Talking Tickets 27 August 2021: Viagogo! Concerts Whiplash! The WWE! And, More!
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To the Tickets!
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1. Whiplash due to the delta variant throws concert business into uncertainty, again:
Big Ideas:
Public health decisions are going to drive the recovery either by mandate or by choice.
Demand is going to be an issue because Live Nation just put the most tickets in their history on sale last month. And, they aren’t alone in dropping tons of tickets. Who is buying all of these tickets?
Saturation + Uncertainty = Lower Sales Volume
I went to my first concert since 2019 on Friday night to see Wilco and Sleater Kinney play a show at Merriweather Post Pavillion in Howard County, Maryland.
It is one of the best amphitheaters in America and the weather was perfect.
For a few hours, I forgot everything.
I don’t think the show was as well sold as a Wilco would normally be, so there was plenty of space, except on the floor, and I’m vaccinated. So it all felt pretty safe and our group had a good time.
Also, count me in as having done more since events started back than I might have in a normal year.
Maybe.
But the story above does highlight the reality that there are still a lot of ways that this recovery could go wrong.
We have the delta variant that is causing a lot of problems with breakthrough cases happening and the unvaccinated getting sick at a really fast rate.
There is also the combination of artists trying to protect themselves and their fans, leading to cancellations. And, there is just a tremendous amount of inventory, creating saturation in the market.
As with most things now, you have to keep in mind my formula:
Volatility + Recover = Opportunity
And, the new companion formula:
Uncertainty + Saturation = Lower Sales Volume
I’ve been reading a book called The Plague Year and there is a section on the typical timeline of pandemics. Typically, you see two humps. We are seeing the third one in the States, but the bigger takeaway from historical context is that public health policies and outcomes always vary from city to city. And, the people that did a good job or a bad job are never known until after the fact, but non-medical interventions help accelerate the end of these pandemics.
Unfortunately, the response to every pandemic is also very political. So…we will have to continue to deal with that.
All of this is just a way to point to the need to pay attention to a little history, recognize that in a public health situation that the medical interventions and the non-medical interventions play a role in ending the pandemic and some of this can seem chaotic because the science of these viruses changes rapidly.
And, to think that this isn’t going to impact sales of tickets or the economy as a whole would be a bit naive.
So concerts.
What is to be done?
First things first, you are going to have to pay attention to the public health situation because that’s going to make or break the entire economy.
I don’t necessarily want to put my mask on indoors again because I did my distancing, got my vaccine, and rubbed my hands raw with hand sanitizer, but erring on the side of public health by putting on a mask seems like a small price to pay to keep events rolling, stores open, and giving kids the chance to go back to school like normal…among other things.
The same goes for shows and events.
At the Wilco show, we had to show our card or a negative test. In Vegas last week, we had to wear masks inside…which, thinking back on it, is not the worst idea.
They cut the smell of cigarette smoke!
All of this is to say that despite any moaning and complaining, most areas are going to put public health first.
Second, there is going to be a significant amount of unsold tickets because there is just going to be too many shows and events on sale at once.
Live Nation put on-sale the most tickets in their history last month?
Who is going to buy all of those tickets?
This brings it back to demand.
How will you win fans back? New fans?
Remember, reopening isn’t recovery.
Finally, there are opportunities during this period. Just like in any other period of uncertainty.
You have to understand where you are going to compete, why people should pick you, and how to message that to folks.
Simple, but complex.
In thinking this through, it seems like we all got a little complacent about the situation we are going to deal with and that a rebound effect like this was always possible, even probable.
The goal now has to be to focus on steps we can do to secure public health because that’s going to limit anything we do either by mandate or personal decision, putting a drag on the economy and our lives.
After that, strategy and demand focus is going to be essential.
2. To succeed after the pandemic, theatre organizations will need to be nimble and creative:
Big Ideas:
Change is constant. After the pandemic will be no different.
Get clear on what success looks like. Most people and businesses aren’t.
There won’t be a return to “normal”. What comes next will be different.
Love this piece from Lyn Gardner because she nails so much about what I’ve been thinking about over the last few months.
Lyn’s piece comes at this from the angle of theatre organizations in the United Kingdom, but her larger message can be applied to people no matter where they are in the world or what part of the industry they exist in.
In my reading, Lyn offers up three important ideas to think through this morning:
The organization of the future has to be agile.
This job is about people.
There won’t be a return to normal. There will just be whatever is next.
