Britney Spears and Groupon: Perfect Together (Analysis)

groupon rihanna concert

The pop star looks to the discount market to offset sluggish ticket sales for her 'Femme Fatale' tour? It's working for Rihanna.

One night into Britney Spears’ two month North American tour and it seemed as if the pop singer was instantly greeted with some not-so-good news: that tickets to her Femme Fatale trek would be offered at a hefty discount through Groupon, the coupon e-tailer which promotes everything from personal trainers to flower arrangement lessons to window cleaning services. The Groupon rate for a ticket that once had a face value of $61? Just about half-price at $31, with a maximum purchase of eight.

On the surface, the move looks like a knee-jerk reaction to sluggish ticket sales. After all, with the high cost of Spears’s production, anything less than a sell-out brings to light not just potential perception problems, but actual empty seats, which equal lost revenue for the venue and promoter and can deflate a performer’s morale.

But as is de rigueur in the concert industry, the artist’s position on this stage is shrouded in meritocracy. Meaning: it’s not really Britney Spears’s problem. As the main attraction from which scores of companies stand to make millions of dollars, the talent is given a guaranteed fee. Whether section 212 at St. Paul, Minnesota’s Xcel Center (the venue offering $31 seats) is full or not doesn’t change what Spears pockets, but it does affect the bottom lines of the promoter (Live Nation for the Femme Fatale tour) and the arena, which count on revenues from parking fees and concessions.

As Dean Budnick, coauthor of the just-released book Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalpedexplains, “For Live Nation, this is really about selling parking, beer and hot dogs. That's where the extra 1,000 people in the venue at discounted prices will really pay off.” In essence, it’s all about getting patrons -- and their wallets -- in the door, where the promoter and venue stand to make the biggest profit margin. The ticket, at that point, is a loss leader -- the earnings have already been spent.

Another positive to incorporating Groupon, which announced a pact with LiveNation called GrouponLive back in May and has already been instrumental in generating sales of albums (like Rihanna’s latest Loud), is that it could draw more casual shoppers who may not have considered attending a Britney concert before. The ticket buyer might be a Groupon diehard or the group leader for a girls night out, but likely not a Britney fanatic. “I know people who are so fixated on Groupon that they'll take just about any ‘deal’ that comes their way,” adds Budnick, “and I think for many of these people, Britney tickets would qualify -- either out of curiosity or as something of a goof.”

No matter the impetus for the purchase, the tactic seems to be working for an artist like Rihanna, who offered tickets to her June 29 stop at Anaheim’s Honda Center (capacity: 18,000) for only $17 and, after 1500 transactions, swiftly sold out. But bear in mind, the Groupon gets are not exactly prime viewing locations. Rihanna’s Anaheim deal lists “400-level seats” among its “highlights” (rather than the area marked “fine print,” curiously).

And therein lies a potential problem: when the person in the crappy seat next to the giddy Groupon buyer is fuming that he or she paid twice as much to sit 12 inches further from the stage. But Budnick points out that in amphitheaters, where many tours are booked through the summer, general admission lawn seats are ideal Groupon purchases as they often involve a group outing. “Last summer, plenty of lawns were empty,” Budnick notes. “The reality is that there are very few artists who can fill an amphitheater these days, especially given the way prices have been rising.”

On the other hand, Live Nation and future Groupon music partners need to be careful so as not to create the expectation that every show will be discounted in such a manner, thereby cannibalizing the performer’s own out-the-gate sales. Then again, the online event marketing method beats the desperation of last summer’s concert season, when, in a bid to drum up more business (concert revenue fell 8%, to $4.25 billion, in 2010), promoters began pushing lawn packages for future shows, often making the pitch with clipboard-carrying cronies who would approach audience members directly at shows.

“I think people learned their lesson last summer,” says Budnick. “Ticket prices are not as out of control as they were. Some of that is due to the economy picking up, but it’s also because of Groupon and similar discount programs like ScoreBig and Goldstar, where tickets are not so beyond peoples’ means.”

And there’s another big plus to the Groupon point of entry: it’s very of the moment. “It’s cool for consumers to get that feeling of a deal,” says Budnick. “Speaking as someone who was at venues last summer, it didn’t feel so great.” And in that sense, Groupon is solving a big problem, not just for the Britney Spears tour but the concert business in general: it’s getting people excited about going to see live music again.