Monday, 31 August 2015

Edinburgh Fringe Festival

From the Guardian

The city’s festival is vast, exuberant and intoxicating – and a giddy opportunity for price gouging that almost every business in town takes advantage of. It is the perfect capitalist model: the owners of assets such as hotels and restaurants skim off large profits, while the people who make those profits possible – the performers sweating in the city’s aircon-dodging venues – walk away penniless.(1)

Take the Ibis, a budget hotel, in the city centre. It makes no bones about its “dynamic” pricing model, with a digital screen facing the street showing the latest shocking room price updates. Last week it was like the Shanghai stockmarket, just with soaring prices rather than collapsing ones. I don’t recall the exact figure, but on the Saturday it was asking above £230. This for a hotel that charges £35 a night for advance bookings at other times of the year.(2)

Not far from the Ibis, I was lucky to get a seat for one of the triumphs of this year’s festival, a theatre production called 1972: The Future of Sex. It’s the third time Wardrobe Ensemble has played at Edinburgh, and even after great reviews and sold-out performances, it will barely cover its costs.(3) One of the group’s actors, Ben Vardy, told me: “We broke even in our first year, and made a small loss in our second. We will turn a small profit this year because it has been very, very successful. But when I say profit, I mean under £100 each.”(4)

The business model for the creative industries is broken. For every performer at Edinburgh working for nothing, read musician on Spotify or writer on the net.(5) Providers of content make peanuts, while the controllers of the infrastructure, such as Google, walk away with extraordinary profits.(6)

It was ever thus, some might argue, although the internet has allowed businesses to extract profits with a precision previously not possible. How can we transfer some of the wealth grabbed by, say, hotels in Edinburgh and hand it to the people who generated it? A city-wide tax on hotels and restaurants during the festival, the money redistributed to performers? Utopian, probably, and in any case illegal under our tax regime.(7)

(1) Well, yes, if you can run a business where you make money as a result of people who are prepared to work for nothing, that is.

(2) What else is it going to do? Hotels across the country vary their prices based on demand. London is cheap at weekends, the Cotswolds cheap on weekdays, coastal places rise in summer.

(3) Maybe if you're selling every ticket, you need to consider raising your prices?

(4) So clearly, they recognise that it doesn't make much money, but keep on doing it. Maybe like lay preachers and people who sing in choirs, it's more about doing the thing for fun. Of course, the other thing in all of this is that these festivals are more about business than pleasure. You hold a festival, you can get various media people from the BBC or C4 to take a trip to the festival to see your show, maybe be impressed with your work and commission you to write something for them, for real money.

(5) The business model isn't broken, because Edinburgh has hundreds of shows being put on. Spotify has 200,000 songs uploaded every day. There's no shortage of people making stuff, which is all we want. And historically, going back to 1980s synth bands, 1930s dance hall bands or 19th century choir festivals, almost no-one made money. People mostly did their thing for pleasure and to perhaps make some beer money. The change today is that people are now doing this with making their music globally available and making a few quid from YouTube adverts. The people who are most upset about this aren't those people but the old gatekeepers of promoting artists in the old media, and the artists who had the big company backing. They really don't like that all these small artists can have access to distribution and sell product instead of them.

(6) Google? I thought this was about Spotify? What infrastructure do Google control? Not the internet, the world wide web, the fibre-optic cabling or any of the domain registration stuff that makes up the net. Google have mostly been rather unsuccessful with making money off artists. Their profits come from people searching for funny cat videos and getting served an ad.

(7) You don't even need anything this complicated - you just charge business rates to hotels that get a financial benefit, and charge the local people who get the benefit of art on their doorstep and spend that on the festival, which is what Edinburgh does already, to the tune of something like £4m per annum.


Rich Tee said...

I was saying to an acquaintance the other day, music has come full circle. Before recorded music, performers played live, then it became all about the records and tapes, and people listened at home or went to discos/nightclubs, now due to rampant piracy musicians can't make a living out of recorded music anymore so they are going back to playing live. Nightclubs are closing en masse, but festivals are booming, and every new pub that opens up has a stage in it.

Artists just tend to be bad business people. People like David Bowie and Thomas Dolby are pretty shrewd businesspeople, but artists mostly hate the money side, and hate having to make hard decisions based on profit and loss.

The Stigler said...

Rich Tee,

Musicians can't make money from recorded music? Tell that to Adele and her 40m sales. Or Taylor Swift who sold 10m albums last year. The music industry only talks about rampant piracy by comparing sales in the early 90s, when people were replacing vinyl with CDs and before DVDs and video games were competing for people's income.

