Journal of Media Business Studies

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Value creation and appropriation in the live music

industry: a population ecology analysis of live
music ticket pricing

Federico Magni

To cite this article: Federico Magni (2023) Value creation and appropriation in the live music
industry: a population ecology analysis of live music ticket pricing, Journal of Media Business
Studies, 20:2, 137-157, DOI: 10.1080/16522354.2022.2036440

To link to this article: https://doi.org/10.1080/16522354.2022.2036440

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Published online: 07 Feb 2022.

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JOURNAL OF MEDIA BUSINESS STUDIES
2023, VOL. 20, NO. 2, 137–157
https://doi.org/10.1080/16522354.2022.2036440

Value creation and appropriation in the live music industry:

a population ecology analysis of live music ticket pricing
Federico Magni
Department of Management, Technology and Economics, ETH Zürich, Switzerland

ABSTRACT ARTICLE HISTORY

The music industry has grown to depend financially on live events, Received 29 December 2019
making value creation and appropriation critical. Connecting the Accepted 28 January 2022
resource-based view and organisation population ecology, this KEYWORDS
study investigates how generalist and specialist live music event Value creation; value
producers differ in their ability to create and appropriate value. appropriation; population
Evidence based on 631 live music events shows that generalists ecology; niche theory; music
are able to create and appropriate more value than specialists by industry; resource-based
setting higher minimum prices and employing more price cate­ view
gories. The generalisability of the findings is discussed by describ­
ing which market conditions drive the effect of niche width on
value creation and appropriation, identifying high fixed costs
paired with a superstar effect and a heavy reliance on status as
likely candidates.

“We need to find a way as an industry to crush the secondary ticketing market this time
around” (Dominic “Dot” Major, London Grammar)

Introduction
With the advent of the new millennium, the music industry has been undergoing a so-
called revolution, as the prevalence of recorded music waned in favour of the digital and
live music sectors (Gateau, 2014; Moreau, 2013; Tschmuck, 2012). The rise of digital
downloading and streaming services has eroded the margins that music labels and artists
used to generate with the sales of recorded music. Yet, the emerging business models
have so far fallen short of providing musicians and music producers with an alternative
source of revenue able to guarantee economic stability (Kusek & Leonhard, 2005). Thus,
music industry players have come to rely more and more on revenues from concerts and
live events (Connolly & Krueger, 2006; Holt, 2010), to the point that the live music
industry has surpassed recorded music to become the highest grossing sector of the music
industry at the onset of the new millennium (Curien & Moreau, 2009; Mortimer et al.,
2012). In parallel, organisations operating in the live events sector, such as Live Nation,
have largely overgrown most major music labels, such as Universal and Sony (Ingham,
2016).

CONTACT Federico Magni fmagni@connect.ust.hk Department of Management, Technology and Economics,

ETH Zürich, Weinbergstrasse 56-58, 8006 Zürich, Switzerland
© 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/
licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly
cited.
138 F. MAGNI

Given the current market conditions, it is thus of the utmost importance for music
industry players to create and appropriate as much value as possible from live events. Yet,
the live music industry is currently affected by two phenomena that inhibit the ability of
concert producers and artists to create and appropriate value: the secondary markets and
underpricing. In the context of live entertainment events, the secondary markets are
those marketplaces involving all ticket transactions that happen after the primary sale
operated by the official ticket seller – including concertgoers re-selling tickets they can no
longer use and professional ticket re-sellers, such as brokers and scalpers who re-sell
tickets for a profit (Courty, 2000). The latter account for a large majority of the secondary
revenues, as an estimated 9 out of 10 tickets re-sold in secondary markets come from
professional brokers (Cardenas, 2016), building up a market worth of around $8 billions
a year (Cookson, 2016). On top of that, the digital revolution not only fostered the
erosion of recorded music margin, but it also enhanced the ease of ticket re-sale through
internet platforms (Perez, 2016), which drove the involvement of large primary market
agents – such as eBay, Ticketmaster, and LiveNation – in the secondary markets
(Cardenas, 2016; Cookson, 2016). Notwithstanding the blurred boundaries between
primary and secondary markets, event producers and performers are undoubtedly leav­
ing value on the table, and this is exacerbated by the generalised tendency to underprice
tickets.
Underpricing is a widespread practice in the live music industry and several factors
encourage its implementation, including both economic and psychological motives
(Courty & Pagliero, 2014; Leslie & Sorensen, 2014; Rosen & Rosenfield, 1997). As far
as the former are concerned, the sales of ancillary goods – such as food, drinks, and
parking – and complementary goods – such as records and merchandise – benefit from
having a larger audience at the venue. Moreover, the “sold-out effect” of an artist’s tour
often translates into future sold-out concerts, thus pushing producers to keep ticket
prices as low as possible to increase attendance. Linked to this economic consideration is
the psychological motive that making a music event sold-out generally has a beneficial
effect on the audience’s enjoyment of the show, as producers “want people to feel that
they’ve come to the hottest show in town” (personal communication with a Professor of
Practice in Music and Entertainment Industry at Syracuse University, USA,
4 September 2014). Finally, many artists tend to care for the long-term management of
their fans and strive to sell tickets at price-points that are perceived as fair. As a result,
artists and producers do not engage in dynamic pricing as much as other live event
producers do (Courty, 2015), even if current technological tools would allow this (Chan-
Olmsted, 2019) and consumers would be willing to pay a premium for tickets, as shown
by the thriving of secondary markets.
The inability to appropriate the value that live music event producers generate for
consumers appears to be endemic in the live music industry. Yet, it is currently unclear
whether the extent of this inability is similar among different market segments or
whether different players differ in their ability to create and appropriate value, and thus
whether some categories of players enjoy a competitive advantage. This study applies
an organisation population ecology lens to this phenomenon, studying how the niche
width of an agent affects its ability to create value (Carroll, 1985; Carroll &
Swaminathan, 2000). By integrating competitive advantage logics in value creation
and appropriation informed by the resource-based view of the firm (Barney, 1991;
 JOURNAL OF MEDIA BUSINESS STUDIES 139

