Suppose Kid Rock rents a 100,000 seat auditorium for $100,000. He plans to hold a concert, choose what to charge for tickets, and pockets all the revenue from ticket sales. The difference between ticket revenue and rent is his to keep.

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Kid Rock's gamble on cheap tickets wakes up concert industry

Recording artist Kid Rock flips his microphone as he performs during Tiger Jam 2013 at the Mandalay Bay Events Center on May 18 in Las Vegas. / Getty Images

When Kid Rock unveiled his $20 ticket innovation in the spring, he didn't mince words: He was out to rock the concert industry.

Ticket prices had gotten out of hand, the Detroit star said. Fans were disgruntled. Pitting himself against the "highway robbery" of $200-plus tickets for acts such as Jay Z and Justin Bieber, Rock declared himself a music-biz revolutionary: For his 40-date summer tour, seats in every section would be $20. Beers would be $4. Tickets purchased at Walmart would have no extra fees.

As Rock hits DTE Energy Music Theatre Friday night to begin an eight-show stand a record run boosted by the cheap tickets it's clear his summer adventure has the close attention of an industry looking for lessons.

"That's what has been missing in the modern concert business, at the top level, anyway the ability to experiment," said Gary Bongiovanni, editor of the trademagazine Pollstar.

Rock's camp, meantime, is already proclaiming it a grand slam. In most markets, his show attendance is up substantially from 2011, in some cases threefold, said Rock's manager, Lee Trink. The remaining six weeks of shows, with opener ZZ Top, are nearly sold out.

The week after the DTE stand wraps up on Aug. 20, Rock expects to play to 28,000 in Chicago, where he drew 15,000 two summers ago.

It all stems from a novel deal with promoter Live Nation, quietly hatched by Rock last year. Rather than operate with a traditional guarantee a set fee for the artist Rock and Live Nation would split revenues from ticket sales, concessions, merchandise and other ancillary revenue. Success would hinge on getting more bodies through the turnstiles.

Also crucial would be sales of about 1,000 quality seats for each show via Live Nation's Platinum Ticket system, where prices shift in real time based on demand. Many have ranged from $100-$200.

A concert's financial risk is usually entirely on a promoter's shoulders. Here, Rock would be putting his own neck on the line. This was uncharted territory. In interviews ahead of the tour, he said he risked a pay cut of up to $100,000 per night.

"Somebody's got to try it," Rock told CNN's Piers Morgan in April. "I'm in a position where I can."

Trink said the scheme faced skepticism from many industry peers: "Nice, cute idea you've got there, but you guys can't make any money with this."

That tune changed as the tour unfolded, said Trink, who expects Rock's take to be ultimately "in the same financial ballpark" as previous tours with the bonus of an expanded audience.

Trink said he's aware of at least one "significant artist at the top of their game" in negotiations for a similar deal. (A Live Nation corporate spokeswoman declined to comment.)

Fan-friendly experience

Rock is bucking price trends. In the first six months of 2013, the average ticket price for North America's top 100 tours was $70.91, according to Pollstar's midyear report up 14.1% from the same period last year.

That was enough to push total revenue for the top 100 tours to a record $1.24 billion, despite a nearly 6% decline in ticket sales.

Agents, promoters and analysts interviewed by the Free Press said Rock's model can't necessarily be replicated by every artist. But they said it reflects a bigger rethink under way in the industry, as some acts try to nurture a more fan-friendly experience, including anti-scalping measures and innovations like Mumford & Sons' invite-only ticket sales.

"The real lesson the industry can draw from this is thinking in creative ways about the needs of artists and fans, and how we meet those needs in a way that strengthens the connection," said Fielding Logan of the artist management firm Q Prime, where he oversees the careers of the Black Keys and Eric Church. "I don't know if you'll see others who have this exactly $20 tickets, $4 beer, Walmart-no-surcharges but the lesson is about ways to strengthen the fan bond and extend an artist's career. That should be the takeaway."

