Can an App for Concert Tickets Beat Out the Scalper Bots?
So your favorite band is coming to town. Sweet! You show up at the venue, stand in line for 20 minutes, get patted down by a really unofficial-seeming security guard—then spend $12 for a warming Bud Light in a plastic cup before making your way to a seat (if the concert hall even has them), only to find that someone the height of Kristaps Porzingis has purchased the one directly in front of you. By the time the beer has run its course, the opening act is still tuning up; better stand in line for the bathroom now, before the toilet paper runs out. That’s if you’re even able to get a ticket. A report by the New York Attorney General’s Office earlier this year revealed that venues often hold back as much as 20 percent of seats for insiders when a big act comes to town. After credit card company presales, there might be only a handful of tickets left. For a July 2014 Katy Perry concert at the Barclays Center in Brooklyn, the report found, only 12 percent of seats were still available at the official on-sale date. A moderately enterprising scalper using automated software can scavenge whatever’s left at the rate of more than 1,000 tickets a minute.
Hard to imagine why you haven’t tried going to see any bands recently, right?
Matt Jones, the chief executive officer of Songkick, an app-based concert-discovery and ticket-sales company in Brooklyn, wants to give you a reason to try again. An exuberant 30-year-old with unkempt brown hair and a Jay Leno-esque chin, he’s one of a number of startup CEOs trying to use technology to reshape concerts, the last bastion of authenticity in the music business. Unlike the recorded-music industry, which has been disintermediated by companies such as Spotify and lost much of its analog-era charm, the concert business, especially in the U.S., is still dominated by artists, venue owners, and ticketing companies, who all retain much of their historical clout, something audiences have just had to accept until now. Recently, Songkick polled some of its 15 million monthly visitors on the most abhorred concert misbehaviors and posted a warning on the company blog: “Arrive late, drunk, and push to the front at your absolute peril. The scorn of the entire Songkick user base awaits you!”
That user base gets offered tickets for A-list acts, Songkick clients such as Adele and Metallica. Jones says Songkick has patented software that can tell the difference between a real ticket buyer and a ticket-hoarding bot. It’s a sad reality that beating a bot is a win, but Songkick is operating in a difficult business. Live entertainment, including theatrical performances, is expected to generate $26 billion in the U.S. this year, according to market researcher IBISWorld. But while Perry sells out arenas, Jones points to a widely accepted statistic in the concert industry that as many as 40 percent of all tickets go unsold. He says Songkick can get more people to go to shows, driving up the industry’s sales. “If you look at recorded music, the market has declined, but it’s arguably coming back now,” thanks to Spotify, Jones says. “Technology has not played its part in live yet, and that’s really what we are trying to do.”
The son of a contractor, Jones grew up outside London, in Essex, and became a music obsessive after an uncle turned him on to Joy Division, the Pixies, and other bands. “My main goal when I was 16 was never to pay for a concert ticket,” he says. “That was a big thing, because I would go to six shows a week.” One way to make that happen was to join the industry. At 18, Jones started a concert promotion company, SPC Live, which he ran out of his bedroom in his mother’s house. It rented small halls in second-tier cities such as Brighton, Cambridge, and Oxford, putting on shows by future stars including Adele and Ellie Goulding. “I knew Ellie and all those people before they had agents, before they had managers,” he says.
Jones was astonished to find out how little control artists have over ticket sales. So in 2008 he created a pioneering side business called CrowdSurge. It let acts sell as many as 20 percent of all seats from their websites, according to several English music industry executives. (Jones declined to discuss specific percentages.) “Nobody made the effort to give artists that freedom before those guys,” says Daniel Ealam, director of live at DHP Family, an English entertainment company. To make its bones, CrowdSurge typically charged a modest 10 percent fee on each ticket.
A gifted salesman, Jones had little trouble signing up acts. His beloved Pixies became a customer. “It was nice to see a company come along that could take a great deal of the heavy lifting off our plate,” says Richard Jones, the band’s manager. In 2011, Matt Jones raised $2.4 million for CrowdSurge from Warner Music Chairman Len Blavatnik’s company, Access Industries. The same year, Jones opened CrowdSurge’s first New York office. “We got it to a point where we had hundreds of artists—Paul McCartney, the Rolling Stones, Kenny Chesney, Blake Shelton—and even big guns in the EDM [electronic dance music] business, like Tiesto,” Jones says. In 2015 he merged CrowdSurge with Songkick, then an English concert-discovery service that let users track their favorite bands’ shows and provided listings for Spotify, MTV, and SoundCloud. (Songkick was co-founded in 2007 by Ian Hogarth, who remains co-chairman of the combined company’s board.) Jones raised an additional $16 million from Access and several other groups.
