The StubHub new sparkled my interest when I heard so many arguments for and against the price of USD 4b at the time I was looking into a prominent ticketing platform in MENA (Qatar). I wish to share my thoughts on the marketplace, considering all the prominent VCs have one of these ticketing platforms in their bags.
What are these ticketing platforms? They are primarily a marketplace for connecting buyers and sellers of tickets. Though it is a simple definition, the nuances of this particular marketplace get a bit trickier compared to other general marketplaces (think: eBay or Uber) and scrutinize by consumer protection authorities in many countries for their unintended consequences (misrepresentation, fake tickets, price manipulation, etc.)
Let's have a look at the way this segment operates. First, some event-originators are int the business of creating events. These guys could be brand owners and producers at the same time, but not necessarily. For example, sports NFL brand and they produce their sporting events, and the same goes for concerts, exhibitions, charity, etc.
Let's call these event-originators as titleholders or brand owners.
Then distributors and agents buy the rights to the events and retail them directly or indirectly via sub-agents. Ticketing platforms are increasingly playing a significant role here. By definition, a platform/marketplace supposed to be in the only middleman. However, there appears to be a few in between-for now.
The (great) event originators are in control of setting the price depending on the brand (Think: NFL, or Laddy Gaga concerts), venue, and location. Moreover, they can determine the transferability rights, price caps, and market validity of the tickets —critical factors influence the ticket retail markets.
So, that makes up the supply side of the business. Moving on to the demand side, which could be characterized by all the people who are interested in attending sports, music concerts, and movies, etc. They are hardcore fans where utility and mania triumph the price/value. Then there is the majority of us subjected to the laws of economics, and a few of my-friend-types who purchase tickets to speculate--sell at peak prices at the last-minute to last-minute-fans.
In summary, both the demand and supply are elastic; however, demand is very price elastic. However, the business is heavily cyclical.
So what role ticketing marketplaces are playing in this vertical? The approach each of these companies determines their value proposition (to event generators, agents, and users) and competitive edge.
For example, StubHub gives users the ability to sell/re-sell tickets (brand owner could directly sell, or it could be you re-selling the ticket because you've changed your mind). Being Tech-enabled with the supply of third party inventories, access to vast consumer history, real-time view of the market gives all the leverage to these companies.
One of the benefits of going digital in tickets allowed consumers to transfer tickets to another purchaser at face value or with little margin for his/her struggles. Now, there's whole another market, operates under the radar, where the so-called margin is stratospherically high in the ranges of 5 to 10 times (I have witnessed 100x)--known as scalping.
Secondary sales platforms have taken this concept a little further allowed consumers to sell tickets above-face-value — a window of opportunity for the so-called scalpers or hoarders and speculator.
Consumer protection authorities and brand-owners are turning their attention to these practices and putting rules in place.
Potentially, a startup in the region could take several routes to capture the market. One founder told me that singing-up exclusivity agreement with super-brand owners in the area to be the ideal solution. This will allow her to position her platform as the sole distributor.
As mentioned, there are many paths to success; however, in my opinion, slow-incremental-capital-efficient-experiments are the best choice for startups.
- Market penetration: goes without saying, if you are not the dominant force where you are operating, then it is of no use discussing further. So, offer a clear value proposition. Give your users and providers (brands or re-sellers) smooth experience, offer them then 100% digital experience, not purchase the tickets online and wait in line at the concert/movies or print paper tickets from the vending machine. Once you excel at authentic digital experience, experiment with the concept of ticket transferability at face value. It is a definite value add for the users and providers and will not be questioned by regulatory bodies instead should be welcomed by consumer protection authorities--in fact, startups should be proactive in working with regulators (https://hbr.org/2016/04/network-effects-arent-enough). Do not forget the fact that you are a marketplace. Do focus equally on users and providers. Users come to because you have access to the inventory (tickets), and sellers and re-sellers-sellers go to you because your platform attracts all the potential buyers (users).
- Build a robust database (to leverage in the future once the secondary ticket sales platform model becomes viable) and offer data-based intelligence to your providers and users. Yes, I am talking about dynamic pricing and complementary value add, such as loyalty programs. This is one of the markets regular consumers are not rewarded enough. Hell! I watch at least four movies a month, and nobody offered me any discounts. (Viagogo accused of misusing this power in Aussie https://theindustryobserver.thebrag.com/federal-court-viagogo-guilty-misleading-consumers/)
- Complete your marketplace model. Take the concept of ticket transferability a litter further. Introduce and incentivize the re-sellers the ability to sell tickets above face value, possibly with ceilings on the price, and take the concept of dynamic pricing a little further and offer last-minute-fan access.
A few of the suggestions mentioned above are not that harder to implement except for the ticket transferability-above-face-value concept. Which seems to be the talk in the media, and resistance is building up from brand owners. Since they have the power to break away from the chain, go direct-to-consumers, and limit the transferability in geographies, prices, or persons, the repercussion would be severe.
Notes:
Comments
Post a Comment