Peteraf, 1993) with organisation population ecology, specifically concerning the degree
of generalism – or niche-width – that players occupy in a given industry (Carroll, 1985;
Freeman & Hannan, 1983), the current study aims to understand whether the niche
occupied by a given player impacts such player’s ability to create and appropriate
value.
Resource-partitioning theory (Carroll & Swaminathan, 2000) suggests that specialists
can occupy fostering niches in mature industries characterised by status and identity
consumption – e.g. the music industry (Larsen et al., 2010). However, the specific
economic characteristics and transaction costs of the live music industry seem to indicate
that generalists enjoy a competitive advantage and are able to create more value com­
pared to specialists. Testing the effect of niche-width (generalist vs specialist) on value
creation and appropriation with ticket pricing data of 631 live music events in Italy, this
study assessed the minimum ticket price and the number of price categories employed in
the sale tickets as indicators of value creation and appropriation respectively, finding that
generalists create and appropriate more value than specialists in live music.
This study contributes to organisation population ecology theories, as well as to the
literature on business in the media and creative industries, as it sheds light on the value
creation problem that has been plaguing the live music industry. By borrowing from the
resource-based view (Foss & Foss, 2005; Peteraf, 1993) and linking it with organisation
population ecology (Hannan & Freeman, 1977), it shows how specific characteristics of
the live music industry allow generalists to enjoy a more favourable position than
specialists. This extends studies of niche-width and counteracts arguments and findings
from other industries (cf., Swaminathan, 1995, 2001). In addition, these findings inform
media business studies and can be extended to creative and media industries other than
live music or journalism (Achtenhagen, 2016; Sherrill et al., 2021). The mechanism giving
an advantage to generalists is highly dependent on the interplay between the ability to
spread fixed costs on a wider audience and the ability to maintain and display a high level
of status. So, industries – such as television (Chan-Olmsted & Guo, 2011; Moe, 2012) –
where the production of goods and services simultaneously entails a substantial amount
of fixed costs and is highly dependent on the producer’s status and legitimacy are likely to
display similar dynamics in favour of generalists.

Theoretical background
Value creation and appropriation
Transaction cost theory was developed in the 1970s to study why firms exist and what
conditions make transactions more efficient in hierarchical organisations than in markets
(Williamson, 1981, 1985). Subsequent developments of transaction cost theory have
focussed on how these costs impact processes such as value creation – the surplus arising
from the gap between production cost and consumers’ utility – and value appropriation –
the ability to capture the surplus generated – in the context of the resource-based view of
the firm (Foss & Foss, 2005; Mizik & Jacobson, 2003; Silverman, 1999). Given that value
creation is the basis of sustainable competitive advantage according to the resource-based
view, it is of the utmost importance for organisations to reduce transactions costs in
order to appropriate the value they generate (Barney, 1991; Peteraf, 1993).
140 F. MAGNI

Integrating the resource-based view, which is often used to explain media manage­
ment phenomena (Oba & Chan-Olmsted, 2007), with organisation population ecology
dynamics (Hannan & Freeman, 1977), which was born in the furrows of media manage­
ment (Achtenhagen, 2016) and has been applied to neighbouring media industries (Cook
& Sirkkunen, 2013), the current research studies the effect of generalism on value
creation and appropriation in the context of ticket sales for live music events. Past
research highlighted the benefits of specialisation, especially in industries where status
and identity consumption are very consequential (Carroll & Swaminathan, 2000), as is
the case of the music industry (Larsen et al., 2010). Nonetheless, the economics char­
acteristics and transaction costs of the live music industry would suggest that it is
a particularly fertile context for generalists.

Generalists and specialists

Organisational ecology scholars have studied how the degree of generalism of a firm might
affect its survival and success prospects, analysing the dynamics of specialist organisations –
which thrive on a narrow range of inputs from the environment – and comparing them to
those of generalist organisations – which rely on a wider range of environmental resources,
including a wider pool of potential customers (Carroll, 1985; Freeman & Hannan, 1983).
Drawing on a wider resource space and appealing to a broader range of customer tastes,
generalist firms compete on efficiency using scale and scope economies, whereas specialists
rely on narrow resource spaces and specialise in a single product niche, usually targeting
a specific range of customers (Barroso & Giarratana, 2013). The differences between
generalists and specialists have been studied through the concept of niche width, defined
as the range of environmental resources an organisation relies upon for its survival and
thriving (Carroll, 1985; see also, Dobrev et al., 2001; Freeman & Hannan, 1983).
According to niche theory, the realised niche of a population is the constrained
resource space in which a population exists by outcompeting all other populations.
While generalists occupy a larger resource space, several studies have shown that specia­
lists can enjoy a competitive advantage compared to generalists thanks to a better focus
(Hannan & Freeman, 1977), for instance, when targeting market segments that value
organisational identity and status consumption (Carroll & Swaminathan, 2000). This
argument has been formalised through resource-partitioning theory (Carroll, 1985;
Carroll & Swaminathan, 2000; Dobrev et al., 2001), whose aim is to explain the emergence
and fostering of specialist organisations in mature and consolidated markets.
The music industry supplies a hedonic product, and not only does it rely heavily on
status (Connolly & Krueger, 2006), but it is also characterised by uncertain demand with
fine-grained variations (Cloonan, 2012). Thus, based on past organisational ecology
research and resource-partitioning models (Carroll, 1985; Hannan & Freeman, 1977),
it might seem that specialists in this field would enjoy an advantage. Yet, countering this
argument, some peculiar features of the live music industry – such as high fixed costs and
the superstar effect (Connolly & Krueger, 2006) – suggest that live music is a more fertile
ground for generalists than for specialists. In particular, there are two main sets of factors
that seem to confer generalist live music event producers an advantage over their
specialist counterparts: The economic characteristics of live music events and the man­
agement of the transaction costs involved in the production of such events.
 JOURNAL OF MEDIA BUSINESS STUDIES 141

