Ruth Tarrant Head of Economics and Politics, Bedales School

October 2013

Bursting the Gilded Balloon?
The Edinburgh Frin...
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econoMAX - Bursting the Gilded Balloon?

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The Edinburgh Fringe is widely regarded as one of the world’s biggest launchpads for new creative arts talent. Artists whose careers have taken off at the Fringe have commented recently, however, that up-and-coming performers are being priced out of the market as oligopoly power has started to bite.

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econoMAX - Bursting the Gilded Balloon?

  1. 1. Ruth Tarrant Head of Economics and Politics, Bedales School October 2013 Bursting the Gilded Balloon? The Edinburgh Fringe is widely regarded as one of the world’s biggest launchpads for new creative arts talent. Artists whose careers have taken off at the Fringe have commented recently, however, that up-andcoming performers are being priced out of the market as oligopoly power has started to bite. The costs of being a Fringe performer Two of the costs have risen rapidly over recent years. Firstly, there are the fees charged to performers by the “Big Four” venues of the Gilded Balloon, the Assembly, the Pleasance and the Underbelly. Demand for slots at these prestigious venues is high, and because the performers are so desperate to launch their careers, demand is also fairly price inelastic. Combined with the lack of alternatives in terms of top venues, the Big Four have strong market power and can ramp up the prices they charge to consumers. Demand for tickets to these Big Four venues has also increased, with some seeing an increase of nearly 30%, which adds to the demand from performers seeking slots. The second big increase in costs is accommodation costs. Demand for the inelastic supply of rooms and beds rockets during the Fringe, and so basic economic analysis tells us that prices will also shoot up. With a 6.5% increase in the number of shows at the Fringe, there are more performers and more spectators hunting down a place to sleep, and so prices are rising each year as demand continues to outstrip supply. A third big cost, but one that is reasonably constant, is that of hiring an agent to help with publicity and marketing. This can cost an artist anywhere between £1500 and £4000 for the duration of the Fringe. With audiences averaging just 6 (!), revenues can be low. With costs of around £5000/6000, this results in the Fringe being a loss-making activity for most artists. So why do they continue to perform at the Fringe? Where’s the revenue? In one sense, many artists regard the loss as irrelevant, treating it as a loss-leader. If they are ‘spotted’, then they may get signed to perform at more lucrative venues in London or manage a tour. In other words, the Fringe is a large marketing opportunity at which artists hope to generate future revenue. Many artists aim to perform every other year because of the costs, but hope that the effects of their performance will continue to last for the following two years. The Australian stand-up comedian Bec Hill has said “we don’t do this to make money – we do it to get our names out there and the opportunities that have come out of this have certainly...paid back anything I ended up owing”. Comedian Mike Shephard agrees with Hill: “None of us are here for the money. We’re here so people go from saying ‘who the hell is that?’ to ‘oh yeah, it’s that guy’”. This suggests that profit maximisation is not the aim in the short term, although the hunt for profit certainly seems to be the longer term aim. Business objectives are never quite as simple as most traditional economics makes out! Sources www.bbc.co.uk/news/entertainment-arts-23778487 www.bbc.co.uk/news/uk-scotland-23842527

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