Will the sports sector ever be disrupted?

by on October 12, 2013 at 10:26 am in Music, Sports | Permalink

Here is a question from a recent symposium:

People spend 4 hours per week watching sports and 40 listening to music. But the music industry is one sixth the size of the sports industry. Why?

No time-shifting for live contests, much less piracy, less substitutability (there is only one Super Bowl), and greater indivisibility of product would be the beginnings of an answer.  The source is here, hat tip goes to Ted Gioia.

soonerhokie October 12, 2013 at 10:39 am

I disagree with the basic premise. I do not know that the average person spends 40 hours per week listening to music.

A few things to add, people who are in to sports are MUCH more into sports than people who are in to music.

There are more places to spend on very expensive items in sports than in music.

Music is a background item while sports requires fans to be actively engaged (for the most part – I will except June baseball or November basketball). This leads to less time shifting (as Tyler notes) and more ad revenue.

Fortysomething October 12, 2013 at 1:49 pm

> people who are in to sports are MUCH more into sports than people who are in to music.

Is that really true?? it certainly wasn’t true among youth in the 70s and 80s. I know this from personal experience but you can also see from the chapter on popular music in Bloom’s “Closing of the American Mind”.

Therapsid October 12, 2013 at 2:23 pm

The culture’s changed. Twentysomethings are, on average, not nearly as into music or musical sub-cultures as their parents were. Social networking and smart phones have supplanted music as the core of youth culture.

Rahul October 12, 2013 at 11:46 pm

Funny how sociologists were complaining that a casualty of modern times was that people weren’t connected or interacting with one another any more.

I guess social connectivity is back like never before. Full circle?

Therapsid October 13, 2013 at 12:38 am

Depends what you mean Rahul.

Young people today are more disconnected when it comes to face-to-face communication.

This is palpably obvious if you go to any public space. Coffee shops look like computer labs. Anywhere you go people are shut away, ear buds on, eyes cast down on their smart phones, tablets, and laptops.

Youth today are generally less adventurous and spontaneous, which is part why vibrant musical sub-cultures no longer find much purchase among them. The bright side of this shift is that crime is down. You can measure this by a myriad of metrics. One was discussed on this blog not long ago – young people are not getting drivers licenses like they used to. Why bother, when you can stay home and check Facebook.

Rahul October 13, 2013 at 12:55 am

What I mean is do the benefits of being connected to people only accrue from face to face communication?

I guess there’s broad agreement that being connected to and interacting with people has social, psychological and other advantages over being a loner.

Question is, does non face to face communication lose these benefits?

Rahul October 13, 2013 at 12:57 am

“young people are not getting drivers licenses like they used to.”

Gas prices are not what they used to be either……

CD October 13, 2013 at 3:14 pm

Anyone have actual data?

A couple notes on observable prices:

Live music: if you attend the opera and symphony in a major city, you’re spending a ton of money and committing a lot of time. So “people who are in to sports are MUCH more into sports than people who are in to music” seems obviously wrong. And FWIW, on my occasional visits to these venues I see lots of people in their 20s and 30s.

And “spend on very expensive items” — soonerhokie has apparently never heard of hi-fi.

Fortysomething October 13, 2013 at 5:07 pm

I’m careful not to use terms like “hi-fi” (or “discotheque”, “answering machine” etc.) especially when talking about “kids these days” ….

In any event, the audio fidelity that people experience today is far worse than it was 20 years ago due to the computer speakers/earphones that are typically used as well as production techniques that remove all the dynamic range from the music.

bluto October 14, 2013 at 1:13 am

Cheap seats at next week’s Redskins game (1-5) start at $130/seat with parking and FedEx field seats around 80,000. Cheap seats at the next opera at the Kennedy Center start at $38/seat with parking and it seats 2,350. Concessions at both are in the same ball park price wise, but have more nitrates and hops at the football game. Nationally broadcast NFL games get 7+ million viewers even when they’re not the most competitive contests (like last week’s Chargers v. Raiders game). Kennedy Center Honors (which is an awards program with a mix of popular and classic performances gets about 2 million viewers once a year).

Rusty Synapses October 12, 2013 at 2:54 pm

+1 My teenage kids just aren’t that into music – they never listen to it on their phones. They probably can’t name more than one or two recently released songs, and never buy (or share) mp3s. I can still remember in the early 70s buying my first 45s and albums, and then later making cassette tapes off the radio (what a time sink that was, for such a crude result). On the other hand, my 14 year old son was explaining to me this morning how he was going to revert to an older version of Skype on his phone because of some of the changes in the latest update.

Dan October 12, 2013 at 10:41 am

The monopolies given to the pro leagues in the USA comes to mind as an important reason.

Brandon Berg October 12, 2013 at 11:17 am

They aren’t given monopolies. They’re given antitrust exemptions. Anyone is free to start a new sports league in competition with one out more existing leagues.