There has been an increase, no doubt. And it's changed the complexion of big music sales as piracy is more of a male, late teen to mid-20s thing. But Mark E Smith is still doing his thing, despite the fact that there's only an estimated 50,000 fans of The Fall. He doesn't get to live in Cannes and drink Cristal - more like Salford and a pint, but it is a living.

Personally, I went off music festivals after a couple of them. Spend £100+ on a ticket. Queue up for ages. Stand in a field, perhaps wet under foot, maybe raining. Watch bands on a TV screen because they're so far away, the sound distorted by the wind, have a tiny selection of crappy overpriced booze in a plastic cup and then spend 3 hours trying to get out.

Bayard said...

"The business model for the creative industries is broken. "

It sure is, if you are the Grauniad. Their "business model for the creative industries" is for the "creative industries" to be given large dollops of public money so that they can live a comfortable life creating things that nobody wants. For a good example of the Graun's "business model" in action see here , allegedly costing the local authority around £50K.

Mark Wadsworth said...

Re 2) and 7) agreed, exactly. Apart from that, as daft as I think Edinburgh festival is, it's a free world and if that's what people enjoy doing, then let them.

I think RT makes good points though, there clearly has been a decline in the number of night clubs and an increase in the number of outdoor festivals. This might have something to do with the smoking ban and online dating apps, but RT might be on to something here.

The Stigler said...


Yeah, and they always talk about "the arts" being starved, as if Cineworld movies, musicals and novels don't count as "the arts".

DBC Reed said...

What's the matter with you? The Guardian is clearly right in depicting a classic rent seeking situation where the land and property monopolists (hoteliers) are coining it from other people's productive work.Clearly "the laws of supply and demand" (so often adduced by those who excuse economic injustice) do not apply where the supply (of hotel rooms) is invariant but the demand goes up in peak periods via the economic mechanism known technically as highway robbery. Clearly room charges should be fixed so visitors have more to spend on productions (theatrical)rather than the unproductive (parasites).

The Stigler said...


I don't have a problem with it existing and people choosing to put on plays that only make them £100. I just don't like this sense of entitlement, that artists deserve enriching. It's especially true when people get into talk of things being critically acclaimed, which often means that it's just not the sort of thing that people want to see after a shit day in a call centre.

Nightclubs are largely about extended licensing of pubs. Clubs always got busy when the pubs kicked out at 11ish and that's gone. You can keep drinking in a pub.

Outdoor festivals have increased a lot because people started running them (and all gigs) more professionally and making them safer. People forget how much trouble there used to be at Glastonbury from new age travellers. Or how often bands would get bottled at festivals y the crowd. Making the whole thing safer led to the crowd changing from kids to a more mature, conservative, middle-class, gender-mixed crowd going and as a result, festivals could be profitable. Festivals like T in the Park and V Festival appeared in the mid-90s, in the pre-internet piracy era.

Bayard said...

DBC, everyone's there because of "other people's productive work", including the artists. Most of these acts are what used to be called "the fringe", because they were only there because of the visitors attracted by the "main" festival. What each artist contributes is very small compared to the efforts of all the other artists, or is it impossible to be an artist and a rent-seeker?

"Clearly room charges should be fixed so visitors have more to spend on productions"

Firstly you do not know that the money saved on accommodation would not simply stay in the punters' pockets and secondly, the whole thing would rapidly descend into some sort of police state in an attempt to prevent the lucky few who were first in the queue for the good places simply selling them on at a profit.

Clearly what should happen is that all the artists should get together and agree to charge more. All those people attending the festival have got to go somewhere; you don't pay £230 a night and then spend it sitting in your hotel room. Because visitiors have to spend more on their entertainment, they will have less to spend on accommodation, and the hoteliers will have to reduce their prices. No need for that state involvement that so dear to the socialist heart.

Mark Wadsworth said...

B, that's a good point re ticket prices, but I suppose psychology is at play.

I (for example) somehow feel more comfortable paying £100 for a day at a theme park with the family where the rides are "free" than going somewhere with "free entry" but where each ride costs £4. Plus I like theme parks.

And we know that performers are happy to run at a loss, so they don't want to or dare charge more than a couple of quid. So perhaps punters are happier paying £200 a night, knowing that they then have more or less a free pick of dozens or hundreds (?) of shows; if they don't like something they can walk out and go to the next one.

But even if performers managed to pump up ticket prices, all that then happens is that venues charge performers more for being onstage. The landlord always wins!

Rich Tee said...

"Tell that to Adele and her 40m sales. Or Taylor Swift who sold 10m albums last year"

Mmmm, well Adele certainly has a large middle-aged following, and middle-aged people will still pay for music because that is how their generation consumed it, and they are less computer savvy. Same goes for Mark E Smith. How old is his fanbase?

