Customers’ perceptions aboutconcerts and CDs

F. Javier Rondan-Cataluna and David Martın-RuizDepartamento de Administracion de Empresas y Marketing,

University of Seville, Seville, Spain

Abstract

Purpose – Taking into account the increasing prices of attending concerts and gigs and thedecreasing prices and better sound quality of CDs and music in file-computer format, is the future ofmusic events threatened by music CDs? Are clients’ perceptions about concerts and CDs verydifferent? This study aims to answer these research questions by comparing important perceptions ofconcert attendees and CD buyers.

Design/methodology/approach – An empirical study is conducted in two different contexts: CDbuyers and concert attendees. In order to answer the research questions outlined the most appropriatestatistical tool is the student’s t-test. The variables to compare do not have normal distributions;therefore, non-parametric tests have been conducted to confirm the results. In addition, a discriminantanalysis has been applied in order to assure that both consumers sub-samples differ with regard to thevariables used in the study.

Findings – The future of music events is not threatened at all by music CDs. On one hand, the concertindustry has been increasingly making more profits in many countries in last decade. On the otherhand, consumer satisfaction, price fairness perception, willingness to pay, customer value, andproduct/service quality are significantly more highly ranked in concert attendees than in CD buyers.The statistical analyses show clients’ perceptions about concerts and CDs are very different. All thevariables analysed except image have been significantly different in both sub-samples of consumers.

Originality/value – This paper examines customer perceptions of two of the most important sectorsin the music industry: concerts and CDs, using variables that directly measure these perceptions. It iscrucial for music managers to understand motives and feelings of music consumers of these basicsectors in order to make appropriate decisions.

Keywords Music industry, Consumer behaviour, Attitudes

Paper type Research paper

1. IntroductionA concert ticket typically costs at least as much as a compact disc or DVD or adownloaded record and, unlike the latter, can be neither shared nor used over and overagain. Of course, to use the latter entails the fixed costs of hi-fi sets, computers, MP3players, and DVD sets, for example, but these can be amortized along many years ofuse, including use in other contexts (non-music DVDs or video games, for example). Alive performance carries additional penalties such as: transport-related costs,sometimes the sound quality is poor, difficulties in seeing the performers,disadvantages of social consumption, undesired supporting artists, limited editingopportunities, and excessive prices of food and drink in events (Earl, 2001). In addition,versions of music downloaded from the internet are being shared cheaply by millionsof users across the world, and these users feel morally justified in their actions in viewof the prices that they were previously charged for such recordings long before theinternet revolution. Furthermore, pirated copies of music, burnt illegally onto CDs andDVDs, are successfully sold all over the world to numerous decent, law-abiding

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Management DecisionVol. 48 No. 9, 2010pp. 1410-1421q Emerald Group Publishing Limited0025-1747DOI 10.1108/00251741011082152

citizens. Promotional campaigns in support of artists’ rights to royalties have beenlaunched by artists associations to mitigate the damage caused by these pirated copies,but these campaigns have failed to affect customers who feel justified in buying itemsat one-fifth of the price they would pay in ordinary retail outlets (Martın-Ruiz andRondan-Cataluna, 2008). At the same time the number of peer to peer (P2P) users isgrowing, world music sales significantly declined from $38.5 billions in 1999 to $33.6billion in 2004 (IFPI, 2005). However, not all the national markets suffered the sametrend. Countries such as France, Spain, South Korea, Sweden, Italy, The Netherlands orJapan have seen a sharp sales reduction in CD units, while some other countries such asthe USA, UK, Canada, China, Russia or India experienced minor reductions or evensome growth (Sandulli, 2007).

Taking into account the disadvantages of assisting concerts and gigs and thedecreasing prices and better sound quality of music in file-computer format, is thefuture of music events threatened by music CDs? Are consumers’ perceptions aboutconcerts and CDs very different? In this study we aim to answer these researchquestions comparing perceived price fairness, value, satisfaction, service or productquality, image, perceived estimated profit, and maximum price paid for product orservice in CDs and concerts. Some interesting ideas that point out a good future forconcerts result of data analysis obtained from a survey conducted to CD music buyersand concert attendees.