US October 12, 2013 at 10:43 am

The 4 hours per week on sports stat I find hard to believe, but maybe I could be convinced that that number is not that far off. But 40 hours per week listening to music? I simply don’t believe that number until I’ve seen a really good source – “[some guy on the internet] believes it was [X] who said” is not going to convince me that’s true.

Americans also watch 34 hours of TV per week (http://www.nydailynews.com/entertainment/tv-movies/americans-spend-34-hours-week-watching-tv-nielsen-numbers-article-1.1162285). At some point you’re going to run out of hours.

Rahul October 12, 2013 at 10:43 am

People spend 60 hours a week sleeping on mattresses. What’s the size of the mattress industry?

kebko October 12, 2013 at 11:51 am

We wear socks about 100 hours a week. The stockings industry should be huge.

Doug October 12, 2013 at 3:43 pm

The average American spends 168 hours a week breathing. Yet last year the aggregated revenue of the oxygen industry was <0.01% of GDP.

BCC October 12, 2013 at 5:58 pm

Americans spend 24 hours a day being alive, so the health care industry should… umm, I forgot where I was going with this.

Anon October 12, 2013 at 11:02 am

Having music on in the background isn’t going to command the price premium of actively watching sports. If you compared how often people sat and did nothing other than listen to music (like people focusing solely on sports when they’re watching, generally), I’d bet you get something under 1hr/week.

DM October 12, 2013 at 11:11 am

Your emotional connection to your favorite sports team is so much stronger than your favorite artist, through thick and thin. I’ve been a Cowboys fan for life, and they’ve been terrible to watch for the past decade. I was a Pearl Jam fan for 3 albums, now I can’t stand them.

CD October 13, 2013 at 3:21 pm

Who is included in “your”?

I don’t find individual artists all that interesting, but my investment in, say, Bach is lifelong and deeply felt.

prior probability October 12, 2013 at 11:15 am

Putting aside the reliability of the data (4 hours vs. 40 hours), there is an obvious and important difference between sports and music: sporting events are competitive … someone has to lose, and this uncertainty is what makes sports exciting … the activity of listening to music, however enjoyable, does not have this same competitive dynamic

CD October 13, 2013 at 3:18 pm

Jugalbandi can get quite competitive (http://en.wikipedia.org/wiki/Jugalbandi)

And, more seriously, live performances can be pretty interesting.

jbm October 12, 2013 at 11:17 am

Large screen HD tvs have started to do this. You hear more and more people say that going to a game in person is less enjoyable than watching at home. Football is somewhat immune to this given the small number of home dates, but watch the secondary ticket markets for non-premium seats in the other major sports. I’d say those have been disrupted.

Law Schools Lie October 12, 2013 at 1:38 pm

This is mostly an American football problem. Baseball, hockey, and soccer are still better live.

8 October 12, 2013 at 11:37 am

According to this estimate, the prostitution industry is bigger than the music industry. I have no estimate on the average time.

Chris October 12, 2013 at 12:38 pm

The average person spends far more time playing sport than playing music

Derek October 12, 2013 at 1:00 pm

Supply and demand? At any time if I want to see an exceptional sports performance there is a limit. Real time by gifted athletes. With music I can choose between living and dead, live or recorded, among a very large selection of talented musicians. There are very few sports events from the past that I would go out of my way to watch.

Yancey Ward October 12, 2013 at 1:16 pm

When I watch sports, I pay attention to sports, and almost surely attention to the ads that support it (though I try not to). When I listen to music, that level of concentration is a lot less (and that is giving credence to the claim about 40 hours/week), and probably am basically unaware of the ads in broadcast music. For music I pay for, I usually have paid once and listened multiple times. This rarely applies to sports where original material is almost 100% of the content.

BC October 12, 2013 at 2:23 pm

Both sports and music are able to charge non-zero prices for live, in-person performance, i.e., tickets for both games and concerts. In both cases, not-in-person broadcast is given away basically for free, where I include recorded music as part of “broadcast”. In the case of music, the giving away part may be unintentional. The difference is that sports’ broadcast business models were built around free, ad-sponsored broadcasts even before the internet, YouTube, etc. (Even ESPN is marginally “free” in the sense that viewers do not incur incremental charges for watching individual games, and ESPN itself is typically included in standard cable packages.) Hence, there is no digital disruption, e.g., no worry about in-person viewers recording games on camera phones and uploading video to web for broadcast in real or near real-time even if/when technology makes such piracy feasible or difficult to stop.

