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.]
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 the advent of social media, which presented very exciting opportunities that weren’t available to us back in the days of TicketWeb,” Dreskin says. “I got very excited about the notion of harvesting the ticket buyer as the event promoter. That was the thing that really sealed it for me.”
As Ticketfly was building its own ticketing platform in 2008, “one of the first things we did was to give users the opportunity to create a Facebook event as part of the event creation process,” Dreskin says. “With one press of a button, not only do they put the event up for sale on our website, but also on Facebook.”
That turned out to be a savvy move. In its first month using Ticketfly, one San Francisco club called Public Works sold two-thirds of its advance tickets through Facebook, with virtually every sale turning into a status update on somebody’s news feed or timeline. And customers who share their ticket-buying behavior on social media tend to be better customers—the company says they spend 40 percent more on tickets than non-sharers. [Data added 3/7/13; see Addendum.]
“Live events are inherently social,” says Dreskin. “We don’t buy sweaters together, we don’t reach out to our friends to buy groceries, but we do go to concerts and sporting events together. If I buy a ticket and share that to my Facebook wall and I have 500 friends, right there are probably 400 qualified potential buyers.”
After getting its Web and Facebook ticketing software running, Ticketfly turned to e-mail and Twitter, which are major publicity channels for most performance venues. The idea was to consolidate all the steps involved in event promotion into one workflow.
“It’s madness to have to enter the same event info five or six times” in different systems, says Dreskin. “With Ticketfly you enter data one time—the band, the date, the price—and all of a sudden it’s for sale on your website, it’s for sale on Ticketfly.com, you’ve created a Facebook event, you’ve sent out some tweets, and it will show up in your e-mail newsletter.”
Ticketfly’s system also provides venues with an analytics package that shows them how many tickets they’re selling, and through which channels, so they’ll know where to spend their marketing dollars. “We are trying to bring some science to ticketing,” Dreskin says.
With 100 employees and $37 million in financing from venture firms such as Mohr Davidow, Cross Creek Capital, Northgate Capital, SAP Ventures, and High Peaks Venture Partners, Ticketfly has a long way to go to catch up with Ticketmaster, or even its SoMa neighbor Eventbrite, which has twice as many employees, has raised twice as much money, and sells more than three times as many event tickets.
It’s probably unfair to compare the two startups too closely. By focusing mostly on tickets for small business functions, Eventbrite avoided taking on Ticketmaster directly (in fact, former Ticketmaster CEO Sean Moriarty is on Eventbrite’s board). Eventbrite and Ticketfly do compete in the market for medium-sized events such as festivals and general-admission concerts. But to a large extent, Eventbrite is inventing a market for event ticketing where there wasn’t one before, whereas Ticketfly is taking on the more daunting task of disrupting the big, established, profitable, and jealously defended business of professional concert ticketing.
And Ticketmaster itself hasn’t been standing still. The Los Angeles-based company has 3,000 employees, sells $8 billion in tickets ever year, and still has a lock on most of the nation’s largest concert venues. Moreover, it’s developing a social media strategy of its own. In 2011, for example, the company released a Facebook app that shows concert ticket buyers a venue map indicating where their Facebook friends are sitting.
But Dreskin says Ticketmaster’s technical innovations aren’t doing much to reassure defectors, who are leaving in part because of the Live Nation-Ticketmaster merger. Ticketfly says it has signed agreements with 98 former clients of Ticketmaster and its subsidiary TicketWeb, including Merriweather Post Pavilion outside Washington, D.C.; the Preakness Stakes horse race and InfieldFest music festival; the Independent and Bimbo’s 365 Club in San Francisco; the Horseshoe Tavern in Toronto; Troubadour, the Echo, and Echoplex in Los Angeles; the Trocadero in Philadelphia; the Vogue in Indianapolis; and the Aladdin Theater in Portland, OR. [Data added 3/7/13; see Addendum.]
The merger “put quite a bit of wind in our sails,” Dreskin says. “In merging with Live Nation, Ticketmaster has become competitive with its own clients and prospective clients. You can imagine how that has created a desire among venues and promoters who use Ticketmaster to seek a neutral player.”
With its more capable platform and its focus on clubs and festivals—in contrast to Ticketmaster’s emphasis on giant theaters and stadiums—Ticketfly isn’t having trouble winning deals away from Ticketmaster, Dreskin says.
“Fifteen years ago, there was more credibility to the argument that promoters needed to have their tickets on Ticketmaster, because that is where people would go to find things,” Dreskin says. “But now that you have Google, and your friends telling you what they are doing on Facebook and Twitter, that notion is quite outdated. The way people find out about music events has changed.” And Ticketfly plans to keep the turn going.
Addendum, 3/7/13: After we published this story, several sources contacted Xconomy challenging the factual accuracy of certain statements from Ticketfly. We investigated further, and have updated the story accordingly.
The questions related to three points.
1. The assertion that fees at Ticketfly are, on average, 30 percent lower than fees at Ticketmaster.
Ticketfly was unable to provide us with systematic data to back up this claim. We’ve decided to let the company’s assertion stand on its own, but have explained this in a note in the story. Both Ticketfly and Ticketmaster told us that it is difficult to make an apples-to-apples comparison between Ticketmaster’s fees and Ticketfly’s fees, because those fees are set in part by venues and in part by artists.
2. The assertion that Ticketfly is growing in part by winning clients away from Ticketmaster.
A Ticketmaster spokeswoman told Xconomy that the company has not lost a “meaningful” amount of business to Ticketfly, and she cited one example of a venue, the Knitting Factory chain of concert houses, that switched back to Ticketmaster after trying Ticketfly. In response, Ticketfly told us that 98 of its clients, or just under one-eighth, are former Ticketmaster or TicketWeb clients. The company provided a list of examples, which we have added to the story.
3. The assertion that Ticketfly is growing rapidly.
We added data from Ticketfly showing that gross ticket revenues increased 61 percent between 2011 and 2012.
In addition, the Ticketmaster spokeswoman told us that Ticketmaster’s social media strategy predates the 2011 Facebook app mentioned in the story, and that Ticketmaster executives have, like Dreskin, long argued that events are inherently social. We went back to Ticketfly to ask for more details about how the company’s social media features boost ticket sales, and have added this information to the story as indicated.
Addendum, 3/20/13: The original version of this story described Andrew Dreskin as the co-founder of TicketWeb, which was later acquired by Ticketmaster Online CitySearch. TicketWeb founder Rick Tyler wrote to Xconomy to assert that he alone started TicketWeb, in 1995, and that he brought on Dreskin as a partner in 1996. We have updated the story as reflected in the author’s note in the seventh paragraph. Ticketfly has responded to Tyler’s assertion as follows: “Rick and Andrew had a really successful run at TicketWeb together. We’re not going to debate the semantics of the company’s founding and hold Rick in the highest regard.”