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The Ticket Fairy is tech’s best hope against Ticketmaster
Ticketmaster’s dominance has led to ridiculous service fees, scalpers galore and exclusive contracts that exploit venues and artists. The moronic approval of venue operator and artist management giant Live Nation’s merger with Ticketmaster in 2010 produced an anti-competitive juggernaut. It pressures venues to sign ticketing contracts under veiled threat that artists would otherwise be routed to different concert halls. Now it’s become difficult for venues, artists and fans to avoid Ticketmaster, which charges fees as high as 50% that many see as a ripoff.
The Ticket Fairy wants to wrestle away from Ticketmaster control of venues while giving fans ways to earn tickets for referring their friends. The startup is doing that by offering the most technologically advanced ticketing platform that not only handles sales and check-ins, but acts as a full-stack Salesforce for concerts that can analyze buyers and run ad campaigns while thwarting scalpers. Co-founder Ritesh Patel says The Ticket Fairy has increased revenue for event organizers by 15% to 25% during its private beta focused on dance music festivals.
Now after 850,000 tickets sold, it’s officially launching its ticketing suite and actively poaching venues from Eventbrite as it moves deeper into esports and conventions. With a little more scale, it will be ready to challenge Ticketmaster for lucrative clients.
Ritesh’s combination of product and engineering skills, rapid progress and charismatic passion for live events after throwing 400 of his own has attracted an impressive cadre of angel investors. They’ve delivered a $2.5 million seed round for Ticket Fairy, adding to its $485,000 pre-seed from angels like Twitch/Atrium founder Justin Kan, Twitch COO Kevin Lin and Reddit CEO Steve Huffman.
The new round includes YouTube founder Steve Chen, former Kleiner Perkins partner (and Mark’s sister) Arielle Zuckerberg and funds like 500 Startups, ex-Uber angels Fantastic Ventures, G2 Ventures, Tempo Ventures and WeFunder. It’s also scored music industry angels like Serato DJ hardware CEO AJ Bertenshaw, Spotify’s head of label licensing Niklas Lundberg, and celebrity lawyer Ken Hertz, who reps Will Smith and Gwen Stefani.
“The purpose of starting The Ticket Fairy was not to be another Eventbrite, but to reduce the risk of the person running the event so they can be profitable. We’re not just another shopping cart,” Patel says. The Ticket Fairy charges a comparable rate to Eventbrite’s $1.59 + 3.5% per ticket plus payment processing that brings it closer to 6%, but Patel insists it offers far stronger functionality.
Constantly clad in his golden disco hoodie over a Ticket Fairy t-shirt, Patel lives his product, spending late nights dancing and taking feedback at the events his clients host. He’s been a savior of SXSW the past two years, injecting the aging festival that shuts down at 2am with multi-night after-hours raves. Featuring top DJs like Pretty Lights in creative locations cab drivers don’t believe are real, The Ticket Fairy’s parties have won the hearts of music industry folks.
The Ticket Fairy co-founders. Center and inset left: Ritesh Patel. Inset right: Jigar Patel
Now the Y Combinator startup hopes its ticketing platform will do the same thanks to a slew of savvy features:
- Earn A Ticket – The Ticket Fairy supercharges word of mouth marketing with a referral system that lets fans get a rebate or full-free ticket if they get enough friends to buy a ticket. Indeed, 30% of ticket buyers are now sharing a Ticket Fairy referral link, and Patel says the return on investment is $30 in revenue for each $1 paid out in rewards, with 10% to 25% of all ticket sales coming from referrals. A public leaderboard further encourages referrals, with those at the top eligible for backstage passes, free merch and bar tabs. And to prevent mass spamming, only buyers, partners and street teamers get a referral code.
- Creative Payment Options – The startup offers “FreeFund” tickets for free events that otherwise see huge no-show rates. Users pay a small deposit that’s refunded when they scan their ticket for entry, discouraging RSVPs from those who won’t come. Buyers can also pay on layaway with Affirm or LayBuy and then earn a ticket before their debt is due.
