In the Season of Ticketfly, Is It Ticketmaster’s Time to Die?

[Updated 3/7/13, further updated 3/20/13, see notes below] Ticketmaster has been called soul-crushingly evil and the most hated brand in America. If it had been included in this January poll, it probably would have ranked somewhere below root canals, head lice, cockroaches, and the U.S. Congress, although it might have beaten out North Korea and Lindsay Lohan.

When is that kind of dissatisfaction a good thing? When you’re a startup that hopes to destroy Ticketmaster.

Frustration with exorbitant fees and poor customer service at the nation’s largest ticket seller—not just among music fans, but among venues and artists—is probably the single biggest driver of growth for Ticketfly, a venture-backed startup in San Francisco that ultimately “would like to be the premier ticket provider in the world,” in the words of CEO and co-founder Andrew Dreskin.

But, as I found out during a recent visit, Ticketfly’s remarkable growth isn’t fueled by resentment of Ticketmaster alone. (In 2011 the company sold 2.6 million tickets for 360 clients; in 2012 it sold 4.1 million tickets for 822 clients, prompting the San Francisco Business Times to label it the fastest growing company in the Bay Area. Gross ticket increased from $78 million in 2011 to $128 million in 2012. [Data added 3/7/13; see Addendum below.]) The company has two guiding technology ideas that set it apart from other ticketing firms, and both seem to be resonating strongly with users.

The first idea is that there’s a natural marriage between event-going and social media. People don’t need to be cajoled to tweet or post on Facebook about the fact that they’re going to a concert or dance event. With just the slightest prompt, which Ticketfly subtly provides, they do it on their own—demonstrably leading to more ticket sales. “Back in the day, event promoters used to run ads on radio and TV, but now with people sharing links to hundreds of friends and followers, it’s reduced their marketing spend,” Dreskin says.

The second idea is that event ticketing, newsletters, social media marketing, analytics, and all the other details that go into staging a successful event should come together in one integrated service. For the most part, the systems that clubs, theaters, and other venues use today to sell tickets online are separate from the systems they use to update Facebook fans or Twitter followers or send out e-mail newsletters. In Ticketfly’s system, everything is in one place—and it’s all free. Ticketfly makes money through service fees on ticket sales, which it says are generally about 30 percent lower than those charged by Ticketmaster. [Author’s Note, 3/7/13: Xconomy has been unable to verify Ticketfly’s estimate of the fee difference. See Addendum.]

Ticketfly home page

Ticketfly's home page

Dreskin, who helped to start TicketWeb, the very first online ticketing service, calls Ticketfly a third-generating ticketing company, where the novelty of simply selling tickets online has given way to the strategy of using network effects to amplify sales. [Author’s note, 3/20/13: A previous version of this paragraph called Dreskin the co-founder of TicketWeb, a characterization that has been disputed by TicketWeb’s founder, Rick Tyler. See addendum below.]

“Ticketing 1.0 was the pre-online days of Ticketmaster and Ticketron,” Dreskin says. “Ticketing 2.0 was purchasing online, and also moving box office operations online for venues and promoters. Ticketing 3.0, here at Ticketfly, is about helping venues and promoters sell more tickets.”

The online ticketing industry has a gnarly family tree, and unlike most of the Gen-Y entrepreneurs clogging the sidewalks of SoMa, Dreskin and his Ticketfly co-founder Dan Teree have been part of it since the very beginning. In fact, they once worked for the same company that owned Ticketmaster, the behemoth they now hope to extinguish.

It all started in 1995, when Dreskin was working at TicketWeb. Dreskin says the first band to use the system—in fact, the first band to sell tickets on the Internet, period—was called Swell. It was performing at The Bottom of the Hill, a (literally) grungy alternative-rock club that’s still in business a few blocks away from Xconomy San Francisco’s Potrero Hill office. [Correction 3/20/13: A previous version of this paragraph incorrectly stated that Teree was a co-founder of TicketWeb. We regret the error.]

“For 11 months we were the only company in the world selling tickets on the Internet,” Dreskin claims. It wasn’t until late 1996 that Ticketmaster started selling tickets from its own website, which gave TicketWeb time to snag clients such as the San Francisco Symphony, the San Francisco Museum of Modern Art, nightclubs like Slim’s and Bimbo’s 365, and Burning Man.

In 1997, the online portion of Ticketmaster’s business merged with CitySearch, and in 2000, the combined company, Ticketmaster Online CitySearch, made a successful bid to acquire TicketWeb. “They saw TicketWeb as the future of Web-based ticketing platforms,” Dreskin says. “But when the market for Internet stocks started to crater, Ticketmaster Online and Ticketmaster proper were recombined, and the outlook for TicketWeb became a little more murky.” Dreskin left the company as soon as his handcuffs were off.

Teree stayed on until 2007, when Ticketmaster’s largest client, concert promoter Live Nation, dealt the company a huge blow by deciding to build its own ticketing system. (Live Nation later acquired Ticketmaster for $2.5 billion—more on that in a moment.) “Dan thought that was a good inflection point, a good time for him to move on,” Dreskin says. “He reached out to me and said, ‘I think there’s still a tremendous opportunity [in ticketing]. What would you think about getting the band back together?’”

Dreskin, who’d been doing event production work for brands like Virgin Mobile, had thought his days in the ticketing business were long over. “I said, ‘Leave me alone.’”

But the longer Dreskin listened to Teree’s argument, the more intrigued he became. “The cornerstone of the discussion was … Next Page »

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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