I’m not going to pretend to be the biggest fan of Taylor Swift. I appreciate her (she has been a chart-topper for almost as long as I have had ears that can understand things) and strangely robust . Her music, not so much. musical vampirism understanding of US securities law Frustratingly, this gives me less pun ammo for the rest of this article. On the flipside, it does leave me in a refreshingly small camp of people not disappointed by missing out on #TaylorTix when the public sale launched here to a frenzy last Friday. The Taylor ticket fiasco came to its most fiery head late last year. On a Friday afternoon in November, Americans in their millions ( ) decided to forego work and wait expectantly for the release of tickets to Taylor Swift’s Eras tour. reportedly 14mm pre-sale Whilst probably not front of mind for those in queue, Swift and her team had decided to entrust the distribution of these tickets to Ticketmaster, a subsidiary of the $21bn events behemoth that is Live Nation Entertainment. Within an hour of the sale going live, Ticketmaster’s website was overwhelmed by the demand and crashed. This snafu left would-be concertgoers either frozen in queue or completely logged out and losing their place in line. The public sale would later be cancelled due to the inability of Ticketmaster servers to keep up with remaining demand. Amazingly, even among all this, the sale still managed to break the previous record for People really like Taylor Swift. most concert tickets sold by an artist in a day. To prove to the public how overwhelming the experience was, Ticketmaster published the below graphic: I won’t go into the details of this event much further because the US press (and regulators!!) have already beaten the point to death. However, there is one very important point to reflect on from the wash-up from Ticketmaster’s big whoopsie. Under Ticketmaster’s surge pricing regime (which increases price with demand), Eras tour tickets quickly went from a US$49 initial offering price (cheapest available) to US$449 for the same tickets. Now, compare that against the incentives for secondary market scalpers (presented below). The biggest losers from this server failure were true fans. The biggest winners? Rent-seeking scalpers. Even if they’d managed to buy cheap seats at the absolute top of the primary market, these scalpers stood to gain ~386% on their purchase. The other winner, as luck would have it, is Ticketmaster. See below the kind of fees they charged on tickets for the Eras tour. Regulators it. Turns out there are enough Swifties to enforce some kind of action among local representatives. Ticketmaster was abhorred as a monopoly, with many retrospective takedowns of its 2010 merger with Live Nation. It was lambasted for anti-competitive practices that benefitted from exclusive agreements with major venues. This anti-competitive mindset was then blamed for the particular brand of complacency required to not prepare servers sufficiently for a highly anticipated tour like Swift’s . hated Eras When the regulators hate the incumbent this much, it presents immense opportunity for disruptors to go-to-market. Competition is always better when an anti-competitive incumbent beats themselves for you. All this hatred directed towards Ticketmaster and the lack of scaled, consumer available innovation in the space points a spotlight towards how we can do it better. Without further ado, I am going to investigate how that might be done by entrepreneurs with incentives for creating better products. Ticketing Today The complexity of the ticketing market is very hard to wrap your head around if you are someone who has ever interacted with tickets. Tickets are a very simple thing. To borrow from the Oxford dictionary, a ticket is as follows: In fewer words, a ticket is an IOU for entering a space. “a piece of paper or card that gives the holder a certain right, especially to enter a place, travel by public transport, or participate in an event. Where it has all become complex and opaque is through the back-room dealings that platforms use to lock their competitors out and secure themselves long-term mutually beneficial relationships with event hosts. Given the immense expected demand for something like the Eras Tour, Taylor Swift and her team know that they are going to need the biggest available venue in any given city that she plays in. For something of this scale, it wouldn’t make sense to issue simple IOUs for seats, but even if they wanted to they couldn’t. Why? Because for most of these large venues that big acts need to play at to fit their audience, Ticketmaster has locked down exclusivity agreements. Because of their merger with LiveNation (who owns 400 major venues), often times the agreements are implicit. The trick in the ticketing game is that the customers are not the people buying tickets. The customers are the venues that are giving up the seats. From the Hustle’s report on the economics of Ticketmaster: “Instead of charging venues to use their ticketing system, Ticketmaster offered to . In exchange, Ticketmaster became their exclusive ticketing platform.” pay