Fuller: Ticketing 2020. New Decade, Who Dis? Fuller: Ticketing 2020. New Decade, Who Dis?
By: Eric Fuller Tickets, tickets, tickets. What’s new, what’s old and of what should you become aware? Well, let’s start here: everything you learned... Fuller: Ticketing 2020. New Decade, Who Dis?

By: Eric Fuller

Tickets, tickets, tickets. What’s new, what’s old and of what should you become aware? Well, let’s start here: everything you learned in the past decade is going out the window. The combination of big data, dynamic pricing and the blurring of the primary, secondary and ancillary ticketing sources into one big amorphous mass combined with the accelerating bias toward knowing just exactly who is in each seat is rewriting everything we once thought we knew.

First, the U.S. government hasn’t yet given up investigating how ticketing really works. There’s a new set of hearings by the Oversight and Investigations subcommittee in Washington D.C. on February 26, 2020. (Live stream at 10 am EST link: http:/bit.ly/37ZNkjM)

It’s part of Congress’ ongoing efforts to figure out what’s lurking behind the curtain and under the hood of the major ticket markets.

The hearing, titled: In the Dark: Lack of Transparency in the Live Event Ticketing Industry is discussed in this article from TicketNews:

https://www.ticketnews.com/2020/02/house-ticketing-industry-hearing-february-26/

The house committee on Energy and Commerce summoned leaders of the biggest ticketing companies to the hearing:

https://files.constantcontact.com/7c26540f001/ddf566f8-5694-4804-933f-540fcb95b722.pdf

The leaders anticipated are truly powerful:

Amy Howe
President & Chief Operating Officer Ticketmaster

Bryan Perez
Chief Executive Officer AXS

Stephanie Burns
Vice President and General Counsel StubHub

Ryan Fitts
Vice President, Legal Affairs Vivid Seats

Don Vaccaro
Co-Founder and Chief Executive Officer TicketNetwork

Joe Choti
President & Chief Executive Officer Tickets.com

At the same time, in the EU (or what’s left of it) there is a new push to outlaw the secondary market:

https://www.thesun.ie/news/5123468/legislation-ticket-touts-eu-approval/

And, Pearl Jam is trying to crash the party by writing its own letter about how to best regulate ticketing:

https://www.politico.com/newsletters/huddle/2020/02/18/what-pearl-jam-wrote-in-a-letter-to-rep-frank-pallone-488349

But, Representative Bill Pascrell isn’t interested in what they have to say:

https://www.insidernj.com/press-release/pascrell-rejects-pearl-jam-criticism-boss-act/

The biggest wild card to start off these hearings may be the now complete acquisition of StubHub by Viagogo. How big a deal is this? Think if Uber were bought by Tesla. Two disruptive companies, consolidated, led by Eric Baker, a man who doesn’t just march to his own tune — he composes it and makes you sing it even if the refrain is disharmonious. This company combines scale, global reach and a complete ferocity in approach. They won’t just move fast and break things. I predict they’ll invent new paradigms of how to blur primary and secondary markets, consolidate their own acquired inventory and that supplied by broker feeds, and create new pricing mechanisms to break away from the rest of the industry who’s only move to date has been to keep bumping up their fee percentages.

We’re not gonna take it

Gonna break it

Gonna shake it

Let’s forget it better still

……..

Blaming “scalpers” for high prices isn’t new for 2020, but it’s still surprising given that the global resale market for tickets will likely exceed $20 billion this year. Even more surprising, once fierce opponents such as Rage Against The Machine are “scalping” their own tickets in a strange blend of allowing both Platinum pricing into the primary distribution of their tickets while they hold back 10% of their ticket inventory in order to sell them for extra high prices with the excess money collected donated to charity.

This is an interesting take on “if you can’t beat them, join them.” It’s reminiscent of Metallica putting 92,000 tickets directly into the secondary market, but enacted with a social conscience. What’s not to like? If you want a ticket to the show, and you have the extra money, buy what’s left which are these highly inflated tickets and soothe yourself knowing the excess cost you paid went to do good rather than into the pockets of the half demented, lecherous spawn of Satan or however the media today wishes to portray those entrepreneurs who place their own capital at risk to take ownership of tickets which hold no value once an event takes place. Just one small problem though, the secondary market pricing runs purely on supply and demand. Hi demand, low supply equals high prices. Low demand, high supply equals low prices. Because, you know, math.

RATM is putting their embellished tickets (“now, with a free capital infusion to the worthy cause of our choice”) on sale for a price which is higher than that at which the free market is trading their tickets. In this truly convoluted world, the tickets being scalped by real scalpers are a better deal than the tickets being scalped by the band trying to block scalpers. Or, more cynically, the professionals who assess risk and value in the secondary market and move prices to balance supply and demand like a Vegas sports book moves odds are better at pricing at scale than a band whose intention is to completely dominate their own ticket distribution when they might be better served working on their chord progressions.

It was Kid Rock who really did this one right. Remember a few years ago when he paired up with Wal*Mart, dictated to Ticketmaster what their fees would be and put all the tickets in the arena for sale at $20, except for the best 3,000 or so which he simply sent into the secondary market to fetch whatever the market would bear? You can’t micro-manage prices on a tour of 10,000+ seat venues. It’s better to let most of the people get a $20 ticket and, if I recall, the beer prices were also capped at very friendly prices. For those who just absolutely have to be close to the front, they were welcome to pay what that cost. For everyone else, it was welcome to my house where the “Cowboy with the top let back and the sunshine shining” could “give a toast to the sun, drink with the stars, get thrown in the mix and tossed out of bars.”

See me, feel me

Touch me, heal me

See me, feel me

Touch me, heal me

…….

Moving front and center this year is a new focus on an old friend: loyalty programs. I keep hearing more and more about markets building out programs to mimic airline frequent flyer incentivization. There’s discounts, free returns, early access, discounts, vouchers — you name it, someone’s got it. The only thing I haven’t seen yet is the companion pass, but undoubtedly somebody has a power point slide ready to go arguing one way to fill an partially sold arena is to offer a free companion ticket. That, in venue speak, is how to bring in one more mouth to fill with liquor, salty snacks and one more body on which to hang a newly purchased t-shirt, hoodie or ball cap. Because no one likes to go to live events alone, an extra ticket is almost as good as a puppy for getting attention among the singles or not so singles given this new age of polyamory. I won’t ever forget once in the day selling an Insane Clown Posse ticket to a fellow over Craigslist who was so excited to go that he offered me his girlfriend for the evening. When I declined he was truly crestfallen to discover that, although I like the band, I didn’t identify as a Juggalo, wasn’t really in the mood to fly to Detroit for some curious version of tit for tat, and although I’m always open to adventure, really thought I’d prefer to preserve the relationship I held dear.

I’m a huge fan of incentive reward programs. I was there at the inception of the AA Advantage and UA Mileage Plus programs. These programs tilted all the assumptions of travel planners. Executives who would have never thought to make a stop enroute to their destination now spent hours charting out a five segment roundtrip so they could earn a free first class airline ticket to Disneyland.

Truly, airline miles presaged crypto. Miles acted as a store of value which could be exchanged for cash by selling to a broker, or for travel benefits such as airline seats or hotel rooms. It took years before the airlines figured out what governments have long known: currency devaluation. But, once the genie was let loose, publishing new and less favorable award charts requiring higher and higher numbers of miles to redeem a flight became standard practice until the newest trend of simply publishing no chart at all began to take hold. Now, on certain airlines like Delta, the price to convert miles to a seat is whatever the price is that day. There’s no longer a chart like in the old days to tell you that first class roundtrip is 100,000 miles, while coach is only 45,000.

Loyalty programs work. But, they have to be carefully designed. People are smart and they quickly figure out the loopholes and ways to maximize their benefits. One major food company to put codes redeemable for mileage beneath the peel off foil of pudding cups. It seemed like a great idea. The company drove sales and the participating airlines got money to participate. But, there’s little value in a small number of airline miles. Somebody bought enough cups to earn 1.2 million miles and donated the pudding within to charity in return for receiving their help to peel off the labels.

Man Gets Millions of Air Travel Miles from Pudding Cups
David Phillips of Davis, California, really did rack up millions of frequent-flyer airline miles as described in a…
www.snopes.com

Mileage times a million is significant. Nobody saw that coming. Well, almost nobody. There is a small group of people who made a market in those miles, me among them. I bought and sold 20 billion miles while I went to graduate school. That was really fun.

Want one more? The U.S. mint sells rolls of collectable coins which have never been circulated. You could buy them with your credit card and the mint would ship the coins to you for free. How long do you think it was before people with a mileage credit card began buying coins $10,000 at a time to get 10,000 miles. Then, when the coins arrived, still in their wrappers, took the coins to the bank, deposited them, and used the $10,000 to pay off their credit card. Do that twice a month and you’ve got 240,000 miles for free. Ultimately, the mint caught on, so that game’s over but there’s always another way to play.

