Is the Internet About to End Ticketmaster’s Monopoly?
An industry at a crossroads
“The simple fact is that ticket companies and their brand just get in the way. Their price is a false price, and an actual impediment to the [artist] selling the ticket. This is a problem for me for so many reasons. I mean, the ticketing companies don’t perform! So why the **** is their name on the ticket? It’s a tax!”
Talk to David Cooper for even a few minutes, and you’ll learn the man has a very clear vision for how he believes the world of ticketing should work.
Unfortunately, that vision doesn’t quite align with the way the world of ticketing actually works.
Cooper, a longtime entertainment industry executive, has a true passion for ticketing — or perhaps more accurately, a truly passionate stance on how to fix ticketing. In the course of his 30-plus year career — a career that has seen him manage ticketing for Pearl Jam, NASCAR and numerous other bands and brands — Cooper has witnessed the complete evolution, and the complete devolution, of the ticketing business.
He’s seen the market grow from what may justifiably be described as a complete afterthought to multi-billion dollar industry — one that inflamed anger and dissension like few others. He’s seen Eddie Vedder and his bandmates battle Ticketmaster in the halls of the United States Congress. He’s seen the Internet turn the industry on its head, he’s seen bands big and small go to war to win back the right to own their ticketing policies, and perhaps most notably, he’s seen most each and every change that has hit the ticketing business mostly negatively impact the very people on which his beloved entertainment industry was built: The fans.
Somewhere along the way, Cooper laments, ticketing (and by extension, entertainment) got hijacked by big business, and as a result, each and every year, millions and millions in profits fall into the hands not of those individuals who provide that entertainment that we all so dearly crave, but rather those who provide access to the entertainment.
Need proof? Well, Cooper has it.
Take a look at most any ticket stub, he says, and you’ll notice something rather peculiar: the branding for the ticketing firm that brokered your ticket will be a lot more prominently placed on that piece of cardboard than that of the team or band or event you paid to see.
Which of course makes no sense at all. And yet … we accept it. Because, well, that’s just the way it’s always been.
It’s maddening for Cooper, yes. But it’s also true to say that it’s maddening, on some level, for pretty much everyone. After all, the reality of this business is a reality that most all of us understand, because it’s a reality we confront almost each and every time we buy a ticket for the events that help shape our lives: we go online, we get directed to some third party, we pick out our seat and our price point and we get our tickets. But we don’t get to do so without paying out a whole lot of money for a whole lot of fees that don’t have much of anything to do with our preferred event at all: A convenience fee. A facilities fee. A resale service fee. A delivery fee.
Taking a step back from it, it all looks, in a word, nonsensical. And if it drives anyone crazy, it certainly drives Cooper crazy.
But if you talk to this ticketing visionary these days, he’ll offer you more than just his outrage at how things got this way. He’ll also offer you the faintest of hopes that, at long last, things may be changing.
And changing for the better, too.
“The ticketing industry has been evolving forever,” Cooper says. “But it’s only now, finally, that it’s evolving in the correct direction.”
In 2003, a Colorado-based jam band called The String Cheese Incident — an oddball group of musical purists and, as it turns out, music-industry idealists, too — launched the first salvo in what would turn into one of the more bitter, and most under-reported, battles between a performing artist and the ticketing behemoth that is Ticketmaster.
In a civil lawsuit filed in the U.S. District Court of Colorado in August of 2003, the band, which had just formulated plans to launch its own ticketing arm, accused Ticketmaster of essentially building and taking full advantage of a monopoly within the concert industry — and, by extension, negatively impacting both bands and fans as a result.
In short, SCI said that their intent with the launch of SCI Ticketing was to allow the band to deal directly with fans when it came to ticketing. Perhaps more menacingly for Ticketmaster, SCI also made clear that they hoped their new operation could handle ticketing for other bands as well. It wasn’t about taking down, or even taking on, Ticketmaster, the band said. It was simply about control. As SCI Ticketing head Jason Mastrine said at the time: “We are not saying Ticketmaster doesn’t have a place in the ticketing business. But we have a different philosophy of doing business, one that caters directly to our fans.”
From the outside looking in, it hardly seemed a radical idea; after all, why shouldn’t SCI, provider of the actual entertainment that its fans wanted to see, not be permitted to determine how access to that entertainment was granted? SCI fans, music fans, the music press — everyone was in agreement: This was a potentially huge step forward for ticketing, and a natural evolution for the music industry. Who could possibly stand opposed?
Well, Ticketmaster.
The Los Angeles-based company had over the course of the previous three-plus decades grown from a tiny startup in Albuquerque, New Mexico to the 500-pound gorilla of the ticketing world. And that growth was no accident.