them with a cut of the service charges This practice is not unique to Ticketmaster. StubHub provides incentives to the likes of ESPN and WWE to be a ticketing partner. SeatGeek is aiming to capture club-level demand with the likes of the Dallas Cowboys, Manchester City FC and the Brooklyn Nets (among others). To learn more about how a ticketing company thinks about the market, the best resource that I came across in researching this post by far was this SeatGeek investor presentation. This post has been very cynical about the role that ticketing platforms play in today’s events ecosystem. But at the end of the day, they are used for a set of reasons. Ticketing platforms solve the , and . That’s it, and it has been a very successful value proposition for what is now a range of unicorn companies. distribution problem for promoters allocate spaces within venues determine the fair price that people will pay for those spaces But these problems, as highlighted above, are largely venue problems. What if we can cover this problem set whilst also creating platforms that are designed in the best interests of concertgoers? What might that look like? Let’s explore. Problems to be Solved As discussed above, the ticketing market has become a very cynical affair where revenues are won on relationships and incumbency. If I were a pessimist, I would outline that possible the key differentiator between the businesses presented in the market map are not the way they compete on product, but the way they compete on relationships. As was the case with Ticketmaster in the Eras tour saga, when the relationships are good enough, often times the product can be allowed to go entirely by the wayside. Anti-Competitiveness. How can some form of competition be brought back to the ticketing industry for any given event? The short answer: create better incentives. The current exclusivity paradigm works because there is an explicit financial incentive for the venues, clubs or performers to stay with the platform who is running their distribution at any given time. For a startup that might be a bit cash-strapped, what options are there to create better incentives? One answer is in the form of soft vertical integration. Rather than following the pervasive platform incentive of selling as many tickets as possible for as much as they can go for, what about ensuring that the truest fans get into the events and then can continue to pay off their ‘willingness to pay’ with in-venue upsells? What about integrating loyalty programs that allow these upsells to accrue well after the concert is over whilst also providing benefits to the customer themselves? I’ll explore these opportunities in more depth below. Sniping most commonly refers to the practice of ‘cutting in line’ on online events portals. This is most commonly done with the assistance of software that packs queues with a large volume of automated ‘queue holders’ at a pace that can’t be replicated by the like of Sarah, 14, sitting behind her computer clicking command R on the events page. Ticket Sniping. From here, tickets are purchased at market price and resold at a profit on resale platforms, delivering a solid return to short-term rent-seeking by the snipers. To read (very much) more in depth, I highly recommend from Professor Avi Loewenstein. this reading Much of the sniping issue was amended US BOTS (Better Online Ticket Sales) Act of 2016. The mandate of this bill was pretty much solely directed at the sniping issue explained above. At the time of the bill’s introduction, 54% of online tickets were reportedly either held by automated queue holds or other insiders. While it is hard to find public data about this share of the market today, it took 5 years for the FTC to bring in a single civil case relating to the BOTS Act. Here is another issue with rich historical links to ticketing platforms’ entrenched relationships with event organisers and venues. In the context of events ticketing, price fixing most commonly manifests itself in the following ways: Price Fixing. Deliberately misleading sales practices (e.g Ticketmaster selling in the same venue) exclusive Drake tickets at a premium before announcing more events to resell on company-run secondary platforms (Ticketmaster again) Deliberately selling to scalpers Capless dynamic pricing leading to (less egregious than the above, but still an issue from customer standpoint) exorbitant ticket prices New Enablers As a form of , NFTs are a logical (and in many cases, already tested) framework for the future of event ticketing. Beyond enabling verifiability of tickets, the use of NFTs to represent rights to attend a given event offer the following benefits that will be key inputs to aiding the problems outlined above: NFT Ticketing. verifiable digital property rights . Users can easily assign tickets to one another rather than acting through rent-seeking secondaries platforms. Transferability . Scalpers will be weeded out early as there is a persistent record of purchase and sale prices for any given ticket. Traceability . True fans can be identified by their interactions with certain assets. This