Venues have a lot of options when it comes to choosing their ticketing provider. So how do venues choose a ticketing partner when there are so many? How are ticketing companies beating out competitors?
A quick note before we dive in: We mention venues a lot in this article, but the same dynamics apply to organizers of popular events, including festivals.
How do Ticking Companies Win Venues?
Ideally, a venue or organizer searches for a ticketing partner that provides the best ticketing services. Ticketing companies compete to offer friendlier user interfaces and flexible event planning. However, there is little differentiation between the major ticketing providers. Furthermore, they can’t customize their platforms to meet every clients’ user interface and planning needs.
Ticketing platforms sometimes compete by offering lower fees. However, in the events industry—particularly in the United States—venues pass the fees on to the fans. Since fees don’t cost venues a dime, many don’t care what a ticketing company charges.
In practice, a good customer experience and low fees are only minor factors when it comes to ticketing. Ticketing companies compete for popular venues by offering them money in exchange for exclusivity.
Ticketing Companies Offer Venues Kickbacks
Venues can earn significant money through kickbacks from fees. A $50 ticket could have $10 in fees which is partially kicked back to the venue. Ticketmaster usually calls their kickbacks facility fees, which they charge fans upon checkout. Kickbacks enable venues to advertise lower face-value tickets.
While kickbacks are deceptive and drive up costs for fans, they are certainly attractive to many venues. Ticketing companies are quick to leverage kickbacks to bolster their services.
Ticketing Companies Offer Venues Signing Bonuses
Ticketing companies will frequently provide venues cash upfront in exchange for signing an exclusivity contract. These signing bonuses range from a few thousand dollars to a few million dollars, depending on the size of the venue.
Venues looking for investment will often consider signing bonuses above all other assets when assessing a ticketing provider. According to their financials, Eventbrite paid nearly $16 Million in signing bonuses in 2018. While signing bonuses are free for venues, ticketing companies always make sure that their fees offset the expense. The bigger the signing bonus, the higher the costs are for fans.
Ticketing Companies Offer Venues Loans
Sometimes venues need more money than ticketing platforms can provide through kickbacks and signing bonuses alone. While venues might turn to financial institutions, ticketing companies can offer similar solutions to prop up their offering. According to their financials, Eventbrite loaned customers over $5 Million in 2018.
Ticketing companies can structure these loans in several ways. Sometimes they can advance capital immediately upon signing. Alternatively, ticketing companies can offer a line of credit, from which venues can draw down when needed. In any case, a ticketing company will leverage its unique position to collect back the loan. Unlike a traditional financial institution, which relies on borrowers to pay in installments, a ticketing company can take a percentage of a venue’s incoming sales until the principal loan and interest are paid off.
Like with signing bonuses, ticketing companies will always assess risk before offering a loan.
Ticketing companies compete for popular venues by offering them money in exchange for exclusivity.
What Does Competition Mean for Fans?
While fans are the ultimate consumer, ticketing companies compete to win contracts with venues. Ironically, the fierce competition only raises ticket prices for fans.
However, there is still hope. If a ticketing company can offer venues a financial incentive that does not raise costs or extract value from fans, the industry might yet see lower ticket prices.
Foria is a new ticketing company aiming to do just that. By regulating the secondary ticket market, Foria can offer a commission to venues on all ticket resales while maintaining reasonable resale prices.
Resale commission is a substantial financial incentive. Currently, venues don’t make anything from resales, while scalpers can expect to earn over $15 billion this year. Foria aims to take that $15 Billion away from scalpers and return it to fans, venues, and artists.
If you want to learn more about Foria, reach out to firstname.lastname@example.org