The economic characteristics of live music events

Existing arts and media management literature explains that music concerts as economic
goods are characterised by five main features: high fixed costs, their nature as experience
goods, perishability, versioning, and the existence of strong complementary goods
(Connolly & Krueger, 2006). These characteristics are likely to generate more favourable
conditions for generalist than for specialist event producers, because the large audiences,
substantial production costs, and the imperfect substitutability of supply give rise to
a superstar effect. In superstar industries, a limited number of suppliers is able to
appropriate a disproportionately high amount of revenues and rewards are highly skewed
(Connolly & Krueger, 2006). Thus, given that the economic features of concerts are
closely linked to audience breadth, a wider audience translates into the ability to spread
those costs more effectively, giving a value creation advantage to generalists. Hereunder
these features are described more in detail.

High fixed costs

The cost of organising, producing, and promoting live music events is largely fixed, as
most costs are independent of the number of actual tickets sold. This phenomenon
fosters the rise of the superstar effect (Connolly & Krueger, 2006). Based on high fixed
costs of production and on the imperfect substitution of suppliers – which depends on
talent-based status differences in the music industry – superstars are able to appropriate
a vast majority of the resource space (Rosen & Cohn, 1981; see also, Coelho & Mendes,
2019; Meiseberg, 2014). In this way, generalist event producers, who are able to contract
the superstar performers thanks to their more abundant economic and social resources,
have a considerable advantage, as they can spread the fixed operational costs related to
event production over a wider audience.

Experience goods
As several products of cultural and entertainment industries, live music events are
experience goods, which means that consumers are often unable to precisely assess in
advance the expected value and utility they will derive from their consumption (Papies &
van Heerde, 2017). Concerts are social experiences and, as such, it is difficult for
prospective consumers to assign them an economic value. Yet, this uncertainty is
mitigated when the performer has a very high status and credibility. Status information
is usually communicated to audiences through “buzz” communication and travels mostly
through word-of-mouth, especially in current, highly digitised environment (Chaney,
2012). As the higher status achieved by superstars reduces expected value uncertainty in
the eyes of consumers, generalist producers, and mainstream performers are better able
to target a wide audience, thus more efficiently spreading fixed costs and enhancing value
creation.

Perishable goods
Tickets for live music events are mostly one-off: Once the event is finished, the ticket
does not hold any more economic value and its opportunity cost is zero (O’Reilly
et al., 2014). This pushes event organisers to underprice tickets, as any unsold tickets
at the time of the event turn into lost revenues. The eventuality of unsold tickets is
142 F. MAGNI

much more likely for specialist promoters: the latter, due to their market position,
generally associate with niche performers, whose performance quality is more uncer­
tain in the eyes of consumers and thus generates a lower expected value. To account
for this uncertainty, specialist producers are thus more strongly driven to underprice
tickets to their events than generalists are. In other words, lower performer status
exacerbates the general tendency to underprice tickets, harming the value creation
and appropriation ability of specialist producers compared to their generalist
counterparts.

Versioning
This characteristic of concert tickets refers to the ability of event organisers to sell
different versions of the same product – i.e. access to the music event. While specialist
producers, with their niche audience, are often relegated to smaller venues, generalists are
often able to arrange huge live music performances in large and dedicated venues.
Moreover, the audience of generalist events is wider and more diverse than the audience
of niche concerts. The possibility to employ versioning allows event organisers to price-
discriminate and thus reduce underpricing, but the ability to do so is limited in the case
of specialists compared to their generalist counterparts due to logistical concerns and
audience composition.

Complementary products
Live music tickets have several complementary goods, ranging from music records to
merchandising, from digital music to ancillary goods – such as food and drinks. While
large producers are generally able to rent and manage a whole venue, thus ensuring
several revenue streams besides entrance fees, specialists often only rely on ticket sales
(Cloonan, 2012). The ability of large producers to profit from the sale of ancillary goods –
including parking fees, merchandising fees, food, and drinks – allows them to diversify
the sources of revenue and reduce risk, on average increasing the creation of value.
Generalist producers benefit from their bargaining power and counteract the general
tendency of the industry to underprice by complementing ticket revenues with ancillary
revenues. Specialists, on the other hand, lack this revenue diversification ability and are
constrained to depend only on ticket sales, which increases risk and decreases their ability
to create and appropriate value.

