Interesting break out of Ticketmaster fees:

A few comments:

-In this example, of the $20.50 in total service charges,  $8.25 (40%) goes to Ticketmaster and the remaining $12.25 (60%) goes to the venue. The distribution of face value ticket proceeds amongst the artist, label, Ticketmaster and venue would be even more interesting.

-Major artists are often able to negotiate cuts of the service fees and/or tickets for their own use or sale. The Nine Inch Nail’s Trent Reznor has eloquently discussed this and the secondary ticket market.

-Although complaints about Ticketmaster fees are ubiquitous, Ticketmaster isn’t making as much money as the average user would think. However, this is probably a moot point as no one likes to be hit with extras at the end; it makes people feel ripped off or cheated. It’s one thing to pay more money for shipping. It’s another to pay numerous extra fees that are often esoteric and glibly named (convenience fees?!). If you ever want to be infuriated look at your cell phone bill. Not surprisingly, customer sentiment towards phone companies and Ticketmaster is very similar.

-But, this isn’t all Ticketmaster’s fault. Ticketmaster has tried switching to a pricing model where all or most of the convenience fees are built in to the face value ticket price. The end price would be the exact same, but the ticket buying experience would be significantly more transparent and mostly spared of backloaded fees. Unfortunately, this sort of pricing structure has been met with opposition from the artists and venues who don’t want to raise prices, or rather don’t want the appearance of raising prices. When the face value cost is lower, it’s much easier for the artists and venues to shift blame towards Ticketmaster for “excessive fees” even if the artists and venues are getting a cut.

-Since Ticketmaster tacks the fees at the end, its competitors and the secondary ticket providers follow suit. People are used to having to pay extras even if they complain about it.

(thanks Garry Tan for the image)

Today on Techcrunch, Michael Arrington added his thoughts about the secondary ticket market, specifically referring to Trent Reznors’ comments.

Pricing tickets is very, very hard. Demand for an event peaks just before it occurs, then falls to zero as it begins, like food that has gone bad. Changes in the economy have a dramatic impact on ticket prices, too. A good ticket broker is thinking about the quality of the event, the date of the event, the venue, the seat locations and the state of the local economy when pricing tickets. And if they do it wrong, they eat their inventory and take a loss.

The benefit to the artists and promoters is clear – brokers create a smooth demand curve for tickets. When an event doesn’t do well, no one feels bad for the brokers. But when tickets for a hot event go for four or five times the face value of a ticket, everyone points to the brokers and says they’re greedy. What they don’t realize is that the broker has paid so many people along the way for those tickets, they’re probably only making a 10% margin on their investment. And that’s when things go well.

Arrington, who used to be the COO of Razorgator, is dead on. I’m going to copy and paste Tom’s and my comments from the Hacker News discussion (a news site devoted to startups) on the topic and add some elaboration.

The vast majority of people are never going to understand supply & demand. They’ll always feel entitled to face value prices while ignoring basic market realities. The Chicago Cubs experimented a few years back with a variation of an auction format for primary ticketing and it completely bombed. Now, instead, they have vested interests in most of the broker shops populating the area around Wrigley Field including roof top tickets. Similar end result, different method.My favorite stories relate to when an artist gives out tickets for a free show then becomes enraged when a secondary market forms for them. Their problems would be a lot bigger if a market never formed to begin with… Update: a perfect example of this is Jay Leno

Also, if the team/fan is really concerned with certain people being excluded due to prices, they should hold a lottery based on cell phone verification. Or make tickets will-call pick up only (photo ID and purchasing credit card required). But even methods like this can be gamed and often lead to more headaches. The interesting part about all of this is the opposite is happening for most teams and artists:

http://ticketstumbler.com/new-stuff/2009/03/08/reillys-right-tickets-are-cheap/

Additionally, Tom added:

Nobody is buying tickets so kids can’t get them. They’re buying them to re-sell them at a higher price because there is a market for tickets at that price. They’re not buying them to hoard them for a rainy day or something.The reality is, for most events you can get tickets for face value, through the primary provider, if you do so in a remotely timely fashion. The other reality is that for most events that have a large secondary market you can get tickets well below face value.

Real “scalpers”, the people who stand around at games, are providing a service. They are selling tickets for cost + a convenience fee to be paid by whoever found it too inconvenient to get tickets earlier (or felt like “playing the market” or whatever).