It was relatively easy for Jones to disrupt the live-music business in Britain. “You can have 10 vendors selling tickets for one show in London,” he says. But in the U.S., ticket sellers bid for exclusive rights to handle sales at the largest venues. The market has long been dominated by Ticketmaster, which Pollstar magazine estimates has contracts with 80 percent of the biggest concert halls. Ticketmaster, which allows artists to sell only 8 percent of their own tickets to members of their official fan clubs, consolidated its power over the market in 2010 when it merged with Live Nation, the world’s largest live-music promotion company.
Live Nation wasn’t interested in being disrupted. As far as it’s concerned, it paid a lot of money for its contracts, so why let some upstart take a cut of the business? “When you have people who come along and simply say, ‘Hey, I want some tickets for free because my business model says if I get tickets for free that you pay for, I can sell them and make money,’ I get that,” says Joe Berchtold, Live Nation’s chief operating officer. “But it’s not sustainable for us.”
Live Nation says Songkick violated the 8 percent rule by selling those tickets to the general public. It also alleges that Jones tried to extract a higher percentage of tickets from the company by getting managers of his clients to threaten to cancel their shows. Songkick says Live Nation was the heavy, refusing to release tickets to Jones’s company, in some cases, unless it tacked on Ticketmaster’s surcharge, which it says could be as high as 80 percent. (Ticketmaster denies this.) Finally, Songkick filed a federal lawsuit in December 2015 against Live Nation, calling it a monopoly. Live Nation countersued, accusing Jones of trying to build a business “on a combination of free-riding and blatant theft.” In May, U.S. District Judge Dale Fischer denied Songkick’s request for a preliminary injunction, saying it had “failed to show virtually any likelihood of success on the merits” of its case. Bob Lefsetz, author of the Lefsetz Letter, a widely read industry publication, says Songkick’s plan to wrestle tickets away from Ticketmaster was doomed from the start: “I have no sympathy for Songkick. They have a flawed business model. They are delusional.” Jones declines to comment on the lawsuit.
Songkick may be facing an existential threat in the U.S., but it’s not the only startup in America out to reinvent the concert industry. Adam McIsaac, a former Songkick executive, now runs Robin, a five-month-old, Toronto-based “concierge service” for concertgoers. Users create a bucket list of artists they want to see, which Robin then takes to bands, hall owners, and ticket companies and finds a way to get tickets at face value. “Our aspiration is that purchasing your own ticket will become almost as odd an experience as cobbling your own boot,” McIsaac says. Eventually, Robin wants to provide customers with a car service, preconcert dinner reservations, and a place to enjoy a nightcap after the encore. It might find them babysitters, too. “I’ve heard from our users that they definitely want assistance with that,” McIsaac says.
There’s also Jukely, a New York startup with a Netflix-like approach to concerts. In 2015 it launched a live-music subscription service in 16 cities enabling users to attend a concert every night, if they have the stamina, for $25 a month. How can it charge so little? Jukely founder Bora Celik says his company has cut deals with smaller venues outside the Live Nation-Ticketmaster universe to offer their unsold ticket inventory. Primarily, Celik says, Jukely offers users the chance to see lesser-known acts. Still, 1,300 subscribers got to see a Halloween performance in New York by Skrillex, the EDM star. “It’s a big behavioral change,” Celik says of his model. “We’re still in the early days.”
Sound Rink, a startup in Portland, Maine, is also expanding the idea of what it means to attend a show. For anywhere from $20 to $300 on top of the actual ticket price, the company will let you have coffee with members of your favorite band, eat dinner with them, listen to an acoustic set on their bus, or just stand backstage while they perform. Cody DeLong, Sound Rink’s CEO, says you shouldn’t have to pay huge amounts to get face time with big stars. “Taylor Swift does a lot of VIP packages,” he says. “She charges $400, and she can sell 100 a show.”
Even Live Nation is trying to elevate the concert experience. It’s letting people buy tickets via Spotify, just as Songkick does. It’s also selling craft beer at shows and having uniformed employees direct ticket holders to concession stands with the shortest lines.
Jones is optimistic; he says the company still has a future in the U.S. Regardless of the lawsuit’s eventual outcome, he has plenty to do: Songkick recently sold more than 50 percent of Adele’s tickets for her four big shows at London’s Wembley Stadium next summer with less than 2 percent being scalped. “What they’ve done has been brilliant,” says Lucy Dickins, a U.K.-based agent whose clients include Adele and Mumford & Sons. Jones has also fashioned himself as something of an evangelist, shedding light on how tough it is to get into shows and how that could be changed. “It’s kind of the reason why I started this,” he says. “I was like, ‘This can’t be the way it is. It’s so backwards.’ ”