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The Rolling Stones most probably need no introduction. At least those born anytime between 1950 and 1980 should know the band, with Mick Jagger as its lead singer, and some of their widely known hits like (Can’t Get No) Satisfaction, Start me Up, Jumpin’ Jack Flash, and Paint It Black. By continuing to perform after the 1970s the band has given better chance for younger generations to become its fans as well. It is the longest acting rock band ever (since 1962, albeit some changes in their original line-up).

  • They are now four: Mick Jagger, Keith Richards, Charles Watts, and Ron Wood (the first two have written most of the band’s songs). Wood replaced (1975) Mike Taylor who has recently returned to perform with the band as a guest.

Therefore, when it was announced this spring that the Rolling Stones will have performed in a concert for the first time in Israel on 4 June 2014, the news were received with great excitement and anticipation. But then came a snag: the ticket prices declared were higher than Israeli rock fans apparently expected. The concert took place in the city park of Tel-Aviv in an area similar in form to an “amphitheatre”. There were three types of tickets. A small portion were allocated for standing on the lawn in a close area in front of the stage (“Golden Ring”), priced 1600 NIS (US$460) for a ticket. The vast majority of tickets allowed standing on the lawn stretching from behind the Golden Ring to the back slopes of the “amphitheatre”. Each ticket cost 700 NIS (US$200). Additional VIP tickets with extra perks offered sitting places on a staircase-balcony situated on the right-hand side, facing the stage, for the price of 2700 NIS (US$770). A total of 50,000 tickets were offered.

Rock fans have made mainly two types of complaints: (a) that tickets were more expensive than demanded for other concerts of foreign artists performing in Israel this year and in the past few years; (b) they were more expensive compared with prices charged in concerts of the Rolling Stones in other countries (e.g., 2012-2013 “50 & Counting” tour and the current 2014 “On Fire” tour).  Those price comparisons were used as a basis for consumers to claim that the ticket prices in Israel were unfair. The anger was directed towards both the local organizing agent and the Rolling Stones. Social activists ran a protest campaign in social media to persuade fans not to buy tickets. It most likely explains the sluggish progress of ticket sales until the day of the concert. All that time in the run-up to the concert there were talks that not enough people were buying tickets. Eventually, the amphitheatre was filled-up with 48,00o spectators, including the VIP balcony (a sigh of relief is permitted).

Consumers frequently judge the fairness or unfairness of a price in question based on comparisons to prices paid by others (e.g., friends), to prices paid by oneself on previous occasions, and to prices paid in other outlets for the same or similar products or services. Such comparisons are not easy to make, varying in accuracy and level of relevance. A key criterion for the relevance of a comparison is the degree of similarity between cases for which prices are compared — the more similar cases are on their non-price aspects while the prices are non-equitable, the judgement of unfairness is expected to be stronger.

  • When comparing with the prices for other rock or pop concerts consumers attended in the past, we should take into account factors such as: (1) the other artists used as reference; (2) when the other concerts took place (e.g., this year, three years ago); (3) the venue for the concert (e.g., a park, a football/basketball stadium, a concert hall). Further attributes extend from a difference in venue: seating or standing tickets, distance from stage, and flat versus rising ground or balcony. For example, standard tickets for standing in the same park at the concert of Paul McCartney cost 500 NIS, but that was five years ago. Niel Young, however, will be performing at that park later this summer, and standing tickets cost less than 400 NIS. In another case, Cliff Richard performed last year at Tel-Aviv basketball stadium: tickets for sitting on the flat floor of the basket field cost about 1000-1500 NIS while tickets in the first rows of the tier balcony facing the stage cost about 650 NIS. Arguing for unfairness is therefore not straightforward.
  • In comparisons to concerts of the Rolling Stones in other countries, differences associated with the venue of the concert are again important. In addition, one may also need to account for differences in standard-of-living and purchasing-power-parity (PPP) between countries. Fans in Israel, for instance, were angered that tickets in countries like the US or UK  where standard-of- living is higher than in Israel actually cost less when translated to shekels. Let us consider a few cases in example: (1) Ticket prices for concerts in Rome (22 June) and Paris (13 June) range from “standard” €78 (~US$110) to “premium” €150 (~US$210), nominally and relatively less expensive; (2) In the concert at Perth Arena in Australia, scheduled for 29 October this year, tickets for standing in the Tongue Pit adjacent to the stage or for seating in the flat area at the centre of the arena cost A$580 (~US$540) whereas tickets for sitting on the lower rows of the tier balconies more distant from the stage cost A$376 (~US$350) — while some place arrangements may be more convenient in Perth, overall the tickets are not less expensive than in Israel; (3) In fact, complaints about the relatively high prices the Rolling Stones charge have also been voiced in other countries — for instance, an article in The Telegraph criticised the high prices for the band’s concerts in London in November 2012 during their 50 & Counting tour (prices ranged between £95 and £375 [~US$150-600] with VIP Hospitality tickets priced £950! [~US$1520]), requiring the Rolling Stones to defend the prices they charge (Ron Wood explained they invested millions in arranging the stage).  Truly, there are not many active bands today like them.

In a cognitive, calculated decision process, according to the theory of mental accounting (Thaler), a consumer would evaluate the value to him or her of attending a rock concert based on some attributes or benefits of the band performing (e.g., how much the songs are liked, their singing and music-playing, and the show given at live concerts). Expressed in monetary terms, it is the highest price a consumer is willing to pay that would be equivalent to the psychological value to him (similar to the concept of reservation price in economic theory). The difference between the monetary value of equivalence and the (normal) price the consumer is asked to pay denotes the acquisition utility for the consumer.

  • The normal or ‘list’ price is often not the actual price paid due to special deals and discounts put forward — a difference between the normal price and the discounted actual price denotes the additional transaction utility a consumer can gain. For instance, customers of an Israeli mobile telecom company could buy their tickets for the Rolling Stones concert at prices 100 NIS lower than the official prices. (Some fans had a chance to buy standard tickets at half price of 350 NIS in a contest organised by the band.)

This methodic way for deriving a (perceived) value and reaching a decision may run out-of-order when trying to apply it to a rock or pop concert. Music as a form of art evokes emotions that are likely to disrupt sensible calculations of value. Moreover for devoted fans of a singer or a band, adoration and affective attachment are likely to influence their decision process more strongly. The fans of the band may find it difficult and disturbing to analyse their experience of listening to the music or attending a live concert in the way required to derive a well-founded value or utility. When the experience is about enjoyment, excitement, and getting carried-away by the music, the monetary value or the price fans are willing to pay can be expected to receive a boost upwards. They could perceive a reasonable acquisition utility even with the premium near-stage or VIP tickets.

But many other fans who feel close to rock and pop music, who may be greater fans of other artists of these genres, could also be strongly attracted to attend the concert because of the extraordinary opportunity to see and hear the Rolling Stones performing live in Tel-Aviv. Consumers may sense the historical significance of such an event, not to be missed. That could act as an emotional inducement for these fans to elevate the price they are willing to pay high enough to buy at least the standard type of ticket. It took until an hour before the concert to ascertain that there were indeed enough of them to fill the amphitheatre in the park (with some help from discounts).

Two important ways of approaching price were considered above: one is directed inwards and focuses on the perceived value of the target service, a rock concert; the other is directed outwards and compares the target price with prices for other cases or episodes that seem similar to the consumers and through which they judge the (un)fairness of the target price. Both avenues introduced challenging problems for the rock concert; it probably could have not occurred without the emotional component of the decision process. However, it does not have to spoil the event itself for those who bought tickets. Price may continue to pre-occupy the customers’ minds in the gap period between the time of buying the ticket and the day of the concert. When the event arrives customers “close” the mental account; they may either conclude the value obtained from their ticket acquisition or shift their attention fully to the event and the benefits it delivers, the more desirable way for them to avoid conflicts of value.

The concert of the Rolling Stones was wonderful. Mick Jagger was fantastically energetic on the stage (admirable in his age of 70+), and Keith Richards looked especially joyful. Jagger also demonstrated nice skills in expressing himself in Hebrew to the delight of the local audience. The band performed the songs mentioned above among others (19 in total); unfortunately Jagger did not sing their beautiful song Ruby Tuesday, but he performed another ballad from their repertoire not appearing regularely in their concerts, Angie.

  • Given the enthusiasm of the audience, the spectators did not let price issues spoil the celebration. There were other two factors that threatened to hinder the enjoyment. First, there was a heat wave that evening with high humidity — but that could not be anticipated and was beyond human control. It just had to be tolerated while drinking lots of water. The second factor was entirely due to human behaviour — spectators lifting smartphones above their heads in attempt to record on video episodes from the concert. The quality of images captured on the little screen (e.g., from a distance of 200m+) and the enjoyment spectators feel doing so is left for debate elsewhere. Meanwhile those screens waived above “stole” pieces from the field-of-view of the spectators behind who tried to escape them — what a shame.