While it has been villainized by bands, music fans and consumers for years now, the reality is that Ticketmaster almost from the start revolutionized the ticketing industry, if no other reason than it recognized that there was actually an industry to be had there — and a much larger one than anyone had seen previously. Just three years after its humble launch, the company had already extended into overseas markets, and when Fred Rosen was named CEO in 1981, the company’s already meteoric growth would only accelerate. Looking back, it’s easy to see why.
Broadly speaking, Ticketmaster’s business model was simple: they aimed to make buying tickets easier for everyone who wanted to buy tickets. For anything. Whether the ticketed event was a concert or sporting event or a night at the opera, whether it was to be held in New York City or Sydney or some tiny college out in the middle of nowhere, Ticketmaster under Rosen sought to make Ticketmaster the one company — the only company — that could handle it all.
Every event. Every venue. Every seat.
They sought to make Ticketmaster as synonymous with ticketing as the Xerox brand was to photocopying. And while Rosen, a famously aggressive businessman who made no apologies for his desire to make as much money for his company as possible, may have been motivated by profits, it must be said that there was something both innovative and consumer-friendly about Ticketmaster’s core strategy. After all, as anyone who once had to stand in line for a day or two or even more to grab concert tickets for the biggest show in town can attest, the idea of being able to simply sit at home, log on to your computer and buy those same tickets in an instant, with the click of a button, does seem, in a word, convenient. On that point, and for all the heat the company has taken over the years, there’s simply no debate that Ticketmaster led the way in making ticketing easier. For fans, yes. But for bands and teams and everyone else, too. If you wanted a ticket, you went to Ticketmaster; simple, easy, and moderately more costly. But still convenient.
The company’s singular mistake, it seems, was making the “convenience” of their model, eventually, too damned expensive. People started to notice. Then those people got angry. And then it all went to hell.
Cooper saw it all happen. Even now, he can’t hold back his outrage.
“Here’s how the world of ticketing works today,” Cooper says. “Let’s start with the artist. That artist has a business manager, and then a manager, and then an agent, who sells the artist and their shows to a promoter, who rents a venue, which has a ticketing company — which screws the fan. But if you shorten the distance between the artist and the fan, it becomes the most profitable model for the artist and the least costly for the fan.”
This, of course, was the issue at hand in SCI’s suit: the band believed its fans were being asked to pay too much — in some cases, way too much — to see its shows. More broadly, SCI and its allies seemed to take offense at the very idea of Ticketmaster reaping profits off the backs of the talent that made the rock shows happen in the first place. To them, Ticketmaster was the middleman that not only wasn’t wanted, but actually wasn’t needed.
Ticketmaster, as one might imagine, took a different view entirely: the company had spent decades building out its massive global infrastructure — an infrastructure that allowed it to fulfill its goal of providing easy access to most any kind of ticket, and part of that infrastructure included exclusive (and hard-won) contracts with some of the best and most desirable concert venues in the world.
If a band like SCI wanted to play at one of those venues, part of the deal included handing over ticketing rights to Ticketmaster. It was just good business. As Ticketmaster CEO John Pleasants told authors Dean Budnick and Josh Baron for the book Ticket Masters, SCI’s actions prior to the suit — essentially, the band was holding half of its tickets back from each of its venues, and selling them direct to fans via its fan club — were “illegal, full stop.”
“There is no debate about whether it is illegal or not — it is illegal,” Pleasants said. “Ticketmaster has a contract that is for exclusively selling every ticket in a particular building. If String Cheese wanted to sell half of their tickets through their website, they should go play in a park or some other place that is not with an exclusive contract with a ticketing company, with Ticketmaster or anybody else. There’s a thing called the law, and if I remember correctly, they were breaking it.”
Ticketmaster fought back hard against the SCI suit. Surprisingly hard, actually. In their own counter-suit against the band, the company alleged that the band and its fledgling ticketing arm were “intentionally interfering” with its contracts and “exerting pressure” on its clients to break those contracts.
The two entities seemed on the brink of an all-out, all-encompassing war, one that would potentially reshape the industry forever. On one side, SCI would battle for bands the world over. On the other, Ticketmaster would claw and fight for the very survival of its business model.
And then?
Well, then the war of words became … a protracted negotiation. A business deal, and nothing more.
Discussions between the parties went on for months, and in the end, the once-heated dispute was resolved surprisingly amicably: Ticketmaster granted SCI the right not only to continue selling some of its tickets direct to its fans, but also to do so — on a smaller scale — for other bands who wanted to do business with SCI Ticketing. In response, as Pleasants and Budnick detail in their book, all Ticketmaster asked in return was that, after the settlement was finalized, SCI not make any public pronouncements about the deal.
SCI complied.
The band won their battle, quietly, and then went back to doing what they loved most: playing music, and entertaining their loyal fans.
Which is why, to this day, few know about this huge moment in ticketing history — a moment that in many ways presaged the many changes that were yet to come, and may yet come still.
