Everybody wants a cut...

Ran into this article reading my weekly subscription to The Economist about the rise of the secondary ticket market. It was especially interesting to me, because I lead the development efforts for a seat charting application prototype for Ticketmaster when I worked for an IT consulting firm, which was one of the more interesting projects I worked on.

At the time, StubHub was the major competitor and leader both in having the most robust internet seat charting application and market share for ticket exchanges. Things really heated up when eBay bought the company for $310M, which gave the company financial and infrastructure backing, equaling Ticketmaster, forcing them to change their business model and adapt to the new demand. As the article states:

This year ticket resales in America are expected to top $3 billion. Fans like online exchanges because many of them hold money in escrow, giving it to sellers only after the event to ensure that tickets are legitimate...

Even a company that once legally challenged the online-resale market is now on board. Ticketmaster, the ticketing agency in Los Angeles which sells roughly half of all tickets to big events in America, developed a creative legal argument in a bid to shut down resellers it felt were earning unfair profits on tickets Ticketmaster had originally sold. Buyers, the company argued, should not be able to resell tickets because they don't actually own the tickets in the first place: tickets are merely licences to enter a venue, and licences are not freely transferable. That argument did not prevail, and Ticketmaster now has its own resale subsidiary, TicketExchange. More than 50 professional sports teams have now negotiated a cut of TicketExchange's resale revenue.

And its on TicketExhange where I found an actual implementation of the seat charting prototype I helped build reside. Though the technology helped spur the growth of this new market demand, its really not as important as being able to understand and foresee how the technology can disrupt and change a market.

And it is this disruption that caused the music industry to hemorrhage so badly, and is now effecting the movie industry which culminated in the recent writers strike covered in the same magazine. With so much video content being siphoned off through non traditional media channels via the internet, the writers realized that they were not going to be adequately compensated for this loss, and the executives do not want to give concessions. The reality is that neither of them are going to win. As Patrick Goldstein, and LA Times writer states:

The WGA is fighting the good fight. But the glory days of "Norma Rae" are gone. Real change in today's world comes from the energy and ideas of entrepreneurs, not from labor negotiations. To take control of their work, writers have to cut out the middleman. Marshall Herskovitz and Ed Zwick, who just struck a deal with NBC to air their "Quarterlife" Web-only dramatic series, will reap most of the rewards, since they own the show. Not every writer has the clout of that duo to attract outside investors. But as the Internet has proved time and again, game-changing ideas are more likely to come from an unknown 26-year-old newcomer than a fiftysomething veteran.

THE models are everywhere today, especially in the music business, where economic upheaval has given birth to a new array of artist-entrepreneurs. Radiohead and Prince have both bypassed the soul-killing tangle of retailers and promotion people by releasing their latest records themselves (with Radiohead using the Internet as its distributor, even letting its fans set the price of the record themselves).

Unlike the music and movie industry, the ticketing companies seem to be aware that it was not in their best interest to try and fight against this force, but rather to find a way to profit from it.

What this indicates to me, is that industry executives are finally starting to realize this and reacting in a more appropriate manner, instead of ridiculously trying to sue some John or Jane Doe who simply wants to purchase and exchange goods and services, through a highly efficient distribution channel cheaply and quickly and on their own terms and conditions.

It has truly become a more user generated and customer focused marketplace, and its sometimes interesting to sit back and see how you contributed to it, no matter how small it was.