How is Seatwave changing the way that music fans buy and sell tickets?
Until a few years ago, unless you bought a concert ticket from the box office months in advance, your only options were to buy from eBay or, worse, a ticket tout. You’d end up paying much more than face value and you’d have no guarantees of what you were getting. Customers were at a real disadvantage. But Seatwave is changing how the ticket resale market works.
Seatwave is a ticket marketplace that allows consumers to buy and sell pre-purchased tickets to music concerts, sports events, theatre and other live events.
Joe Cohen, Seatwave’s founder, says his company is filling a gap in the secondary ticketing market, which has typically neglected consumers: ”Historically, the fundamental relationship in event ticketing has been between the event organiser and the ticketing company; customers have never been the centrepiece of the model,” he says. “This is wrong. My focus is to build a business around customers, allowing them to discriminate what is available and make informed choices.”
What’s the business opportunity for Seatwave? “For the business opportunity to exist, we needed a large secondary market and that condition was met: we estimated at the time that there was a multi-billion pound secondary ticketing market in existence that was marred by extremely poor customer characteristics: offline (hence inefficient), ripe with fraud (hence a risk for consumers) and underground (sometimes forcing consumers into illegality),” writes Fred Destin, partner at Atlas Venture and investor in Seatwave.
Anyone can list an event ticket on the website for free. Sellers type in the venue or artist name for which they have a ticket and select the event from Seatwave’s event catalogue. Once they’ve chosen which performance they have a ticket for, they input what seats they have and the ticket information, as well as what price they would like to sell the ticket for.
Sellers can either set a fixed price or a price fork, where Seatwave declines the price every day until the ticket hits the floor price. Sellers must also provide a credit or debit card as guarantee. “This is so that if a ticket gets sold but isn’t delivered or is fake, we can source a replacement ticket for the buyer and charge the seller for it. It removes an opportunity for sellers to profit from selling fake tickets,” explains Cohen.
For buyers, they can search for any event and see which tickets are available. Seatwave provides seat maps for every venue as well as “3D views” from the seats, giving users a computer-generated view of how the stage will look from the seats. Once the user buys the tickets, an email gets sent directly to the seller with a link to Seatwave. From there, the seller arranges for the ticket to be collected from UPS, which is partnered with Seatwave. As soon as the UPS driver scans the package, the buyer is sent an email to notify them that the tickets have shipped and will be with them within 24 hours.
Seatwave also offers a “Collect From” service, where the sellers send their tickets to Seatwave, and buyers can then buy and pick up tickets directly from a collection point near to the venue, for example at HMV Trocadero in central London or outside of the O2 Arena. Tickets sold at the “Collect From” points sell for an average of 18 per cent below face value, and account for nearly 10 per cent of all of Seatwave sales, according to Cohen.
Finally, if sellers have tickets in PDF format with a scannable barcode, they can upload them directly to the website. Seatwave will decrypt the barcode to ensure it is valid, and then send a link to the buyer.
Seatwave has a big addressable market. The ticketed events market in western Europe is worth €20 billion a year, and the organised resale market runs at approximately 15-20 per cent of the primary market size. “In terms of total transaction value, it’s a multi-billion euro opportunity,” says Cohen.
Consumers are allowed to sell “pretty much anything”, he adds. The only events which are restricted are football tickets, which can only be sold with the football club’s consent, and Olympic tickets.
Seatwave competes against both primary ticketing sites, such as Ticketmaster, and secondary players, such as viagogo and GET ME IN!. “There is no shortage of places for consumers to go and buy tickets, but we try and differentiate ourselves by providing as much information as possible, which allows people to make good decisions,” says Cohen.
“We were the first company in Europe to do interactive seating charts on the resale side, we were the first and only to do 3D views from the seats, and we show historic pricing charts since the tickets have gone on sale. Providing that information and allowing our users to make informed decisions has been our focus. We’re very focused on making it a clean experience.”
Around one per cent of transactions ends up in a refund rather than a ticket delivery. To mitigate this, first-time sellers are only paid ten days after the event, giving Seatwave and the buyer enough time to ensure that tickets were legitimate.
Cohen says the company’s biggest challenge is changing consumer behaviour. “Fake tickets are not a huge challenge. It happens from time to time, but it’s rare. Our biggest challenge is reforming the category, getting customers to understand that what was an inconsistent, grey market is now whiter than white. It’s a communications challenge.”
