http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6261096.ece
Ticket swap website Seatwave.com calls the tune for fans
From the King of Pop to sporting superstars, Seatwave is successfully allowing ticket sellers to contact buyers on the web
Whatever you think of him, Michael Jackson remains big box office. Seatwave.com, the specialist website, has already traded 10,000 tickets for his forthcoming season at the O2 since the tickets went on sale in March.
Joe Cohen, 41, who founded Seatwave and is its chief executive, says that on the first day the tickets went on sale fans from 34 countries logged on to buy them. “It's huge for the London economy. Around one million tickets will be sold.”
Seatwave operates a little like eBay, putting sellers of tickets for music and sporting events and a limited number of theatrical productions in touch over the internet with those who want to buy them. It handles the payment and delivery of the tickets and offers guarantees that they are genuine. In return, the site takes a 25 per cent cut on any sales achieved.
However, it and its two main rivals in the UK operate in a controversial area. Ticket touts have a bad reputation and Seatwave and its peers are, according to their critics, merely electronic equivalents of the spivs who hang around the doors of music and sporting venues offering dubiously acquired product.
It is true that the internet has given rise to a new breed of “bedroom touts”, who obtain as many tickets as possible for any upcoming performance, purely for resale on the internet.
Mr Cohen points out that his venture offers those who are genuinely unable to obtain the tickets they want through the usual channels a risk-free way of doing so.
For example, for the Jackson O2 concerts, fans are unable to specify what seats they want and are largely allocated these at random. His site allows them to swap these for the seats they actually want, while defraying some of the expense by selling those they are offered through official channels.
The Government has been looking at the so-called “secondary market” for music and sporting events, which probably accounts for about 15 per cent of the total, for at least three years.
Under a consultation process, submissions are due in by this Friday. Although sources at the Department for Culture, Media and Sport, initially talked of an outright ban, this looks impractical.
Instead, they have talked more recently of the possibility of a voluntary code, which would ban the resale of tickets to events of “national significance”, such as the Grand National, Wimbledon and one-offs such as Live 8, while allowing the market to operate without hindrance elsewhere.
Mr Cohen says that the goals of his business, which he founded in 2006 and launched in February the following year, are in line with the aims of the Culture Department. They are to give fans greater access to tickets, paying less for them and dealing in them in an environment that protects seller and buyer alike.
One option, he says, is that companies such as his should operate under licence, as they do in American states such as Georgia. Too many complaints, and the licence would be withdrawn. He also wants search engines such as Google to agree not to advertise unlicensed sites.
This would avoid the problems experienced by some British punters ahead of the Beijing Olympic Games, who paid money to sellers that promptly filed for administration and disappeared with the cash.
Increasingly in music, the real money is in performances rather than recorded output and the competition to obtain tickets is fierce. “In the world we live in today, recorded music is like water. But there are only a few unique experiences people can have.”
Seatwave does about 70 per cent of its business in music and has seen brisk trade for tours by the likes of U2, AC/DC, Pink and Girls Aloud. Mr Cohen believes that the punters' view of sites such as his and rivals such as Viagogo is changing and earlier disapproval is inappropriate today.
“It's a very middle-class, British attitude,” he says. “When Mr [Charles] Saatchi buys a painting for £1million and sells it for £2million, no one calls him an art tout. The world is moving on. Lots of people understand that for a whole bunch of reasons there is inefficiency in the pricing of tickets.”
By bringing together a large number of sellers of tickets to any given event, he provides buyers with an efficient market and more transparency on what they should fetch. In this way, prices are forced down.
It is a typical internet paradigm - the justification of the business models of sites such as eBay, Lastminute and specialist sellers such as Alibris. Mr Cohen has spent his working life in businesses similar to these.
Brought up in Cleveland, Ohio, he made a documentary film and gravitated to Los Angeles to sell it. He then spent 2 years with Disney, helping to sell porcelain figures of Mickey Mouse and the rest.
After Disney he worked as a consultant to various internet start-ups and ended up working for online businesses owned by Barry Diller, the media tycoon, including Ticketmaster.com, and led the dating site Match.com's international expansion into 38 countries.
He founded Seatwave with the help of Atlas Ventures, the venture capital firm. There have been three cash-raisings so far, worth $36million in all, the most recent for $25million in February 2008.
Seatwave employs 75 people in five European countries. He is excited by the prospects of setting up in Turkey, which has the three demographic advantages of a relatively large middle-class, a young population and a keenness for sport.
The business expects to be profitable by the end of this year. Seatwave claims to be market leader, which is significant for a consumer-facing web venture.
Success, as Google, eBay and others have proven, tends to go with being the biggest in the market and the first to attract those consumers' clicks. It is also the kind of business where, once the initial cost base is established, increasing revenues drop straight through to the bottom line.
His backers, which now include Fidelity Ventures, will eventually want an exit, possibly once the market for IPOs comes back, though there is also the option of a trade sale, perhaps to a much larger Internet player. “If we execute on our plan, this is a business we can float,” he says. “If we don't think that's going to happen, we should be selling hats on a beach in Thailand.”
unk:
