Ticket Pricing Wars Goes Into the Hands of the Consumer
For many sporting and music fans, live events are a must. But rising ticket prices and a fragile economic recovery have made attending live events prohibitively expensive for some. Saturday is NASCAR's coveted Daytona 500 but if you want to go, the access comes at a hefty price.
What if you could bid and buy those tickets at a discount? That's the business strategy behind a new online ticket seller. The company is called ScoreBig and I decided to speak with the CEO of the company, Adam Kanner.
Before Scorebig he was the Vice President of Relationship Marketing and Business Development for the NBA leading all global direct customer relationships for the NBA, WNBA and D-League.
LL: If you Google "ticket sales" you get approximately 16,900,000 results. StubHub and Ticketmaster are two of the must click destinations How do you break through?
AK: What we are doing is different from what the others like StubHub are doing. We sell tickets at below retail prices. We give you the approximate retail price of the tickets and the consumer then bids on the price.
Typically you can save 40, 50, 60, even 70 percent on live event tickets. We also guarantee every ticket we sell is valid and below the retail price. You can't choose your exact seat. You can choose if you want a five star, three star seat (which gives you the area of the seating). If you want to chose the exact seat then you have to go to the primary market and buy it at full price.
It's up to you the consumer to choose what you are willing to pay and then we say yes or no to that. The consumer knows the value of their ticket. When you go to the secondary market you don't know what the true value of the ticket is. It could say 50 dollars but it really could have been a 25 dollar ticket that's pumped up.
This solution took a year and a half to build and was born from the experience from my team. Before this I was at the NBA, our head of product was the former general manager of NFL.com, our chief operating officer was from Napster and my head of ticketing operations was the head of ticket operations at the NBA.
LL: So the venues come to you directly and say sell "x" amount of seats.
AK: Yes. For the first time all the unsold inventory is available.
LL: And it has to be good for the venue because they are at least getting something for the ticket.
AK: Correct, but as long as it doesn't hurt them. There is so much hype around discounting and the fact is, for the mom and pop companies, discounting as a form of advertising can be effective but the point is when you are a billion dollar brand that can be dangerous.
LL: How can it be dangerous? Have you quantified the opportunity of the capacity that goes unsold?
AK: The live ticketing event space is about a $20 to 25 billion a year in North America and if you do the math—40 percent of total industry capacity goes unsold—that's $15 to 20 billion dollars. It's a pretty staggering number. And as ticket prices go higher it is pricing people out. Its an expensive commitment for a family four.
Traditionally, a discounter may go out and get x tickets for 50 percent off and that can erode a companies brand and it sends a message for people who paid full price maybe they should have waited.
It is also very damaging especially for sports. You don't want to insinuate that the whole brand is on sale. It has ripple effects on the merchandise the sports team sell etc. It's not a matter of discounting, its a matter of matching the right ticket to the right consumer through dynamic pricing. Now it is below retail price, everyone is getting a deal.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."