Transaction costs in live music events

Not only should generalists enjoy a competitive advantage compared to specialists
thanks to the economic characteristics of live music events, but also thanks to their
ability to manage transaction costs more efficiently. Transaction costs are generally
divided into three broad categories: search and information costs, bargaining and
decision costs, and enforcement costs (Dahlman, 1979). Building on this taxonomy,
Foss and Foss (2005) exemplify four sources of relevant transaction costs, namely
contract drafting, monitoring, attribute measuring, and barriers to entry and innova­
tion. In the context of live music events, generalists are expected to create and
appropriate more value by being better at managing these four kinds of transaction
costs, as detailed below.
 JOURNAL OF MEDIA BUSINESS STUDIES 143

Contract drafting
Generalist live music event producers tend to either enjoy a close relation with venues or
directly own some of the largest concert venues (e.g. Live Nation owns many arenas
throughout the world1). While the management of whole venues, including ancillary and
complementary revenue streams, might suggest a higher extent of contractual complex­
ity, this complexity dissipates when considering factors such as direct venue ownership
or the diffusion of 360° contracts among generalists. 360° contracts allow one corporation
to draft a single contract with a performing music artist to cover the management of all
potential revenue streams, including live event tickets, merchandise, and licencing
revenues (Karubian, 2009). Live Nation has notably been the market player most prone
to employing these full-fledged contracts, which greatly reduce costs related to contract
drafting and enforcement (Wikström, 2013).

Monitoring
Monitoring costs are related to moral hazard – i.e. the eventuality that one party might
change their behaviour to the detriment of another party after a transaction has taken
place (Hölmstrom, 1979). In the case of live music events, ticket re-sellers in the
secondary market engage in such detrimental actions by re-selling tickets at an increased
price after bulk-buying them from primary sources (Courty, 2000). Event producers are
thus incentivised to diversify their ticket offer to discourage this kind of behaviour and, in
turn, the proliferation of secondary ticket markets. In this way they can manage to better
appropriate the value they generate for consumers with the sale of event tickets.
Generalist producers tend to have an advantage in this regard, as the costs for monitoring
other market players are often considerable (S.D. Williamson, 1986), and spreading them
over the large audiences of mainstream events makes their impact on the price of a single
ticket proportionally negligible compared to niche events produced by specialists. This
difference is exacerbated when considering that generalist event producers often directly
operate in the secondary market thanks to their market position, a move which greatly
reduces their monitoring costs in comparison to specialist event producers (Cardenas,
2016).

Attribute measuring
The problem of attributes assessment is closely related to the problem of adverse
selection – i.e. a situation in which a party in a transaction is harmed by asymmetric
information (Akerlof, 1970). Related to the status and uncertainty arguments discussed
above, this problem is particularly relevant for specialists in the context under investiga­
tion, because mainstream artists, who appeal to a wide audience and are generally
managed by generalist producers, are endowed with high status. Status, defined as the
perceived quality of a product compared to the quality of its competitors’ products
(Podolny, 1993), acts as a guarantee for the value of a concert in the eyes of the audience,
thus reducing the uncertainty related to the costs of purchasing a ticket compared to the
expected benefits of attending the show. Niche performers generally lack status in
comparison to their mainstream counterparts, so the uncertainty linked to the value
that their live performance will generate is higher. This affects negatively both supply and
demand. On the supply side, niche producers tend to lower prices to make sure the event
sells well, also because of the sold-out bias mentioned above (Courty & Pagliero, 2014).
144 F. MAGNI

On the demand side, consumers would be less prone to purchase tickets for an event of
uncertain value to them. Specialist producers thus might create (more) value for some
categories of consumers, but their incentive to sell-out an event will exacerbate their
inability to create value for the general audience, as it is often harder for them to
understand the amount of value they create for the market. Because specialists might
have less information about their target market, they are more affected by adverse
selection and thus tend to underprice more than their generalist counterparts.

Barriers to entry
Barriers to enter the music industry are not negligible: While the investment needed to
produce and launch new music is decreasing thanks to technological advancements
(Lewis et al., 2005), established players still manage to force most potential entrants
out (or at the boundaries) of the mainstream market thanks to oligopolistic control over
valuable channels of promotion, such as radio airplay and massive advertisement (see,
Alexander, 1994; Anderson, 2006). Thanks to their higher financial and social capital,
generalist event producers are able to maintain substantial control over the organisation
of concerts by mainstream acts, whose high-status is a good predictor of commercial
success. In this way, generalist producers foster a virtuous cycle that, also considering
their ability to vertically integrate, leaves specialists at the outskirts of the market, forced
to survive in less fertile resource spaces (Cloonan, 2012).
In sum, it appears that the economic characteristics of the live music industry provide
an advantage for players that rely upon a wide arrange of resources (e.g. broad audience),
who enjoy high status, and who control complementary products – i.e. generalists.
Similarly, generalists have a better ability to manage transaction costs, such as contract
drafting and barriers to entry, and mitigate the problem of attribute measuring with
status and broad audiences. Thus, based on both the economic characteristics of live
music events and the management of transaction costs, generalist live music event
producers can create and appropriate more value than their specialist counterparts.

Hypothesis 1a: Generalist live music event producers create more value than specialist live
music event producers.

Hypothesis 1b: Generalist live music event producers appropriate more value than specialist
live music event producers.

