Today’s News: The Plot To Overthrow Ticketmaster

15 Nov

The ticketing industry is widely fragmented: Ticketmaster sells more than 130 million tickets a year, while numerous small companies compete for the rest of the live-event pie.  The most recent issue of Wired has a fantastic piece on the subject.  Its point: the ticketing industry is wide open for a new competitor that goes after Ticketmaster’s biggest weaknesses.  Wired reports:

“For all its clout, Ticketmaster has two major problems.  Most obviously, it gouges ticket buyers.  But less talked about is its lack of flexibility.  With an old codebase, a huge customer roster, and a long-established way of doing things, Ticketmaster is notoriously slow to innovate.  Its new CEO, Nathan Hubbard, points out that his company is starting to add features like interactive seat maps, but even he acknowledges that it can’t ‘turn on a dime like a startup.’

“Virtually all the new ticketing startups aim to lower service fees to fans.  But because this isn’t necessarily important to venues – in fact, it may run counter to their interests – the new guys must focus on Ticketmaster’s second weakness: its inability to innovate.”

For better or worse, Ticketmaster is the standard against which all other ticketing companies are judged.  As a result, new competitors have turned to social media integration, lower fees, and powerful analytics in order to differentiate themselves.  While Ticketmaster has a huge database of customer names (and the bands they’ve seen), the company’s sheer size makes it nearly impossible to use that data in a meaningful way.  When event promoters and artist management can apply that sort of demographic modeling, they are able to implement more effective marketing strategies that reach out to fans directly. (In related news, Chicago’s Jam Productions is suing Ticketmaster to be released from its pre-merger contract over concerns that rival promoter Live Nation could access confidential business information through Ticketmaster and use it against them.)

The fact of the matter is, Ticketmaster protects its bottom line by working for the venues, not the fans.  Fred Rosen, who ran the company from 1982 to 1998, used this realization to grow the company into the juggernaut it is today by thouroughly undercutting its main competitor, Ticketron.  Here’s how:

“[Rosen realized that] ticketing isn’t about the bands or the fans.  It’s about the venues.

“Shortly after he was hired, Rosen systematically contacted the biggest concert halls and arenas in the country and made them the same spectacular offer: Where Ticketron charged venues for its service (adding a minimal fee for customers – $1 per ticket), Rosen offered to actually pay the venues.  He would increase service fees and split the money with whoever housed a concert or sporting event.  Everybody signed up and Ticketron was quickly decimated.”

This is a short-term solution, especially in today’s economic climate.  Cost is more of a factor for music fans right now, and the existing ticketing paradigm leaves them hanging.  It’s easy to see how FanFueled empowers artists and their fans by rewarding them (in cold, hard cash) for spreading the word about events, but this feature adds major value for venues as well.  As fans get fed up, attendance drops and the long-term costs of being locked in to an inflexible contract with Ticketmaster become clear.

That’s where FanFueled comes in.  Our software has the “hook” that other ticketing services are lacking when they try to go up against Ticketmaster.  It takes the formerly hierarchical relationship between ticketing provider, event organizer, and audience and blows it apart.  With FanFueled, the fans drive the marketing instead of faceless e-mail blasts and bland concert listings in the local paper.  Research shows this is far more effective – 90 percent of people trust online recommendations from people they know, compared to 54 percent from e-mail solicitations they’ve signed up for.  At FanFueled, we value the fans’ voice and the direct monetary effect it has on ticket sales – that’s what makes us unique.

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