The following article is part 2 of 3 in an op-ed series by Dan Marcus, Founder of SeatSwap. As the son of a long-suffering New York Jets season ticket holder, Dan was raised on live events but after missing out on one too many great events without anything to show for it, he decided he wasn’t going to take it anymore. Since then, he’s been on a mission to help fans everywhere get to more of the events they love even when life gets in the way: one game, one ticket, and one fan at time. In a former life, he used to cover both the Jets and Yankees as a writer for SNY.tv and as a (sort of) lawyer is happy to offer his semi-professional legal opinion when called upon. Feel free to shoot him a line with comments, complaints, or Ernie Adams conspiracy theories to dan@seatswaptickets.com
This Scalped series is a deep-dive into the inner-workings of the event ticket industry attempting to shed light on why fans are the ones who constantly have to bear the cost, while the rich seemingly get richer. In Part I we took a look at how new technologies and market incentives have given rise to market manipulation by bad actors and why unless something dramatic happens, it’s unlikely to change anytime soon.
In “Part 1” of this series, I painted a pretty bleak and cynical picture of the ticket market from a fan’s perspective. However, in Part 2, I want to instill hope in the face-painting, flag-waving, family function-skipping-to-make-the-tailgate-masses that make events worth going to in the first place.
In my estimation, the ticket industry’s biggest obstacle when it comes to churning out innovations that can have a real impact on everyday fans is the prevalence of the “Pay for Play” model pioneered by Ticketmaster and imitated by the companies that have emerged in their wake. Ticketmaster, by virtue of its status as the original (or as the kids would say, “OG”) player in the space, created a business model that was especially attractive to teams, venues, and event organizers at a time when sports and entertainment was in its relative infancy as a legitimate sector of the US economy. Although their business has expanded into different areas, Ticketmaster’s core business model hasn’t changed since they sold their first ticket forty years ago. Anyone who has ever purchased what they thought was a $30 ticket only to watch it balloon to $50 at checkout knows all about the dreaded service fee. The service fee represents a trade-off where Ticketmaster kicks back a percentage of the fee to the venue or organization in exchange for iron-clad exclusivity as the sole ticket seller (and re-seller) of that particular organization.
Ticketmaster’s “airtight” exclusivity clauses are what allow them to crowd out competitors by keeping access to valuable event data and information within their own closed ecosystem. While leaders in other industries have embraced the open source movement by creating robust and elegant API’s that enable third parties to build on top of their technology/data, Ticketmaster keeps the vast majority under lock and key, reserving such access for “Preferred Partners” (AKA: those who can afford it). Arguably the most valuable piece of data that Ticketmaster and all primary ticketing companies possess is the ability to verify the validity of a particular ticket. In fact, the biggest selling point for their NFL, NBA, and NHL Ticket Exchange platforms is the fact that all tickets listed for sale are verified “100% authentic.” Unfortunately, curtailing access to this data has given rise to system-wide fraud and manipulation by bad actors.
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To make matters worse, Ticketmaster’s contractual exclusivity gives them a tremendous amount of leverage over their team and venue “partners” by limiting their ability to integrate or contract with third party secondary ticketing companies. The Cleveland Cavaliers in tandem with Flash Seats (a company Dan Gilbert owns a considerable stake in) famously attempted to challenge the scope of Ticketmaster’s exclusivity clause in Federal District Court in Ohio in 2007. Much to Dan Gilbert and the Cavaliers’ collective chagrin, the court found that Ticketmaster’s exclusivity extended to secondary platforms as well. Ticketmaster’s legal victories have only made them more brazen and ruthless in their practices and dealings with venues and franchises. If Ticketmaster gets wind of something that can even be remotely interpreted as a breach of contract, they will wield and drop the proverbial “hammer” of litigation without much (if any) hesitation.
However, in spite of all of this, there is still reason for hope and here’s why:
I believe we’re in the midst of a paradigm shift, a perfect storm of sorts where Ticketmaster is coming to grips with reality that their days of selling tickets primarily over the phone and at the box office are over. Although that moment of enlightenment took longer than any of us would have liked, the live entertainment monolith has finally realized that it is no longer a ticket company but a tech company. As such, they have begun to build API’s and SDK’s so third parties and companies wishing to enter the space can make use of their treasure trove of data. Naturally, they are making this transition ever-so-slowly by creating access “tiers” for their API’s depending on how you want to use them and as was mentioned above, they reserve access to the truly useful data to preferred partners. However, the real “game changer” could very well be their forthcoming “Account Manager” SDK’s that would enable users of a third-party service to manage their Ticketmaster accounts and inventory within the auspices of the third-party site or app. Of course, I and others maintain a healthy amount of skepticism about what the proverbial “catch” will be when these SDK’s actually become available for use.
Although Ticketmaster is moving in the right direction, what the ticket industry really needs is a completely open platform, similar to the kind SeatGeek Co-Founder, Jack Groetzinger, suggested in his blog post a couple months back. That said, I think we might have differing opinions about what that means and looks like. To me, a truly “open system” has to start at the top with the ticket issuer and of course the biggest domestic ticket issuer in the US, bar none, is Ticketmaster. It starts with giving third parties the ability to verify the validity of a ticket: it could be something as simple as taking a bar code and making an API call to Ticketmaster that comes back with a “thumbs up (valid)” or “thumbs down” (fake) response.