Methods
Sample
In order to test the hypothesis presented above, I focussed on the pricing policies that
event producers enforce as a proxy for their ability to create and appropriate value.
I collected data about the pricing schemes of all music events available for consultation
on the website Ticketone.it in a period of five consecutive weeks in September and
October 2014. Ticketone is the main online and offline retailer of entertainment tickets
in Italy, as it sells tickets for entertainment events both through its own website and
 JOURNAL OF MEDIA BUSINESS STUDIES 145

through a network of authorised physical retailers spread in the territory (Prisco et al.,
2017). As confirmed by a personal communication with a Live Nation ticketing manager,
at the time of data collection Ticketone had an agreement with most small and big event
promoters, including Live Nation, to sell tickets for their events and it held a quasi-
monopolistic control of the market.2 It was thus a natural choice to collect data from the
Ticketone platform, as it was the supplier of tickets for most non-negligible live music
events organised in the Italian market. I collected most of the data directly accessing the
price information available on the website, except for some rare instances in which price
data were not available, such as in the case of sold-out events. In these instances,
I checked other reliable websites, such as the website of the venue hosting the event, of
the headline band, or of the event itself to gather the information about the number and
price-point of the price categories. In the rare cases when the information was not
available from any reliable source, I dropped the entry, so that the database has no
missing data. The total amount of entries collected in the sample is 759, each entry
indicating a single event or show. To the benefit of internal consistency, in the current
study, given the difficulty in comparing status across different sub-genres, I only included
live music events coded as pop-rock (82% of the total), and I excluded events in the
classical, musical and theatre, and metal categories. The final database was composed of
631 entries.

Dependent variables
Value creation – Minimum price tag
In order to measure the ability of event producers and artists to create value for their
audiences, I measured the minimum price tag set for each live music event. While
maximum prices have a considerable variance, especially considering the fact that
some events (almost 3.5% of the total number of events accounted for) offer the
opportunity to purchase expensive VIP packages, minimum prices are a more reliable
indicator of what is the value that producers expect all potential concert-goers to be ready
to pay in order to attend the event. This represents well the amount of value the
producers and artists are able to create for the wide, mainstream audience. The prices
in the database are in Euro and are comprehensive of pre-sale rights but not of any
further services offered by Ticketone, such as delivery and the printing of fan-tickets.

Value appropriation – Number of price categories

The value creation skills of live music event producers also depend on their ability to
maximise the revenues stemming from different categories of customers. The number of
price categories used to sell tickets for an event represents well the ability of event
promoters to cater various categories of consumers in the market, thus allowing for the
appropriation of a larger extent of value thanks to a more nuanced pricing of tickets. This
is consistent with past research on pricing, which highlighted how different price levels
help appropriate more value by tapping into the different utilities of different categories
of consumers (Burkert et al., 2017; Hinterhuber, 2004; Morris & Calantone, 1990). Given
the limited prevalence of dynamic pricing (in the primary market) in live music com­
pared to other live event industries, such as sports (Courty, 2015), the ability to offer
consumers different prices categories catered to their different consumption utility is
146 F. MAGNI

a strong signal of the performer’s ability to appropriate the value created for its diverse
audience. It is noteworthy to mention that in the current study I merged into a single
category instances of multiple ticket types sold at the same price-point, as the focus of this
empirical study is on economic value. Moreover, reductions have not been accounted for,
as their presence is mostly limited to a very small number of theatrical shows in Italy due
to the policy of most promoters – including Live Nation Italia – to not set any reduction
or discount, except when imposed by the artist’s management.3

Independent variable
Generalism
Generalists are defined as those market players that draw on a wide resource space and
appeal to a broad range of customer tastes (Barroso & Giarratana, 2013). With the aim of
studying the extent of generalism of the live music events featured in my database,
I collected data on the HitParadeItalia.it website about top-selling singles and albums
charts for the focal year (2014) and the preceding year4. I coded generalism into a binary
variable, indicating as generalist all the events with performers who managed to feature at
least one single or one album in the Top 100 chart of either year, and specialists all those
which did not. This measure, while possibly biased for recent success, is a good repre­
sentation of the status of the performing artist at the time of the live event. As direct data
on the niche width of events producers were not available, based on the arguments
developed in the theoretical section above and on personal communications with live
music experts, the mainstream success of the performing act is regarded as a sensible
proxy of generalism.

Control variables
To test the hypothesised relationships with the proposed measures, I included in the
regression models several control variables about other features of live music events.
Specifically, I controlled for the characteristics of the performing artist – i.e. whether it is
an individual artist or a collective and whether it is a national or international performer –
because these factors might influence pricing, also in light of the superstar effect (Courty
& Pagliero, 2014; Krueger, 2005). I further controlled for specific characteristics of the
event which might also affect pricing strategies, including whether the event is a one-off
or part of a tour, and whether it happens on a weekday or on a weekend (Cloonan, 2012;
Courty & Pagliero, 2014). Finally, to partial out the influence of the kind of venue on the
number of price categories, I controlled for the kind of venue that the concert took place
in (cf., Courty & Pagliero, 2014). Thus, the controls include:

Band
A binary dummy variable to differentiate whether the main act was an individual
performer or an ensemble, a duo, a band, an orchestra or any other kind of collective.

Italian
A binary dummy variable to differentiate whether the act was an Italian performer or an
international performer.
 JOURNAL OF MEDIA BUSINESS STUDIES 147

Tour
A tour was defined here as the repetition of the same act for at least three dates performed
by the same artist in the same venue or in different venues within the country in the
amount of time recorded in this study. This binary dummy variable differentiated
whether a performance is part of a tour or whether it is a one-off event.

Weekend
This binary dummy variable indicates whether the event was performed on a weekend
night (Fridays, Saturdays, and Sundays) or on a weeknight.

