Getmein - hypocracy and lunacy in a single venue Wednesday, July 16, 2008

Whilst emailing some friends about the possibility of going along to one or more of the concerts being held at Excel alongside the British Motor Show, I saw a Google ad for Getmein, the ticketing secondary market that was acquired by Ticketmaster.

If you recall, Ticketmaster had been vociferous in its opposition to secondary markets, strongly arguing to the UK Parliamentary select committee that such exchanges were wrong on numerous grounds, citing profiteering and exploitation of fans amongst them. Evidently, these views have been dropped now that it owns several such exchanges.

Out of curiosity, I looked up the gigs I was interested in and saw tickets were indeed listed on Getmein for the events at prices, including a 10% mark-up for Getmein, up to £82.50. Yet the primary market, in the form of See Tickets, was offering the same tickets at £30, including their £3 fee.

Since listings are free on Getmein, silly priced sale ads can be posted on Getmein with no downside and only upside if someone gullibly buys at an inflated price - or put another way if an ignorant fan parts with more money than they need to.

Don't worry, I'm not performing an about face on secondary markets, but simply noting the hypocracy of certain companies and the lunacy surrounding the opaque nature of the ticketing market.

Most noteworthy was the accompanying T&Cs on the See Tickets booking page.

All tickets purchased on this site are governed by our terms and conditions. In particular, we draw your attention to the fact that all tickets are for personal use only and cannot be resold under any circumstances. Resale or attempted resale is grounds for seizure or cancellation without refund or other compensation. The Event Partner and its affiliates, successors, or assigns may enforce these terms in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999 (the Act).

So Ticketmaster seems to be complicit in breaching such conditions, a matter that it presumably understands.

Separately, the US division of Ticketmaster is now issuing paperless tickets citing consumer convenience and the disruption to touts as being major reasons for their introduction. Unfortunately, this has met a considerable consumer backlash, in the main because they have continued to charge the same high level of fees despite the evident savings from paperless ticketing and because people recognise it has damaged their ability to transfer the tickets should they need to.

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Madonna knocks bricks out of a crumbling wall Thursday, May 15, 2008

Last week the news emerged that Madonna is endorsing secondary trading of concert tickets, and has negotiated directly with the market operators to get a slice of the action. StubHub will be able to trade tickets for her North American concerts, while Viagogo has been given the rights to be secondary ticket partner in Europe, as well as handling VIP packages and all premium tickets.

Having sold her touring rights to LiveNation last year, this represents a major endorsement of secondary markets by one of the world's largest promoters and blows a hole through the "moral" arguments that were advanced by some parts of the live music industry, who condemned such market as scalping or touting. Similarly, it leaves the recently formed industry association that was advocating a revenue tax on secondary markets completely wrong footed.

I've already heard it said that Madonna is an exceptional case and most artists won't be able to negotiate the same deals with secondary market operators, but this applies equally to the situation most artists face with promoters who underwrite tours [primary market].

Live Nations endorsement follows the complete about face by Ticketmaster, who acquired two secondary market operators a mere six months after appearing before a UK Parliamentary Select Committee to advocate such markets were plainly wrong. The hypocrisy isn't unique to them - effectively, many industry incumbents have been arguing it is wrong purely because they don't profit from it, which is a very difficult matter from it being wrong in principle.

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How the FA Cup creates unnecessary pain for IT managers Thursday, March 13, 2008

Making your IT department endure unnecessary pain would seem like a reasonable idea to many users seeking retribution for their computer experiences.

One recipe for this but which may to rebound on you [and your customers] is to follow these steps:
Such a situation occurs any time that tickets go on sale for an event. You automatically create a surge in activity as everyone tries to simultaneously log on/phone in and grab the best seats before they're gone. Inevitably the facilities can't cope as resources are maxed out and customers end up angry/frustrated etc. The situation is exacerbated by setting the start time for tickets going on sale at a peak time eg 9/10am.