2. Reasons for attending live music performanceIn spite of some possible disadvantages of live music versus recorded music the formerindustry shows healthy revenues. The decline of record business and the rise of livemusic and festival are a fact. Pollstar (the standard for the US overall live music data)gave the value of live music in North America during 2007 as $3.9 billion, excludingprivate functions such as weddings, parties, etc. (Alhadeff, 2009). Live music wasworth more in the UK last year than recorded music, according to numbers released byWill Page, Chief Economist at Performing Right Society (PRS) for music.

Earl (2001) pointed out some psychological, sociological and anthropologicalreasons that justify why music-lovers continue buying tickets:

. Many performers play some not recorded songs, improvisations, adaptationsthat makes each concert unique.

. A live concert provides excitement that cannot be provided by a recording, interms of the risk that one may observe a disaster, such as musical errors,on-stage personnel disputes, equipment trouble, or the failure by artist orroad-crew to catch a thrown guitar.

. In concerts and gigs new and older songs are played by bands, therefore, fans areconfident that, at worse, only part of the concert (less known songs) could makefeel them like they are wasting their time.

. Concerts enable normal people to get physically close to famous people andsometimes their heroes and attendees become part of the performance.

. A live concert allows opportunities for social behaviour that may be precluded in adomestic setting, such as high sound levels, dancing, jumping, shouting, etc.

. Concerts are places at which to see, and be seen by, others, as well as to makenew friends or relationships.

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. Music events entail a set of stereotypical roles, a definite script in terms of aprescribe sequence of events, the use of a range of ritual artefacts, and anaudience. Ritual elements include grooming prior to the concert, delays before theheadline band appearing, final applauses or the journey home.

All these reasons explain the attendee behaviour but their measurement is difficult.Other variables more objective and less subjective have to be found. Live musicperformance is a pure service. The performance is an intangible that is simultaneouslyproduced by the band and consumed by the audience. Performances are unique andvary based on song mix, stage layout, audience size, audience members, venue, adticket prices (Fisher et al., 2002). In consequence typical services measures can be usedto assess this pure service. But in order to make the comparison they have also to bemeasured in the CD product.

3. Variables analysedIn order to answer the research questions (is the future of music events threatened bymusic CDs? Are clients’ perceptions about concerts and CDs very different?) someobjective variables have been measured. In this section we justify the use andmeasured of these variables.

3.1 Perceived price fairnessPerceived price fairness has been recognised as one psychological factor that plays asignificant influence in consumers’ reactions to prices in products and services(Kahneman et al., 1986). Analysis of price fairness perceptions provides new insightsregarding consumer behaviour, enhancing the analytical validity of typical householddemand models (Daskalopoulou and Petrou, 2006) that can be applied to the musicsector. Perceptions of price fairness are based on the presumption that firms areentitled to a reasonable profit and that customers are entitled to a reasonable (or“reference”) price (Bolton et al., 2003). This implies that price increases should not bemade for the purpose of increasing profit margins or exploiting market conditions, andthat price rises due to increasing costs should be fair (Kahneman et al., 1986).Consumers often withstand price increases that are perceived as unfair (Campbell,1999). Furthermore, negative consumer reactions to perceived unfair prices can resultin customer boycotts (Goldman, 1994), lower sales (Grover, 1994), such as the case ofdrop sales of CDs in some countries. According to data about sales drop in CDs andgood health of performance industry in Spain, it is reasonable to think that perceivedprice fairness in CD buyers is lower than in concert attendees. The scale used tomeasure price fairness has been developed by Martın-Ruiz and Rondan-Cataluna(2008), which is made up of a four-item, 1-5 Likert type scale.

3.2 Perceived estimated profitThe companies’ profit perception is the customers’ subjective evaluation regarding theprofits (price-associated costs) of a particular product or service. Explicit profitinformation is absent from labels, so customers must infer it on their own. Bolton andAlba (2006) provided additional support for the important role played by costs indetermining price fairness reactions. Apparently, the costs of a performance may beperceived as higher than the cost of a CD. In the former, there are costs related to

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earnings of musicians, transport, accommodation, lights, support staff, soundequipment, etc. In the latter, a CD and the CD packaging are the only costs visible bypurchasers. The estimation of the vendor’s margin was measured in the survey withthe following question: “what percentage of profits do you think the vendor obtainedwith your purchase?”

