We’ve all gotten that last minute email from a friend. There are tickets for sale to an awesome concert. Someone got sick or missed their flight. The tickets must go, but of course you’ll need to meet up in person. If a buyer in the social circle can’t be found, the seats end up on Craigslist instead, forcing a last minute meeting between two strangers who now most likely have to deal in cash.
A New York City startup called SeatGeek wants to solve that pain point, making it easy to sell or trade your unwanted tickets with just a couple taps in their app. SeatGeek launched in 2009 by Russell D'Souza and Jack Groetzinger, and at the time its focus was on helping people find the best deals for tickets other people were selling on the secondary market. Today, SeatGeek is branching out to an entirely new line of business, connecting users to the primary seller of tickets and, more interestingly, offering its users a way to easily trade or sell tickets themselves.
When you open the SeatGeek app it will show you nearby events or let you search for something specific. Once you buy a ticket, it’s stored in the app and you can trade it to anyone else with the SeatGeek app in just a few taps. You can charge that person any price or simply give them away. If you don’t have a friend who can take them, SeatGeek now allows you to list them on their own marketplace, avoiding the hassle of needing to create a posting on Craigslist and physically meet the stranger who ends up buying.
SeatGeek’s differentiator early on was that it crunched data to offer suggestions on which seats to buy and when. It was also, from the beginning, as rich an experience on mobile as on the desktop. The site grew quickly, allowing it to raise over $100 million in funding and expand to around 100 employees. For its move into offering primary sales, SeatGeek has scored partnerships with the biggest seller of Broadway tickets and biggest seller of college sports tickets. It shows primary and secondary tickets side by side, and in some cases the price difference is significant.
SeatGeek isn’t alone in offering the ability to trade digital tickets. Major League Baseball, which also owns Tickets.com, has allowed customers to trade tickets within the app of several teams. And of course the 800-pound gorilla in the room, TicketMaster, also allows users to exchange tickets, but requires customers accept them via email on a desktop browser, not with a mobile device (SeatGeek’s new service will work on both desktop and mobile).
But of course, like most companies in the ticketing space, SeatGeek has one major obstacle here. It can’t act as a primary seller for tickets to most of the biggest events in music and sports, a market dominated by the combination of TicketMaster and LiveNation. SeatGeek says it will allow users to trade any valid digital ticket, even if it wasn’t purchased through SeatGeek. Paperless tickets come with a unique identifier that will allow SeatGeek to validate them. But TicketMaster is now moving to block secondary sales for some of its tickets as well.
Season ticket holders for the Golden State Warriors were recently told that their tickets could be revoked if they were resold anywhere but TicketMaster’s official marketplace. TicketMaster argues that tickets are simply a temporary license on the seat in question, and as such cannot be sold by the person who purchases it. That point of view was upheld in court. TicketMaster insisted that customers use sites it owned or operated to resell their tickets, and canceled tickets if it learned they had been resold elsewhere.
StubHub, one of the largest secondary sellers for tickets, argued this was an unfair and illegal anti-competitive business practice that prevents fans from deciding how they want to resell their tickets, which artificially drives up ticket prices, but a judge sided with TicketMaster. According to Amplify, which covers the ticketing industry, "since signing an exclusive resale deal with the team in 2012, Ticketmaster has seen its secondary sales of Warriors tickets skyrocket while StubHub’s Warriors inventory has fallen as much as 80 percent."
It’s quite possible that if users were to try selling or trading their season tickets to a Warriors game through the SeatGeek app, the startup could run into the same issue. TicketMaster, with a court victory in its pocket, is also likely to expand this practice to other venues it controls. "They are using every trick they can to lock up the market," says Dave Brooks, the executive editor at Amplify, a magazine covering the ticketing and live entertainment industries. According to Brooks, at recent sporting events, TicketMaster had waited until the last minute to release tickets to fans, trying to cut down on the possibility of resale. "A lot of the stuff they do is not customer friendly, but there is no organized opposition pushing back."
While TicketMaster / LiveNation have most of the biggest names in music and professional sports locked up, smaller players have been thriving in niche markets. Along with college sports and Broadway shows, SeatGeek is now powering direct sales for companies like WanTickets, which focuses on the EDM industry. "We’ve been surviving, even thriving in this business for 16 years," says founder and CEO Diego Carlin. "We do that by connecting authentically with the fans, by avoiding the generic experience that the bigger platforms offer." He pointed to features like mobile ticket trading as a feature that SeatGeek had enabled which perfectly fit his audience. "You’re in the club, and someone is stuck outside on line, and you can just tap to transfer a VIP pass to them. For millennials, that’s a killer experience."
"For millennials, that's a killer experience."
In 2012, SeatGeek said it had millions in gross revenue and a small profit. By 2013, it laid claim to over $100 million in annual sales, from which it took a roughly 9 percent cut. Today it says that number has risen to "hundreds of millions" of dollars. It takes 10–12 percent of all secondary sales and will take 12 percent plus a credit card fee for tickets sold on its own marketplace. For primary ticket sales and tickets sold directly to friends, it won’t take anything. "We think that if people are able to buy and sell tickets with just a few taps on their phone, that could be a huge new business for us," said Groetzinger.
Ticketing is a market also being targeted by players in the streaming music space. Earlier this year Pandora acquired TicketFly, and on an investor call this week Pandora CEO Brian McAndrews said the company's goal was to expand beyond the low margin business of selling ads against streaming music and capture some of the value in selling tickets to live events. Last week, Spotify made a similar move, announcing a new feature that gives users a personalized playlist of local concerts with the ability to purchase tickets baked into the streaming service.
Ticketing, like paying for cable TV or buying health insurance, often still feels painfully mired in the past. SeatGeek is an upstart with a disruptive business model that has found some success. But as it looks to really shake up the industry, it moves itself more directly into competition with TicketMaster. Even as SeatGeek moves into primary sales, TicketMaster is expanding its claim on secondary sales. SeatGeek can offer a far nicer, more modern experience. TicketMaster, meanwhile, holds the rights to the most valuable events. "Mobile upends industries, and it’s beginning to reshape ticketing," says Groetzinger. "Everyone has a go-to app for ordering food or getting a taxi with a few taps. We’ve created that for live entertainment: a liquid, mobile market where buying, selling and sharing tickets is as easy as calling an Uber."