1. No, the product is not the violinist. Yes you're paying big money for the performance/art, but part of the performance/art is the entire experience. You're paying to listen to music in a nice hall, versus in the subway where it's incidental/background. That's the product, not just the violinist.
1b. Often (at least historically) the big draw for attending classical music performances is the opportunity to mingle with "who's who" in the local community. The music itself is a secondary activity sponsored by these patrons. That might explain why tickets are expensive.
2. Joshua Bell is not that great a musician. And he's not a great person either.
What percentage of people going past would actually go to such a conert?
What (disjunct) percentage of people could actually tell if the violinist is merely playing not-obviously-wrong notes or is even merely "good"?
I don't usually listen to classical music, or solo violinists. So unless a random mood struck me, I would not stop (but also not go to the concert). If this was a (metal/punk rock) band I liked then the setup would be more realistic, but the sound could still be terrible or at least too weird in that setting. Or maybe I like the songs and am not particularly married to the musicians' particular performance, so if they played other people's songs I wouldn't even like it?
And finally, I don't casually take the subway. Even I found this performance terrific, the chance that I can't stop for more than 5 minutes is pretty high, because I need to be somewhere, on time. Not even talking about work, but catching a train or something.