By Jim McCarthy Jul 19, 2010 3 comments

The Broker’s Dilemma

Last week, I was honored to be asked to speak at Ticket Summit in Las Vegas for the second or third time.  Although I’ve always wondered why an audience that’s primarily composed of ticket brokers was interested in hearing from me, I’ve always been pleased to accept their invitation because Ticket Summit is a surprisingly powerful week.  As a contrast to the more box office operations focused Intix, Ticket Summit has, over the last several years, been in some ways a  more general, marketing and trends-oriented conference, despite its origins as a broker conference.

In this iteration, I felt as though Ticket Summit were returning to its roots.  The crowd seemed to me to be more heavily weighted to brokers, especially individual brokers than in the past, and they all had a burning question in their minds:

What are we going to do now?

Just about every session that I sat in (including the one for which I was on a panel) gradually turned into a search for answers to the problem of being squeezed between higher prices from primary sellers and the new and numerous constellation of discounters.

Throw a severe economic downturn into the mix and you’ve got a real pickle for brokers.  If you’re in the business of “taking a position” in tickets that you think you’ll be able to sell for above face value, it’s a pretty unfavorable environment right now.  Primary sellers have raised prices over the last few years to capture some or all of the upside that the secondary market used to get.  At the same time, discounting has become far more sophisticated and popular, in part because of, but at least coincidental with, the recession.  Together, these have blunted consumers appetite for way-above-face-value tickets.  Or at least that seemed to be the conventional wisdom at Ticket Summit.

I know what many of you in the primary market are saying:  boo-hoo.  It’s true that most sellers in the secondary market, back around 2006, were about as insensitive as could be to primary sellers’ concerns about their activities.   They saw history being on their side and happily cried “Free Market!” whenever the primary sellers complained.  They didn’t take the opportunity, most of them, to improve their relationships with primary market sellers, and the primary market responded by pricing the upside out of many tickets and protecting themselves on the downside with better discounting policies and outlets.  And then the worst economy in a generation flattened demand, particularly in the already-frothy premium market.

The result for a broker is that most or all of the upside on most events is gone and a more empowered consumer expects price AND quality.

So now what?  This is a question our panel got, and while I don’t presume to have a solution to the Broker’s Dilemma, I do have some suggestions:

1.  Get a niche and serve it well. You can’t be in the business of selling tickets to ‘whoever.’  Work with Japanese Travel Agents or specialize in Catholic parishioners or Doctors and Lawyers.  Only sell the first two rows to every show everywhere.  These might all be dumb examples, but if you can get prohibitively good at something, you might be able to build a business on it.

2.  Build a ‘membership.’ Whatever you do, don’t spend your life trying to find buyers for your tickets; spend it trying to find tickets for your buyers.  It’s not about the inventory; it’s about the customers.    Yes, build a database and an email list, but more than that, build a loyal following and spend your time serving them well.  (This is much easier when you have already done number 1.)

3.  Put an emphasis on service. Let’s face it.  Buying tickets is pretty convenient now.  With just a little work, people can find what they want.  But if you provide a service that some people don’t want to provide for themselves, you’ve got a chance.  I know several very successful guys (and yes, they all happen to be guys) who couldn’t really care less how much they pay for a ticket; they just want to make one short phone call and get exactly the ticket they want  with absolutely no further effort on their part.  If those guys are out there, there must be more people who want service like this or similar.  Provide it and you might have a chance.

4.  Build your relationships with venues.  I know many brokers have relationships with venues, but if I’m being completely honest, it feels to me as though most brokers think of their interactions with the primary sellers mostly in terms of “what they can do for me.”  Obviously, there’s a lot you can do for them too, but if you’re not investing time in these relationships, how would they know that?

5.  Be humble and adjust. There’s no law of nature that says the secondary market has to exist and thrive.  The last few years have been kind because of the rise of e-commerce and soaring ticket prices during a more or less decent economy.  But remember that if you’re just a re-seller, and not adding value, that’s basically arbitrage, and once the potential for arbitrage becomes well-known, it tends to disappear.  Imagine if a supermarket were giving change back from your purchase using $1 denominated gold coins.  How long do you think it would take for that to end?  That’s arbitrage, and if you’re not doing something to make your product special in the secondary market, you’re basically doing arbitrage too.  So you’ve got to remember that and you’ve got to constantly adjust so that you’re always finding new ways to create value for your consumers.

The broker’s dilemma is serious, and while I know many people have mixed feelings about the secondary market, it can be good for the industry if done well.  A secondary market that offloads risk from the primary market and adds value to the market by doing something special for the consumer would be a boon to the industry.  A secondary market that has nothing to add and grumbles about the primary sellers “not giving them what they need” is not.

The next few years will tell us which we get.

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