It's great if you have a corporate heavyweight record company behind you and you can cross-sell younger artists to an older audience.

I can tell you that I went to a workshop with an experienced record producer laat year and he said he can't make any money out of recorded music anymore, and he said you have to have a full-time occupation and do the music in your spare time (although maybe it was alaways that way). He was unequivocal about it.

Bayard said...

"So perhaps punters are happier paying £200 a night, knowing that they then have more or less a free pick of dozens or hundreds (?) of shows; if they don't like something they can walk out and go to the next one."

AFAIK, it's always been the way it is, we won't know the answer to your question, because the alternative has never been tried, but you are right about the landlords, though, although of course they can't risk not actually having anyone use their venue.

RT, Q What do you call a musician without a girlfriend? A Homeless. I heard that joke in the '90s and I suspect it's as true now as it was then.

DBC Reed said...

@B Good Gawd! You are talking about attempts to control rents (for hotel rooms) as a descent into a police state (on a land tax supporting website). I have visited a police state (Greece under the colonels) and room prices were strictly controlled and the prices printed on a officially signed form stuck to the back of the door. I do not remember any queues or people selling on tickets as you suggest.We used to arrive late in the evening, sling our stuff on the beds and go off to eat and drink in the tavernas till late at night.
Do you consider George Osborne's attempts to increase wages from their present low level by government edict evidence of a Police State?

Bayard said...

DBCR, you have just made my point, which was not, as you appear to have read it, that controlling rents was the action of a police state, but that if you do control rents, then it takes a police state to prevent those rents being resold for a profit by those at the front of the queue, as you discovered in Greece, all those years ago.

Incidentally, given a mandatory flat room charge in Edinburgh during the festival, how would you prevent "ticket touts" booking the rooms and selling them on to latecomers at a profit?

Lola said...

Under the Guardians rationale I need to paid a state subsidy to race my car.

I PAY to race. The circuit both charges the organiser AND sells tickets to the public.

As a 'cultural pursuit' clearly I qualify for a state subsidy.

DBC Reed said...

What is all this nonsense about hotel queues with touts selling rooms on to late comers? This doesn't happen and couldn't happen, especially in an organised system which you exaggerate into "a police state". In the actual police state-ish of the Colonels' Greece, I did actually turn up in Athens at midnight only to find all the hotels booked solid because of a religious festival.A taxi driver drove us round and eventually got us into to a hotel store room which had a bed in it.Somewhat ungratefully, I queried the price in the morning, and was shown the full approved list of prices per room which our room did not appear on ,of course: it did n't have a number.But it was half the price of their cheapest room, so we re-booked a cheap room which had become available and spent the next day eating and drinking in their bar, having spent so little on rent in classic post LVT style.
I also remember a State organised system (Police State! The knock on the door at 3 o'clock in the morning!)in Ireland where you turned up in a town and went to the Tourist Information bureau where they phoned through, referencing an enormous list and arranged a room for you in a private house.We were not beset with touts, queues, upward price changes or prefects invading the small boys dormitories which seems to lie behind the right wing fear of Police states a la 1984 ( Orwell/Blair went to Eton, you know off his father's savings from the Imperial organisation of the Opium trade).

The Stigler said...

DBC Reed,

"What is all this nonsense about hotel queues with touts selling rooms on to late comers? This doesn't happen and couldn't happen, especially in an organised system which you exaggerate into "a police state"."

Of course it would happen. If a hotel was forced to charge £50 all year for a room, people would grab the rooms in peak times and sell them on. It's what happens when a musical artist undervalues their ticket price (Kate Bush tickets selling for 10 times face value) or in the case of Morgan cars, they undervalue them and people buy a Morgan just to sell it on.

Lola said...


It's not Hotels raising their prices. It's hotels cutting their prices when the Festival ends.

DBC Reed said...

@L It is about hotels raising room prices.
The original Guardian story was about the so-called "budget" hotel chain Ibis raising prices on a daily basis to £200+ from the standard rate of £35.

Lola said...

DBCR. Nope. They 'd like to charge 300 quid all year round. But they can't as there is no demand at that price. So they have to cut prices until they find the market clearing price, which still varies by season. This is the classic case for LVT.

Lola said...
This comment has been removed by the author.
Bayard said...

DBCR, I fail to see what point you are trying to make. Firstly you say that in a real police state, no-one was brave enough to try and buck the system and put the prices up when demand was high, then you say that there were no touts or price gouging in a situation where both demand and supply was high. Sure, Edinburgh City Council or whoever the LA is could set up some sort of AirBnB type system so that the worthy burghers of Edinburgh could rent out their spare rooms for the festival, but so could AirBnB, which they presumably do already. I doubt it would make/makes any great difference to what the hotels charge.

