Crunch Network

Ticketing’s distributed future is not only good for fans, it’s already happening

Next Story

Microsoft Teams feels like déjà vu all over again

Since the dawn of consumer history, tickets have been a product defined by scarcity and lack of accessibility. The result is an abysmal category user experience that’s most often talked about with undertones of anger, skepticism and distrust.

For evidence of scarcity in action, look no further than the World Series between the Cubs and Indians, which is the most expensive we’ve ever tracked — fans in Chicago and Cleveland paid from $2,000-$10,000 to witness history live.  

The reason people are willing to pay so much — and the reason the market exists at all — is the pay-off of an amazing and unique live experience. While high prices for big events will never change, there’s momentum building for a shift to more open access for everyday games that could create a real opportunity for change that benefits everyone: primary platforms, teams, secondary marketers and fans. It’s a once-in-an-industry opportunity that has the chance to turn ticketing into something that works well enough that people don’t have to talk (or think) about it at all.

To frame the opportunity: When is the last time you heard anyone talk about the airline-ticketing industry? Sure, people complain about travel, but rarely do those gripes focus on tickets not working, or worse, being fakes. The airline-ticketing ecosystem works well because it’s controlled, from the distribution (email) to the fulfillment (phone scan or credit card swipe).

For event tickets, however, closed isn’t a viable model for several reasons. Most importantly, teams need to manage their risk by moving inventory to third parties. With perhaps a few exceptions, that’s not changing anytime soon, which means that the challenge for ticketing 2.0 is simultaneously managing the three-headed monster known as transferability, access and security. While it’s a daunting challenge, there is more investment than ever trying to make it happen — and even more financial incentive for the industry to figure it out.

SeatGeek’s recent announcement of their Open ticketing platform has shined the spotlight on this monster question brighter than ever. Despite competing with them over the last five years, I admire what SeatGeek has done in bringing technology-based thinking into the market. With Open, they’re hoping to expand their impact on the industry, from consumer to teams. MLS may be the best bet for a league where that can happen, and we look forward to working with them to find unique opportunities for innovation. We also look forward to continuing to work with other platforms, like Ticketmaster, Telecharge, Spectra and Ticketfly to help their clients market directly to fans.

With phones in every pocket, the box office only needs to be a couple of taps away.

While distribution is a growing buzzword in the category, we’ve been thinking about, and managing, team and rightsholder distribution for almost seven years. During that time, we’ve worked with more than 50 clients to help them “get the right offer, in front of the right fan, at the right time.” While TicketIQ has only been live for two months, we had been doing business for the previous six years as TiqIQ. The original vision for TiqIQ was a white-label publisher platform that would deliver unsold inventory from teams directly to fans, alongside the secondary market. TiqIQ’s view of the market in those days was Ticketmaster and StubHub, and the goal was to create a truly transparent view of the marketplace, as “reported” by the most trusted sources in local journalism, like The Washington Post.  

In sports, unsold primary market tickets are cheaper than secondary market tickets around 50 percent of the time. Showing all the options in one place created a form of transparency that didn’t exist in 2010. It was a consumer value proposition that publishers liked — including The New York Post, The Boston Globe, The Atlanta Journal-Constitution and The Village Voice. Despite our best efforts, however, big partners, like the pre-Bezos Washington Post, were too entrenched in old-school thinking and doing to pull it off.

While the big publisher model didn’t work, it did have two lasting benefits. Firstly, it helped us sign a handful of teams that also bought into the vision. Secondly, over our first six years, in addition to the big publishers, we signed up almost 2,000 small and medium publishers, like River Avenue Blues, the gold standard of Yankees blogs (yes, I’m a Yankees fan).  

Many of our partners today publish only on Facebook and Twitter, and our network now reaches almost 50 million people. As we’ve grown the network and our roster of team and festival clients — like NYCFC, The Atlanta Falcons and The Voodoo Music Festival — we’ve gotten very good at selling tickets across web and app ecosystems. This season, we had our first million-dollar year for a team, which was a big milestone for the company. Despite that exciting progress, it’s a drop in the bucket compared to what Ticketmaster’s distributed commerce program will do this year.

According to the Sports Business Journal’s ticketing issue published recently, Ticketmaster will sell 10 million tickets through distributed channels in 2016. Along with a recent announcement of a Costco deal, deals with Facebook and Bands in Town have driven most of that growth — up almost 100 percent since 2015. Over the next few years, expect that growth rate to increase as quickly as Ticketmaster can make it happen.