Seatwave was set up by American entrepreneur Joe Cohen in 2006. Prior to setting up Seatwave, Cohen was chief operating officer at Match.com, where he oversaw the brand’s international expansion into 35 countries. Before then, Cohen was vice president and general manager of Ticketmaster.com for Europe, where he gained his experience in online ticketing.
Before even founding Seatwave, he had already signed up Atlas Venture for seed funding. “While I was still at Match.com, I started thinking of what early-stage business I could launch. I met the Atlas Venture team who, after a few weeks, said they’d be willing to back me on Seatwave,” explains Cohen.
While he founded the business on his own, he says that he “very quickly” put together a strong team. Seatwave employs 85 people. One third of the workforce look after product, project management, development and technology, another third work in operations and customer care, and the last are in sales and general administration.
All of Seatwave’s technology has been developed in-house. The core marketplace platform was built in 2006-7 in C# using Microsoft Visual Studio, running on MySQL databases with IIS webservers.
At times, the company receives big on-sale traffic spikes of up to 40 times the website’s peak load. To manage this, Seatwave’s back-end infrastructure is hosted on a dedicated private facility from Peer 1 held over multiple data centres, and the front end is cloud based, allowing the company to turn on however many servers are necessary during spikes. Having a private environment with Peer 1 also helps Seatwave achieve PCI compliance, which is important when dealing with credit cards on a regular basis, adds Cohen.
The company’s development team has also built a mobile iOS app and has released a set of APIs, allowing developers to plug into Seatwave.
Seatwave already owns several foreign-language sites, which Cohen says is “pretty straightforward” to do from a technological perspective: “The front end is completely localisable. You just need local content, a local payment method and to test it before it’s up and running.”
There is no global event listing database, so the company licenses the information from a number of sources, which then gets normalised into Seatwave’s database. Ticket sellers can also be used for data, which is then reviewed and polished by Seatwave editors, to retain quality.
“There are roughly 100,000 performances on our database at any given moment. It’s a huge technological challenge to ensure you’ve got the right venue, the right start and end time, the right seat map configuration. Some spaces have different configurations depending on the event, so we have to manually check in some instances,” Cohen explains.
Seatwave has sold just under two million tickets to date, and another 7.5 million tickets are for sale on the website, which attracts 1.5 million unique visitors per month. The company’s iOS app has been downloaded more than 300,000 times.
Around 60 per cent of tickets listed on Seatwave are for music concerts, 25 per cent for sports events and the rest is theatre and arts.
Forty per cent of sellers are consumers who have extra tickets or are unable to use them, and the rest are repeat sellers, who buy tickets in order to resell them. The average resale price is around 1.6x face value. On average, once Seatwave has taken a fee and VAT has been paid, sellers make a 22 per cent profit.
Seatwave charges a 15 per cent booking fee for buyers and a 10 per cent sales commission from the seller. The average ticket price is just under £100, so the company will charge buyers £115 and pay sellers £90.
Cohen will not disclose Seatwave’s annual turnover, but says revenue is expected to grow by 25 per cent this year. He also says that the company has been profitable since the end of 2011.
In addition to its UK site, Seatwave is present in 11 other markets, though Cohen says this is higher in reality: “We are definitely listing and selling tickets for events in many more countries than we have sites in. This is one of our big questions: do we want to deploy more local sites, or go after inventory on current sites?”
Since launching in 2006, Seatwave has raised $53 million in four rounds from investors including Atlas Venture, Mangrove Capital, Fidelity Growth Partners Europe and Accel Partners. Cohen says he is not currently looking to raise more investment. “We have a number of questions around growth. Do we want to double down and reinvest or should we go after organic growth? The answer to that will determine whether we seek additional investment.”
He adds that the opportunity for Seatwave to grow is big: “If you look at the tickets listed on Seatwave, they are just single-digit percentages of the total tickets available for these events, and the number is growing. We want to drive more liquidity and volume. This will give us more pricing power, and will help to drive tickets to a rational price. It’s a big opportunity.”
Investor Fred Destin adds: “We live in an age of markets. Pretty much everything can be priced dynamically based on supply and demand. Price discovery happens on tickets as it does on everything else.
“To get the market to be most efficient – that is, best for the end consumers – you need rich inventory: diversity and volume. At Seatwave, we’ve always gone out of our way to get as many fans and sellers as we could, whether it’s people who cannot go or fans who decide to fund their addiction by reselling one of their tickets above face value when ticket prices have gone up. There is an ample body of evidence that shows that marketplaces over time tend to drive optimal low pricing once they are highly efficient.”