3.3 Customer valueNevertheless, consumers are primarily concerned about the value they will actuallyreceive from the product or service, rather than just the price to be paid or what thecompany’s profits are. Zeithaml (1988) defined value as “a judgement of generalutility of a product, a result of the comparison between what is given and what isreceived”. In theory, customer value of a CD that can be used repeatedly in your car,house, or portable CD player may be higher than the customer value of a gig. Inthis case, the cost of tickets has to be added to costs of transport, time, and othersacrifices. The measurement of customer value can be characterised asunidimensional or multi-dimensional. The unidimensional approach assessescustomer value directly through single measures of utility or value for money(Zeithaml, 1988; Dodds and Monroe, 1985). The multi-dimensional approachconsiders customer value to be a highly complex concept that should be measuredthrough its components rather than directly (Rust et al., 2000; Sheth et al., 1991). Inthis study we adopt the unidimensional (1-5 Likert type scale) approach of value forsimplicity reasons (MacKenzie et al., 2005).

3.4 Willingness to pay (price sensitivity)The findings of Sandulli’s (2007) study revealed that Spanish P2P users with a lowerproportion of CD music are mainly motivated by price. Therefore, willingness to pay isa relevant factor in the P2P/CD proportion decision of the P2P user. Obviously, thisvariable is also relevant for concert attendees. Price sensitivity is the awareness of theconsumer to what they perceive to be the window of cost within which they will buy aparticular product or service (Miller, 2006). We expect that this variable differ betweenboth music sectors. The variable was measured in the survey with the followingquestion: “What is the maximum price you would have paid for this product orservice?”

3.5 SatisfactionOliver (1999) defines satisfaction as the customers’ perception of the extent to whichtheir needs, goals and desires have been fully met. Services that elicit satisfaction arelikely to be ones where users want to maintain a relationship in the future(Sanchez-Franco and Rondan-Cataluna, 2009). It is quite usual that bands or artistsfanatics’ buy all records of their myths and they assist once and again to their gigs andconcerts. However, research differentiates between economic satisfaction andnon-economic satisfaction (Shankar et al., 2003). Non-economic satisfaction is definedas “a channel member’s positive affective response to the non-economic, psychosocialaspects of its relationship, in that the interactions with the exchange partner arefulfilling, gratifying, and easy” (Geyskens et al., 1999, p. 224). This type of satisfactionit seems to be more important in consuming hedonic products or services than mereeconomic satisfaction. In order to compare CDs and concerts significant differences in

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consumer satisfaction are expected. Specifically, customer satisfaction has beenmeasured with six items (1-5 Likert type scale) based on Taylor and Baker’s (1994) andOliver’s (1980) work.

3.6 Product/service quality, brand imageThere is evidence that customers fail to take into account all the vendor associatedcosts involved in a product or service delivery. Given these difficulties, it is notsurprising that the consumer relies on other tangible attributes to evaluate them, suchas brand equity, or product/service quality (Bolton et al., 2003). In the case of music,brand image is band or artist image and it is intimately related to product/servicequality perceptions. Also, significant differences are expected between concertattendees and CD buyers for these variables. We adopted the service quality scale fromTaylor and Baker (1994) and Gremler and Brown (1996); brand equity/image itemsfrom Yoo and Donthu (2001); product quality was adapted from Brucks et al. (2000), allof them are 1-5 Likert type scales.

4. Sample, data collection and methodologyA “snowball” sampling method is followed in order to collect data by means of apersonal survey. The use of snowballing sampling is appropriate as a method ofextending the scope of the study beyond a university environment into the generalpopulation, as other articles have shown (Sullivan and Drennan, 2005). Respondentswho answer affirmatively to the different filter questions in the questionnaire areinterviewed accordingly; if the respondent could bring somebody to verify their filterquestion’s answers, this second person is also interviewed. Filter questions are aimedat selecting only those customers who:

. obtain the CD new/ticket within a recent time frame;

. pay a price to acquire them (not for free); and

. are the major users of the product or service (not for gifts).

