The world of ticketing is one that is going through profound change as commercial battles with regulatory factors and the supposed ‘free market’ is reset to favour fans rather than touts or scalpers depending on your geography.
This morning we are pleased to bring you an exclusive interview with one of the key disruptors in the market, Daniel Marcus who established Seatswap as a law student in New York in 2013 and who will be speaking in Limerick this weekend at the Sportstech Ireland Masterclass at the University of Limerick.
SfB: Tell us a little about SeatSwap and what you are doing within the ticketing environment.
SeatSwap in its simplest terms is a place where fans can connect to swap or trade event tickets with one another. In essence, it allows them to get to another event they want to see with the tickets they already have for another.
The genesis of the company is a by-product of me having been raised on live events and mediocre football courtesy of my father’s devotion to our beloved New York Jets. I’m someone whose greatest memories can be traced by digging through my shoebox of ticket stubs that I have been keeping and collecting since I was a kid.
However, for as many events as I was able to see, it was the ones I missed out on that kept leaving a void and that sinking feeling of having missed out on a “once in a lifetime” opportunity. So after missing out on one too many events, I decided I would build something that would enable more fans like myself to get to the events they love even when life got in the way.
That’s perhaps the poetry of why the business was brought to life. The more prosaic reason for why it has a genuine place in the sports and entertainment landscape is that the ticket market is basically broken.
Purchasing event tickets for most people is an inherently emotional investment, in that you don’t buy tickets to see U2 or The New York Yankees because you’re looking to make a buck by re-selling them but because you have an emotional attachment to that team, artist, or performer.
As such, often times we put aside common sense and the inner monologue that frequently asks us “Should I be paying $1,000 to see Bruce Springsteen” and instead we let our emotional attachment take the wheel and buy them anyway.
Why this is relevant is because it’s the same rationale that sports season ticket holders have when deciding to purchase 81 baseball or 41 basketball and hockey games in bulk in spite of knowing in their heart of hearts that the team they love won’t be competitive or compelling enough for enough time to recoup their financial investment.
So one of the biggest failings and inefficiencies of the current ticket market is the fact that aside from the traditional buy/sell secondary markets such as StubHub, fans don’t have a hedge against a bad season or a flat secondary market where tickets are being sold for 30% of their original value (if they sell at all).
As a result, what you see is a whole lot of what we like to call “breakage” or inventory that goes dormant because it didn’t sell or it never made it to market.
We estimate that about 40 percent of tickets listed for sale on the secondary market go unsold and according to an April report by the United States House of Representatives, at least 50 percent of tickets sold on the secondary market sell for less than face value. So what we end up with is scores of fans who purchased tickets and have no meaningful way to derive any sort of value for them, and that’s where SeatSwap comes in.
We cater to those emotional bulk buyers we call “Super Fans” and season ticket holders to enable them to make use of otherwise unusable inventory. Instead of a best case scenario where you walk away with a paltry sum of money, SeatSwap enables fans to take the tickets they have and turn them into another event experience. So if you want to trade your Yankees tickets for an opportunity to see U2, you can do that. If you want to turn Munster Rugby tickets into Hozier tickets, you can do that too.
The swap transaction is our way of getting a toe-hold and introducing a much more user-friendly, transparent experience that fills the gaps and blind spots of the current secondary market.
You are just offering a swap marketplace for ticket holders, and not any form of cash equivalent, is that right?
Because no two individuals covet the same event with the same degree of affinity, we give fans the ability to appraise the value of their tickets using real-time secondary market data.
Hand in hand with that functionality, users are also capable of adding and requesting cash in addition to cash as a way to make each trade proposal more equitable. So if I have Yankees tickets for a Tuesday night game in May that are worth $100 and I’m asking for your Bruce Springsteen tickets that are worth $200, I can add $100 on top of my tickets to “Sweeten the Deal.”
Have you found there is a sufficient market across different events?
We have nine major professional sports teams that sell in excess of 13,000,000 tickets annually and according to the US Congressional report I referenced earlier, on average major domestic professional sports teams sell a minimum of 55% of their ticket inventory via season ticket packages and some even as high as 85%.
If we estimate even more conservatively than our decision-makers in Washington and assume that 50% of tickets sold are sold as season ticket packages, that is an immediately addressable market of 6,500,000 tickets in terms of inventory. And that’s just sports.
Broadway sells another 13,000,000 or so tickets a year and combine that with virtually every major music tour and some of the most iconic live entertainment venues and acts in the world, New York alone offers enough inventory and users to not only prove out this concept but create a vibrant community of event goers that extends beyond sports.
SeatSwap is a quintessential network effect platform in that the more diverse inventory that is posted, the greater the experience is for the user in terms of event choices and potential swaps.
Do you hold inventory or does it have to be peer to peer direct?