- Anti-Scalping – The Ticket Fairy offers identity-locked tickets that must be presented with the buyer’s ID on arrival, which means customers can’t scalp them. Instead, the startup offers a waitlist for sold-out events, and buyers can sell their tickets back to the company, which then redistributes them to a specific friend or whoever’s at the top of the waitlist at face value with a new QR code. Patel says client SunAndBass Festival hasn’t had a scalped ticket in five years of working with the ticketer.
- Clever Analytics – Never wasting an opportunity, The Ticket Fairy lets events collect contact info and demand before ticket sales start with its pre-registration system. It can create multiple variants of ticketing sites designed for different demographics, like rock versus dance fans for a festival, track sales and demographics in real time and relay instant stats about check-ins at the door. Integration of email managers like Mailchimp and sales pixels like Facebook plus the ability to instantly retarget people who abandoned their shopping via Facebook Custom Audience ads makes marketing easier. And all the metrics, budgets and expenses are automatically organized into financial reports to eliminate spreadsheet busywork.
Still, the biggest barrier to adoption remains the long exclusive contracts Ticketmaster and other giants like AEG coerce venues into in the U.S. Abroad, venues typically work with multiple ticket promoters who sell from the same pool, which is why 80% of The Ticket Fairy’s business is international right now. In the U.S., ticketing is often handled by a single company, except for the 8% of tickets artists can sell however they want. That’s why The Ticket Fairy has focused on signing up non-traditional venues for festivals, trade convention halls, newly built esports arenas, as well as concert halls.
“Coming from the event promotion background, we understand the risk event organizers take in creating these experiences,” The Ticket Fairy’s co-founder and Ritesh’s brother Jigar Patel explains. “The odds of breaking even are poor and many are unable to overcome those challenges, but it is sheer passion that keeps them going in the face of financial uncertainty and multi-year losses.” As competitors’ contracts expire, The Ticket Fairy hopes to swoop in by dangling its sales-boosting tech. “We get locked out of certain things because people are locked in a contract, not because they don’t want to use our system.”
The live music industry can be brutal, though. Events can have slim margins, organizers are loathe to change their process and it’s a sales-heavy process convincing them to try new software. But while the record business has been redefined by streaming, ticketing looks a lot like it did a decade ago. That makes it ripe for disruption.
“The events industry is more important than ever, with artists making the bulk of their income from touring instead of record sales, and demand from fans for live experiences is increasing at a global level,” Jigar concludes. “When events go out of business, everybody loses, including artists and fans. Everything we do at The Ticket Fairy has that firmly in mind – we are here to keep the ecosystem alive.”
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SoFar Sounds house concerts raises $25M, but bands get just $100
Tired of noisy music venues where you can hardly see the stage? SoFar Sounds puts on concerts in people’s living rooms where fans pay $15 to $30 to sit silently on the floor and truly listen. Nearly 1 million guests have attended SoFar’s more than 20,000 gigs. Having attended a half dozen of the shows, I can say they’re blissful…unless you’re a musician to pay a living. In some cases, SoFar pays just $100 per band for a 25 minute set, which can work out to just $8 per musician per hour or less. Hosts get nothing, and SoFar keeps the rest, which can range from $1100 to $1600 or more per gig — many times what each performer takes home. The argument was that bands got exposure, and it was a tiny startup far from profitability.
Today, SoFar Sounds announced it’s raised a $25 million round led by Battery Ventures and Union Square Ventures, building on the previous $6 million it’d scored from Octopus Ventures and Virgin Group. The goal is expansion — to become the de facto way emerging artists play outside of traditional venues. The 10-year-old startup was born in London out of frustration with pub-goers talking over the bands. Now it’s throwing 600 shows per month across 430 cities around the world, and over 40 of the 25,000 artists who’ve played its gigs have gone on to be nominated for or win Grammys. The startup has enriched culture by offering an alternative to late night, dark and dirty club shows that don’t appeal to hard-working professionals or older listeners.