can be extended to streaming a certain artist’s music, collecting other assets they have released etc. to move the truest fans up the queue and give them a fair offering. Proof-of-Interest & Identity Rather than rely on the (supposedly) ‘first-come, first-served’ ticketing systems that cause so many failures today, tickets are distributed based on pre-defined rules set by the operator of the contract. This can be distribution by engagement with the artist, distribution via auction or any other mechanism that can be thought of. Automated Distribution. People with a history of scalping can be blacklisted from ticket sales. Sale mechanisms can be amended with things like price caps (if needed), pre-sale whitelists for ‘true fans’ etc. Enforceable Contract Logic. . If ticketing platforms want to continue providing incentives for organisers, they can set programmatic fees to redirect to these parties. These will automatically execute upon each sale of the relevant NFT. Customisable Fees Another (maybe less convenient and realistic) solution to the scalping problem is that of biometric identifiers for purchase verification. This is something that SeatGeek is already exploring, as revealed through the investor presentation linked above. Biometric Identifiers. I will not delve too much deeper into this because I think NFTs are a far more likely solution to a lot of the verifiability issues in the space. The one thing that biometrics may allow that NFTs do not do as well is proof-of-personhood and some forms of legal compliance (e.g. KYC, proof of age etc). For the uninitiated, are doing some interesting things at the intersection of biometric ID, crypto and proof-of-personhood. Worldcoin Ticket sales should not have to rely on traffic being directed centralised portals or webpages in order to sell-out. This is ultimately one of the underlying factors that triggered the November Eras tour controversy. Open APIs. In order to adjust to a world where people don’t want sites to fail under the pressure of extreme demand for tickets, we need better ways of distributing the channels through which these tickets are acquired (and marketed). One way to do this is via ticketing APIs that event organisers or touring teams can plug into any front-end they like. The obvious precedent (and possible competitor) in this space is Stripe. Another good analogy for understanding what this might look like is the suite of e-commerce APIs that allow people to add to cart and execute sales while browsing platforms. is a good example of this - they provide an SDK, APIs and customisable CSS-style elements for people to embed e-commerce offerings within any kind of content platform. Carted Instead of going to Ticketmaster.com and spamming command R, these users will be able to see the artists promote on their TikTok or Spotify accounts and be able to buy tickets directly through these platforms. As discussed above with regards to provable identity through NFTs, these APIs may also be able to build in mechanisms that create price or access preferences for those who have better histories of engagement with the artist’s content in order to ensure that seats are packed with these fans. The Vision: A Ticketing Platform that Works for Fans Before diving into the specifics of any kind of platform design or integrations, I’ll define what I believe the ticketing platforms of the future should solve for: Unapologetic preferential treatment of true fans (with reputation systems that can account for and reward verified fans with better prices, added perks and exclusive access); whilst Enabling Artists to earn their dues (via means including direct NFT ticketing); without sacrificing Interests of corporate sponsors and advertisers (achieved via integrated loyalty programs and other mechanisms that provide delayed gratitude through customer acquisition with longer-term payoffs) Unlike in other pieces, the vision for a comprehensive solution to solving the most pressing problems in the ticketing market is not dominated by new enablers. Rather, the likely successors to the king-size thrones in this industry will be those who can re-arrange prevailing incentive structures and business models to better suit the majority of people who interact with the platforms themselves. For the reasons outlined above, the end goal of the events platform of the future is to issue users a on space within the venue at the time of the event. persistent NFT representing their claim To reiterate, these act as digital versions of the very basic paper IOU with the added benefits of: transferability, programmable rules for interacting with or selling the tickets, traceability of ownership, links to user identity & interests and the possibility for automated distribution to ‘true fans’ based on this identity. In a strong bend away from the current anti-competitive criticisms of today’s ticketing giants, it would also be interesting to see some kind of universal NFT ticketing standard adopted. This would open the door for competitors in the space to compete and test out new specifications for how tickets sold through the platform should