The biggest problem with the ticket industry isn’t the secondary market, it’s the lack of transparency from not only Ticketmaster but from the promoters, artists and teams associated with them. And while there are still many events that completely sell out, the majority do not. For event goers this means deals can be had. Also, in recent congressional hearing, the CEO of Ticketmaster, Irving Azoff, testified that Ticketmaster only sells 60% of its total tickets. Meanwhile MLB attendance is expected to drop a staggering 20%. For teams and artists in this economy, the real challenge is the empty seats and canceled tour stops.

Over a month ago, Ashley of Beats & Eats lamented about her terrible experience at the The Goat, a sports bar near her residence in Columbus, OH.  Ashely’s bartender was rude and inattentive to her and her friends despite a sparse crowd. The Goat was “out” [1] of almost every menu item. When Ashley’s group was finally able to find something the restaurant had, the food was awful. This wasn’t a one time occasion, as Ashley had similar experiences before and had witnessed other patrons’ confrontations with the bartender. However, there was no one to even complain to; the bartender was also the manager.

Making matters worse, the incident occurred on Sunday Funday, a long held post-college tradition. Since Monday’s inevitably blow for anyone with a real job, Ashley and myself [2] have long celebrated Sunday Funday. It’s a very sacred tradition that usually involves drinking, movies, hookah bars, trips somewhere new, sporting events, live music or all of the above. It’s a wonderful deterrent to the crotch-grab/punch to the face that Mondays often bring [3]. Frustrated, Ashley wrote about it. Bill Semeraro, an executive at The Goat’s parent company (and perhaps, a Google/Backtype Alerts user),  responded:

Ashley,
Hi, My name is Bill Semeraro, I run the Goats for Lifestyle Communities. Obviously concerned about your “Sunday Funday” experience at the Gahanna Goat. Please contact me at Bsemeraro@lifestylecommunities.com to discuss further.

Sincerely,
Bill Semeraro

Shocked and enthused to receive a reply, Ashley immediately contacted Bill:

Good Afternoon Mr. Semeraro:

Thank you for contacting me.  I would like to start off saying that I generally enjoy my visits to The Goat.  My friends and I go to both locations weekly and several of them are even registered in the Wii Bowling League and/or the Sand Volleyball League.  I realize that this blog post may sound a bit too scathing, for lack of a better word, but this is by no means a secluded incident.

Please understand that in no way do I wish to shed a bad light on The Goat. I hoped I have made that clear by stating that this is not a rant against the establishment itself. I am open to discussing this further if you wish.

With much appreciation,
Ashley Geisen

Bill responded warmly:

Ashley,

Thank you for responding so quickly to my comment on your blog.  First of all, I’m impressed with your writing skills to say the least. From a managers perspective, you have given me great insight from the view of a customer.

I have no excuses for you because there are none. It’s a totally disappointing encounter when sales and customer counts are a struggle in this economy.  Through your post it seems like this is not the first incident with this staff member.  For that, I’m truly sorry.  I genuinely appreciate your honesty and taking the time to correspond about the experience.  Comments like yours will help us improve our operations and opportunities for POSITIVE memorable experiences. Rest assured, your comments will not be taken lightly by myself nor my team members.  Actually, it  will be discussed and corrective measures will be put in place to ensure better awareness and customer service. To show gratitude for your past and future patronage; I ask one more thing.  If I could get your mailing address I have stumbled on something that could help with future “Sunday Fundays”.

Sincerely,

Bill

We’ve had similar experiences with bush league companies like Comcast where after raging about their ridiculous bullshit fees on twitter, we’ll receive a courtesy call the next day [4]. Some of our friends have also received free months of service or quicker customer responses after posting scathing tweets. It’s nice that companies are listening.

But what always get me is that instead of being proactive and not having shitty service or hack job fees to begin with, companies dedicate teams and spend loads of money to monitor twitter or utilize google alerts. Or, even worse,  overpaying someone to do the same thing as those services. This problem is only exacerbated during a recession. In an effort to satisfy short-term earnings expectations, companies often nickel & dime their customers while laying off people in customer service. It’s as if companies need to be reminded that even in a recession, people still want to be treated right.

