer, and then Target and Walmart started carrying LPs. And that was just a game changer.

And they started placing these giant orders that the handful of vinyl makers in the U.S. could barely keep up with, like Brandon Seavers of Memphis Record Pressing. Walmart's got 4,000 plus stores in the U.S. So even if they only ordered 10 for every every store it's 40,000 records. So Brandon went from six pressing machines to 16. That meant he was going from producing around a million records a year to 7 million. But he points out vinyl has very real limitations. For one thing, record pressing machines are basically all antiques. They're fussy and they break down and they require people who know how to run them

and tweak them depending on the temperature and the humidity. Two things are required to make vinyl, steam and cold water. Steam to heat the plastic up and to melt it and cold water to cool that record back down. And if your steam isn't right and your cold water isn't right,

you're not going to have a good record. And also it's powered by a huge steam boiler that if you turn it off every day, you've got to wait an hour and a half for it to warm up every morning. It's much more dark arts than it is science. It takes nearly 30 seconds to press each record, and that compares with a CD, which you can make in less than two seconds. Also, don't forget the raw materials, the vinyl itself, which basically all comes from overseas in these giant crates.

You ever had a nerd, the candy? They look exactly like nerds. So you've got these little nerds that are in different colors. Last year, when so many people were stuck in their homes during COVID, vinyl sales went bananas. And, you know, slow machines plus soaring demand plus raw material from overseas equaled a major supply chain strain and huge delays on record releases. Brandon's vinyl now takes months to arrive, and the turnaround time for a record went from around eight weeks to now it's about eight months for new clients. Eight, 10, 12 months in the music industry is life and death three times over. And then in the midst of all of this, along came Adele. Her 500,000 LP mega order descended like a monolith onto the fragile, strained vinyl supply chain. Because even though vinyl has been growing for years, there still just aren't that many places on earth that even make vinyl. And for the companies that do exist, like Brandon Seavers,

there's this slowness. Remember, 30 seconds per record. Can't brush it. I'm going to do some math real quick. All right. So if you're making two records a minute, records a minute, 500,000 LPs is 174 days of production. Six months. That's 24-hour days, seven-day production. Now, of course, if you're Adele or Ed Sheeran or Beyonce, you can probably just make it happen. Pay what you've got to pay to cut the line and rush your record. But if you're an independent musician, like the ones who made vinyl popular again in the first place, like Shamir, the Adele factor happening at this particular moment means you probably can't get a vinyl album out for six months or more. Adele's not the culprit. And I think we were struggling with vinyl delay times before Adele. I think people are upset because Adele's not helping. Adele is not helping. Adele is not helping. And this has affected Shamir.

Shamir has a new album coming out and has no plans to press any vinyl. I hate it as a small label owner, but I also made like kind of like a joke tweet where I was joking about like buying the Adele vinyl because it's just like, listen, like... You're buying Adele on vinyl. Probably. I mean, the new single is amazing. She's amazing. And it's just like, if anyone wants to be mad at anything, don't be mad at Adele, be mad at capitalism. And, you know, and that's that. But all of this really worries vinyl maker Brandon Seavers. He's worried that if vinyl

cannot rise to this occasion, people will just move on from it again. Musicians like Shamir will stop pressing records and fans will migrate to other formats that might also be a physical album that they can connect with, but might be faster to produce than LPs so they can come out, you know, the day an album drops and not eight months later. And Brandon's actually already seeing that. It's astonishing. I'm like, there's no way you're selling them. They're like, we sold out. You know, we're making 50,000 CDs for this new release and we're selling out. We never thought we would make CDs like that again.

Cassettes are the same thing. There are a very, very limited number of cassette manufacturers left and you can't get cassettes for months. By the way, the Adele album also is available on cassette. That's about $17. A lot more expensive than the CD, by the way. The CD only costs $12. Go figure.

Somehow there's a cassette premium, which is interesting. But Shamir, our artist, you know, says do not count vinyl out. You know, he says vinyl, for all of its faults, still has that special warmth, that crackle. And when all the supply chain issues ease up, he actually does plan to release his new album on vinyl. And he's especially excited to hear this one about supply chain struggles and the very strange economic moment we're in, check out The Indicator from Planet Money. You can email us at planetmoney at npr.org. You can find us on Twitter, Instagram, TikTok, and Facebook at Planet Money. The original Indicator episodes were produced by Brittany Cronin, Adrian Ma, Julia Ritchie, and Taylor Washington.

They were mastered by Isaac Rodriguez and edited by Kate Kunkanen. This Planet Money episode was produced by Emma Peasley. Our supervising producer is Alex Goldmark. I'm Stacey Vanek-Smith, and this is NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.