But it’s also entrenching a long-standing problem: the underpayment of musicians. With streaming replacing higher priced CDs, musicians depend on live performances to earn a living. SoFar is now institutionalizing that they should be paid less than what gas and dinner costs a band. And if SoFar suck in attendees that might otherwise attend normal venues or independently organized house shows, it could make it tougher for artists to get paid enough there too. That doesn’t seem fair given how small SoFar’s overhead is.
By comparison, SoFar makes Uber look downright generous. A source who’s worked with SoFar tells me the company keeps a lean team of full-time employees who focus on reserving venues, booking artists, and promotion. All the volunteers who actually put on the shows aren’t paid, and neither are the venue hosts, though at least SoFar pays for insurance. The startup has previously declined to pay first-time SoFar performers, instead providing them a “high-quality” video recording of their gig. When it does pay $100 per act, that often amounts to a tiny shred of the total ticket sales.
“SoFar, however, seems to be just fine with leaving out the most integral part: paying the musicians” writes musician Joshua McClain. “This is where they willingly step onto the same stage as companies like Uber or Lyft — savvy middle-men tech start-ups, with powerful marketing muscle, not-so-delicately wedging themselves in-between the customer and merchant (audience and musician in this case). In this model, everything but the service-provider is put first: growth, profitability, share-holders, marketers, convenience, and audience members — all at the cost of the hardworking people that actually provide the service.” He’s urged people to #BoycottSoFarSounds
A deeply reported KQED expose by Emma Silvers found many bands were disappointed with the payouts, and didn’t even know SoFar was a for-profit company. “I think they talk a lot about supporting local artists, but what they’re actually doing is perpetuating the idea that it’s okay for musicians to get paid shit,” Oakland singer-songwriter Madeline Kenney told KQED.
SoFar CEO Jim Lucchese, who previously ran Spotify’s Creator division after selling it his music data startup The Echo Nest and has played SoFar shows himself, declares that “$100 buck for a showcase slot is definitely fair” but admits that “I don’t think playing a SoFar right now is the right move for every type of artist.” He stresses that some SoFar shows, especially in international markets, are pay-what-you-want and artists keep “the majority of the money”. The rare sponsored shows with outside corporate funding like one for the Bohemian Rhapsody film premier can see artists earn up to $1500, but these are a tiny fraction of SoFar’s concerts.
Otherwise, Lucchese says “the ability to convert fans is one of the most magical things about SoFar” referencing how artists rely on asking attendees to buy their merchandise or tickets for their full-shows and follow them on social media to earn money. He claims that if you pull out what SoFar pays for venue insurance, performing rights organizations, and its full-time labor, “a little over half the take goes to the artists.” Unfortunately that makes it sound like SoFar’s few costs of operation are the musicians’ concern. As McClain wrote, “First off, your profitability isn’t my problem.”
Now that it has ample funding, I hope to see SoFar double down on paying artists a fair rate for their time and expenses. Luckily, Lucchese says that’s part of the plan for the funding. Beyond building tools to help local teams organize more shows to meet rampant demand, he says “Am I satisfied that this is the only revenue we make artists right now? Abslutely not. We want to invest more on the artist side.” That includes better ways for bands to connect with attendees and turn them into monetizable fans. Even just a better followup email with Instagram handles and upcoming tour dates could help.
We don’t expect most craftspeople to work for “exposure”. Interjecting a middleman like SoFar shouldn’t change that. The company has a chance to increase live music listening worldwide. But it must treat artists as partners, not just some raw material they can burn through even if there’s always another act desperate for attention. Otherwise musicians and the empathetic fans who follow them might leave SoFar’s living rooms empty.
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MyMusicTaste, a Seoul-headquartered service that lets fans campaign to bring their favorite artists to their city, plans to double the concerts it organizes next year after raising an $11 million Series C.