In regards to inventory, it’s completely peer-to-peer. From a business perspective, there is a tremendous amount of risk associated with owning inventory and trading on one’s own account so to speak.
How does SeatSwap make its money?
Additionally, we also partner with third-party ticket sellers such as SeatGeek to supplement our inventory, so if there’s something you’re looking for that we may not have in our inventory, we enable you to purchase those tickets via SeatGeek and earn a modest commission on those transactions.
Ticketmaster has recently announced the closure of their secondary ticket service. How do you think this will impact on the market?
Ticketmaster is the omnipresent metaphorical “8,000-Pound Gorilla” that absent government intervention, will always be in the room.
Domestically in the States, they’re as strong as ever and with the introduction of their “Presence” ticketing system, will only continue to get stronger and more emboldened.
I expect that the shuttering of SeatWave and Get Me In are more of a direct response to changes in the legal landscape that made it a losing proposition to continue to foot the costs of operating these platforms with a clearly delineated and limited financial upside.
However, it should also be noted that Ticketmaster is in the process of consolidating their marketplaces to bring all tickets transacted on a Ticketmaster platform under the TM flag.
To me, the closures of SeatWave and Get Me In, mark the beginning of a two-year process in which Ticketmaster plans to phase in its Presence product which uses unique radio frequencies to validate tickets in lieu of a bar or QR code. The obvious advantages of this system are the ability to restrict the transfer of tickets, which will ensure that less Ticketmaster-issued tickets end up on third-party platforms such as StubHub.
The second phase of the implementation of Presence is the incorporation of the facial recognition technology of a company they recently acquired called Blink Identity. Ticketmaster reportedly plans on using this technology to phase out tickets altogether and instead have one’s face substitute as their ticket, thereby solidifying Ticketmaster’s place as the unavoidable “middleman” between the ticket purchaser and any means of transferring a ticket.
In a world of supply and demand will there ever be a totally transparent ticketing culture?
The optimist in me says that there will be eventually but there has to be some sort of incentive to bring about that kind of change and my hope is that we can be a part of that change.
Thus, unless a new upstart proves that you can be transparent and make money while doing so, it’s unlikely that we’ll see that kind of transparency anytime soon.
When you know what you’re getting yourself into and who you’re dealing with, there is less of a feeling that you’re being ripped off. More importantly, when you know who you’re making a deal with, you’re making a connection that extends beyond the transaction and is more like recognizing “Joe from Section 103” as opposed to a nameless, faceless ticket listing.
In reference to price transparency, I think that’s more of a psychological thing as StubHub tried to do “All-In” pricing that has the cost of fees included in the price of the ticket and noticed a significant drop-off in sales.
The reason being that psychologically, most people fall into the trap of feeling “pot-committed” at checkout and are more willing to complete the transaction at that stage as opposed to being scared off by a massive sticker price on the front-end of the transaction. In terms of the transparency on the retail side of things, it doesn’t really make much sense for Ticketmaster not to do “all-in” pricing unless they noticed the same disparity in sales.
My rationale for why it doesn’t make sense for someone like Ticketmaster not to be transparent is because they have exclusive deals with all of their clients and carry no risk of buyers purchasing tickets from another retail provider.
Above all else, I feel as though complacency has a lot to do with why these platforms are in no rush to move towards a more open and transparent system, thus it falls to the innovators in this space to force their hands.
In the modern era of sport and entertainment, the ticket is merely the start point of the value for a sports club or rights holder. The absence of a season ticket holder from lesser games is a cost in terms of money foregone on food, drink, and merchandise as well as a risk to wider support through having gaps in the stadium and thereby losing some of the ‘have to be there’ appeal on which they rely.
Marcus’ solution is a neat one if the peer to peer market becomes big enough and the diversity gets to the point where it could become the first port of call for every season ticket holder to go in search of ‘experiences’. The Irish market may be too small for it to have an appreciable impact but with 6,500,000 season ticket seats in New York that begins to make sense.
Sport for Business has secured a special discount for an exciting Sports Entrepreneurship Masterclass taking place at the Kemmy School of Business in the University of Limerick on Friday 21st and Saturday 22nd September.
The event has been created by Sports Tech Ireland and will feature contributions from former Irish Rugby Captains Jamie Heaslip and Niamh Briggs, the Head of Innovation from Under Armour, Sam McCleery, Head of Stats EMEA Operations based in Ireland Grainne Barry and a host of other Irish and international speakers.
The Masterclass is limited to 30 places, most of which have already gone but a limited number are available at a discount price of €495 for members of the Sport for Business community.
To apply for the code you need to email Emily@SportstechIreland.com and she will send on what you need to complete the booking.
Read more about our 2018 Sport for Business Sport for Social Good Report and half day conference on September 27th and reserve your place to hear about campaigns from the Manchester United Foundation, Unicef, Allianz and many more