operate. What kind of fees are directed straight to the artist? Should tickets be entirely non-transferable? What kind of different loyalty systems can work with these tickets? What are the best ways for event sponsors to reach these fans directly? What kind of third-party services can they interact with to improve user experience? So on and so forth. The first, and probable most frequent, step in the user journey is organic discovery of ticket issues through the platforms where the entertainers ‘live’. For example, your favourite indie artist might issue the tickets via Spotify, enabled via an open ticketing API that means you can purchase without leaving the app and continuously refreshing an overloaded webpage. If we do trend towards a world with self-owned, opt-in personal interest graphs, the API may be able to move you forward in the queue or offer you a better price because you have streamed the artists latest album for 21 hours in the past month. In a more basic proposition, a sports team could advertise tickets for their highly awaited championship final in the semi-final highlights video. If you have a season membership in your wallet, you will immediately be whitelisted and able to attend. There are varying levels of complexity for how personalised this can go. The main point to understand is that a) there are and b) they can with minimal friction. rewards within the ticketing system for people who are proveably true fans purchase their tickets in the digital space that is most convenient for the organiser to reach these fans There will still be a need for some kind of webpage to advertise all events using the company’s ticketing system within the one place. Eventbrite does a very good job of this. Many Eventbrite users will create an event there because of the ease of managing registrations, and then promote elsewhere where their fans live. There are some points of friction but it is by and large a fairly painless customer experience. However, even though most of the event organisers are distributing elsewhere, Eventbrite’s central platform serves an important purpose for a whole segment of customers: . discovery If you are new to a city, travelling or just looking to find interest groups, if there is nothing immediately available to your knowledge, Meetup.com, Eventbrite or even Facebook Events are handy places to look. How can these be improved upon? As mentioned above, intelligent identity & opt-in interest graphs. Rather than filter by location or manually inputting categories of interest, a better platform could take your interest graph and match you to upcoming events based on groups that match your profile within the constraints of your geographic location. Not the biggest money maker in this idea, but important nonetheless. The last bit, and the one I find particularly interesting, is the potential for . Events are big business. In sports alone, businesses spend per year to reach fans. ( That is how much money and technology goes behind this. loyalty programs to be built into these platforms >US$77bn Fun fact: stadiums change the display of ads to reach different customers in different parts of the globe for the same event.) How much more sophisticated can this be made to get sponsors the best bang for their buck whilst rewarding eventgoers? Picture this. I have my status verified as a Taylor Swift fan through wallet identification linked to streaming platforms and NFT sales indicating that I have purchased $1,000 equivalent of Swiftie merch and streamed her latest album for 100 hours in the past month ( ). disclaimer: this is an example and I haven’t done either of these things The first thing the ticketing platform of the future would enable is for me to use my ‘reputation’ to provide me a better offering and privileged seats for her upcoming Melbourne seats. But, this would disrupt the auction system that is so fundamental to markets and given TSwizzle’s popularity, would lead to a massive loss on her team and the venue’s end. So where can this money be made back? Through sponsorships and loyalty programs targeting loyal fans like me. Brands like Qantas can negotiate agreements with Swift’s team (potentially through the platform) to provide her with sponsorship in exchange for access to her customers, which can then be added to loyalty programs. This is a positive ROI move for Qantas as the expenditure in sponsoring the shortfall of Swift’s concert ticket sales is offset by long-lived customer lifetime value generated by on-selling concertgoers to flights to see her other concerts into the US or miscellaneous other holidays rather than flying with their competitors. This is just one such example. I chose this Qantas example in particular because a) their (!!!) and b) this is actually a path they may already be looking to go down with legacy ticketing platform Ticketek (see below). loyalty program is bigger than their core aviation business Cracking the Market That’s a fairly comprehensive vision with a lot of moving parts. So, where to start? Firstly, no matter how hard they seem to be trying to self-inflict damage, Ticketmaster will not be gone