When Taylor Swift announced “The Eras Tour” in 2023, her fans were beyond ecstatic. This concert would mark a five year long gap in Swift’s public appearance in a concert mainly due to pandemic shutdowns. On Nov. 15, 2022, when the tickets went online on the Ticketmaster platform, 3.5 billion active users on the website caused a system slowdown. Fans were left in despair as ticket buying converted into nothing less than a battleground – any ticket they tried to purchase would already be sold out.
Resellers were the main culprit. Often assisted by bots, resellers hoarded tickets as soon as they were available – also called ticket scalping and sold them at a high price. Taylor Swift tickets were sold for as high as $500.
The ‘monopolistic merger’ and the DOJ concerns
In 2020, Ticketmaster and Live Nation (LYV) announced their merger. The merger, for many, was a monopolistic move that left little leeway for the competitors to make their place in the ticketing space. Activists called on the Department of Justice (DOJ) to reverse the merger. After the Taylor Swift fiasco, a DOJ case was filed against Live Nation. The pushback doesn’t come as a surprise as both companies today serve 70% of the ticketing and live event venues market.
To mitigate the damage, Live Nation is now calling Congress to pass a legislation – the “Fair Ticketing Act” proposal that will prevent scalpers from marking up ticket prices and also stop bots from purchasing mass tickets. The company is also investing heavily in an identity-based ticketing system to improve the live ticketing experience as a whole. As Live Nation and Ticketmaster are seemingly moving towards repairing their reputation, there is still a long road ahead towards regaining the trust of activists and fans.
Blockchain in ticketing solutions
In 2018, two years before the merger, Ticketmaster acquired Upgraded – a blockchain ticketing solution specializing in the live events industry. With this acquisition, Ticketmaster expects to create a secure blockchain solution, where creators can have more control over how tickets are distributed and fans can use encrypted barcodes to prevent fraud which is often the case with paper or pdf-based tickets.
After the Taylor Swift debacle, YellowHeart, a New York-based blockchain platform saw the problem with Live Nation and Ticketmaster’s approach to the ticketing process and wanted to find an innovative solution. The blockchain platform allows artists to track the entire lifecycle of the ticketing process – from the number of tickets sold at a time to how they should be resold further. The artist can decide if tickets can be sold in bulk, or if artists should also get a specific cut of the resale amount. By running sales through this open–source blockchain platform, YellowHeart wants to provide an honest ticket-buying and selling space for both artists and fans.
How the pandemic paved way for competitors
Eric Baker founded StubHub in 2000. Four years later, he left the company and moved to Europe where he built Viagogo – a European equivalent of StubHub. Viagogo gained popularity quickly. Back in the States, StubHub was also gaining momentum – particularly due to the $310 million ebay’s (EBAY) acquisition of the company.
In 2019, ebay listed StubHub for sale at $4.05 billion. Eric Baker’s StubHub affair wasn’t over – he wanted to buy back his company. Shortly after the deal was closed, the pandemic shut down all the non-essentials including live events. It was a huge blow for StubHub, as sales began to plummet fast. However, during this period, many new competitors found a way to swoop in. Vivid Seats (SEAT), SeatGeek, TickPick, and GameTime were along some of the startups that emerged in the ticketing space.
Prospects to look out for
StubHub, the popular ticket buying and selling platform, recently filed to go public via a direct listing. The valuation is expected at $13 billion. StubHub is working with advisers including JPMorgan Chase & Co. and Goldman Sachs Group Inc. in preparation for the potential listing.
Another versatile contender in the space is Eventbrite (EB) – a self-service ticketing, marketing, and experience platform. Over the last decade, Eventbrite has shown steady growth in revenue as well as its subscriber base. In May 2022, the company surpassed $1 million in annualized revenue. In the fourth quarter and full year ending December 31, 2022 the revenue was $71.5 million and $260.9 million, respectively. As of March 21, 2023, the stock is at $8.83. The 1-year target is expected at $10.
Eventbrite is also a member of Zack’s Computer and Technology group and stands at #5 in the Zacks Sector Rank and #2 in Zacks Rank (Buy) — an indicator for the stock to potentially outperform the market over the next 1-3 months.
Fan-focused company Vivid Seats went public in October 2021. The company sells concert, sports, and theatre tickets. Vivid Seats also provides 100% buyer guarantee where the fans are promised their ticket before the event. The tickets on the platform are also 100% valid and the customer service is responsive. If an event is canceled, the fans are refunded their full amount. Vivid Seats also has a reward system where 1 ticket = 1 stamp. Collecting 10 stamps gives fans a reward credit to be spent on future tickets. The stock jumped recently by 17.4% after its fourth-quarter 2022 financial results that exceeded Wall Street analytics’ expectations. Currently, the stock is at $7.19 and the expected 1-year target is $12.
The ticketing space may look like a monopolized entity today, but many new startups have emerged, specifically after the pandemic. As the trend towards attending live events continues to move back to the pre-pandemic levels, more fan participation is expected. However, the dust on the emotional and political sentiments for companies such as Ticketmaster and Live Nation hasn’t settled yet, so it’s best to proceed with caution.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
