Madonna on Pay-Per-View

Madonna on Pay-Per-View

Madonna on Pay-Per-View

        Madonna is one of the most successful and controversial performers in history. She currently holds numerous world records including “Best-selling female recording artist”, with more than 300 million albums sold ("Best-selling female recording artist | Guinness World Records," n.d.), seven Grammy awards ("Madonna | GRAMMY.com," n.d.) and numerous other major awards, She seems to have an excellent grasp on marketing and business platforms. In later years, her ever-changing business strategy, spanning three decades, has shifted her focus from CDs and music videos to a schedule of year round live performances. Utilizing Per-Per-View programming, Madonna could capitalize on extensive profit building opportunities, while only performing in major cities.

Synopsis of the Case

In 2012-2013, Madonna’s “MDNA” tour consisted of 88 sold-out shows grossing $305 million (Lawrence, 2015) and moving 2.2 million tickets. For her current “Rebel Heart “tour there are 64 planned shows (Stickler, 2015) with the first show set for 9 September already sold out. That said, there is speculation that “Rebel Heart” U.S. ticket sales may mirror its poor album sales in which equaled about half of the “MDNA” album sales (McIntyre, 2015).

While Pay-Per-View is often associated with sporting events, particularly boxing and UFC, this platform has proven very effective for other music entertainers in producing revenue. Acts such as N’Sync and The Rolling Stones have used Pay-Per-View to supplement live ticket sales (Umstead, 2012). The Grateful Dead’s Farewell Tour became the biggest pay-per-view musical event of all time with over 400,000 viewers paying upwards of $80 dollars for the event.

Relevant Factual Information about the Problem or Decision the Organization Faced

Overall tickets sales for Madonna’s “Rebel Heart” tour are predicted to be lower than previous tours. While she still has a very strong fan base, ticket prices for the upcoming tour are significantly higher than previous shows. On average, secondary ticket prices are $331; which is an increase close to $100 in some venues. With venues ranging from 20,000 to 60,000 seats, in terms of value for the customer (Grant, 2013, p.62), only devout fans will be willing to pay these prices at the risk of getting mediocre seats. By today’s standards, a successful pay-per-view event is estimated to generate between 150,000-200,000 homes (Fried, n.d.) costing on average around $50. That is additional revenue of $7.5-$10 million minus fees

Explanation of Relevant Concepts, Theories and Applications Derived From Course Materials

In early 2000’s, there was a decline in album sales revenue due to file sharing and illegal downloading. Live performances that were once just publicity mechanisms for new album releases became primary revenue streams for artists (Grant, 2013, p. 443).While most people will argue there is no substitute for live concerts, many people would also say it is still not worth the high price tag that comes with some of these concerts. As a music promoter, prices of tickets are driven by the costs of booking venues, advertising, and booking backup musicians and equipment (McDonald, n.d.). These costs can be very expensive for a promoter and musician, so often times that hefty price tag can be both a necessity and a hindrance.

For Madonna, the demand to see her shows has been well documented with sold-out shows around the globe. However, by limiting her sales to just the 20-60 thousand that will fit in the venue she is losing significant revenue opportunities. Along with live airing sales of the concert, there are also delayed broadcast sales, closed circuit sales, and even DVD sales opportunities (Fried, n.d.). Additionally, supplementing ticket sales with Pay-Per-View television opens up sponsorship opportunities that may reduce setup and overhead costs of the concert. Again, this strategy has created impressive profits for other performers in the past.