With the advocacy group Fans First Coalition, Logan is a vocal proponent of paperless ticketing, designed to thwart scalping and the higher resale prices that often result. Several thousand seats at each Kid Rock show are paperless, requiring those concertgoers to show a credit card for entry. When country star Church went paperless, Logan said, fans overwhelmingly supported the move.

"That's the thing: If Kid Rock is winning, it's because he's looking out for fans," Logan said. "Clearly, he has a large blue-collar fan base, salt of the earth. Twenty dollars really speaks to them."

Bon Jovi manager Paul Korzilius applauded Kid Rock's gamble: "This is a very entrepreneurial business. You either do it yourself, or it's not going to happen."

Bon Jovi has added a $19.50 ticket to its own array of price options.

"It's about great pricing, accessibility, growing your fan base. Slowly but surely over the years, our pricing strategy became more refined," Korzilius said. "What we found is we're getting people into the show who used to be priced out, who wanted to come but couldn't. It's good for the fans, and it's good for future business."

That points toward another big-picture benefit for 42-year-old Rock: shoring up his audience at an age when many rock acts struggle to stay relevant.

With inexpensive tickets to draw new fans or coax old ones back into the fold Rock can pitch his wares and try snaring them for the long haul. This summer's tour may amount to what retailers call a loss-leader discounted merchandise that lures customers through the door in hopes they'll stick around.

"Present a value, and you'll make fans for life. I think that's what Kid Rock has very savvily done in the middle of his career, maybe past the middle of his career: get some fans to re-up and recommit to him," Q Prime's Logan said.

"We know that with the strength of his show, once you get them in the room, you'll have them as a fan," Trink said.

The $20 price convinced Birmingham's Nicole Akemann. Wednesday will be her first-ever Kid Rock concert, and one of the few shows she's attended in years.

"I'm not paying these crazy ticket prices anymore," she said. "When we heard Kid Rock was doing a $20 concert, we were like, 'Well, yeah!' "

Trink concedes that the Kid Rock camp has learned some lessons along the way. Kool & the Gang may have been an ill-fitting opener for the tour's first half, he said. (Another unnamed act had been initially slotted as opener.) Folding parking fees into the ticket price turned into a red-tape headache in some cities. And if Rock sticks with this model, the price point may not always be $20, which was chosen this year "to throw down the gauntlet and almost shock sensibilities," Trink said.

But for now the mood is decidedly upbeat as Rock preps for his eight-show DTE home stand, which Trink said would have grown to 10 or more shows if the venue's event calendar had the room.

Longtime Kid Rock associates weren't surprised to see him roll the dice.

"When I first heard about it, I thought it was a concept that was completely unprecedented," said Joe Nieporte, who operates Freedom Hill Amphitheatre and booked some of Rock's hometown shows in the 1990s. "And it didn't surprise me it was Kid Rock that came up with it. He's a pretty smart cookie."

Question 1: Consider this quote from the article when you answer:

Rock's camp, meantime, is already proclaiming it a grand slam. In most markets, his show attendance is up substantially from 2011, in some cases threefold, said Rock's manager, Lee Trink. The remaining six weeks of shows, with opener ZZ Top, are nearly sold out.

According to the article, dropping the price increased ticket sales "threefold".

What is the percentage change in ticket sales using the endpoint method?

Question 2: Consider this quote from the article when you answer:

Rock's camp, meantime, is already proclaiming it a grand slam. In most markets, his show attendance is up substantially from 2011, in some cases threefold, said Rock's manager, Lee Trink. The remaining six weeks of shows, with opener ZZ Top, are nearly sold out.

What is the percentage change in ticket price using the endpoint method of Kid Rock lowers his ticket price from $200 to $20?

Question 3: The price elasticity of demand when Kid Rock lowers ticket prices from $200 to $20 is:_______________