The final kicker: even after that pleasant exchange with Bill, Ashley has not received the vouchers (or anything) from The Goat of January 13, 2009. If anything changes, we’ll update this post accordingly.

UPDATE (1/21/09): Though it took a while, Bill from The Goat/Lifestyle Communities is sending Ashley two VIP tickets to see the Killer’s concert on May 5, 2009. Very impressive.

[1] Or as Ashley speculated, maybe the manager was feeling lazy.

[2] At TicketStumbler headquarters all days are mostly the same. As such, when we remember what day it is, we designate Friday as Friday Funday. Drinking at work is fun and often productive.

[3] Monday, I used to hate you. Now I don’t even remember you.

[4] Of course, their fees remain in place while they advertise misleading rates.

Since Tom has been too busy/lazy to start his “Weekly Updates” yet, we decided to break the silence with the story of our acceptance into YCombinator – enjoy!

The Story

For those of you that don’t know, our investor is YCombinator (YC), a seed stage investment firm started by Paul Graham, Jessica Livingston, Robert Morris and Trevor Blackwell. Since 2005, Y Combinator has invested in two startup batches (8-22 startups) per year and has over 100 investments to date. Our company, TicketStumbler, was part of the Summer 2008 batch. Since the selection process for the Winter 2009 batch is underway, we’ve received numerous inquiries about our backgrounds, interview experience and the origins of TicketStumbler.

My cofounder, Tom, and I have known each other since 3rd grade when we spent the next 8 years playing Starcraft, neighborhood street hockey, various iterations of every EA NHL game, and trying to join web rings, of course. Childhood in the sleepy town of Sylvania, OH – it doesn’t get any easier. Sometime in high school, Tom moved away and we sparingly, but consistently, kept in touch via internet. Following high school, our paths were quite different as I opted to attend college at the University of Dayton while he joined the Army. Less than a year ago, I was a financial analyst working at a boutique transaction services firm just outside of Washington DC while Tom was stationed in Afghanistan as part of the PSYOP mission there.

While Tom was overseas, we kicked around a few startup ideas before finally settling on TicketStumbler. Tom thought of our wonderful name. As a sports fan and frequent business traveler I was very familiar with the secondary ticket markets as well as the lack of a “Kayak” or “Expedia” to help ticket buyers compare multiple ticket providers at once. (Note: It turns out there were competitors doing this already; we just didn’t know it at the time).

Tom returned to the states in February 2008 and took about a month to recharge his batteries through beer consumption, intense video game playing and couch time. After that, we decided to start working on TicketStumbler. Concurrently, YC began accepting applications for the Summer 2008 batch. Before Tom told me about them, I had never even heard of Paul Graham or YCombinator. I had heard of the Morris worm, however. At first I was skeptical about giving up equity so early in the process, but eventually we reasoned that filling out the application was a good exercise and the worst thing that could happen was a “No” answer – just like dating in high school. Also, filling out the application sure as hell beat doing a business plan.

After submitting our application, we were pleasantly surprised when Paul Graham asked us a question about some of our project details. We were even more surprised when YC wanted us to talk to two current YC portfolio companies, Draftmix and Songkick (Note: YC is not doing this for Winter 2009). Our interviews went pretty well despite getting absolutely grilled by Pete from Songkick. It was probably one of the sharpest, toughest interviews I’ve ever had. At this point, we thought our acceptance chances were slim to none and were just happy that two Ohio kids (that’d be us) had made it this far.

Less than a week later we received an email from YC asking us to fly out to San Francisco for final round interviews. We both flew out to San Francisco and were able to stay with an old high school friend. Tom and I hadn’t seen each other in 7 years, which was a little weird at first, but luckily our interests and senses of humor had remained largely unchanged. Our interview was Saturday afternoon, and I’d be lying if I told you I did anything to prepare for it other than reading more about YCombinator (Note: I would recommend preparing. We just tend to be at our best “winging it”). Tom had spent 40 of the past 48 hours finishing up a bare bones working prototype and was tired as hell. We arrived fifteen minutes early and were greeted by the warm, smiling face of Jessica Livingston.

