February 10, 2013 Leave a comment
Despite some mounting challenges, Apple’s pile ‘o’ cash now stands at a reported $137 billion. As of BizSinc’s March 26, 2012 post (“Apple’s Cash“), this amount was a mere $100 billion. David Einhorn and Greenlight Capital (link) have filed suit against Apple for its alleged cash hoarding and low-risk investments – citing a “Depression-era mentality”. Although that’s a story for a different day, let the words “Depression-era mentality” sink in as you read on. It apparently stands in stark contrast to baby-boomer mentality.
Looking for a Handout
I’m thinking that Apple should give me some cash so I can go to see Heart (Photo-Michael Sierra). Among Seattle’s finest, this semi-iconic rock band just came through town with ticket prices ranging from $75-105 per ticket. Scoffing at the ticket prices, I took a pass on the Rock and Roll Hall of Fame-nominated band’s live versions of “Magic Man”, “Barracuda”, “Crazy on You”, “Little Queen”, etc….even though they were right in my own little town. It’s not a knock on Heart per se, but I’m not paying $105 to see any band. My internal value proposition goes bonkers at those prices. Quite confidently, I concluded that my view on this matter aligns with everyone’s. Why wouldn’t it?
Fast forward to a few weeks later….I’m “here in my car” – navigating through a bit of unanticipated traffic. Up ahead, I see the “Lot Full” sign which just about causes me whiplash. The neon hits me straight upside my rock ‘n’ roll head. Translation…I’m driving past the venue where Heart is playing, and it’s a full house. Small venue, 1,600 seats…but we will trust the parking proclamation for its accuracy as a leading economic indicator of this show’s gross revenues….. somewhere between $120-$170K. Holy heck, Batman. That’s really something.
Of Value Propositions & Luxury Goods
Who are these people? No, not the Wilson sisters, not Heart, we know them…..but the people in the audience for whom this value proposition worked. People willing to plunk down $75-$105 to see Heart. Given the longevity of Heart, this audience had to be comprised largely of Boomers and sub-Boomers. As “Subs”, we’re close but not quite Boomers. We’re a few years younger….roughly the same demographic, as time blends and bends. Perhaps we just had older, hipper friends back in the days when 33 1/3 meant something.
For these 1,600 people, their individual and aggregated demand curves exhibited some serious price inelasticity. As much as I love live music and brandish a concert resume that’s truly major league, I guess the simple fact is that my rock concert demand is much more elastic. Price goes up, I stay home. In Bringing Business to Life terms, this leads to a fundamental economic question. Have rock concerts become a luxury good? To be sure, BizSinc is not picking on Heart. It’s an across the board phenomenon. It’s not just them. Check ticket prices for yourself. This ABC news article makes the same point and provides a few great examples.
Priceless Memories at a Cost
Is it that middle-aged Booms and Subs are again enjoying the freedom to move around the cabin as their nests empty? Is it their time to step back in time and relive the experiences of their youth after years of straightening up and flying right? A chance to rock out for a night. “Who can put on a price on that?”, they say. And to some extent they’re right. While sipping a hearty Cab and dining well pre-show and present day, their youthful lore no doubt returns. Where they were, who they were with, and what they were doing when they first heard the “Dreamboat Annie” album….as they tell their now twenty-something (year old) kids who through some amount of coercion accompany them and are pretty much bored with what they probably regard as their parents’ disgustingly tall (but largely true) tales. It was a simpler time….pre-MTV, VH1 and YouTube. “All we had was Don Kirshner’s Rock Concert.” Mom, Dad, stop, please.
No doubt Heart played a great show. That’s not the point. It’s the high concert ticket prices. It’s the cost of reliving memories. It’s the value proposition. Gets me every time. For me, this free link works just as well- check it out. It’s the Wilson sisters’ rendition of one of the best rock songs of all time – with 3/4’s of Led Zeppelin looking on…and a close link to the missing 1/4 with Jason Bohnam (John’s son) on drums. Priceless memories at a much lower cost.