After discarding the respondents who provided incomplete information, 226 validquestionnaires were obtained from individuals living in a major city in Spain. Fromthen, 101 valid surveys are collected from 102 music CD buyers and 124 for musicconcerts attendees. Data collection was performed from late March to early April, 2005.

In Tables I and II the sample is described according to gender and age, respectively.

SectorCD Concert Total

Male 53 45 98Gender (%) 54.1 45.9 100.0Total (%) 23.6 20.0 43.6

Female 48 79 127Gender (%) 37.8 62.2 100.0Total (%) 21.3 35.1 56.4Total 101 124 225

Table I.Sample by gender

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In total, there is a 56.4 per cent of females and a 43.6 per cent of males, but in CDs thepercentage of men that bought a CD is over the percentage of women, the contraryoccurs in the concert sector where there is a 62.2 per cent of females versus 37.8 percent. In this sample more men buy CDs but more women assist to concerts.

The mean age is 25.59 and 24.10 years old, it is a young sample. This feature isdesirable for this study because young people are more confident with other new musicformats than mature or elder people, therefore they consider more alternatives to CDsfor listening to music. In fact, previous research (Lee and Low, 2004; Freestone et al.,2004) found that older P2P users are more likely to believe that downloading musicfrom P2P networks is illegal.

To answer the research questions outlined and to contrast significant differencesbetween the variables analysed, the most appropriate statistical tool is the student’st-test. This method allows us to demonstrate the existence of differences between thedependent variables in CD buyers and concert attendees. The variables to compare didnot have normal distributions; therefore, non-parametric tests were conducted toconfirm the results.

In order to use properly the methodology multi-item scales were resumed in aunique variable that is the average of all the items that conform it.

In addition, a discriminant analysis has been applied in order to assure that bothconsumers sub-samples differ with regard to the variables used in the study.Discriminant analysis is a statistical technique which allows the researcher to studythe differences between two or more groups of objects with respect to several variablessimultaneously (Klecka, 1980).

5. ResultsFirst of all a descriptive table (Table III) about the mean values of the studied variablesby the two music sectors is presented.

Observing Table III it can be commented that the mean values are similar for bothsub-samples only for variable image, and they are extremely different for perceivedprofit and willingness to pay. To prove if these differences in the mean values of thevariables between CD buyers and concert attendees are statistically significant thestudent’s t-test is applied in Table IV.

The results of Table IV show that except for image all variables have p-values lessthan 0.05, and therefore, there is significant statistical evidence that average values ofperceived profit, willingness to pay, perceived price fairness, value, satisfaction andproduct/service quality are different for CD buyers and concert attendees. But the

Sector Tip. error

CDMean 25.59 0.690Median 24.00Tip. dev. 6.937

ConcertMean 24.10 0.735Median 21.00Tip. dev. 8.180

Table II.Sample by age

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variables analysed are not normally distributed as showed the Kolmogorov-Smirnov test,for this reason non parametric tests that avoid the normality assumption were performed(Mann-Whitney and Wilcoxon tests) and their results are presented in Table V.

Results of non-parametric tests confirm student’s t-test results and average valuesof all variables differ for both music sub-samples, except image.

Now, the main results of the discriminant analysis are exposed. Firstly, the Wilks’lambda score is 0.566 and the significance value is 0.000. Wilks’ lambda is theproportion of the total variance in the discriminant scores not explained by differencesamong the groups. Values close to 0 indicate the group means are different. If thesignificance value is small (less than say 0.10), as in this case, this indicates that groupmeans differ. Therefore, the result reinforces the previous analysis indicating differentmean values for both groups with regard to the discriminant variables.

t df p-value

Perceived profit (%) 2.039 224 0.043Willingness to pay (%) 24.855 224 0.000Perceived price fairness 210.623 224 0.000Value 28.149 224 0.000Satisfaction 21.705 224 0.090Product/service quality 23.807 224 0.000Image 20.154 224 0.877

