Ticket startups get heat from those terribly sweet promoters

The so-called ‘secondary ticket market’ has a bad rep in the UK. Scruffy ticket touts outside concert venues have been the traditional conduit for unsold tickets and they operate under the guise of everything from a shifty looking guy outside the venue all the way through to agencies – some even linked to organised crime – who bulk-buy the biggest concerts to sell on for a fortune. Some resellers even advertise tickets before they have acquired them and profit from secondary tickets to charity events. eBay’s non-policing of the scoundrels out there hasn’t helped.

Which is why any Internet company like Viagogo, GetMein and Seatwave should expect to get some heat, and be tarred with the same brush, even though they are actually bringing a lot more transparency to the market and allowing fans to trade in a peer to peer fashion.

The government’s Culture, Media and Sport Committee today released a report actually saying the secondary ticketing industry had been ‘transformed’ by the Internet and provided convenience. And no wonder, since the opportunity online is substantial. This market is worth over £1bn a year in the UK alone. About 23 percent of tickets sold in Britain are now through secondary sites. Tickets for Led Zeppelin’s comeback concert in London last year originally sold for £125 pounds, but were resold for an average £7,425 pounds, according to Seatwave. (Although I would hardly call this a typical case).

But although the industry won’t be ‘banned’ by legislators, it must “clean up its act.” The committee and the government is reluctant to legislate but may do so if the sector does not form a voluntary scheme. Viagogo, Seatwave, GetMeIn and eBay have welcomed the report but think this would be a “tax” on secondary tickets and increase the price. Viagogo has already signed a deal with Warner Music Group where fans can buy tickets and receive additional downloads or videos, while Warner receives a share of revenues. This seems like a sensible path which could be developed further.

Alas, promoters are called this flourishing of the market “parasitic profiteering” which gives nothing back to the entertainment industry – but then they are the ones who make the prices so high in the first place, right? Outside of Live8/Aid, the entertainment and promotions industry is not exactly known for its charity towards fans in terms of prices. It’s an industry ripe for disruption and the same thing that happened to the music labels will now happen to the promoters as night follows day.

UK startup Seatwave, the fan-to-fan ticket exchange, last year raised $8 million in Series B funding from Mangrove Capital Partners, Atlas Venture and Oliver Jung, one of Germany’s most successful early stage business angels. Viagogo.com, launched last year by Eric Baker of US ticket reseller StubHub, is a well funded competitor, having raised $20m from Index Ventures and others. It is also backed by lastminute.com founder Brent Hoberman and David Katz, head of Yahoo’s sports and entertainment unit. Getmein.com was launched by Advanced Ticket Systems, creators of Soldouteventtickets.com.