This morning, for instance, the sale of West Brom's FA Cup semi final tickets go on sale online to season ticket holders, who will have an exclusive window of 4 days to get their tickets before the eligibility criteria is widened. They are guaranteed to get a ticket and allowance was made for people to buy groups of tickets together. Hence, there should have been less panic other than where you got to sit and at what price. Made no difference - the site was inevitably under strain from the high volume of log-ins being attempted.

Result - the customers will be unhappy and criticise the "lack of preparedness" of the site when it was inevitable it would be hit with high volumes. The club will challenge the supplier about it readiness, and the supplier's management will question its' IT team. They in turn will complain about "lack of resources" and no one ends up happy with the situation.

Whilst the service provider, Tickets.com, will be familiar with this scenario [they also handle Chelsea FC's ticketing], it is immensely costly to carry capacity for such occasional spikes and no one really wants to pay to have this idle capacity.

Is there a better solution I can suggest to mitigate the problem? No solution is perfect but a few options include
Just a thought.

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Yoonew - A continuous options market on tickets Wednesday, February 27, 2008

Similar to Sean Park, I've long maintained that the arcane ticketing industry is ripe for capital market models and techniques to be applied. The growth of online secondary markets has been spectacular and has even been embraced by traditionalists like Ticketmaster who recently acquired Getmein in the UK.

The next wave of market evolution is building, which will be very familiar to anyone in capital markets, namely an options market. Several examples now exist in the USA, with Yoonew, being one of the latest. It offers a continuous market on US sports events, most notably the Superbowl.

In Yoonew's case the market actually culminates in physical delivery of the tickets to the event, rather than a cash payout. Hence, if you buy an option for a Superbowl ticket for a specific team then that contract will either result in you forfeiting your "single premium" if the team you select fail to reach the final or actually receiving tickets if they do. As a consequence of this structure, people selling options on teams have to be able to guarantee delivery of the event tickets by buying event tickets contracts in the Yoonew market which provide a ticket regardless of which teams reach the final.

For example, if you wanted to short Fantasy Seats for the New England Patriots in Super Bowl XLII in seating category B, you would first need to buy Super Bowl Tickets in seating category B. Purchasing tickets give you the ability to short contracts in one or both conferences. If you purchased 10 tickets, you could sell 5 contracts for every NFC team and 5 contracts for every AFC. Or you could short 10 contracts for every team in a given conference. With our Ticket Margin system you can short sell Team Fantasy Seats as long as you own enough tickets to cover the maximum number of short positions.

Operating a physical delivery constrains the number of contracts that the market can sustain - ultimately the size of the stadium is the limiter and so the market operator will set a threshold of underlying tickets it thinks it can supply to the market. This will dictate the maximum number buy orders for any given team.

There are a number of fascinating about this including
There will be many traditionalist who will contend this is scalping in disguise, but I disagree and think this represents a sensible development of the market and one that I hope that will soon be replicated in Europe. You can also see here the view of Allaboutalpha on the matter.

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If you can't beat em, buy em Tuesday, January 29, 2008

In a huge corporate u-turn, some have described as hypocritical, Ticketmaster in the UK have bought secondary ticket exchange Getmein. This follows a purchase of a similar business in the USA this month by Ticketmaster USA.

Ticketmaster had made strong representations to the UK Government Select Committee in the Summer arguing it should legislate against such ventures. That Committee declined to make such recommendations in its recent report.

So, following the flop of its Ticket Exchange venture that ensured people could only sell tickets at a loss, they've evidently had a sudden change of heart.

This raises an interesting scenario. Thanks to exclusive deals with many venues and promoters, Ticketmaster control some of the ticket supply to popular events. So what precludes them from releasing such supply directly into the secondary market and profiteering on their own account? Whilst they may be separate legal entities etc it would be staggering for them not to cross sell, especially with 4 million registered customers known to want tickets.

Perhaps this is part of the start of an awakening to economic realities and market models by Ticketmaster.

