Study: U.S. wealth gap rises to record highs; wealthiest less impacted by recession

Pew Research Center report, 7/26/11 [h/t ArtsJournal.com]

The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009. These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that prevailed between these 3 groups for the two decades prior to 2009. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households. During the period under study, wealth disparities increased not only between racial and ethnic groups, they also rose within each group. Even though the wealthiest 10% of households within each group suffered a loss in wealth from 2005 to 2009, their share of their group's overall wealth rose during this period. These trends indicate that those in the top 10% of the wealth ladder were relatively less impacted by the economic downturn than those in the remaining 90%.

 

Commentary: Most affluents are harder to market; "emerging" rich are best prospects

David Hirschman, Advertising Age, 5/22/11

The wake of the global economic recession has shown a spotlight on the yawning divide between the richest Americans and everyone else. The top 1% alone control nearly 40% of the wealth. The accrual of wealth among the very few is of great consequence for marketers, since 10% of U.S. households "account for almost half of the consumer spending" and represent about 1/3 of total GDP, according to the American Affluence Research Council. Before the downturn, luxury marketers embraced the concept of "mass affluence." Buoyed by fatter stock portfolios and exploding equity in real estate -- and encouraged by easy credit -- a larger portion of the population considered itself wealthy enough to buy luxury goods. But in 2011, these consumers no longer "feel rich," and they are not particularly likely to graduate into affluence later on (and thus are not a particularly promising future market for luxury brands to seed). The real growth for luxury brands will come from young, ambitious consumers already involved in jobs that will likely launch them into affluence later in life. Because they have fewer household expenses (such as mortgages and children), they have enough disposable income to develop an early taste for luxury goods and services that will develop further later in life. The "Emerging" tier has also widely adopted interactive and social media, while more affluent groups increase their use of media filters and are therefore harder for marketers to reach. Thus the Emerging tier presents a golden opportunity for luxury brands to reach consumers who will likely be wealthy in the future -- before they begin to more actively police their interaction with advertising.

 

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Study: Who is buying Broadway's premium-priced tickets?

Brian Mahoney, Shubert Ticketing Market Notes e-newsletter, July 2011

As an industry, we make a lot of assumptions about buyers of premium tickets. One such assumption is that customers who buy premium seats will do it over and over, because they always want the very best. We ran some numbers recently and came up with a few interesting facts about premium buyers:

  • 88% of the premium buyers made just one premium purchase in a single year; only 12% made multiple premium purchases.
  • For 40% of the customers who purchased a premium ticket, it was their only Telecharge purchase.
  • 60% of the premium buyers saw more than one show in a year, but the others were not premium purchases.
  • While women are the predominant buyers of theatre tickets, men are the predominant buyers of premium tickets.
  • Most premium buyers are from out of town (65%); only 12% are from Manhattan. 

This data doesn't support the notion that there is a "premium buyer" who always wants the best seats. Why don't buyers make multiple premium purchases? Could the nearly 100% premium mark-up on orchestra seating be the deciding factor in how many premium purchases people make? Would shows sell more premium tickets if the mark-up to its premium seats was only 50%?   

 

Commentary: Advice to museums on premium pricing

Judith H. Dobrzynski, Arts Journal blog Real Clear Arts, 6/6/11

The Metropolitan Museum [has opened] its very popular Alexander McQueen exhibition to the public on Mondays, when the rest of the museum is closed, for the price of $50 per person. The public has matured on the issue since 2006, when the Neue Museum backtracked from its plan to charge the public $50 on Wednesdays, when it's normally open only to members. This is a good thing. Airlines, theater, and many other places have succeeded in using variable pricing, with few or no complaints from the public, which has proven again and again that it understands the market (to this extent). In 2009, I wrote an opinion piece for Forbes advocating variable pricing in the arts, specifically museums. Here was my guidance:

Besides charging extra on weekends, they could get a premium for the first hour every day. Many people delay seeing special exhibitions until the last minute; maybe prices should rise as the end nears. Or maybe tickets purchased online to avoid lines should carry a service fee, as they do for movies. To make variable pricing a success, the differential has to be meaningful. The benefits have to be obvious - early entry, fewer people, for example. And the public has to understand the rationale, knowing that those who can't afford the premium are still welcome during most museum hours.

 

In London, "people continue to want to spend money on a great night out"

The Stage, 8/28/11

[West End] box office for April to June [is] up 2% on the same period in 2010. Theatre producers and owners had been bracing themselves for a difficult 2011 after results for the January to March period were down 6% in terms of box office and 10% in audience numbers. However, the sector has recovered in the second quarter, thanks principally to a strong performance from plays, for which attendance was up 13% on the same period in 2010 (revenue was up 20%). Musical attendances fell by 2%. Society of London Theatre's Julian Bird said he was "cautious, but optimistic" about prospects for the remainder of the year, adding that advance ticket sales are "substantially" up on both last year and 2009: "If our revenues are above 500 million for the third year running, then I think that would be an amazing result in this climate, given the results that are being disclosed in the retail sector and other sectors. I think it shows that London theatre is giving people something they really want and it shows that people continue to want to spend money on a great night out." While figures for the first half of this year are still down on 2010, the drop is not as serious as had been feared. Overall, the first six months of the year are down 1.7% in terms of box office and 5% in attendances. Total revenue for 2011 currently stands at 250.5 million, meaning that it is on track to break the 500 million mark for the full year. Box office figures relate to the 52 major theatres in the capital, including both the commercial West End and major subsidised venues in central London, such as the National Theatre.

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