Table IV.Student t-test

Sector Mean Tip. error

Perceived profit (%)CD 49.3700 2.08141Concert 43.5000 1.96179

Willingness to pay (%)CD 5.2758 2.32680Concert 54.0143 8.74595

Perceived price fairnessCD 2.2700 0.07668Concert 3.3452 0.06654

ValueCD 3.0275 0.08925Concert 3.9583 0.07307

SatisfactionCD 3.8800 0.08261Concert 4.0873 0.08620

Product/service qualityCD 3.6180 0.06764Concert 3.9825 0.06629

ImageCD 3.4267 0.09224Concert 3.4471 0.09225

Table III.Mean values by sectors

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Secondly in Table VI, the standardised canonical discriminant function coefficients areexposed.

The coefficients of the canonical variable are used to compute a canonical variablescore for each case. These coefficients show the weight and sign of each variable in thediscrimination function. Value, perceived price fairness (both with positive sign) andsatisfaction (with negative sign) are the most discriminant variables.

Table VII displays the canonical variable means by group, and within-group meansare computed for each canonical variable. Results show a high divergence betweenboth groups: CD and concerts, the first it has a near 1 negative value (20.978) and thesecond a strong positive one (0.776).

6. DiscussionAccording to the previous analysis and results some interesting ideas may becommented that help to answer the research questions proposed in this work.

First of all there is a remarkable difference in what CD buyers and concert attendeesare willing to pay in percentage. The former only will pay 5.28 per cent more than whatthey paid for the last CD they bought, however the latter will pay until 54 per cent morefor their last concert. These are outstanding figures that show CD buyers are not

Function

Perceived price fairness 0.577Value 0.717Satisfaction 20.423Product/service quality 0.165Image 20.240Perceived profit (%) 20.074Willingness to pay (%) 0.228

Table VI.Standardised canonical

discriminant functioncoefficients

Function

Sector 1CD 20.978Concert 0.776

Table VII.Functions at group

centroids

Mann-Whitney U W Wilcoxon Z p-value

Perceived profit (%) 5337.000 13338.000 21.986 0.047Willingness to pay (%) 3199.500 8249.500 26.404 0.000Perceived price fairness 2053.000 7103.000 28.730 0.000Value 2782.000 7832.000 27.228 0.000Satisfaction 5159.500 10209.500 22.395 0.017Product/service quality 4345.500 9395.500 24.018 0.000Image 6136.000 11186.000 20.338 0.736

Note: Factor variable: SECTORTable V.

Non parametric test

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willing to pay more for music, perhaps influenced by the new cheaper technologies todownload and play music. With regard to concert attendees they seem willing to spendmore money on concerts and gigs and this is very interesting data for music concertmanagers.

Another interesting question is that CD buyers perceived that record companiesachieve almost a 50 per cent of profits with each CD sold. However, this figuredescends to 43 per cent for concert managers profits according to users’ perceptions.Likely, this idea is related to the customer perception of higher costs associated tosetting up a concert in comparison to manufacturing a CD.

With regard to perceived price fairness, concert ticket prices are perceived as fairerthan CD prices. In our opinion, the decrease in CD sales in many countries in recentyears can be partially caused by the perception of price unfairness of this product.Fakes are attracting an increasing number of consumers who cannot afford, or will notconsider paying for, original CD records in the legal marketplace (Martın-Ruiz andRondan-Cataluna, 2008). As a response, some firms of the sector are lowering prices orincreasing the number of bargains or adding more value to their products, trying toimprove the perceived price fairness of their customers (Darke and Dahl, 2003).Nevertheless, the hedonic nature of a music concert may changes the importance offinancial aspects and prices become less important than other factors, such assatisfaction, value or service quality.

The sub-sample of concert attendees perceived higher customer value than the CDbuyers. The experience of a unique concert is assessed more positively than the use of aCD that can be reproduced unlimitedly. It is interesting the fact that a particular concertthat implied buy tickets, transport costs, time costs, etc., is valued over a CD that usuallyinvolves less purchasing efforts. But the social aspect of going a gig or concert is animportant issue that the music sector should not forgive. Some intrinsic activities ofassisting to a concert are very important from a psychological point-of-view and manypeople need this kind of social features to improve their welfare.

