When you’re a Jet
You’re a Jet all the way
From your first cigarette
To your last dyin’ day
Jet Song – Leonard Bernstein
On Thursday June 10, 2021, ticket resale marketplace SeatGeek traded away its future for a momentary dalliance with Bruce Springsteen. In Leonard Bernstein’s West Side Story, loyalty is the core element of the story. When you belong somewhere, you take care of your tribe and you remember from where you came. Break that trust and the consequences come fast and hard.
SeatGeek is a New York based ticketing company which for years has been a secondary marketplace matching buyers with ticket sellers. More recently, SeatGeek gave away substantial equity attempting to enter the world of primary ticketing. The company currently acts as primary ticket seller for the Dallas Cowboys, Cleveland Cavaliers, New Orleans Saints and half a dozen or so lesser teams in the U.S., plus half a dozen soccer clubs in Europe.
In any ticketing company there is a dynamic tension which exists between the desire of fans to purchase tickets at face value and the capacity of ticket sellers to purchase those tickets to resell in the future. Ticket selling is a brute force effort, where tens of thousands or more tickets go on sale all at once and there is a scramble to see who can buy them. Typically, the public has no idea the event went on sale until long after it sold out, or no plans at the time of the sale to be in the city where the event will occur. It is only later when fans discover there is something happening where they are, but the tickets were sold out months before. Ticket sellers buy and hold those tickets giving liquidity to a marketplace which would otherwise reward the diligent and freeze out those who have other things to do rather than wait in online ticketing queues like raise children or go to their jobs.
Demand for discretionary event tickets is unpredictable. Springsteen fans tend to be older, which makes them potentially more conservative about Covid-19 than younger fans. They also tend to have more money which allows them the luxury of buying tickets which cost close to $1,000 apiece when all fees are added. What stimulates sales is when everyone wants to be sure they are not the ones left out. The harder the ticket is to acquire, the more status conferred upon those who attend.
Last week, SeatGeek managed the sale of approximately 51,000 seats when Bruce Springsteen returned his solo acoustic show to Broadway. This is a show for rich people. Springsteen’s tickets were mostly priced between $500 and $850 plus service fees, with a few tickets on the outer edges priced at $75.
The run is thirty nights from June 26th to September 4th. Prior to the pandemic, Springsteen on Broadway was consistently one of the highest grossing shows on Broadway playing to about 975 people a night at the Walter Kerr theatre. The 2021 run of shows moved to the St. James Theater which seats 1,710. That is almost twice the seats for each show, but the prices remained the same. The show should gross between $1 million and $1.25 million per night plus merchandise and bar sales.
SeatGeek has said the Jujamycn Theaters decided whether ticket sellers were allowed to purchase tickets, acting with or at the direction of the Springsteen team. SeatGeek posted rules on their website for buyers, specifying that only two tickets could be purchased by any single person for the entire run of the show, and to make the purchase the account name, credit card and billing address all had to match.
Here’s what happened: resellers complied with the rules and made thousands of attempts to purchase a pair of tickets. Virtually every single time they bought tickets an email arrived stating “we were unable to confirm your order because the tickets you selected are no longer available. Sorry about that! We will refund your original payment method.” Here’s an email from that sale:
Now, that email is likely not entirely true. The purchase generated an order number, the credit card was charged and there is clearly a record of the purchase as displayed in the email message. More likely is SeatGeek simply decided or allowed Jujamycn Theaters to decide who could buy tickets and who would be rejected.
The odd thing is that SeatGeek is a secondary market. They really need a supply of tickets to function. Otherwise, they are simply a small primary market. Once they grow much larger in the primary space the long knives of competitors will be out each time SeatGeek tries to get another client.
And, as a secondary market which has embraced rejecting ticket sellers from acquiring primary inventory, SeatGeek has facilitated the argument by large primary markets that resale should not exist in its present form. After all, here is a large secondary marketplace who cancels tickets acquired by ticket sellers to list on resale markets. There is only one step from there until every primary market tries the same thing, at which time SeatGeek is too small to survive as a primary market and they instigated the damage which could be inflicted upon the entire secondary market. Being a secondary ticket market, which blocks its suppliers from buying tickets is like building gallows then acting surprised when you get hung.
I reached out to SeatGeek for comment, and received the following:
“SeatGeek strives to build a better ticketing experience for all parts of the live event ecosystem. This past week’s Springsteen on Broadway on-sale was no exception. We put together a successful on-sale that respected Jujamcyn’s desire to put tickets in the hands of real fans with a two ticket per person limit, which matched the exceptionally high demand we saw for this first full capacity event on Broadway since the pandemic began in March 2020. We’re excited to help welcome Springsteen fans to the St. James Theatre for the first show on June 26, 2021 as a part of this incredibly unique concert experience.”
The truth is that SeatGeek just openly denigrated those sellers who helped them grow large enough to play in these larger arenas. They also implied that their own customers who purchase resale tickets are not real fans. In fact, all people who purchase tickets for the purpose of attending shows are real fans. The only reason secondary marketplaces exist is to fill demand for those fans who were not aware when shows went on sale or did not know they would be somewhere an event was taking place until after the tickets had already been sold. Resale equalizes access.
What few people understand is resale markets do not own the tickets they offer for sale. They are just a platform matching sellers and buyers. If the buyers remove their inventory, the resale market cannot function and the whole enterprise grinds to a halt.
As the majority of SeatGeek’s revenue still comes from their resale of tickets, irritating suppliers is dangerous. All it would take to really wake up SeatGeek would be a decision which I’m hearing discussed among their reselling partners to enter the term “-SeatGeek” into their point-of-sale systems and SeatGeek would be instantly irrelevant as a resale marketplace. That simple “-SeatGeek” entry would wipe out the inventory from SeatGeek’s resale platform and their revenues would plummet immediately.
Ticket sellers might acknowledge The Boss’ return to Broadway the same way SeatGeek did, by blocking access to for sale inventory. What I’m hearing discussed is blocking listings from SeatGeek from today until September 4th when Springsteen on Broadway ends. Ticket sellers would still have lots of ability to sell, as their inventory would move on Vivid Seats, Ticketmaster, Ticket Network, StubHub, TickPick, Ticket Evolution or any of the other two dozen or so competing resale marketplaces who appreciate those who take on risk with their own money to supply the markets with tickets. Meanwhile, they could have some time to think about whether its a good business practice to undermine your relationship with those who provide the inventory you exist to sell.
When your revenue comes on the back of others’ risk capital, it is always strategic to protect the relationship. When you don’t the consequences can be dire for your business’ economic health.
One more thing: as of this writing, there are still tickets available on SeatGeek at face value for every one of the thirty Springsteen shows. In rejecting the ticket sellers purchases, SeatGeek failed to sell out any of the Springsteen shows. When shows don’t sell out their prices decline. What should have been a triumph for Bruce Springsteen is instead the first major failure to sell out a show by a big-name artist in the post pandemic recovery.
Had those now unsold tickets been acquired by ticket sellers, fans would have had the opportunity to purchase tickets below face value because the prices for this event exceeded the demand. Instead of Springsteen selling out, and ticket price discounts flowing to fans at the expense of resellers who got caught, we’ve destroyed the mystique that Springsteen can sell out endless shows at outlandish prices and taken away from fans the opportunity to save some money. It is like we exited Thunder Road early and entered the Badlands. All there remains to do is some Growin’ Up.