Your Personal Live-Music Itineraries: Are They Feeling The Pinch?

Sure, today saw quite a few highly anticipated concerts in the news. But Forbes.com is seeing through those lineup announcements and sellout crowds and forecasting nothing but gloom and doom, thanks to—what else?—recent global economic woes. Layaway plans for pricey festival tickets are just the beginning!

Coachella, the annual rock festival near Palm Springs, Calif. produced by AEG Worldwide, recently announced it would offer a layaway plan for fans who want to spread out the $269 it will cost for a three-day pass. Like a department store pushing hard to sell furniture, the festival will let fans pay half now and the rest by April 1, or put 10% down with equal installments of $121.05 in March and April.

The business model has worked for StageCoach, the country companion to Coachella. Layaway tickets made up a quarter of all sales, promoters say.

Other festivals that offer layaway plans include the All Points West Festival in New Jersey, the Bonnaroo Music and Arts Festival in Tennessee, and the Rothbury Festival in Michigan.

None of it bodes well for the live music industry. Even if customers are able to purchase tickets, they may not be able to purchase high-margin items like beer and T-shirts at the venue. For example, Live Nation, the world’s largest promoter, loses 4% on each ticket sold, but makes 43% of its overall revenue from extra charges like parking and food.

That puts the company in a precarious place, analysts say. “Tickets are a luxury item that people cut back on,” said Alan Gould, an analyst at Natixis Bleichroeder in New York. David Kerstenbaum, an analyst at Morgan Joseph, agreed, saying, “The company is going to have to be very careful about its price points. They won’t be able to raise prices as much as they probably would have liked.”

Live Nation maintains customers are continuing to buy tickets because their typical consumer goes to just one or two concerts a year. The company says they saw little difference in ticket sales between 2007 and 2008, when the recession kicked in.

Artists, meanwhile, may be hit especially hard by any dip in ticket sales or prices. The upper tier of performers make 7.5 times more money from touring than from recorded music sales, according to a study by Marie Connolly and Alan B. Krueger at Princeton University.

Musicians have leeway in setting ticket prices but are often reluctant to cut prices. “They think ‘Well, so and so got that much, so I’m worth at least that,’ ” Bongiovanni says. “Until the public proves them wrong by not buying tickets, you’re not going to see an adjustment.”

So, public… are you planning on proving anyone wrong this summer? Or taking advantage of the (admittedly convenient) lay-away plans? I suspect that the low Albarn/Coxon quotient of the Coachella lineup will result in more than a few people suddenly realizing that they need to be a bit more budget-conscious about future trips to the desert, but I may be wrong, what with the Beatles Factor coming into play and all.

Concert Industry May Be A Bust This Summer [Forbes via TDS]