DBC Reed said...

Wow.We now have two alternative scenarios to simple anti-rent seeking controls. One where touts buy up room bookings and stand around outside hotels (the way ticket touts used to stand outside Wembley or perhaps they still do); the new one is the right-wing panacea: "market clearing" in which presumably a hotel starts offering cheap rooms at £300 to begin with then makes weekly reductions until it starts getting customers.In the meanwhile the hotel goes out of business.

Lola said...

DBCR. You are confused soul. Hotels aren't 'rent seeking'. They are charging for the service of operating an hotel. 'Rent seeking' is seeking to obtain economic rents.

As to the second bit, yes, that is in effect what they do. It does this by doing some 'market research' to find out what prices might be charged. Does a bit of COBA and gets going.

DBC Reed said...

They are rent-seeking, literally. The basic hotel service which is much the same everywhere (in the instance being described) leads to huge premium prices for renting the rooms out the nearer they are to the popular fringe events in place and time.
And you call me confused, tch!(This is supposed to be our specialist subject!)

Bayard said...

DBCR, have you considered that the Ibis Hotel can only offer rooms at £35/night most of the year because of the profits made from the £230/night charges during the Festival, or that hotels can only stay in business because of the money they make over the festival?

Assuming the Festival lasts for 10 days, then the total income per room for the Ibis is £14,725 a year, or £40.34. If all the other hotels did the same, all it would mean that the non-festival visitors would be subsidising the festival visitors. Is that a better system?

If all the hotels were forced to stick to their non-festival prices during the festival, and the Special Festival Police made sure there was no black market, then I suspect that many would go out of business, resulting in there being a shortage of hotel rooms for the festival. As a result fewer visitors would come to the Festival, many being discouraged by not finding anywhere to stay, and the poor struggling artists would get even less money than they do now.

DBC Reed said...

Just look at the Ibis website.There seems to be no rhyme or reason to their prices other than taking what they can get at the time. I do not believe the Edinburgh Ibis runs at a loss all year and makes up the losses during the Arts festival as you state. I should imagine they make a small profit all year and a monster profit from would be fringe audiences.There is no need for a "Special Festival Police" force to terrorise poor innocent hotel proprietors who we all know pay their staff a king's ransom to provide superlative service.
They never had such a force in authoritarian Greece.A stamped official room price list in the lobby was sufficient.Why are right-wingers so scared of the police? They are supposed to love Laura Norder.

Bayard said...

"I should imagine they make a small profit all year"

Yup, that's the voice of the socialist, "profits must be small, if at all". I suspect that if the Edinburgh Ibis only made a small profit, it would be closed down.

"They never had such a force in authoritarian Greece."

They didn't need to. Everyone was scared of the regular police.

Look, it boils down to this: 1) running a hotel is a marginal business at best, unless you are one of the international chains of luxury hotels. Most hoteliers depend on "the season" to make any profit at all, whether in Edinburgh, or a seaside town. For the rest of the year they might as well close down, and many do, 2) if you mandate room rates as the Greeks did, there will be people selling rooms on at a higher price, like subletting council tenants in London. This will be very difficult to police, because it won't be the hoteliers doing it.

So 1) would you be happy if hotels that charged £230 a night were only open during the festival, i.e. that was the only price they charged all the year round and 2) do you really believe this wouldn't happen?

DBC Reed said...

To my certain knowledge of living in a seaside town (Brighton), small hotels and B&B's used to tide over the winter with low-paying regulars:traditionally little old ladies but increasingly with the growth of Sussex University, students who of course vacated during the high season. Bizarrely young footballers from Brighton and Hove Albion were billeted with the students with odd results like the footballers getting more interested in the academic studies than the students. If the Edinburgh Ibis departs from the old pattern of "resident" hotel guests, it is because it can't be bothered because its making too much money without.
From your jibes at Socialism it appears that you believe that private sector operators including those in the cartel of hotel chains should profiteer from location advantage, exactly what land taxers oppose.

Bayard said...

DBCR, you haven't answered my questions.

Your Brighton examples don't actually prove one way or the other whether the low-paying regulars were being subsidised by the high-paying holiday-makers or whether the hoteliers could have survived with little old ladies all the year round.

My jibes at Socialism imply nothing of the sort. All hoteliers benefit from location advantage all the year round. It's in the nature of a hotel to benefit from location advantage in that it's no good having a hotel in a place where nobody visits. What the original author and you are complaining about is temporal, not locational.