09
Sep
11

Ticket Masters – Part 1: The Emergence of Electronic Ticketing Services

“Ticket Masters. The Rise of the Concert Industry and How the Public Got Scalped” by Dean Budnick and Josh Baron is one of the first books that highlight the emergence of the modern concert industry by telling the story of the rise of its main players: Ticketmaster and Live Nation. It gives a deep insight into the processes within the network of concert promoters, ticketing firms and artist agencies and how this network has evolved over the decades.

In the following six blog articles I am going to summarize Budnick’s and Baron’s book on the live music business starting in part 1 with “The Emergence of Electronic Ticketing Services”.

 The origin of the modern concert business can be traced back to the emergence of electronic ticketing systems at the end of the 1960s. In the decades before tickets were sold as physical copies at the box offices of the concert promoters, by mail order and by registered ticket agencies, which charged a fee up to $1.50 per ticket for their efforts (p. 19). Ticketing at that time was a very time and cost consuming business since all the tickets sold and unsold by the agents had to be collected and counted in order to calculate the revenue share for the performing artists. Electronic ticketing improved not only the way tickets were sold but also provided valuable demographic data about the ticket buyers for concert promoters, bookers and artist management agencies. However, the development of electronic ticketing was anything but an economic success story and was impacted by several business failures as Budnick and Baron highlight in the first two chapters: “A Few Reservations” (pp. 1-26) and “Put Your Seats in Our Hands” (pp. 27-54).

The very first player in the electronic ticketing market was Ticket Reservation Systems (TRS), which started its operations in mid1967 in New York,  focusing on selling Broadway theatre tickets. The company was backed by an investment fund (Cemp Investment) headed by Edgar J. Bronfman Sen., who ran the U.S. operations of the world’s largest distillery at the time, Seagram. This was a period before his son Edgar J. Bronfman jr.  turned Seagram to a large entertainment conglomerate under the Universal label. However, Bronfman Sen. was already involved in the entertainment business , funding film, TV and Broadway production firms. Since Bronfman was familiar with the problems of ticketing, he envisioned a computerized ticket system to make ticket buying easier (p. 5) and Ticket Reservation Systems (TRS) was incorporated on May 4, 1965. However, the new company was not viable until 1967, when computer and marketing expert Jack Quinn was hired to solve the technical as well as logistical problems. Quinn resolved the problems by finding a sufficient number of clients willing to sell computer printed tickets through outlets in hotels, banks and department stores in New York City. In the TRS business model each electronic ticket carried a service charge of 25-50cents, half of which belonged to the outlet. A further 25 cents was charged to the clients – theatres, producers, sports teams who used the system. In addition, the outlets had to pay a monthly rental fee of $150 for each box office terminal and a monthly service charge based on the venues seat capacity that reached $500-1,000. (p. 10).

Despite a good start in respect of marketing and public attention, the electronic ticket enterprise ran an annual deficit. In summer 1969, Seagram decided to sell a 51 percent stake for $3.9 million to Control Data – the company that had been providing the hard- and software for the electronic ticket system. TRS was renamed Ticketron and its operations were downsized and reshaped.

Another reason for TRS/Ticketron’s poor financial performance was the emergence of a competitor on the West Coast. In July 1967, California based Computer Science Corporation (CSC) unveiled Computicket, which offered a similar electronic ticketing system to TRS. Both firms, TRS and Computicket,  began to compete for as much market share as possible in order to drive each other out of business. Computicket was first to concede defeat after it had lost $12.7 million in just 18 months in business (p. 25). Even after Computicket closed down in 1970, Ticketron remained unprofitable. Nevertheless Control Data decided to stay in the business and acquired the remaining stock from the Bronfmans’ investment vehicle Cemp in 1973 (p. 26).

Even though the fierce competition between Computicket and TRS/Ticketron damaged both firms, the main cause of the initial failure of early computerized ticketing could be attributed to their clients not providing a complete ticket inventory but only 30-50% of all available seats to TRS/Ticketron, something that prevented their electronic ticketing system from being profitable.

Nevertheless new players entered the electronic ticketing market in the early 1970s. Arizona-based Select-A-Seat was founded by the former high school teacher Dorothy McLaughlin, her sister Margie Bliss and husband Bill Bliss in 1972. The firm literally operated in the Bliss’ living-room and Dorothy McLaughlin wrote the system software late at night, after her children were in bed (p. 30-31). The concept of Select-A-Seat differed to that of Ticketron and Computicket. The whole system did not rely on  a  costly centralized data-inventory, but instead provided its clients a tailored software package to enable them to display all the seats on a monitor with a feature to show their availability. It was very user-friendly and the small Select-A-Seat team provided personalised customer support if needed (p. 32). However, this business model did not provide an adequate revenue stream. Since Select-A-Seat did not rent  the hardware,  it relied on fees for  storage, setup, terminal and even paper stock.  As long as operations were limited to  a local market, this nickel-and-dime approach produced a steady but small revenue stream. However, market expansion needed larger investments which were eventually provided by Arizona Cattle Company (p. 33).

However, Dorothy McLaughlin became aware of another company, Bay Area Seating Service (BASS) using a very similar ticketing software to Select-A-Seat (p. 34). BASS was established in 1974 by roller skate impresario Jerry Seltzer and his wife Hal Silen who looked around for a better ticketing solution for their roller skate shows. They hired the well-known Stanford AI-programmer Bruce Baumgart to create their ticketing software. Within six weeks he supplied a solution similar to McLaughlin’s concept (p. 39). Select-A-Seat’s parent company Arizona Cattle sued BASS for wrongful software appropriation. A court-appointed expert compared the source code of both software packages and found no evidence that BASS had infringed Select-A-Seat’s intellectual property. The loss of the lawsuit was the beginning of the end of Select-A-Seat and in 1977 the company had to file for bankruptcy (p. 53). Two years later BASS also went out of business, despite its close relationship with rock concert promoter Bill Graham, who ran the famous Fillmore West and East concert venues (p. 51).

After a third electronic ticketing provider – Fototicket – had closed it doors in 1979 (p. 53), a small firm called Ticketmaster was the only competitor to the now market giant Ticketron.

 

Part 2 will tell the success story of Ticketmaster and how it gained a more or less monopolistic market position.

Budnick Dean and Josh Baron, 2011, Ticketmasters. The Rise of the Concert Industry and How the Public Got Scalped.New York: ECW Press. ISBN 978-1-55022-949-3, EUR 18.99.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


September 2011
M T W T F S S
« Aug   Oct »
 1234
567891011
12131415161718
19202122232425
2627282930  

Archive

Twitter

Categories

Blog Stats

  • 196,912 hits

Follow

Get every new post delivered to your Inbox.

Join 96 other followers

%d bloggers like this: