Concert Cost Breakdown: Where Does the Money Go?

Organizing a live music event is a complicated task that requires expert budgeting and event coordination skills. As a music industry manager or promoter, you already know that concerts involve more than merely booking a venue. It requires deploying marketing strategies, navigating contract negotiations, and assembling a network of skilled industry professionals for support. What’s more, new technologies have opened up a wealth of opportunities and management tools for creating memorable, interactive events.

Of course, all of these factors come with a price tag. Learning about industry advancements is a great way to further your success and make your work life easier. In this breakdown of concert expenses, discover current industry trends and the major costs associated with organizing a live music event. 

Concerts in the Digital Age: New Possibilities and Complexities

Today’s concerts are significantly more complex and dynamic than they were even a decade ago. What used to be a fairly straightforward music presentation has evolved into a richly visual, multifaceted performance. Concertgoers expect an attention-grabbing, immersive experience with everything from artistic lighting to pyrotechnics, VIP packages, merchandise offerings, and more.

For many artists, live performances involve a web of moving parts. Dancers, backup musicians, and multiple wardrobe changes must be carefully coordinated. New advancements in live streaming technology have created additional possibilities. With the right tools, artists can livestream their concerts online and sell digital tickets for fans to watch the performance at home.

As an industry professional, organizing an event that encompasses all of this can be complicated, to say the least. There are so many aspects of each performance to consider and plan for to ensure it’s a success for the fans and the artist. 

Rising Prices and Increased Expectations 

For many years, ticket prices have been on the rise. They have climbed so high that The Wall Street Journal dubbed 2023 “The Year of the $1,000 Concert Ticket.” Consumers have come to expect an unforgettable performance to justify their price of admission. Yet, with today’s impressive performance offerings, many are willing to pay the price.

Many consumers are reporting that they would even consider getting a second job to purchase tickets to see their favorite artist. Financial news sources have been offering tips to help consumers fund their entertainment. They advise music lovers to invest spare change, rent out unused bedrooms, and strategically choose credit cards to afford a concert ticket.

These trends signify that the role of music industry professionals is becoming more demanding. Event promoters, talent agents, and venue managers must remain current on industry changes and adopt solutions to stay organized and ensure they deliver successful shows. 

The Impact of Streaming 

One significant evolution that’s shaping the decision to tour is online streaming. With platforms like Spotify, Apple Music, Pandora, and YouTube Music, more consumers are streaming their favorite artists instead of downloading albums or buying physical merchandise. Unfortunately, musicians are reporting a loss of income from this trend. 

According to The New York Times, Spotify pays artists less than half a cent per stream—money that will filter through many hands at record labels before an even smaller portion goes to the artist. These challenges make live concerts an appealing way to earn income for many artists, and it’s the reason why so many bands continue to go on long tours decades past their glory days. Concerts are more effective for paying the bills. 

Related: The Changing Role of Music Agents in the Digital Age

With ticket prices so high, the profitability of touring is perhaps better than in previous decades. Artists can take home as much as 85% of the revenue from each venue, resulting in a nice income, even from smaller gigs. While performances at smaller venues or neighborhood nightclubs don’t have the same production level as a major tour, they also come with fewer expenses.

If you don’t have to pay dancers, stylists, makeup artists, or opening acts, you can enjoy a higher profit margin. Plus, music lovers continue to pack venues of all sizes. Smaller concerts will always remain a fan favorite for the intimate atmosphere they create—as well as the more affordable price tag.

What is the Concert Cost Breakdown? 

No matter how large or small the concert you’re planning is, the money from ticket sales will primarily go to the same places. Setting the price of concert tickets involves multiple factors, including production costs, desired take-home revenue, and promotion expenses. The costs must be carefully calculated and balanced with the expected ticket sales. 

This is the realm where more experienced concert promoters excel. With a longer history of industry experience behind them, they can anticipate hidden costs, navigate marketing tactics, and negotiate better deals with long-term partners.

Still, there are many considerations when planning a concert. These factors can help anyone in the industry get organized and enjoy a more successful event. Below, we’ll explore the biggest expenditures when calculating music concert costs.  

The Artist

While artists receive the bulk of ticket sales, many factors go into these calculations. In some cases, talent is more than one person. Larger groups or bands need to split concert proceeds, and any performer will also need to pay their crew members.

Many other costs typically come out of an artist’s pay, such as hotel prices, transportation costs, and any of the artist’s personal needs during the show. These expenses can fluctuate significantly depending on the event or length of the tour. If an artist is local to the venue where they’re performing, for example, they won’t require hotel accommodations. 

An artist’s popularity also determines ticket price. The more well-known an artist is, the more fans will be willing to pay to attend a concert. Groups with multiple members can usually charge more than solo acts since their income will be divided. 

Choosing whether or not to include an opening act is another important decision. Booking popular openers can help draw bigger audiences and increase awareness about your event. Including opening artists can allow you to charge more for tickets, but it also means your revenue must be shared to pay for them. 

The Venue

After you’ve considered artist pay, your venue is the next expenditure. Large arenas are much more costly than small local venues and can be difficult for independent concert promoters to book. In most cases, large promotion companies snatch up the biggest venues for expensive tours involving well-known artists. However, with the right contacts, you can navigate and negotiate your way into any hotspot. Larger arenas can hold thousands of fans, resulting in more ticket sales and increased revenue. 

If you’re looking for a smaller venue, you can expect more affordable prices, but the booking process isn’t always simple. These locations tend to get reserved quickly. With competition so fierce, it’s important to plan in advance. You’ll also have to consider the detailed breakdown of other costs associated with the venue, such as lighting, sound, staging, and a production team. Some locations offer these services, but others require you to bring your own team.

You might also need to hire venue-related staff, such as a clean-up crew, security detail, or parking attendants. Costs can escalate quickly if none of these services are included in the venue price, so it’s always important to verify the details of your agreement. 

Marketing and Advertising

Marketing and advertising are sometimes overlooked as a concert expense, but they are crucial to the success of your event. Ticket sales depend on you getting the word out about the show and enticing fans. However, seasoned professionals avoid investing too much into marketing as it can cut too deeply into their profit margins.

In the digital age, there are many marketing channels you can utilize to spread the word. However, the more channels you use, the higher the cost. Social media is a necessity, but it’s also worth exploring radio, print, and television. Maintaining an active social media presence on multiple platforms is one of the best ways to get attention and foster a close connection with fans. 

Ticketing

Ticketing prices are an important aspect of concert costs, and there are many ways you can go about selling tickets. Some promoters sell tickets on their website, linking directly to the ticketing platform to make purchasing simple for fans. Depending on the ticketing platform, you can choose to pass fees onto your attendees or absorb the costs yourself and simply deduct them from your revenue.

Related: A Quick Guide to Concert Budget Breakdowns for Music Venues

Certain ticketing platforms charge an initial setup cost and monthly software licensing fee but allow promoters to keep their booking fees. Other options include a fee per ticket sold or a flat monthly rate. Evaluate your options by searching for the latest reviews, and remember that the easier it is to purchase your event tickets, the more likely you are to sell them.

The Rider

Many performance contracts include a rider. This contract addition specifies the artist’s requirements to perform. Many famous artists have been in the news for having extravagant or unusual riders, but in most cases, this section features more simple expectations. An artist might request certain technical equipment, security staff, or other hospitality-related items. There’s usually a negotiation process involved before the contract is finalized so you can address any budget concerns at that time.

Additional Investments 

Finally, don’t forget to factor in the cost of equipment you might need to rent. If you’re planning on simultaneously livestreaming your event, you should set up the infrastructure for it and also sell separate tickets for at-home viewers. Smaller venues aren’t always set up to accommodate the needs of live music events, so it’s important to verify what you’ll need in advance. Some venues, for example, don’t provide a sound engineer. These details can result in high costs if you’re unprepared for them. 

Another helpful tool to consider investing in is process management software. Today, you can access options and features developed with the needs of live music promoters in mind. These tools provide an easy-to-use platform for managing all aspects of your events, from accounting to communications and much more. With the right technology, you can stay organized, reduce spending, and work more efficiently. 

How Software Can Affect Your Bottom Line  

Music management software works behind the scenes of concert planning as a beneficial productivity and cost-cutting tool. The right software can help you automate concert cost budgeting by breaking down each task into steps you can handle from one platform. These tools manage every detail of live events, freeing up extra time for industry professionals. 

In the past, managers and promoters used an assortment of time-consuming methods for performing their work. Spreadsheets, data entry, emails, phone calls, and text messages all had to be handled separately to ensure events were executed smoothly. Budgeting, deposit tracking, and managing rider requests were all handled separately as well. With newer technology, all of these details can be managed from one mobile platform, ensuring nothing gets forgotten. 

It’s even possible to integrate software with your ticketing platform and receive updated financial information in real time. You can gain instant access to ticket sales data and make better informed decisions quickly. Music management software eliminates the need for a series of phone calls to ticketing companies and waiting until the day of the show to know the accounting details. 

Choose Software That Helps You Manage Every Aspect of Your Concert

Live music events are complicated to organize and require skillful coordination, budgeting, and planning. Luckily, you have access to a wealth of new technologies to assist with the process. While some tools have made it possible to create even more engaging and memorable performances, others are delivering solutions for staying organized and working effectively.  Music management software from Prism streamlines your workflow, putting all the tools you need in one convenient location. Invite effortlessness and ease into your music event planning while working more efficiently than ever. Get started now to discover why Prism is trusted by thousands of industry professionals.