Event Ticketers See Online Sales Setting the Stage for New Markets
As event ticketing shifts Web-ward, online companies are expanding beyond traditional seat-selling to offer an array of customized goods and services based on information that technology allows them to gather on customers.
Buy Bruce Springsteen tickets electronically? Expect e-mail offering special tour memorabilia or a link to a ticketer’s online store to pick up the Boss’ CDs.
Want U.S. Open tennis tickets? How about a weekend travel package to the Big Apple, complete with hotel, restaurant reservations and a Broadway show?
The changes in the $15-billion-a-year event-ticketing industry are driven by pure Internet economics: Companies need revenue to offset the 20% to 50% more it costs them to sell a ticket online than offline.
Hefty marketing, infrastructure and customer service expenses have left industry leader Ticketmaster Corp.’s Internet partner in Pasadena and its main rival, Tickets.com Inc. in Costa Mesa, deep in red ink.
Ultimately, online ticketers believe, their plunge into targeted marketing will bring consumers unprecedented convenience for a smidgen less privacy--and lead them to profitability.
“Companies have to approach this gingerly, although, obviously, it’s a lot less sensitive for someone to know you like Metallica than your bank information,” said Mark Basham, an analyst for S&P; Equity Group. “They are re-envisioning ticketing as part of a larger service. As long as they keep making things more convenient, it’ll work. That’s what people want.”
A growing proportion of ticket sales are carried out online. Ticketmaster sold more than 20% of its tickets through its Web site in the first three months this year, up about 18% from the previous quarter. Tickets.com’s online sales account for about 18% of its ticketing business now, but are projected to reach 40% by year’s end, company executives said.
Offline, Ticketmaster has held a near-monopoly in handling large venues and high-demand events since swallowing the remains of Ticketron in 1991.
A bevy of smaller, regional companies have sprung up to challenge it online and to serve second-tier venues. So far, Tickets.com, founded in 1995 and rooted in the software business, has emerged as the most viable national alternative--largely because of its online savvy, analysts said.
The Orange County upstart sold just 5.4 million tickets last year, compared with Ticketmaster’s 75 million, but it has forged partnerships with Excite@Home, Cox Interactive Media Co. and MP3.com Inc. and snared the contract for the 2002 Winter Olympics, partly because of its database-marketing capabilities.
The companies’ rivalry came to a boil last year when Ticketmaster sued Tickets.com, alleging the smaller firm’s practice of linking users to pages deep within competitors’ Web sites for events it does not handle was unfair and deceptive. A judge ruled in March that so-called deep linking alone, which skips most of the competitors’ advertising, does not violate the law. The lawsuit is pending.
As the companies duel over online turf in court and in the marketplace, both are struggling to define a profitable Internet strategy.
Electronic ticketing delivers instant benefits to consumers, eliminating the need to camp outside arenas or put up with endless telephone waits. Web sites offer more information faster and in more usable formats than traditional retail outlets or ads, including such features as seating charts and event listings by place and date.
Recently, several companies added systems that will let shoppers print tickets themselves on regular computer printers, using bar codes to prevent forgeries.
For the industry, however, online ticketing’s costs so far have outweighed its rewards. Ticketmaster Online-CitySearch Inc. lost more than $121 million last year. Tickets.com recorded $66.6 million in losses.
Wall Street, impatient with money-losing e-commerce ventures, has punished both companies. Tickets.com shares sank Friday to $3.53 from a high last year of $32 and are down more than 70% this year. Ticketmaster Online’s stock has dropped by about 50% in the same period, closing Friday at $19.25 a share.
Electronic ticketing may become more efficient, but for now, its main advantage comes down to one word: Information. Offline, ticket buyers remain passing strangers. Online, ticketers can recognize you, remember your purchases, track your tastes.
That data can help ticketing companies find new revenue sources or, perhaps, recapture thwarted ones.
An example: When Ticketmaster Online customers try to buy seats for a sold-out show, the company’s Web site will suggest alternative entertainment based on their previous purchases and on when and where they want to go out.
“One of the realities about Springsteen is that 200,000 people will try to buy tickets when we only have 20,000 seats,” said Tom Stockham, Ticketmaster.com’s president. “We used to know nothing about 180,000 of those people.”
Information gathered on their Web sites--from buying data, chat-room traffic, newsletter sign-up lists and fan-club enrollments--also enables ticketers to identify true die-hards and try to sell them additional items related to events.
The band Yes, touring behind its latest release, used Ticketmaster’s database to send fans a digital audio postcard, including a way to download songs not available anywhere else. The promotion had a 70% click-through rate (percentage of users who clicked on the ad to check out the offer) and proved to be an efficient way to reach the people most likely to want the album, said Ed Thomas, co-general manager for the Left Bank Organization, the West Hollywood company that handles the band’s promotions.
“As good as Yes’ Web site may be, Ticketmaster’s information about its customers is unrivaled,” Thomas said. “We couldn’t afford a scattershot approach where you buy TV ads across the country.”
Ticketers acknowledge that, if handled wrong, their use of customer data could raise concerns about privacy and possibly alienate customers turned off by the hard sell. The industry’s top players take pains to emphasize they do not share or sell the data they gather.
“It’s our information and only ours,” said Andy Donkin, Tickets.com’s senior vice president of marketing and Internet products. “We won’t share it unless the customer opts in and allows us to.”
Ticketmaster said customers choose--and limit--the types of come-ons they receive.
“It has to be something they really want, or it will be discarded or annoying,” Stockham said. “We will never just put people in a database and send them something.”
Perhaps customers can live with strangers knowing about their love of the Backstreet Boys, as long as the ticketing companies can deliver on the promise of seamless, hassle-free service.
In Stockham’s idyllic vision of ticketing’s not-so-distant future, customers will buy Lakers seats online, then use the same Web site to order beer and hot dogs timed to reach their seats 15 minutes after the stadium’s bar-code reader scans them through the turnstiles.