as soon as you start working on an MVP. The approach will need to be tested in new markets and in new ways (away from big-ticket venues owned by Live Nation, for example). I have covered much of this in the section above with regards to in-built loyalty offerings for corporate sponsors of events and NFTs that can programmably distribute any fees in exactly the manner that event organisers want them. By painting a picture of different returns from Ticketmaster’s fixed fees and programmable fee structures, the platform of the future can sell event organisers on a potential switch from exclusive agreements without harming their own precious cash balance. Better Incentives. When I speak of virtual events, my mind instantly flashes to a random evening in April 2020 when I ironically hopped onto a Fortnite server to watch a super-sized Travis Scott perform virtually. This was an interesting experiment, and may just be something that people are willing to pay for in the future rather than being an expensive marketing stunt. New Forms of Events. However, in researching this piece I discovered a massively underappreciated segment of the events market: . Corporates are projected to spent ~US$1tn on virtual events by 2032. Even if this is a far-out projection and in-person conferences seem to be back in vogue, it is easily a large enough market to present a viable go-to-market strategy. Virtual conference ticketing The ticketing platform of the future may be able to cut its teeth and test its systems by providing for these kinds of conferences (as opposed to paying an event manager exorbitant fees for end-to-end management of these systems). These tend to be big ticket items, and as such can i) be a good early winner for and ii) secure these large networking investments through and can verify a person's presence at any given conference for future outreach. self-service ticketing platform fees ticketing mechanisms that ensure traceability Boring corporate stuff, but important and useful nonetheless. The primary challenge here is ensuring that the organiser delivers enough value on their end to warrant any conference not being an open access YouTube stream. For online platforms that supposedly get a lot of value out being universally accessible, the current generation of ticketing barons have a hefty concentration of sales in the US, Canada, Europe and Australia. Ticketing in the developing world. So what about events in the rest of the world? Saudi Arabia’s ticketing market is projected to reach >US$450mm by 2027. Across Africa, this figure is expected to exceed US$1bn in that time. (data courtesy of Statista) Rather than going head-to-head on the incumbents’ home ground, there is plenty of design space in the parts of the world that they are not devoting a great volume of resources to currently. There are already platforms targeting the 370K active crypto wallets who want this functionality. Among them: , , and . Web3 native ticketing. Seatlab NFTTix Afterparty GUTS What these platforms lack as it stands is any kind of volume. The wall that they are running against is that not all events desperately want or need to issue NFT tickets. In order to capture this market and make it as convenient as possible, the NFT development concept needs to be obfuscated away to as reasonable a degree as possible. This is where API and SDK strategies as discussed above come in really handy. A platform could issue tickets as they are done today, whilst allowing this receipt to also be duplicated as an NFT that can be added to the wallet of anyone who wants to adopt this functionality. Just as today’s platforms often give you the option of ‘Add to Google Wallet’ or ‘Add to Apple Wallet’, there should be built-in functions that allow both opt-in and opt-out for NFT ticketing. This means that platforms don’t need to go balls-to-the-walls after a crypto audience whilst still satisfying users that want all of this utility. Win-win. Final Words Based on the most recent valuations I could source, there were 5 unicorns in the ticketing space (StubHub, SeatGeek, Ticketmaster, Viagogo and Vivid Seats). Of these, only StubHub was what one may call ‘fan first’. I give it this definition because its primary advantage comes not from marketing to venues but from marketing to regular, everyday customers. However, even then StubHub is still an ultimate beneficiary of crooked upstream sales practices. If Ticketmaster issued tickets at fair prices, what incentive would there be for scalpers to sell for 3x the price on resale platforms like StubHub? The purpose of this article is to try and explore how to build a better class of ticketing business. One that is not optimised for maximising the utility of venues, but for optimising customer experience. One that operates openly and isn’t scared of competition. One that can hopefully operate in a world where venue performance is a way for artists to connect with their true fans rather than comprise the majority of their income. Ultimately, I look forward to ticketing platforms that can take care of good fans whilst still allowing artists to get what they deserve.