In reference to satisfaction and quality perceptions the fact is that concert attendeesscored more positively than CD buyers. Satisfaction levels are ranked higher by theformers, and similar comments can be stated than in the case of customer value. Theexperience of a concert usually becomes in positive memories or pleasant experiencesto be recalled, that turn into a future willing to pay more for a similar event. Thecomparison between product and service quality is more difficult because of thedifferent nature and basis of products and services. But, concerts have some tangiblefeatures such as good access to place, quality of sound, lights, bar services. Thesefeatures facilitate the assessment of quality; and again, concert attendees scored higherproduct/service quality than CD buyers.

The only variable that not differs between both sub-samples is image. In the musicsector brand image is closely linked to bands or artists image independently of the wayyou listen to them. In this study there are not significant differences in the averagevalue of image in the two music sectors analysed. Nevertheless, a bad concert maydamage the image of an artist in a lesser extent than a bad record because the audienceof a particular concert is more reduced.

Finally, discriminant analysis reinforces the results of student’s t-test andnon-parametric tests. The variables used are discriminant in both sub-samples of musicconsumers and the discriminant function allows us to classify individuals in each group.

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7. Conclusions, limitations and future researchThis paper examines customer perceptions of two of the most important sectors inmusic industry: concerts and CDs, using variables that directly measure theseperceptions. It is crucial for music managers to understand motives and feelings ofmusic consumers of these basic sectors in order to make appropriate decisions.

In conclusion, we can answer now the research questions proposed in this study: isthe future of music events threatened by music CDs?, and are clients’ perceptions aboutconcerts and CDs very different?

In reference to the first question, the answer is that the future of music event isabsolutely not threatened by music CDs. By one hand, the concert industry has beenincreasingly making more profits along many countries in last decade. By other hand,satisfaction, price fairness perception, willingness to pay, customer value, product/servicequality are significantly best ranked in concert attendees than in CD buyers. Even the mostfuturist views about digital music that imagine a world where music flows into our homesmuch like water or electricity, where we pay a small monthly flat-fee for almost unlimitedaccess to digital music (Kusek and Leonhard, 2005) will not threaten the vivid experienceof a concert live. The personal feeling of becoming part of a show, being near your musicheroes, or simply spending a good evening with your friends is a treasurable reward thatbalance the costs of it and that overcome other light forms of listening to music.

With regard to the second research question, the statistical analyses showed clients’perceptions about concerts and CDs are very different. All the variables analysed exceptimage have been significantly different in both sub-samples of consumers. Concertattendees showed significant higher levels of satisfaction, customer value, service qualityperceptions and perceived price fairness than CD buyers. Furthermore, the former werewilling to pay much more for the concerts and perceived a significant lower profitpercentage of gig organisers than the latter. In addition, discriminant analysis pointed outthat six of the seven variables were discriminant for both types of music consumers.

This research recognises a series of limitations. First, the lack of psychologicalvariables in the analysis, in future works it would be very interesting to mixeconomical, psychological and marketing variables in order to make a bettercomprehension of CD buyers and concert attendees. Specifically, emotional variableshave a great value in this area. Sanchez-Franco and Rondan-Cataluna (2009) pointedout that music managers should take account of customer emotions when allocatingtheir marketing efforts. And according to the results of this study, this is especiallyimportant in music events such as concerts, gigs, performances, etc.

Second, the sampling method applied is non-random, reason why generalisation ofresults is not possible. It would be very interesting to repeat the study with randomand significant samples.

Third, new technologies for playing and downloading music, such as P2P, shouldhave been taking into account in future studies because they threaten current mainformat: the CD. This fact is especially important because CD format will likelydisappear in the same manner that vinyl practically faded out of shops. Furthermore,more research is necessary in order to set up the main perceptions of users of these newtechnologies and the influence that will have on concert industry.

Last but not least, customers’ perception can change over time. Longitudinal studiesmay be conducted to analyse the impact of new technologies or music trends incustomers.

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Corresponding authorF. Javier Rondan-Cataluna can be contacted at: rondan@us.es

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