It’s important to note that even some at Ticketmaster eventually realized the company’s business model was vulnerable. Not broken, necessarily. Not fundamentally flawed. And certainly not unprofitable.
But vulnerable? Yes, absolutely.
At the same time he was waging his battle against SCI, Pleasants recognized that his company’s fee structure made it a clear target for unhappy music fans. Perhaps just as notably, he came to realize that as the Internet became an ever more important driver of his business — his online strategies were instrumental in driving millions in additional revenues for the company in the early 2000s — it was almost inevitable that smart bands and smart companies would almost surely see the Web as an opportunity to pursue new ways and new avenues for ticketing. In response, he made big moves to solidify his market share; on one front, he tried to make the company seem more consumer-friendly, while on the other, he worked diligently to convince bands, sports franchises and other clients that, even in a time of industry pivot, Ticketmaster was still the most economical way to market their event and sell their tickets.
It was hardly a revolution, but even the fact that the one and true behemoth of ticketing was taking these steps was a clear signal that things were indeed changing — changing in part to technology, in part of the nascent world of data analytics, in part to the democratization of information made possible only by the Internet, in part by the changing attitudes and behaviors of consumers and in part, just as Pleasants had expected, by a few smart entrepreneurs who understood there was more to ticketing than even Rosen could have foreseen.
In 2003, a young Penn graduate by the name of Christopher Stanchak launched a ticketing startup he called Ticketleap. [Disclosure: This article was commissioned by Ticketleap] With the able assistance of his mother — his only employee at the time — Stanchak sought to build a firm that would be revolutionary in the world of ticketing, in a truly unique way; the company was built specifically to cater to an underserved and in many ways completely untapped market — the thousands and thousands of “smaller” events that the big boys deemed too insignificant to deal with: conferences, festivals, fundraisers and countless other happenings. What the company sought to do was empower anyone, or any group, to not only host an event, but promote and sell tickets for those events — on a very professional level, and at a relatively modest price. In a sense, and in their own small way, the Ticketleap pioneers would inch the industry closer to the ideal that Cooper had always dreamed of — a model in which almost any brand could deal almost directly with their fans and customers.
A few years later, out on the West Coast, former PayPal exec Kevin Hartz and his wife Julia used $250,000 in seed funding to launch Eventbrite, which sought to pursue a similar business model; to say they succeeded would be an understatement. Today, Eventbrite says it helps sell tickets for 2 million events in 187 countries each year, and it has become the biggest player in this sub-niche of the ticketing world.
“The ticketing industry has evolved dramatically over the past 10 to 12 years,” says Fred Maglione, a longtime ticketing industry insider who currently serves as executive chairman for the Americas for TopTix and previously was president and CEO of New Era Tickets. “[Much of this change] can be seen in the way [the startups] have started focusing on the long tail — those Sweet Sixteen parties and small little local events and regional events. They realized there was a business to be had there, whereas I don’t think many of us thought about that.”
Eventbrite is widely seen as the biggest player in this newly discovered (and potentially disruptive) market. But it’s hardly the only one. Ticketleap continues to operate out of Philadelphia more than a decade after its launch, and counts the American Red Cross, DogfishHead Brewing, FringeArts and the Museum of Modern Art among its clients. Meanwhile, like-minded startups such as TicketFly, Splash and Brown Paper Tickets have joined in this upstart industry movement to reduce unnecessary fees even further.
The rise of these young firms — and the questions they are asking through their disruptive business model — offers Cooper and Maglione some hope that change, at long last, is finally afoot.
The startups haven’t just opened industry eyes to the incredible breadth and depth of the potential ticketing marketplace, they’ve also challenged the well-established model on which the industry is built. So now, we must wonder: just how great an upheaval is this long-stagnant industry facing? Can the upstarts really topple the big boys? And if they do, will they actually remain committed to their central ideals? Or will they, once placed in the position to do so, eventually succumb to the temptation to step away from their stripped-down model and backtrack to the practices of the bad old days?
Cooper, for one, chooses to be an optimistic. He says he can foresee a day, finally, when bands actually do get to deal directly with their fans — without any middleman at all. Maglione, for his part, says he thinks the old-school practice of Ticketmaster and other big players securing “exclusive” contracts with venues is not only fundamentally flawed, but flat-out living on borrowed time. He openly wonders: What happens if Amazon decides to make a move into ticketing? What if Google does? In a day and time when so many consumers have access to so much information, are any of these old practices really built for the long haul?
The industry, it seems, stands at a crossroads.
And so we are left to wonder: After decades of devolution, has the tide finally turned?
Can the consumer really take back the ticketing industry?
We don’t know yet. But we may know soon.
Ticketleap is rethinking ticketing.
Check out what they’re working on and let them know what changes you’d like to see from the ticketing industry.