A simple look at the numbers shows why. Assume that the 10 million tickets sold by Ticketmaster in 2016 are worth roughly $500 million in gross revenue ($50 per ticket). If Ticketmaster gets 10 percent of that gross as the toll booth, it would turn LiveNation, it’s parent company, into a consistently profitable company for the first time in its history. Five hundred million dollars is also just 2-3 percent of the overall primary market opportunity, which means it’s massive. It’s also a chance to grow the market to young consumers in creative and yet-imagined ways.

Despite the early success, not all primary ticketing companies are rushing in. Tickets.com, which powers ticketing for about two-thirds of Major League Baseball, has not disclosed any distribution plans. While baseball needs open distribution more than any league, Tickets.com’s parent company, MLBAM, makes so much money streaming video for ESPN and WWE that incremental ticketing revenue may not be meaningful.

They’re also technically protected by monopolistic immunity, which comes with it the nasty habit of controlling commodities like tickets. In the election to make ticketing good (not great!), MLB and Tickets.com are likely to play the role of Trump, at least for a couple of years.

Teams and promoters need an active secondary market to manage risk and fund what are very expensive operations.

The other big question mark is Veritix-AEG, the second biggest ticketing company following the 2015 acquisition. Over the last 10 years, Veritix tried to tame ticketing with a closed system called FlashSeats. Since launching, they’ve gained only about 10 percent market share across the NBA, NHL, MLS and NFL. Veritix-AEG is now formulating their post-acquisition strategy, and it would be surprising to see them stick with a closed system, given all the money on the table.

Regardless of the pace at which each platform moves, as ticketing makes the next push into digital efficiency, one thing will not change: the buyers’ claim to ownership, both economic and emotional. That claim includes the right to resell; without it, the ticket market can’t properly function. Despite efforts to reinvent tickets in subscription-based models that compress the supply chain, resale is here to stay.

At the most basic level, teams and promoters need an active secondary market to manage risk and fund what are very expensive operations. While it’s different in every league, ticket sales can generate anywhere from 25-50 percent of a teams overall revenue, which means they can’t function without it. What makes open access even more critical is that the exact combination of risk management is completely unique for each team and market. If primary platforms dictate distribution rules, teams can’t optimize.

Contrary to the opinion of some, the great ticket market rewrite is not about a world without the secondary market — it’s about a world where all inventory exists together, transparently. Over the last few years, millions of lines of code have been committed to the effort, much of it fueled by the $3 billion of recent investment — via acquisition or direct capital — in the category.

Despite all the code and dollars, however, the 2016 ticket market remains in technology purgatory. Craigslist is still one of the biggest ticket-selling platforms out there — perhaps second only to Google. For this to change, open and digital primary platforms are mission critical, as are clearly defined distribution and fulfillment channels in each market.

With phones in every pocket, the box office only needs to be a couple of taps away. Just like you used to go to Tower Records, the future of ticketing will have many Tower Records, all in your pocket. By 2050, it’s possible that paper tickets will exist only as a commemorative upsell; and with the right cooperation and holistic thinking, Craigslist may also become a ticket-buying relic. For consumers, such a world would mean that every ticket purchased works, period.

As simple and exciting as that prospect is, patience may be the biggest challenge in the current evolution. The first era of buying tickets online lasted almost 20 years, and it could take 10 years before it’s clear what the shape of the current cycle will become.

The optimist might argue that with all the code being committed to the effort, it’s only five years away. If the major primary platforms, however, can’t agree to a relatively common framework of distribution and fulfillment, the industry will linger in technological purgatory for another 25 years. As the CEO of a ticketing company committed to the mission of making the ticket market better, I’m optimistic about the industry’s chances for two reasons, beyond the current investment in technology.

The first is that distributed commerce is already a proven model in ticketing. Since the first ticket was purchased on the internet in the late-1990s, $5-10 billion of secondary market value has been created using the distributed web as a core platform. Secondly, and most importantly, the new world of ticketing could transform the biggest ticketing company on the planet into a money-making machine. If that’s the cost to make tickets a product that actually works, it’ll be a small price to pay.

Featured Image: Thomas Winz/Lonely Planet Images/Getty Images