It will certainly be interesting to see if they sign up to the Music Manager Forum backed initiative that seeks to impose a levy of 15% of revenues on secondary market operators.

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Proposed levy on secondary market in tickets Wednesday, December 05, 2007

Yesterday the Music Managers Forum ("MMF") unveiled the Resale Rights Society ("RRS"), which has been established to "license" the secondary market for live music tickets in the United Kingdom. Artist management firms representing more than 400 performers have confirmed their support for RRS, including the teams behind Robbie Williams, Arctic Monkeys and Radiohead.

RRS chairman-elect Marot explained that the body's aims are two-fold. The first is to introduce uniformity in the sector through a kite-mark system for ticket sales Web sites. Secondly, the society pledges to fight on behalf of artists and the live sector by negotiating a share in the proceeds of those resold tickets.

It is believed that a levy of 15% on the resale value is being proposed by the Society although details are sketchy. The target is the £250m turnover on the secondary market exchanges.

Unsurprisingly the online exchanges are unimpressed. Joe Cohen, CEO and founder of Seatwave, commented, "This is a direct attempt by a few music managers and promoters to line their pockets at the expense of consumers." He added, "Everyone in this value chain has already been fully paid for their work - this proposed tax is like BMW asking car owners for a cut every time someone resells a car. It's laughable that rock managers and promoters are holding themselves out as consumer champions."

Personally, I think the online exchanges hold the upper hand in the upcoming "discussions". Other than for PR reasons of being seen to co-operate with artists, they have no reason to voluntarily pay away a percentage of the turnover, since the market exists anyway. If reports are accurate, the suggested percentage would take a big chunk out of the 25% tariff the online exchanges typically enjoy.

Other than the kite mark, what else do secondary market operators get out of it?

Well, perhaps one arrangement to motive the exchanges could conceivably involve managers guaranteeing a supply of tickets to major events to provide liquidity to the online markets, with primary market tickets being diverted directly into the secondary market, allowing the price to be set based on demand and "windfall" profits retained by the event promoter/artist? This practice is not uncommon in capital markets, with allocation of new equity granted to favoured parties who then enjoy windfall profits, and which was at its height in the dot-com boom in the late 1990s. However, this may be unpalatable in some quarters.

The key problem is that the tickets issued for most events are "bearer" tickets (admittance give to whomever presents the ticket at the door) over which great care has been made to evidence their authenticity via embedded security and anti-counterfeit measures. As such private transactions can be easily conducted away from the managers and promoters. Unless this is addressed by the Managers, and "bearer" tickets discontinued, the secondary market will be able to easily avoid the levy.

Furthermore, I'm not even sure that the "Prisoners dilema" applies in this case, were one of the online operators to break ranks and agree to participate, since the others could operate without penalty. Ultimately, consumers just want access to the tickets and I suspect are less likely to care about a kite mark if the online exchange provides money back guarantees.

The timing of this initiative is very interesting though, as the UK Govt Select Committee is due to report in early 2008. In launching the RSS, the MMF has effectively endorsed the principle of secondary markets, which is a reversal of the position presented to the Select Committee which proposed that they legislate against the secondary market and effectively outlaw the reselling of tickets for a profit in a similar manner to sports events such as soccer.

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A barometer of live entertainment Thursday, November 01, 2007

IAC's latest results included the following

Ticketmaster

Revenue growth was driven by an 11% increase in worldwide ticket sales and 2% higher average revenue per ticket. Domestic revenue increased 5% primarily due to higher average revenue per ticket and increased ticket volume. International revenue grew 36%, or 28% excluding the effects of foreign exchange, due primarily to increased revenue in the United Kingdom and Australia. Profit growth was adversely impacted by higher operating expenses associated with technology improvements and the continued build out of worldwide infrastructure and higher overall royalty rates. Operating income was negatively impacted by an increase in amortization of non-cash compensation of $1.9 million.