Not only will such functionality have the ability to dramatically reduce fraud and the (estimated) millions of dollars venues and organizations spend dealing with disgruntled customers who purchased fake tickets, it will create a brand new avenue for event organizers to keep tabs on their ticket inventory. As it stands right now, once an event organizer sells a ticket, there is no way of reliably tracking its movement in real time. It’s no secret that attendance for sporting events is waning, especially for sports like the NFL that have incredible home viewing experiences. However, in many cases a dip in attendance isn’t directly attributable to the amount of tickets sold but the amount of tickets that are sold but go unused.
On average over 40% of tickets listed for sale on the secondary market and for a sport that plays to 80,000-plus crowds like football or a sport like baseball that has a tremendous volume of events, we’re talking hundreds of thousands of tickets that go unused annually because of market inefficiencies. Thus, if event organizers theoretically had the ability to know that “x” amount of their tickets were posted on StubHub and “y” on SeatGeek, then they could use that information to entice those fans to actually attend the event, etc. instead of letting them go dormant on the secondary market. It’s simple math: the more fans that come through the turnstiles, the more in-stadium revenue these organizations stand to earn.
The advantages of an open system aren’t simply on the venue and third-party platform side of things, as they represent a potential windfall for fans as well. An open system means never having to worry about purchasing a fake or fraudulent ticket, it means event organizers “sweetening the pot” to get you through the door, and it could also very well mean having complete autonomy and control of what you do with your tickets. The problem with these closed ecosystems that use the same company for both the primary and secondary ticketing is that it often times handcuffs fans from seamlessly selling, transferring, or of course swapping their tickets.
Most recently, we’ve seen a lot of sports franchises take some extremely controversial defensive measures to discourage fans from taking their tickets outside of their ecosystem. The Yankees famously did away with PDF tickets as a way to stop their inventory from ending up on StubHub but then did a complete about-face by striking a deal with the secondary ticket giant halfway through the season. The Golden State Warriors took an even more aggressive and heavy-handed approach by threatening season ticket holders who decided to sell their tickets on any other platform except their Ticketmaster sanctioned resale exchange, with reprimand and potential cancellation of their season tickets. This policy caused such a stir that StubHub actually filed suit (albeit unsuccessfully) against Ticketmaster over it.
An open system doesn’t just mean more unfettered access and exchange of data between companies in the space. In order for a truly open system to work, there needs to be a certain level of industry-wide uniformity and standardization. Currently, ticket types vary greatly from one team, venue, or event to another. Some require you to print out your PDF, others (like the Yankees) only allow fans to use hardback or mobile tickets, some (like music festivals), don’t use tickets at all instead opting for the wristband system. Thus, it’s no surprise that in many cases, the notion of moving a ticket (buying, selling, transferring, etc.) represents a massive headache for fans. Every event organizer has the freedom to impose its own system and set of restrictions on fans but many would rather stick their heads in the sand and refuse to acknowledge the very existence of the secondary market altogether.
From the perspective of secondary ticket companies, what you have right now is a race to keep up with event organizers efforts to curtail the free exchange of their tickets on platforms outside their own and a shifting of the burden/risk to fans. What I mean in respect to the latter, is the fact that secondary companies have washed their hands of attempting to stay current on the ever-changing ticket policies of event organizers and as such put the onus on what ticket types a venue will accept on the fan. So while you might be able to buy a ticket through SeatGeek that can be used for mobile entry through their app, you (the fan) carry the burden of doing the research and knowing whether the venue will let you in with a mobile ticket or if you have to print a PDF. However, this is a secondary issue. The real issue is not in the delivery but the ability of secondary platforms to handle a particular ticket type. I can tell you from personal experience that without the benefit of access to the ticket issuer, it is exceedingly difficult to find a seamless way of handling mobile-only ticket events.
Unlike access to verification data, I see uniformity as being a much bigger hurdle to overcome but I can imagine at least two viable routes to get there. The first would be what I like to call a meeting of the “Five Families of Ticketing,” where the industry leaders come together and work towards creating a technology that serves as the uniform industry standard, much like the credit card companies did in moving from the magnetic strip to the chip. The alternative avenue is a much more arduous and time consuming one, where companies like SeatGeek who are creating an open platform of their own, create a technology that more and more event organizers decide to adopt over time. If a company devises a versatile and completely agnostic platform that allows the free flow of inventory from the issuer to third parties and amongst fans, then it would be the functional equivalent of having an industry-wide standard. Unfortunately, in order for a company to completely supplant Ticketmaster, it will take time tremendous time and money to compensate for their 40-year head start. I’m not saying it’s impossible but it’s very much an uphill battle.
Although I’m a firm believer in the ability of technology to turn an industry on its head, I don’t think technology alone will spur the requisite change we seek in the near term. No, the real catalyst for change that will provide the proverbial “kick in the pants” that this industry so desperately needs is coming in Part III of this series.