This was posted by TEMPTATION elsewhere in the site. I thought it beared repeating because it answers many questions about ticket prices, advertising, etc. Check it out:

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No one here seems to understand the business nature of this Musicology Tour. Prince is not taking any risks whatsoever; the PROMOTER is taking all the risks; and the PROMOTER has taken key steps to MINIMIZE those risks. That's it in a nutshell, and if you care about the specifics, read on.

The "Up-Front" Contract
For the Musicology Tour, Prince worked out a deal similar to the deals that the Stones created and used on all their recent tours. Other acts such as The Who have worked out similar deals in recent years. This is the rage for the top tier of performers, and if you want current examples, see the Celine Dion and Elton John extended Vegas engagements.

Here's how this type of deal works:

The Promoter pays the artist (in this case, Prince) a large up-front fee. One lump sum for the entire tour. This is the artist's payment for the ENTIRE tour, and the lump sum nature of the payment increases its value. That's because the lump sum earns interest while the tour is in progress.

This is the exact opposite of the traditional tour model, where the artist sweats it out show by show, town by town, worrying about the gate receipts. This new model frees the artist from worry. The artist has already been paid! HANDSOMELY. And in this case, this particular artist will pad his profits with aftershows, which are not part of the arena tour arrangement.

In return, the promoter "owns" every aspect of the arena tour. The promoter writes specific demands and requirements into the artist's contract, including set length, number of shows, duration of tour, and so on, right down to the set list.

It's a business and you better believe that every Top 40 song Prince ever had will be played on this tour. Almost every song from his biggest album "Purple Rain" will also be played. That's because the promoter included the list in the contract. They aren't stupid! They aren't giving a lump some payment to someone and saying "play what you like." They are getting exactly what they need to sell the maximum number of tickets. This is why Prince displayed a list of hit songs at his press conference. Those are the song titles that are in the contract.

So, let's proceed to the other components of the deal.

Venue Selection
The promoter picks the venues, with an emphasis on venues that the promoter owns, to maximize their profits. That's why you see the Staples Center on this list - the promoter owns it and they can use the building for a minimal investment. It is cheaper for this promoter to use the 20,000-seat Staples Center than to rent the 13,500-seat LA Long Beach Arena! So of course, the business decision is simple: Put the show at the bigger house because you own it - and get more capacity for less money. This makes a sellout "nice to have" instead of mandatory.

That's also why you see a number of college venues on the list - because colleges are the easiest, and most agreeable places for promoters to arrange shows. Colleges are always looking to make extra money and, since the colleges own the arenas and use them for athletic teams, colleges can offer promoters great deals in comparison to non-college venues. Simply put, IT'S CHEAPER to use a college athletic venue than any other type of venue.

Marketing & Advertising
The promoter handles all the promotion and publicity in each market, using a raft of media connections, sweetheart deals and bulk national buying from major media conglomerates. For example: A promoter can get a great deal on newspaper ads by purchasing them at a bulk rate from large newspaper corporations like Knight-Ridder. Knight-Ridder owns a bunch of different papers in many different markets. So the promoter buys in bulk and then places certain percentages in different target markets. This is extremely cost-effective and much CHEAPER than what Prince had to do on the ONA tour (buy each newspaper ad separately in each different market).

This marketing piece is a HUGE part of what makes this formula work. The promoter has big-time buying power and money talks. It's all about volume discounts and working the connections. Another example: This promoter has existing relationships with Tickets.com and Ticketmaster. The promoter buys banner ads on the ticketing websites and pays the ticketing corporations for dedicated e-mails to subscribers. These marketing purchases translate to increased awareness and more importantly, increased ticket sales. And the promoter gets volume discounts because the promoter has a well-planned approach. They buy a big package up front, divide it up around the country throughout the tour, and greatly decrease their per-piece (or in this case, per-show) marketing costs.

Scheduling, Ticket Prices & Attendance
The promoter sets the ticket prices at the top limit of what each particular market will bear, using formulas and averages from each different market. The promoter also schedules as many performances into the time period as humanly possible. That's why you see so many three-nights-in-a-row performances on this tour. It is a complete, holistic approach and it's extremely effective from a BUSINESS perspective. It's about minimizing risks and costs; maximizing profit potential; and averaging costs out over an entire tour.

Because the promoter is applying well-planned formulas, it's not mandatory to sell out every show, or even one show. As long as these shows AVERAGE a 60% full rate, the tour will be profitable. Anything over a 60% average will be pure gravy for the promoter!

Planning and Advance Notice
Planning and advance notice are key elements in profitability of this type of tour. That's why you are seeing tickets onsale for a month or many months in advance. The promoter takes the ticket sales and earns interest on the receipts for a long period before the show date. Then, on or after the show date, they pay the venue. The media purchases (including newspaper ads, radio ads, e-mail marketing, etc.) are also on net-30 to net-90 terms. This means the promoter is making money long before their expenses must be paid. It's a great model for the promoter and again, it's all about maximizing profits.

LONG STORY SHORT
Prince has already made a huge amount of money on this tour. And the promoters are going to make their money too. Anyone worried about these shows selling out, your concerns are misplaced. Just go to the shows and enjoy! I guarantee that's what Prince will be doing!!
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Thanks krebsne. As someone else posted in a related comment, this is a big reason why Prince is so relaxed and happy in the face of this huge tour...he ain't worried about a thing!

Temptation said:

and why would he be worried? he's done this so many times , money-worries or not.

Milty said:

And don't forget, age sometimes brings wisdom. And getting the type of recognition he's getting now along w/being inducted into the Hall of Fame where he will be in the company of GIANTS has got to feel good too. I remember my Mom, as she got older, just kinda stated, f-it. When we're young we stress ourselves out so. I'm still in the midst of that. I'm also sure his relationship w/God has lots to do w/it as well. The man did the walk around, knock on folks' door Jehovah's Witness thang! Now that takes some relaxation and happiness to do.

One Love, P. Glad you're happy now. My prayers have been answered!