Venue
I collected and coded data on the venue of the concerts. In the context of this study, I coded
the venue as a binary variable, taking Arena as the reference category to which all other kinds
of venues (Open air, Club, Theatre, and Other) are compared, as arenas are generally the
venues in which mainstream acts perform and also the ones usually booked and controlled
by generalist event producers. Conducting additional analyses specifying each of the other
kinds of venues as a separate binary variable resulted into unchanged significant patterns.

Analysis
To test whether the value creation ability of generalists was different than that of
specialists, a one-way ANOVA compared the means of the dependent variables (value
creation and value appropriation) between generalists and specialists. Moreover, to check
the robustness of the findings, linear regression analyses (Models 1A-3A) were used for
value creation and, due to the count nature of the dependent variable, Poisson regression
analyses (Models 1B-3B) were used to value appropriation. First, regressions were run
with just the control variables, and then adding the predictor (Models 1 and 2 respec­
tively). In order to check the validity of the proposed effects, further testing controlled
separately for maximum price and price standard deviation as possible confounding
measures of minimum price (i.e. value creation) and number of price categories (i.e.
value appropriation) respectively (Model 3).

Results
The correlations among all variables under analysis are shown in Table 1. The analysis of
variance for value creation showed that the minimum price of generalist live music events
(M = 33.00, SD = 8.24) is significantly higher (∆M = 8.68; F(1, 629) = 146.33, p < .001)
than that of specialist events (M = 24.32, SD = 9.49), supporting Hypothesis 1a. Similarly,
for value appropriation, generalists (M = 3.28, SD = 1.69) implemented more price
categories than specialists (M = 1.84, SD = 1.23), and the difference was significant
(∆M = 1.44; F(1, 629) = 154.11, p < .001) in support of Hypothesis 1b. These results
suggest that generalists and specialists differ in their value creation and appropriation
ability, and that, as hypothesised, generalists tend to create and appropriate more value
than specialists in live music event ticket sales.
148 F. MAGNI

Table 1. Means, standard deviations, and bivariate correlations.

Variables M SD 1 2 3 4 5 6 7 8 9
1. Generalism 0.44 0.50
2. Band 0.44 0.50 − .32***
3. Italian 0.62 0.49 .52*** − .36***
4. Tour 0.63 0.48 .45*** − .29*** .58***
5. Weekend 0.56 0.50 − .03 .12** .08* − .01
6. Venue 0.31 0.46 .57*** − .12** .32*** .29*** − .02
7. Value Creation 28.13 9.94 .43*** − .31*** .14*** .35*** − .13** .44***
8. Value Appropriation 2.47 1.61 .44*** − .37*** .30*** .38*** − .07 .45*** .47***
9. Price Maximum 53.30 78.56 .28*** − .17*** .10* .14*** − .08* .36*** .50*** .57***
10. Price Variance 10.78 27.87 .25*** − .14*** .08* .11** − .07 .33*** .42*** .55*** .99***
n = 631; Generalism: 0 = “specialist”, 1 = “generalist”; Band: 0 = “individual act”, 1 = “band”; Italian: 0 = “international act”,
1 = “Italian act”; Tour: 0 = “single concert”, 1 = “tour concert”; Weekend: 0 = “weekday”, 1 = “weekend”; Venue: 0 =
“other venue”; 1 = “arena”.
* p < 0.05
** p < 0.01
***p < 0.001

Table 2. Linear regression results (Unstandardised coefficients) for value creation.

Value Creation
Model 1A Model 2A Model 3A
Independent variables b SE b SE b SE
Intercept 27.65*** .81 27.11*** .80 25.01*** .77
Band − 5.01*** .71 − 4.40*** .71 − 3.61*** .66
Italian − 5.02*** .87 − 6.31*** .89 − 5.50*** .83
Tour 6.18*** .84 5.59*** .83 5.35*** .77
Weekend − 1.36* .67 − 1.24 .65 − .92 .61
Venue 8.62*** .75 6.50*** .84 4.37*** .80
Generalism 4.64*** .89 3.86*** .83
Price Maximum .04*** .00
R2 .33 .36 .45
Notes: n = 631.
* p < 0.05
**p < 0.01
***p < 0.001

Table 3. Poisson regression results (Unstandardised coefficients) for value appropriation.

Value Appropriation
Model 1B Model 2B Model 3B
Independent variables b SE b SE b SE
Intercept 1.03*** .06 1.06*** .06 .95*** .07
Band − .38*** .06 − .35*** .06 − .31*** .06
Italian − .05 .07 − .11 .08 − .07 .08
Tour .33*** .07 .31*** .07 .32*** .07
Weekend − .32 .05 − .03 .05 − .01 .05
Venue .46*** .05 .38*** .06 .26*** .06
Generalism .19** .07 .16* .07
Price Variance .01*** .00
Likelihood Ratio Chi-Square 220.91*** 228.40*** 281.53***
Notes: n = 631.
* p < 0.05
**p < 0.01
***p < 0.001
 JOURNAL OF MEDIA BUSINESS STUDIES 149

Results of the regression models used to check the robustness of the findings are
reported in Tables 2 and 3. The baseline models (Model 1A and 1B) are regressions of the
control variables (band, Italian, tour, weekend, and venue) on the dependent variables.
Models 2A and 2B include the independent variable generalism, which had a significant
impact on both value creation (b = 4.64, p< .001) and value appropriation (b = .19,
p= .006) above and beyond the control variables, providing further support to
Hypotheses 1a and 1b. In Model 3A, the maximum price of event’s ticket sale was further
controlled. While maximum price and minimum price were moderately correlated
(r = 0.500), the effect of generalism on value creation remained significant, showing
that it had explanatory power on the minimum prices beyond that of maximum prices
(b = 3.86, p< .001 in Model 3A). In a similar fashion, in Model 3B price standard
deviation was controlled for as a possible alternative mechanism affecting value creation
through the number of price categories. Price standard deviation and number of price
categories were, as expected, moderately correlated (r = 0.549), but even adding price
standard deviation as a covariate, the effect of generalism on the number of price
categories (i.e. value appropriation) remained significant (b = .16, p= .030).