Eventually, after what seemed like an eternity, we were called in for the interview. What transpired was a rapid fire Q&A session. Tom was out of his mind tired – I think he only said a sentence or two – for all I know he could have been sleeping during the interview. Despite having a working prototype, they only looked at it for maybe 15 seconds, but I think it really showed we could execute. At one point I remember fielding 3 or 4 related questions at once until I finally said: “Because the markets aren’t efficient”. I don’t know if that was the turning point or “aha” moment, but it sure felt like it. Other than that, I don’t remember much other than talking fast.

The interview was concluded once everyone realized it had gone a few minutes over the time limit and we were ushered out of the room, reimbursement check in hand. We boarded the Caltrain in good spirits and I told Tom: “Hey, that went pretty well, I’d bet $500 we got in”. Tom, taking my statement literally, looked at me, then looked at the reimbursement check, and readily agreed to the deal. What a bastard – although I can’t blame him for hedging. Upon arriving home, Tom went to bed and I went with my buddy to the bar. Around 6:30 pm that day I received a phone call from an unknown number. Paul Graham. I answered the phone and the words on the other end of the line will stay with me the rest of my life: “We’d like to fund you.” I immediately texted some close friends and called my cofounder. Tom was still so out of it that after hearing the news he uttered some swear words and told me to stop messing with him. I laughed to myself and headed back into the bar. Like any good friend, my buddy had shots of triumph or potentially, despair, waiting.

For us, the decision to do YC wasn’t a hard one. Neither of us had/have a wife or kids. Tom wanted a change and any excuse to leave Ohio. I had lived in Washington DC for two years and although I had a solid, well-paying job and a great group of friends, it was time to try something new. Based on my uh, skills, a career in finance didn’t seem very promising and I was worried about the direction of the finance industry (Note: I had no idea the markets would turn bad this quickly although a downturn was obvious. You mean people making 50k per year shouldn’t own 600k houses?). In retrospect, swapping a finance job for a startup may now be considered the “safe choice”.

From there, we haven’t looked back. Founders accept YC funding for various reasons. For some, it’s investor exposure. For others, it’s a chance to be guided by YC. For TicketStumbler, it was for the people, and we’d do it all again in a cokehead heartbeat.

The Advice

If you’re a YC hopeful, you probably expected to find some interviewing advice here. Unfortunately, it’s quite difficult to provide over-arching advice on how to win a game that is highly subjective and imperfect. However, if we had to pick one piece of advice it would be: Have your shit together.

Paul has always said YC is more about finding “good” people than “good” ideas since ideas can (and, in YC, often do) change. If you present yourself as knowledgeable both in general and with regard to your chosen problem domain, you’ll vastly increase your chances. Additionally, be confident. You’ve done your homework, you know your shit, so act like it. As previously stated, I didn’t do much preparation for the interview because I already knew our market in and out and knew how to explain it.

Having your shit together also means making sure you can convince YC that your team is solid, capable and dedicated. Starting a company isn’t a seminar; it’s not a goddamn weekend retreat. Convince them that you’re going to make SuperPoke2 whether YC funds you or not and it’s going to be awesome. Be solid, but not arrogant — take criticism with grace and pragmatism.

This post rated PG (Pure Genius Injected)

It’s Tom again, you friendly neighborhood TicketStumbler developer, here to bring you lots of good news! This post could easily be thousands of words long, but for the sake of our generation, I will strive for brevity mixed with a healthy does of ambiguity.

Beginnings of Concerts

For those early adopters, you can now begin finding concerts via search here at TicketStumbler.  As of this writing, we have concerts from StubHub and TicketNetwork with more providers being added to the fold over the next day or so.  Usually this would be done faster, but silly me, I’ve gone and created code so fast that our Database cannot keep up and must be monitored until a new server can be brought online, less the current one explode — and I am not paying for that whole rack!  Concerts will take a prominent position alongside Sports and soon Theatre in the (sorta?) near future.  We’re happy to add other event types you folks want — please suggest some because for each additional million tickets I stuff into the Database, Dan gives me a cookie.  I thoroughly enjoy cookies!

I know it’s just search and just a few providers, but there’s this philosophy I live by that goes, I do what I want. As in, I want you to be able to find concert tickets a little early, before we’ve put on the finishes touches.  So go wild.  Nobody’s watching…

New Site Structure

If Dan and I could pick only one thing to hate, which is certainly impossible, it would be clutter. In the spirit of that, we will be changing our site structure over the coming days to separate Concerts and Sports on the site.  A new homepage will be added which will aggregate a sensible amount of new, upcoming, and interesting events from all of our ticket categories which you’ll be able to tab through at your leisure.  Not only will this make sure clutter doesn’t creep onto the main pages, it will also allow us to provide unique features and content on a per-category basis.