The Rolling Stones did everything in their power, and they had the power, to make spectators happy for the money they had paid to the last shekel. Price did matter in making the decision to purchase and it even threatened to spoil the concert. However, that was true during the run-up period until the concert started on 4 June at 21:15. As the performance went on the spectators could easily forget about the price. The price effect was mitigated or vanished, leaving the spectators with pleasure of the music and performance of the Rolling Stones and particularly Mick Jagger. One may think of other artists who can achieve this outcome, but the Rolling Stones are definitely on the top list. It remains a specially good experience to remember.

Ron Ventura, Ph.D. (Marketing)

 

 

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That the music retail industry is in trouble is no secret. When we look, however, at what happened to major music store chains over the last five years it may become much clearer how serious the crisis is. Here are some highlights:

  • In 2007 Richard Branson decided time was up for Virgin‘s music Megastores and sold his chain of 125 stores in the UK and Ireland in a management-buy-out to a team of executives. The new retail brand Zavvi took place of the Virgin name that after thirty years vanished from High Street in the UK, particularly its famous flagships on Oxford Street and in Piccadilly Circus in London. By 2009 Virgin closed the last of its stores in the US. Stores in other countries were also closed while a few stores may still be found under the Virgin brand  in France, Greece, and in the Middle East. 
  • Zavvi survived no more than a year. It was dependent on a unit of Woolworths (Entertainment UK) as its primary supplier and with the collapse of the veteran retail chain, Zavvi ran into serious difficulties, forced into unfavourable new trade agreements. It entered administration in late November 2008 and within 3 months the chain ceased to exist. 14 of its stores were sold to HMV, 7 others and all stock sold to Head Entertainment, and all remaining stores were liquidated.
  • The once giant American music retailer Tower Records got into troubles already in 2004 when it sought bankruptcy protection and was doomed just two years later in 2006. Great American Group that bought the retailer in an auction soon declared its plan to shut down the music retail chain. All US stores were closed by the end of 2007 and in the following three years many stores overseas were sold or closed down. The stores in the UK closed in fact already in 2003 (Virgin took over its flagship in Piccadilly Circus but as noted above it did not last long).
  •  And now we hear that HMV is in trouble and struggling to keep its head above water. It is threatened by an increasing debt and a difficulty in keeping with terms of a bank loan. To be accurate, it is since January that news of troubles at HMV have been coming in about unsatisfactory sales results over the holidays shopping period and three consecutive warnings of dropping profits. First it announced plans for the UK and Ireland to close 40 music stores along with 20 book stores of Waterstone’s that HMV Group apparently also owns. Then it became known HMV intends to split Watesone’s from its core business in music, video, and games ; this prospect sale is still in negotiations. Analysts predict that break up is inevitable but still express concern that this will not be enough and HMV will be forced to close more stores to avoid administration.  

Explanations given by analysts for these misfortunes are probably not surprising many: the growing shift of consumers to digital download of music, video and games, and the tight competition from stores like supermarkets that sell discs at low-cost. While retailers started offering their merchandise online on their websites several years ago they were quite unprepared for the trend of digital download.

As implied above the problem is centered on but not limited to music. More than ten years ago music chain stores have actually transformed into entertainment media stores in order to expand their business and not be reliant only on music. Yet, the retailers could not cope with the fast technological developments in this field during the years 2000s that altered consumer behaviour patterns. This is not just about low price but also convenience, flexibility of choice and immediacy. True, especially in the early Internet years but even nowadays items can be obtained for free on the net and this phenomenon poses problems for many in the industry, perhaps mostly to the artists. This issue is complex with legal ramifications beyond the scope of this article-post. However, the whole field encompassing the different types of entertainment media has progressed considerably and broadened in the past five years and it would be too simplistic to attribute it squarely to price.

Music stores should not be given up too quickly. There are certain things about the stores — the sights of loaded stands of products, colours and sounds, movement on the floor and buzz — that the Internet and various electronic devices cannot provide. Many private stores, small or niche stores, may still remain but the chain stores were the real engine of this retail industry. It is worth investing much more effort to create a new model for music or entertainment media stores that will retain some of their more traditional virtues in new forms and yet offer new benefits. I suggest two dimensions for development in which strong advantages can be created: personal customization and social interaction. These can be sources for strong shopping values and enjoyment.

Personal Customization

Consumers want to choose more freely their favourite songs and create their own song compilations. They are much less willing to wait for record companies to produce albums and compilations based on their judgements. Consumers are less tolerant towards albums that contain 2-4 really good songs and 8-10 mediocre ones. The choice has to be delegated more extensively to the consumers. This phenomenon is becoming stronger and wider.