Listening to you, I get the music

Gazing at you, I get the heat

Following you, I get climb the mountain

I get excitement at your feet

…….

DEMAND ( demand.area120.com ), the new product from Google is another lightning strike at the established order. Ticketing has not yet truly had a tech disruption. Yes, I know that mobile tickets are rapidly making paper stock tickets irrelevant, and that electronic secondary markets have broadened distribution, but let’s pull back the lens. Ticketing is still a tug of war where acts, shows and teams seek two things: fans and venues. There is an entire industry built of people and companies who have built the relationships to route tours, secure venues, assure the stages get built and the sound systems function and handle the mundane day to day problems when there are people and trucks moving from city to city.

What happens when technology replaces much of the work these people — the promoters — have done old school? It is still the promoter who sets ticket prices by giving the primary market the marching orders of when and how to move pricing. And, it is the promoter in conjunction who is making the decisions of which cities to play and at what sized venue. These are still “gut” decisions.

But, DEMAND and similar data driven tools may change the game. What happens when all of the pertinent information which used to take a lifetime in the business is available on a smart phone? There is an instructive example: when’s the last time anyone used a travel agent? It used to be that if you wanted an airline ticket, it was the travel agent who got it for you. They had the special computer system that could reserve a flight and issue the ticket on the special ticket paper which the airlines required they keep locked in a safe at night. And, they booked your hotel room by calling the phone numbers listed in a directory which weighted about ten pounds and listed contact information for every significant hotel in the world. Then, the internet and computers made public the ability to book flights and hotels yourself. Making reservations for planes and rooms became self-serve friendly. In March, 2002 most airlines told the travel agents who had served them since their inception that, thank you very much, we won’t need you anymore. Instead of paying agents a 10% + commission for each sale, these airlines would now pay nothing. It was up to the travel agents to add a surcharge to the price of the tickets to cover their services. As you might expect, once their “free” service was no longer free, most people quit using agents and went to the internet to book their own flights.

What does this mean for live event promoters? Well, the parallels are pretty clear. If demand, pricing and routing can be divined by easily available technology, then promoters have only two remaining virtues: the upfront money it takes to build the tour and the capacity to manage the day to day decisions which have to be made with so many moving parts. If there’s data to predict a tour’s profitability, then there will probably be risk capital available to fund it, particularly in a world with tiered distribution: primary and secondary prices can be made to work together rather than against each other. Assuming the act can secure funding to mount their tour, they can hire a tour manager to handle the issues which arise on the road.

What happens next? I think the venue owners have the most risk. Their building are a lot like hotels. They have no value unless they are filled. And, as more companies compete to build venues, there are more and more choices around the world. If promoters get marginalized, the next domino to fall is the ability of venue owners to maintain their margins. Ultimately, it only takes two competing similar venues to start a bidding war. Three venues would assure one. Again, here’s an example: in Los Angeles AEG owns Staples Center and MSG owns the Forum. Either is a great venue for an act looking to sell 12,000 + tickets. They are fighting hard to confirm acts, offering benefits at other similar venues they own in order to get the L.A. show. But, here’s the twist: Steve Ballmer (Microsoft billionaire) owns the Los Angeles Clippers and he wants to build them their own arena very close to the Forum. MSG is fighting in every forum: politically, in court, lobbying the neighborhood to prevent that venue from being built. Why? Because then there would be three similar venues competing in L.A. and we’re only one step away from someone building the venue equivalent of Priceline.

As we enter this next decade, the convergence of big capital, artificial intelligence, mobile ticketing and the increasing demand for live entertainment by a generation which gets all its needs served by smartphone in milliseconds will be transformative. In every instance where prices get out of hand, or supply and demand are imbalanced the markets correct and there’s reversion to the mean. For me, when I’m unsure of what to expect next, I look to the sages of the past, like Pete Townshend who wrote the song threaded through this piece. Ultimately, in commerce as in politics, all power resides with the people. I can’t wait to hear them.

Right behind you, I see the millions

On you, I see the glory

From you, I get opinions

From you, I get the story

We’re Not Gonna Take It — The Who

Let me know what you think.

I’m a consultant advising leading companies in the live event space. If you are an investor, artist, promoter, team, producer, venue operator, primary or secondary market of ticketed events or have comments on this article, please don’t hesitate to contact me:

[email protected]

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This post was originally published at Medium. It is republished here with the author’s permission.

About the Author

Eric Fuller is an $895/hour consultant advising leading companies in the live event space. If you are an investor, artist, promoter, team, producer, venue operator, primary or secondary market of ticketed events or have comments on this article, please don’t hesitate to contact me: [email protected]