The organizers of live events have a problem. Every year, on average, 40% of tickets—for concerts, sporting events, comedy clubs, and theater—go unsold. But until now, there hasn't been an efficient, and "brand-safe," way for event organizers to unload unused inventory.
"Chief marketing officers of major sports teams do not want to hang out a sign saying 'My team is on sale. I can't sell out the building,'" Rick Lewis, of US Venture Partners, tells Fast Company.
Last week, Ticketmaster announced it was going to introduce dynamic pricing, to raise and lower prices in response to demand. But ScoreBig thinks it has a better idea: a Priceline for live events. And given that they've secured a total of $22.5 million in funding, including a second round worth $14 million from USVP and Bain Capital Ventures last week, they might be on to something.
In this age of soaring ticket prices, many people can't afford to pay face value to go see the latest pop tart or cheer for the hometown team in person—much less contemplate the jacked-up prices on secondary markets like StubHub. ScoreBig now provides a place that caters to the needs of the price-conscious event-goer. And event promoters have a place to discretely fill seats that would otherwise remain empty.
The service, which launched in December, works the same way Priceline does: Log on, find an event you want to attend, and enter the price you’re willing to pay. As long as you don’t go below the minimum required bid, you’ve got a deal. If you end up lower, you’re locked out of bidding on that event for 24 hours.
As with Priceline, buyers trade convenience for price. Buy your tickets on Ticketmaster, and you get to choose your specific seats. Buy them on ScoreBig, and you’ll only know the general section where you’ll be sitting. And if you bid too low, you could miss out on the event altogether. On the other hand, if you do nab tickets, you'll save anywhere from 10 to 70 percent.
ScoreBig CEO Adam Kanner tells Fast Company the system makes sense. As with plane tickets and hotel rooms, tickets for live events are "perishable"—they have a sell-by date, after which they’re worthless. That motivates sellers to do what it takes to get "butts in seats."
But the Groupon and Living Socal-style option that has emerged in recent years—offering coupons or discounts through daily deal sites—are anathema to this industry. "Discounting is dangerous to the live entertainment industry," says Kanner. "It degrades the brand and cannibalizes inventory."
And he should know. Before cofounding ScoreBig, Kanner was vice president of relationship marketing and business development for the NBA. He sat through many a pitch meeting with vendors trying to sell him on couponing solutions, not realizing that those kinds of deals are a "third rail" of sorts in the sporting business. ScoreBig, then, becomes the place where organizers can still unload excess tickets without giving the impression that they themselves are cutting their own prices.
Last week's announcement from Ticketmaster doesn't diminish ScoreBig's expectations. Lewis says he expects that Ticketmaster—and the event organizers using it to sell tickets—will primarily use the system to capture "upside" that gets lost to the secondary market when demand for specific events starts soaring. Allowing Ticketmaster to lower prices, though, Lewis says, would be tantamount to hanging out that sign that says not enough people are interested in your event.
Ticketmaster, however, tells Fast Company that they'll use their new system to change prices in both directions. In an email, a Ticketmaster spokesman writes, "Our goal with dynamic pricing is to address the inefficiencies in the current ticketing model, including the 40 percent of tickets that never get sold. We believe dynamic pricing will enable artists and sports teams to offer more price points, including more affordable tickets for many events."
Either way, Kanner says the problem ScoreBig (and perhaps Ticketmaster) is solving—enabling companies to move inventory without cannibalizing sales that would have happened anyway, and without cheapening their brands—are issues the current daily deal trend is eventually going to have to reckon with.
"The next wave of coupon and deal sites are going to have to address this issue," Kanner says. "Only now are people beginning to realize the negative implications of selling stuff this way."
[Image: Flickr userb youngrobv (Rob&Ale)]