Wednesday, April 15, 2009
Leonard Cohen, Green Day and wine prices
Last night I had a concert-shopping experience that had me thinking about how top-end wines are priced.
I wanted to see Leonard Cohen at the Paramount Theater in Oakland. The show wasn't sold out, but the remaining tickets were $176 each, which is more than I wanted to pay for a concert.
I tried buying a ticket from people with extras; there was a little knot of "miracle seekers" outside. I was offering $80 for a ticket and it was the highest cash offer in the group. But several people walked in with their extra ticket unsold rather than take the cash.
Coincidentally, Green Day was playing a one-shot concert a block away at the Fox Theatre. Unlike Cohen, that show had been announced just the day before and had sold out in minutes, at $50 per ticket. About 20 minutes after Cohen started playing, I wandered over to the Fox to see if I could get in.
Sure enough, within 5 minutes somebody sold me a Green Day ticket at face value: $50 (thank you, Ian from Berkeley). He was actually grateful to get the money and couldn't believe it when I bought him a beer.
Now here's the thing: why was Leonard Cohen $176 (more than that to sit close up), and Green Day $50? Why is, for example, Screaming Eagle $750 and Siduri Sonatera Pinot Noir $50?
People who buy the more expensive product want to believe that it costs more because it's either more exclusive, better, or both. But is it really?
Chateau Margaux, $440 pre-arrival at K&L, is widely available -- tens of thousands of cases are made. Parker rated it a 92; Spectator gave it 92 to 94. A good wine, but not a great wine, and not at all exclusive.
Just for comparison, I noticed that K&L has Altamura Napa Valley Cabernet, a more limited product, for $70. Parker gave it 95; Spectator gave it 93. Is the Margaux better? Possibly, but not empirically or demonstrably.
Back to my concert analogy. Let's compare Green Day and Leonard Cohen concert tickets for a moment.
Leonard Cohen: Hasn't toured in several years, but he's doing 3 shows in a fairly large venue, so tickets are available, and in fact didn't sell out. Great songwriter; hard to say he's at the height of his powers, though.
Green Day: Hasn't toured in several years. Doing a series of small shows in small venues, leaking information about them to the fan base just before each show. Tickets are selling out immediately. Good songwriters whose last album was as good as any; young and energetic enough that they may well be at the peak of their career. This individual show, in which they opened by playing their entire new album straight through, was so unique that they had t-shirts and posters printed to commemorate it.
So what made Leonard Cohen tickets worth more than three times what Green Day tickets were worth? It's marketing. The Cohen crowd was older and more affluent looking; you can charge what your audience will pay. And you need to make them feel that what they're paying for is worth it, which means the illusion of exclusivity. In the case of Cohen tickets, the concert went on several "members-only" presales before tickets were available to the general public. You could walk up at showtime and buy a ticket, but the people who spent $350 each for front-orchestra tickets months ago had no way of knowing that.
Think about that when you're buying expensive wine. What are you really paying for? Is it quality? Is it exclusivity? Or is it the illusion of exclusivity?
I'm thinking about it because, while I enjoyed Green Day, I still want to see Leonard Cohen ... and tickets for tonight are still available. Pricing decisions aren't any easier for the consumer than they are for the producer.
Posted by W. Blake Gray at 10:47 AM