As with most businesses, you can improve your results with
- better margins
- industry price increase
- more sales volume

or combinations thereof. I suspect the 2% growth in revenue per ticket has come from higher ticket prices rather than improved margins, but sales volumes are definitely the driving force as more people participate in the live entertainment space.

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Market distortions - ticketing Tuesday, October 30, 2007

Sorry for the avalanche of post on the ticketing industry - as you'll guess, I am immersed in the space at present with one of our ventures.

Some things you may not know

- When you whinge about the "high" booking fees charged by agencies, some promoters actually charge the agents a booking fee on top of the face value e.g. of the £5 you pay, £2 could be an enforced kickback to the promoter levied aside from the ticket price. This isn't made public for a myriad of reasons.

- Most venues oblige artists/promoters to share 40-60% of the allocation of tickets with them to distribute via channels they have got arrangements with. e.g. Ticketmaster has deals in place with many venues to take a majority of the tickets to events they host. So even if the artist wants to make all the tickets available to their fan club, they may not be able to.

- Credit card companies take a sizeable chunk in merchant fees from ticket agents, judging them to be highly risky. 3%+ is not uncommon out of booking fee norms of 10-12%.

For two great posts on ticketing markets have a look at part one and two of a piece by Sean Park. With similar backgrounds, perhaps it's unsurprising that Sean and I think alike on such matters.

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Court takes the scalp of Stubhub

According to Read/Write web

The now-EBay property StubHub has lost a battle in court and handing over the names of 13,000 of its users to the New England Patriots American football team. The suit was filed last November - two months before the acquisition of the site was announced, so it probably didn't go down like some of the YouTube suits.

It's never a good day when almost any website is forced to disclose the names of its users.

The Patriots alleged, and the court agreed, that all participants in auctions for game tickets between 2003 and 2007 violated company policy and state law. StubHub says that the majority of the names belonged to buyers, not sellers. Season ticket holders on the list of names may have their tickets cancelled and the team may hand the list over "to the authorities," the team told the Boston Globe, whose in-depth coverage is also worth a read.

Well, that should scare off some customers from online secondary markets - far safer to buy in cash from a tout standing outside the ground, where you can't be traced!

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Oysters at London 2012 Monday, October 29, 2007

During a chat today with a senior executive of a global ticketing business, he mused that the tickets for London 2012 Olympics would actually be embedded within the expanding capabilities of Oyster cards.

Having recently gone from being a mobile wallet for travel fares, Oyster cards can now incorporate a debit cards from Barclaycard and Barclays Connect Visa cards following an exclusive contract between Barclaycard and TranSys, the consortium which runs Oyster card in partnership with Transport for London (TfL).

Adding ticketing entries onto the card seem an obvious evolution - money, travel and tickets in one personal card. It would screw the secondary market since your entry would be embedded into the card, in an even more effective manner than email tickets.

We also chatted about the opportunities email ticketing creates for an upsell - still want a souvenir ticket? No problem sir! For an extra £3.99 we will be happy to send you one separate from your email ticket.

More cunning though is the opportunity to actually create a proper secondary market that can be monitored and regulated easily if you have immobilised the record of ticket ownership via Oyster cards or email tickets, since by the same process as operates with share registration, you can easily transfer ownership centrally and enable the operator to collect fees in the process!

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Seatwave are riding the wave Sunday, September 30, 2007

Wow - Fred Destin reports here that Seatwave has already done 500,000 ticket trades on their site, spanning 40 countries. Given their 25% gross margin on the price, this will add up to a chunk of change.

Obviously there are costs associated with providing their insurance guarantee re genuine tickets, not to mention reputational risk. But what a success story.

Oddly, this success could play out two ways in the current campaign by promoters and ticketing companies to ban secondary trading of tickets. The increased profile/activity of such services will increase the vigour with which they are pursued by promoters etc as these numbers are hard to ignore. Conversely Governments may be even more unwilling to intercede in something that evidently is proving popular with the public.

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