Since we’re on the topic, I might as well mention that the main blog will be split up on a per-category basis as well.  We have a serious problem here at TS:  Too damn many people want to write for us and there’s just too much important ticketing news to fit on a single blog.  With up to half a dozen posts per day on the main blog, it’s easy for stuff to get buried and that’s just not cool.  That’s why I keep things lean on this blog; for you.  More information on these changes as they develop.

Of course, by using the search you will always get results from all our events, regardless of category.  Only because we love you.

New Provider

We’re indifferent-bordering-on-ecstatic to announce we now have tickets from the following new (to TS, anyway!) provider:

• TicketNetwork

Roughly 3-6 others will be added in the near-term and as always we will continue to add high-quality, reputable, safe ticket providers as we’re able… or as they’re able to handle the traffic

Looking Ahead

We have so many new features coming up that it’s getting difficult to decide which we want right away and which can wait a little while (Psst, using the feedback forum would help us!).  After the new site structure is complete and live, work will begin on our User Dashboard feature which will allow you to do so many badass things we haven’t even come up with all of them yet, lest we overload our threshold for badassery.

To start, though, you’ll be given the ability to register on the site (using existing accounts from AIM, Google, Yahoo and many others — because who needs another login to remember?) which will allow you to setup alerts and feeds for… well, almost anything.  Get alerts when new tickets are available for events, when specific search results are updated, whatever.  Don’t feel like coming to site every day and filtering through tickets for an event you just can’t miss? Good, I’m sick of seeing you around here anyway; you should just setup filters in your account and we’ll alert you of new tickets which fall within them (for that event your significant other will kill you for not getting tickets to!)

Hey, this is just the beginning.  We’ve got a lot more lined up which we’ll be announcing as features get close to release.  We also have one feature which will, quite literally, cause our competitors to burst into flame due to jealousy. We’ll be mailing out fire extinguishers soon to help avoid any loss of life, although we cannot stop the inevitable loss of hope and feelings of melancholy which will result.

As a final note, I will also start being more active around here.  I’ll be providing weekly change logs (non-geek: “updates”) regarding minor new features, bug fixes, changes, etc.  I’ve also got some posts lined up on other rant-like topics.  Lets be honest here: This the best day of your life because you’ll get to read more of my super awesome writing.  Like, whoa.

Looking Behind

Ever look behind you? There’s scary stuff back there.  That’s why we don’t have eyes in the back of our heads.  Scientific fact.  Anyhoo… what was I saying? Oh, right.

It’s been a really long road just to get to… what?  Some concerts and a couple new site sections?  Some of you may be wondering why that is and I’ll be covering that topic in another post.  For now, I want to ease your collective minds that such profoundly long release cycles are now a thing of the past and we can all move forward amicably.  Depending on interest, we can have theatre tickets up in two shakes of a lamb’s tail, for example.  Well, after I put out the fires on the servers anyway.

That being said, lets not get ahead of ourselves, okay?  We can’t all be like Posterous. They get better every day. A couple of cocky over-achievers if you ask me.  Dan suggested we should also get better every day once, but I threw a Molotov cocktail at his face and that pretty much ended that discussion.  I’m going to shoot for every few days instead.  Although, if you’re really motivated for the every-day thing, we are hiring.  And by hiring I mean I will bestow upon you the honor of doing some of my work for free; there’s plenty to go around.

… Please?  I’ll wash your car?  Or dog?  Or… you?

So I just type anything I want and it shows up here?

Well, that’s pretty much all I’ve got for now.  Oh, wait, here are some big numbers.  Big numbers == impressive, unless it’s my credit card statement — these will probably increase by 50% within the next few days.  That’s nearly 1/2 of 100%!  Stick that in your pipe and smoke it, other dudes!!! (dudettes?)

Now Serving:  8,191,150 Tickets representing 2,151,170 listings to 20,562 Events!

You know what they say about men with big numbers.  They work at TicketStumbler!  ZZIIINNNGGGG!!!!