By Lisa Walls-Hester on Monday 28 November 2016
Ticketing sites are the hot topic of the week as MP’s call for an investigation into the ticket-resale market following complaints from consumers and event owners about profiteering in the industry.
A Parliamentary committee hearing last week found evidence that Britain's biggest resale websites are "courting" touts and even offering them "preferential treatment" in a bid to hike profits and MPs are now calling for an exhaustive investigation into the sector.
Technology and the internet have fundamentally changed the ticketing environment over the last ten years but if MPs get their way and introduce new legislation the sector might face further disruption.
The ticket-resale market is represented by four main players Seatwave, Get Me In, Viagogo and eBay-owned StubHub but some new platforms have emerged which claim to solve the social injustice in the market by selling tickets for their face value or less.
Both these platforms have a potentially lucrative business models and the companies could be in for a bigger boost if MPs get their way and outlaw overpriced resellers.
Twickets is a ticket resale platform working with music, theatre and sports events to enable fans to trade spare tickets securely and fairly, at face value.
According to Twickets, many of the existing secondary ticketing platforms are being exploited by those intent on profiteering and an estimated 70-80 per cent of trades are by professional ‘brokers’ using technology or ‘bots’ to sweep up tickets, which may be breaking the law.
Fans are frustrated at being priced out of events as concerts appear to sell out in a matter of minutes, only for tickets to appear on secondary sites almost immediately. Resale websites often charge many times above the face value and have no incentive to drive down inflated prices because they take a proportion of the selling price.
Twickets was started by a team of experienced entrepreneurs and has received investment and support from leading entertainment industry figures. These include the founder of Ignition Management, Noel Gallagher, Catfish and The Bottlemen, One Direction, Olly Murs, Arctic Monkeys, Royal Blood, and several senior industry executives. It is now raising funds for expansion both in the UK and internationally.
Twickets has currently funded 70 per cent of its £700,000 target.
The company has a valuation of over £10m which it attributes mostly to the technology investment in its platform. It says it has built a scalable ticket resale platform and the founders have spent several years building strong relationships within the industry which are now beginning to demonstrate the company’s value.
Twickets has been around since 2011 but had a re-launch about 18 months ago and since then claims to have achieved £2.5m of ticket sales and 250k app downloads with over 100,000 registered users. It is forecasting revenue of almost £8m by 2020.
The business model
Twickets is free to sellers for most events but charges a small fee for a growing number of partner events. It charges a 10 per cent booking fee to buyers.
Premium services are planned such as promoted tickets and a waiting list service which will attract higher fees.
Use of proceeds
The company wants to development its platform and will also enhance its team. But the majority of its new capital will be used for marketing activity which is planned for mainland Europe. It says its social media engagement demonstrates a demand for a service model in Germany, Italy and Spain and it also wants to launch in the US and Canada in 2017.
The platform has been appointed as the exclusive resale platform for many high profile partners including Adele, Mumford & Sons, One Direction, QPR and, in the near future, Crystal Palace FC.
The Ticket Factory, one of the UK's leading ticketing agencies, is planning to integrate with the Twickets platform and one of the biggest music promoters in mainland Europe has agreed on a partnership to launch the service there. HMV-owned Fopp is a delivery partner.
This latest Parliamentary interrogation comes only months (May 2016) after the government published an independent report into the secondary ticketing market. The report observed “Where once there were only pre-printed paper tickets despatched by post, there are now print-at-home tickets sent by email, tickets on your mobile device, wearable tickets, such as wristbands and credit/debit cards doubling up as tickets. It has never been so easy to buy, sell, or validate tickets as it is now.”
It went on to make several industry recommendations for consumer protection measures including banning the use of bots or botnets. It’s unclear if the industry will self-regulate or wait for legislation, but either way, a transformation is on the cards.
Whether it is new legislation or new competition in the industry that drives change, what is certain is that the established players won’t give up their market share and big margins easily. We may see some strategic positioning in an industry that has already experienced a fair amount of M&A activity in recent years and for investors looking to leverage an industry on the cusp of change there may be opportunities here.
The UK’s ticket resale market is estimated to be worth £1bn and the global secondary tickets market is projected to exceed $15bn by 2020, growing at a CAGR of over 19 percent.