HELLO, CLEVELAND.(The Talk of the Town)

In the summer of 1924, a Kansas City band called the Coon-Sanders Original Nighthawk Orchestra did something unusual: it went on tour. Popular as live music was, bands in those days tended to serve as house orchestras or to play long stands in local clubs; there was hardly even a road to go on. But Jules Stein, a booking agent from Chicago, convinced the Nighthawk Orchestra that it could make more money by playing a different town every night. The tour, which lasted five weeks, was a smash. Soon, bands all over the country were hitting the road to play ballrooms and dance halls.

Stein's original vision hasn't changed much, despite some modifications over the years--parking lots, hair spray, the disposable lighter. Consider Metallica, the Coon-Sanders Original Nighthawk Orchestra of our day. Though Metallica still sells a fair number of CDs from its back catalogue (it has made just one album in the past six years), it makes most of its money from concerts. Two years ago, the band brought in almost fifty million dollars with its Sanitarium tour. Last year, it brought in sixty million with its Madly in Anger with the World tour. God knows what it would take to make Metallica happy.

The music industry may be in crisis, what with illegal file-sharing, stagnant CD sales, and the decline of commercial rock radio, but the touring business is as sturdy as ever. In some ways, it is healthier than some of the mediums (radio, recorded music) that at one point or another were supposed to render it obsolete. Since 1998, annual concert-tour revenue has more than doubled, while CD sales have remained essentially flat. Last year, thirteen different artists grossed more than forty million dollars each at the box office. (Prince made eighty-seven million.) Consumers who seem reluctant to spend nineteen dollars for a CD apparently have few qualms about spending a hundred bucks or more to see a show.

There are still artists who make huge sums of money selling records, but they are the lucky few. A longtime recording-industry rule of thumb holds that just one in ten artists makes money from royalties. Today, it's probably less than that. So the best model, if you're in it for the money, may be the Grateful Dead. Although the Dead didn't sell many records or get much airplay, they worked the big stadiums and arenas long enough and often enough to become one of the most profitable bands out there. As in politics and sales, nothing beats meeting the people face to face.

Most musicians, from a business perspective, at least, would wish it otherwise. Selling CDs is, as economists say, scalable: you make one recording, and you can sell it to an unlimited number of people for an unlimited amount of time, at very little cost. A tour, on the other hand, is work. You have to perform nearly every night, before a limited number of people, for hours at a time. You can knock a ...