Perhaps as some analysts claim there is less justification for the large space of stores we have known so far. Stores may restructure and re-allocate floor space between product displays and personal self-service stations. A shopper will be invited to sit on a stool in front of a flat screen at his eye-level and use a multimedia programme to search and scan the store’s wide selection of music pieces as well as films, TV series episodes or games and choose whatever he or she likes. When the shopper completes, for example, to create a song compilation to his/her taste, an instruction will be given to the computer system to burn it on a CD, DVD, Blue-Ray disc or alternatively be saved on some other memory device such as Disk-on-Key. Appropriate payment arrangements may be devised including advance deposits and pay-as-you-collect at the cashier or pay with credit card at the station. Sessions may be limited in time.

Why doing this at the store and not at home? First, it may be because of powerful utilities of the multimedia programme that makes the shopping experience smoother and more enjoyable — well-designed graphic displays of items planned with consumer search behaviour in mind and friendly tools for building and displaying at any time the content of the shopper’s basket. The display may incorporate information structures such as a matrix or table of a relatively large variety of items , a “ribbon” mounted across the screen (moved left and right) for quick scan in a narrowed-down set of items, or “wheels” that include possibly artists in an inner tier and song pieces in an outer tier. Second, the programme may allow playing songs or showing short samples from film in live-streaming directly from the store’s library (if the system works on an Intranet it may work faster than on the Internet). Third, when required the shopper may consult with a personnel adviser, assuming hopefully that the store employs people expert in various genres of entertainment.

It should be remembered, however, that there are different types of shoppers. We may distinguish primarily between (a) those who come with a more clear and well-defined plan of specific songs, artists, TV programmes etc. that they wish to find and buy, and (b) “explorers” who have a more general idea, perhaps only at the level of a style or genre, of what they want and whom in the “old days” liked to browse through items on display with their fingers. For consumers who do not have well established preferences and who even seek surprising discoveries the old format was simpler and easier to explore and probably less time-consuming compared with a computer application. A multimedia programme with a search engine may be less advantageous for them. In order not to lose those customers the store will have to devise more creative solutions, combining intelligent computer-based cues and guiding tools, physical displays even if more limited than before, and human advice.

Notwithstanding, there are types of music pieces and areas in which it should be sensible to offer physical copies on display. For instance stores can continue to offer films, live concerts,  TV series by season, and games as ready-made products. In addition, areas like jazz and classical music should still deserve special rooms with most space allocated to displays of physical items to accommodate usually more conservative habits of amateurs of these types of music.

Social Interaction

Consumers of entertainment of sorts, especially younger ones (say under 30), prefer to sit in front of the computer at the comfort of their homes, sometimes for hours, surf the network for various music and video pieces. They also like to download pieces onto portable devices such as MP3 players, smartphones and tablet computers. But they do not truly perform this activity all alone. Conspicuously as they sit on their own with the computer they often communicate with friends and relatives, consulting and change ideas or recommendations talking on the phone or chatting in social media communities.

So why not offer these consumers a more lively social way to interact with friends face-to-face  in a store? For that purpose, special sitting sets for 2-4 people can be installed in special areas of the store (not to disturb other customers). At the set a small group of customers-friends can sit together, use each his or her multimedia application to explore and examine favourite pieces while from time to time conversing with each other on their findings. This setting offers people a more natural, direct and open way of socializing, and it has a good chance of producing richer shopping baskets.

These are two directions for developing a new model for music or entertainment media stores that I conceive as promising from a consumer perspective. More generally and beyond the proposed directions, stores will have to create benefits that enrich the whole experience of shoppers during their visit and that the Internet and personal electronic devices (i.e., for online sales and digital download) cannot in their capacity replace (e.g., contact with expert staff, events, sensual stimuli in the store’s scene).  For stores’ owners and managers, the goal is clearly to convert shoppers into happy customers who enjoy returning frequently to the store(s).

Ron Ventura, Ph.D. (Marketing)

Media Sources:

“Branson sells Virgin Music Stores”, BBC News, 17 Sept., 2007

“Zavvi placed into administration”, BBC News, 24 Dec. 2008

“Tower Records victim of iPod era”, Associated Press at MSN Money, 10 Oct. 2006

“HMV prepares for split to stem rising debt“, Financial Times FT.com, 28 March 2011

“HMV in its third profit warning of this year”, The Guardian (online), 5 Apr. 2011

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