Pitchfork: Brand vs. Band
It's mid-March, and the annual South by Southwest Conference in Austin, Texas, has the attention of the global entertainment industry. Naturally, much of the conversation has shifted over the past few years from hot, new talent to the business of digital platforms and content distribution channels. Recently, newby SXSW Interactive has begun to encroach on the venerated Music Conference as the two share focus on monetization strategies and the power of the online brand. Arguably, the innovations discussed in the Interactive Conference may eventually be hailed as the solution to the music industry's revenue issues (as opposed to being blamed for its current piracy problem).
Pitchfork Media has held much of the spotlight since its SXSW debut in 2005, due to its redefinition and dominance of the editorial space within the new millennium music industry. Not surprisingly, Pitchfork has largely supplanted the record labels as the industry's most trusted curatorial perspective and has even become a more reliable brand than the vast majority of the artists it covers. But its brand entrenchment and power is the source of a really interesting business experiment this year as it ramps up to its marquee annual event: July's Pitchfork Music Festival in Chicago.
Historically, Pitchfork has announced the lineup of its summer festival and released tickets early enough in February that its three-day passes have sold out well prior to SXSW, which usually drives tons of buzz for its killer day parties and official showcase in Austin. This year, however, Pitchfork pushed back its sale date for festival tickets and announced only a small portion of its lineup, so far primarily consisting of new and little-known solo artists like Willis Earl Beal, Tim Hecker, and Kendrick Lamar. Paraphrasing IMP member and The Onion A.V. Club contributor Cal Roach: "I'm a little worried Pitchfork is going to pull a smug 'told you so' and announce the awesome bands for its festival after tickets are sold out."
There's some speculation that Pitchfork has released significantly fewer full-weekend passes this year and is, thus, keeping its big hitters wrapped tightly under its kimono until demand for the higher-margin single-day tickets increases so that it can delay buzz and drive profits with a big reveal. A second hypothesis is that the event's organizers believe 2012 is Pitchfork's tipping-point year and are holding off on courting some of the upper echelon performers until a clearer picture of ticket sales emerges. A sold-out festival minus the costs of hosting major-label acts who have performed in recent years (e.g., the Flaming Lips, LCD Soundsystem, TV on the Radio) would certainly boost profits from the event, which spokespeople have repeatedly stated barely breaks even, while still providing a high-quality music experience for diehard fans. Although Pitchfork has kept ticket prices the same this year as last, three-day passes have apparently not sold at the feverish pace of previous years.
Regardless of the strategy, holding off on announcing headliners is a surprising tactic, given the struggles of some of the industry's top drawing artists to sell tickets over the past few years (Rihanna and Christina Aguilera come to mind). Whereas Coachella and Bonnaroo routinely sell out prior to unveiling their full lineups, those brands deal exclusively in destination-style festivals that attract fans who will invest their full concert budgets in just one or two big-ticket events per year. Pitchfork, on the other hand, is still known primarily as a journalistic enterprise and tends to attract a highly discerning following. Despite the festival's relatively low ticket prices and rave reviews year after year, the majority of its concertgoers also still tend to be local.
That's why this year's plan is both risky and exciting from a business perspective. The trend of selling out the full ticket allotment early and the high aftermarket demand indicate that, all other things held constant, Pitchfork could raise prices, since it has clearly been selling at a price lower than the point at which the demand and supply curves meet. However, unlike Coachella and Bonnaroo, which rely primarily on their lineups and pricing to drive brand value, the Pitchfork Music Festival's brand also gains tremendous value from Pitchfork's core offerings (i.e., Pitchfork.com, Pitchfork.tv). So, the levers it can pull are more varied—Pitchfork has the unique luxury of pushing on cost while using brand to manage perceptions of quality, which is a pretty neat option. Essentially, Pitchfork is choosing to hold price, but nothing else, constant.
According to my analysis, Pitchfork is playing a game it's almost sure to win. If its brand is as strong as it seems to believe, its cost-management strategy will pay off with higher profits, since the value proposition to its core audience of local, discerning, price-sensitive fans hasn't really changed, even in the absence of big-name headliners and matched up against the higher profile but more expensive likes of Lollapalooza. If Pitchfork's brand is weaker than it believes, and if ticket sales are soft, it can afford to sign up or unveil a huge headliner closer to the actual festival date and expect to break even again this year, with hopes of strengthening its brand on the back of a reliably spectacular event whose longer window for adoption this year allows for diversification and expansion beyond its core buyer segment.
This is actually the scenario Coachella used to cross the chasm in 2008. After a light lineup and increased competition slowed ticket sales that year, the organizers added Prince as a headliner only a week before the event, which not only guaranteed a sellout, but assured that the increased short-term costs incurred by organizers that year would be a fair tradeoff on huge brand value and early demand from a much broader audience in all future years. Now Coachella sells out two consecutive weekends at a higher price point before it even announces a single act from its lineup. Not to say that the Pitchfork Music Festival will have that kind of success in subsequent years as a result of this year’s strategy, but the late announcement of an artist that aligns well with the ever-expanding indie audience the way Prince aligns with the mainstream audience (e.g., Pulp, Drake, Arcade Fire, PJ Harvey, Phoenix, Jack White, Daft Punk) could open the door to and, perhaps, lock in, a whole new class of customer.
-- Ryan Mixtape, 03/12/2012