Discussion
The results indicate that live music events produced by generalists showed evidence of
greater value creation and appropriation, even when controlling for concert character­
istics such as day of the week, nationality of the act, venue, whether the concert was
a single performance or part of a tour, and whether the act was an individual performer
or a band. Further controlling for potential alternative mechanisms, such as maximum
price tag and price standard deviation, the effect of generalism on the value creation and
appropriation indicators – minimum price tag and number of price categories –
remained significant, supporting the hypotheses.
The theoretical synergy between resource-based view and population ecology pro­
posed in this study and applied to the context of live music can foreseeably act as
a springboard for future media business research focussed on value creation and appro­
priation through a niche-width lens. Interestingly, and in opposition to past research that
found specialists to hold an advantage in industries where identity consumption prevails
(Carroll & Swaminathan, 2000), the current study contributes to the extant literature by
showing that resource-partitioning models are contingent on industry- and organisation-
level characteristics, such as the ability to spread fixed costs and to minimise transaction
costs. Thus, even in some markets – such as live music – where status and identity are
cardinal concepts, generalists can enjoy a competitive advantage over specialists. This has
relevant implications for media business research, as mentioned below.
Another important contribution of the current research is to apply the resource-based
view to media business. This research extends previous work on the importance of
managing transaction costs to increase value creation and appropriation (Foss & Foss,
2005) to the media industries, specifically to the live music industry. This study builds
upon and goes beyond existing theoretical frameworks utilised to study live music
(Courty & Pagliero, 2014; Holt, 2010) by analysing how the economic characteristics of
and the management of transaction costs in live music events impact value creation and
value appropriation. Building on the economic features of the live music industry, such as
150 F. MAGNI

the pairing of high fixed costs and the superstar effect (Connolly & Krueger, 2006), the
results evidence the ability of mainstream artists and producers to create and appropriate
more value by leveraging on their status and on wide audiences. Interestingly, the current
findings can be extended to other media-related industries where the same features
exist – i.e. contexts characterised by the pairing of superstar dynamics and high fixed
costs – a combination that engenders an advantage for generalists – as well as by
a reliance on status to reduce the uncertainty of consumption value among final users.
Examples of media industries with these characteristics include not only television
(Chan-Olmsted & Guo, 2011; Gimpel, 2015; Moe, 2012), but also home video (Elberse
& Oberholzer-Gee, 2006), performance content creation (Pitt, 2010), and museums
(Frey, 1998). Another possible example in this regard is the (print) publishing industry
(Cook & Sirkkunen, 2013), which is characterised by substantrial fixed costs (McGuigan
& Russell, 2008) and heavy reliance on legitimacy (Thornton & Ocasio, 1999).
Finally, this study contributes to a more high-construal discourse in media manage­
ment research. Media business has been radically transformed by the digital revolution in
the last two decades (Kaplan, 2015; Perez, 2016). The effects of this revolution on the
music industry have been substantial and have put live music in the spotlight (Moreau,
2013; Tschmuck, 2012), making it ever more important for producers and artists to
capitalise on the value created with live events. For this reason, assessing the drivers of
value creation in live music is ever more important. In addition to this, media research
has acknowledged the unique positioning of media industries, which are driven by
a combination of cultural, business, and social logics (Altmeppen et al., 2017; Eikhof &
Haunschild, 2007). Thus, the creation and appropriation of value in media – including
live music – is a multi-layered question due to the multi-faceted nature of value in such
contexts. Namely, economics, social, and cultural components converge into notions of
value in media industries (Bolin, 2016; Bourdieu, 1993). As the current research has
mostly focussed on the economic component of value, it would be interesting to extend
the current framework by accounting for other dimensions of value. For instance, are
specialists creating social or cultural value that generalists are unable to produce (cf.,
Whiting, 2021)? By considering logics that are not just economic, the answer to these
questions might further inform on the impact of niche width on value creation, and
potentially on the necessity to economically support specialist live music event produ­
cers, especially during moments of crisis such as the Covid-19 pandemic (Davies, 2021).

Practical Implications
These findings have important implications for practice: By highlighting the factors that
allow generalists to occupy an advantageous position in the live music industry, this
study offers insight to both generalists and specialists on possible improvements of
managerial practices aimed at enhancing value creation. Generalists should leverage on
their competitive advantage to increase their ability to create and appropriate value not
only by diversifying the revenue streams, managing fixed costs, and reinforcing their
relationship with superstar performers, but also by making the sale of ticket prices more
dynamic, so as to catch as much utility surplus as possible. Specialist event producers, on
the other hand, need to limit their disadvantage by replicating the behaviour of general­
ists whenever possible. Some strategies aimed at doing so include the recruitment of
 JOURNAL OF MEDIA BUSINESS STUDIES 151

popular emerging artists that are not yet orbiting in the generalist market space – e.g.
performers who become popular by sharing their content online (Cayari, 2011) – but also
the diversification of revenue streams by attempting to manage ancillary goods in
addition to ticket sales and the formation of specialist alliances to boost the ability to
fight the secondary market and generalist competitors. Specialists should also make
efforts to improve their pricing strategies, for instance, increasing the price categories
on sale whenever possible, so as to enhance their value appropriation ability.