The mystery is why ad-sponsored broadcast works for sports but not music. It’s due to the active engagement, as many have pointed out, which in turn is due to fan affiliation (non-substitutability), the fact that viewers don’t want to watch sports generically but instead want to see their particular team because they care about the outcome (and are convinced that their mere act of watching and cheering remotely from thousands of miles away can somehow affect the outcome). In contrast, radio stations play songs from a variety of artists rather than broadcasting “concerts” of songs from a single artist. When an ad starts, listeners change the station rather than sit through the ad to wait for the rest of the “concert”, i.e., substitutability. This part is not the mystery; the mystery is *why* sports fans affiliate, at a very personal and emotional level, with particular teams. Today, for example, I will root for both the Red Sox and the University of Michigan, although I don’t know why. Yes, I live in Boston and went to Michigan, but I don’t know any of the players personally. Somehow, sports viewers become vested in outcomes; some even refer to their favorite teams in the first person — “We” won or “we” lost. (I usually avoid the first-person references, but I do confess to slapping high-fives with my fellow fans when these perfect strangers score.) Even a musician’s biggest fan typically won’t say something like, “We gave a great concert tonight. I hope our next concert will be just as good.”

I wonder whether any other industry has ever tried to build a marketing campaign around customer affiliation, where they try to make customers actually care about a particular firm’s or firm’s regional office’s sales, profitability, or some other measure of success. It’s hard to imagine.

duke the lost engine October 12, 2013 at 2:41 pm

as one who spends maybe 60 hrs/week listening to music, i think its relevant that:
(1) almost all that time i am focussed on something else
(2) only perhaps 5 hrs/week of that music is new to me

unionman October 12, 2013 at 3:07 pm

Other important differences are the popularity of sports, the huge decrease in utility from a late or repeat viewing, and the limited tiers in competition.

First, the popularity of sports is generally above a critical point where you will find out the results even if you don’t want to. For something like the latest episode of American Horror Story, it’s very unlikely most people I’m around have seen it, and if they have, it’s usually easy to avoid any spoilers. This is especially true if you are a fan. Someone will almost always ask me if I saw the latest episode of my favorite show before spoiling it, but I’m liable to come into work with a big Cowboys flag on my desk if they beat my favorite team.

Sports viewing also seems to bring most of it’s value by exciting viewers with uncertainty. I almost never hear of someone watching a big game more than a day after. Once the result is spoiled, it’s just not that exciting the view. This is very different from other media like music which can someone even get better with repeat viewing, and they are minimally impacted by delayed viewing.

Finally, sports are inherently very competitive and provide very few “tiers”. In music, I can like hundreds of bands without any conflict, and there are almost limitless genres and sub-genres. However, the NFL has essentially one competitive tier, and this forces fans to have a fairly limited and clearly ranked set of preferences. This really limits the number of exciting opportunities, and missing my favorite team has no substitute. However, I have a huge variety of favorite bands that fit me better at different times of days, moods, etc. Missing a concert or new album release is rarely that impactful, which drives a huge increase in price sensitivity.

Chip October 12, 2013 at 7:36 pm

I’m the odd one out, I guess. Lost interest in watching sports years ago though still mildly follow the progress of my favorite boyhood football team, Everton.

But I look for and download new music all the time. Podcasts too. It provides an element of discovery entirely missing from sports.

Therapsid October 13, 2013 at 1:46 am

Not to single you out, but your comment exemplifies the diminished place of music in early 21st century popular culture.

Grouping music along with podcasts is emblematic. Would kids who were Led Zeppelin fans or punk rockers in the 70′s have placed their musical obsessions alongside listening to talk radio?

Music today still has a place in our culture, but its been reduced to simply one medium of many in a general stream of media *content*. Music is a form of content just like movies, TV shows, YouTube videos, Internet memes, and Twitter hashtags are.

Rahul October 13, 2013 at 2:44 am

Is that just an observation or are you making a value judgement?

CD October 13, 2013 at 3:39 pm

This is just silly – you’re ignoring qualitative and enormously beneficial changes, because you only want to tell one story: kids these days, decline of the culture, et cetera et cetera…

The key term in Chip’s astute comment is “look for.” Music is an enormous ocean, and it has gotten a whole lot easier to sail it with the rise of the internet and internet commerce. You can hear whole genres that were unavailable a few decades ago, track down performances and artists. I can read blogs on West African pop and hear examples. Youtube is great: the sound quality is abysmal, true, but you can find an amazing range of performance.

And speaking as a onetime punk, what does that middle sentence even mean? Punk was DIY and disposable and a lot of participation was semi-ironic (which was part of the reason, since you were in revolt against the po-faced solemnity of Led Zeppelin etc.) Ever hear Jello Biafra in concert? Closer to talk radio than you might think.

john October 14, 2013 at 2:12 pm

how about the effect of government support for sports? sports are exempted from antitrust laws and get money to build stadiums.

bob October 14, 2013 at 4:40 pm

Maybe the answer to the question is in the name of this blog? The marginal utility of another NFL game is vastly different from the marginal utility of someone recording another song.

Does every football game this season have to compete with the Superbowl of the 99 season for eyeballs?

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