Limitations and future research

Notwithstanding its contribution in exploring new avenues of research by synthetising
organisational theories – the resource-based view and organisational ecology – and
applying them to the context of the live music industry, the current study is not exempt
from limitations. The first limitation of this study is that no data were collected to
measure transaction cost management directly. While there is a strong theoretical basis
to argue that managing transaction costs is one source of value creation, the current
empirical test was that of a main effect of generalism on value creation. Future empirical
research could directly measure transaction costs management and its interaction with
generalism to affect value creation, so as to provide an empirical test of the interaction of
those two components. For instance, specialists’ increased ability to manage transaction
costs – for instance, by increasing the status of their performers and thus reducing
consumers’ uncertainty – should reduce their gap with generalists in terms of value
creation and appropriation.
A second limitation of this study is that data about the niche width of music events
producers has been collected based on the mainstream success of performing acts, due to
the unavailability of direct data collection from producers and content creators.
Theoretical and empirical arguments support the usage of performing acts’ success as
a proxy for producers’ generalism by showing that generalist event producers tend to
organise events featuring mainstream artists while specialists focus more on niche
performers. Nonetheless, future studies could further contribute to the literature by
directly measuring niche width at the producer level, collecting data from event
producers.
On a related note, the measures of value creation and appropriation that I employed
are context-specific. Even if the minimum ticket price is an accurate proxy of value
creation, as it indicates the value that promoters and artists expect the whole audience
of potential consumers to be ready to pay, future studies might develop and test more
generalisable measures of value creation. In a similar fashion, the number of price
categories of tickets on sale for each live music event effectively tests the ability of
producers to appropriate value from different segments of their audience; yet, the
measure is domain-specific and might not be easily generalisable. Moreover, the
number of price categories might be considered as just a mechanism that event
organisers use to appropriate value. Whereas I explained the proximity between price
categories as a measure and value appropriation as a construct, I acknowledge that the
number of price categories is an imperfect proxy. I wish for future research that will be
able to assess value appropriation more directly in live music. Nonetheless, the sound­
ness of minimum price tag and number of price categories as proxies for value creation
152 F. MAGNI

and appropriation in the context of live music events is supported theoretically by the
arguments described above and empirically by the significance of the results of this
study, even controlling for potentially competing mechanisms such as price maximum
and price standard deviation. Yet, when extending the current theoretical framework to
different industries and contexts, the development of more generalisable measures to
assess the ability of organisation to create value would constitute a meaningful con­
tribution to the literature.
A final drawback of the current research is that, due to computational limitations, the
data collected are limited in time, as they feature all the available concerts on sale on the
Ticketone.it website in the span of five weeks, and they are not dynamic. While the prices
that regulate transactions in primary markets tend to be stable, the ability of future
research to collect data dynamically, particularly by incorporating dynamic data about
sales on secondary market platforms, would definitely shed additional light on the
phenomenon under study. It would further our understanding of value creation in the
live music industry by better understanding secondary market pricing dynamics, possibly
generating insight useful to quantify the surplus that event producers are leaving on the
table – or rather in the pockets of scalpers.
In addition to the possible refinements of the measures used in this study, I call for
future research to extend the current findings both theoretically and phenomenolo­
gically. Theoretical extensions could investigate mechanisms that drive the effect of
generalism on value creation and appropriation, as well as identify moderating factors
that might amplify or weaken this relationship. For instance, when specialists orga­
nise concerts with niche artists who have a strong fanbase and enjoy a high reputation
among a sizeable niche of the consumers, it is possible that their disadvantage in
value creation and appropriation might be reduced. On the other hand, some main­
stream artists – such as Bruce Springsteen (Krueger, 2005) – might focus on creating
goodwill for their fans and voluntarily minimise value creation and appropriation.
Finally, as mentioned above, I underline the desirability of research testing the
relationship between niche width and value creation and appropriation in other
media industries.

Notes
1. http://www.livenationentertainment.com/map/venues
2. “Live Nation has a long-term deal with Ticketone, which sells all the tickets for the events
organized by LN. [. . .] Ticketone’s monopolistic power is not indifferent. [. . .] Big interna­
tional artists take the whole ticket sales revenue, promoters only get part of the pre-sale rights
(15% by law), the other part of which goes to Ticketone” (personal communication with
Ticketing Manager at Live Nation Italia, 2 October 2014). Transcript of full interview
available on request.
3. “Tickets for Live Nation events never get age or family or other kinds of reduction due to
a policy of the firm. Tickets are never put on clearance sale, it not a promotion, it’s a sale”
(personal communication with Ticketing Manager at Live Nation Italia, 2 October 2014).
Transcript of full interview available on request.
4. Data retrieved on http://www.hitparadeitalia.it/classifiche/ on 10 November 2017.
 JOURNAL OF MEDIA BUSINESS STUDIES 153

Disclosure statement
No potential conflict of interest was reported by the author(s).

Notes on contributor
Federico Magni is a post-doctoral researcher at the Department of Management, Technology and
Economics, ETH Zürich. His research interests revolve around creativity, artificial intelligence in
organizations, diversity, and the intersection between arts and management.

ORCID
Federico Magni http://orcid.org/0000-0002-3797-8155

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