I kept thinking about that this week as I kept trying to think through what I was thinking about the ticketing game after my trip to Vegas for Ticket Summit, the ECHL, and the ALSD.
Then I had a meeting this week where I asked someone what the biggest challenge was in their prospects and the word that came out was “apathy”. Then, I had another meeting where “apathetic” came up a few times. Finally, I talked with an old friend that was in the game but moved on to other areas and he said, “apathy” to me at several points in the conversation.
Then it came to me, in too many instances the primary side in the States can feel apathetic to the changes that are happening all around them and the brokers are the opposite of apathetic, gung ho about the future, pushing constantly, for better or worse.
Remember my formula:
Volatility + Recovery = Opportunity
The reality is that coming out of the pandemic, we know a few things that are likely to impact our businesses:
People are making different decisions about where they spend their money and what is important to them.
We are going to be dealing with a significant psychological situation for the foreseeable future. Don’t believe me? Go outside and take a walk or a drive and just see how people are acting.
There are economic trends that are likely shifting the ability for markets to be able to make sales. A case in point, I read a book on Amazon’s growing dominance of the American economy this week, Fulfillment, and I didn’t realize that Baltimore used to be the 6th largest city in America and that as the economy has become more unequal and unstable that the city has shrunk to half the size of DC. This has impacted the economic base of the city and could explain some of the Orioles’ attendance struggles the last few years, along with performance. As for the book, check it out, and think about if this was Wal-Mart doing all of these same behaviors, what would people be saying? Outside of that, check out some of the economic trends on display and look for the root causes and think about how they apply to your business.
What do we do with all of this?
First, it comes with the proper mindset.
All three of the above factors require a proper mindset:
Agility in your business practices requires you to know that you can’t do things the old way any longer.
A focus on people means that you have to do more than just pay lip service to folks. You have to act like they are the most important factor in your success because, without customers, you don’t have anything.
Knowing that there won’t be a return to “normal” but something different means that you can lean on your experience but recognize that it isn’t likely to be enough.
Second, embrace innovation.
Innovation is just the chance to better.
As I’ve been sitting here doing so much thinking about what I want to do on the other side of the pandemic, the idea that sticks with me is the idea of getting to the next level.
By this, I mean that we want to push forward, not just fix problems.
Fixing problems is easy.
Pushing forward is tougher, but more rewarding.
Granted, you can’t have some big gaping holes in your business. But you can’t just keep putting out fires either.
You have to think about and act upon the tasks and goals necessary to push yourself forward.
Finally, know what success looks like.
This seems rather basic on the surface, but when I go out into the world to talk with folks and work with clients, I always ask them what success will look like for them.
Most of the time, they aren’t clear on what success looks like.
Why?
Most strategies aren’t strategies.
Most goals are wishes.
And, most people aren’t clear on where they are trying to get to with their focuses, goals, or ambitions.
I usually call this having a grand ambition, but for today let’s just think about defining what success will look like for your organization and setting some SMART objectives around those goals.
The reality is that what comes next will be different. Change was always coming even if we didn’t have a pandemic. And, you either embrace change or you run from it.
3. The Viagogo/StubHub merger leaves a lot of financial questions:
Big Ideas:
The CMA’s actions against the Viagogo and StubHub merger was as obvious as the sun rising in the east and setting in the west.
Over 75% of mergers fail and the longer this goes on, the more things begin eating at this merger’s ability to succeed.
The secondary market is facing headwinds around the world.
This is the story that will never die or the merger that will never get completed.
I’ll start out this one by pointing out that the idea that the CMA’s intervention in the deal was something folks couldn’t see coming is a very American point of view. If you’ve spent any time in the UK market, you recognize that this was the most likely scenario from the first moment the deal was announced.
Viagogo’s problems with the CMA could fill several notebooks. And, provide a great case study in business schools at some point.
In general, this story highlights the difference in the position of the secondary market in the US versus the rest of the world because in most parts of the world there are greater restrictions on ticket resale with more coming as we’ve seen with examples recently in the UK, Ireland, Australia, China, and other places.
On a larger note, now seems like another good time to point out that most mergers fail, historically north of 75%.
Why?
For any number of reasons, but a few that may come into play here:
There is not enough new value created in the partnership.
The internal cultures are never properly integrated.
“The Winner’s Curse” of paying too much for an acquisition.
In thinking through this deal a bit further, it is pretty clear that no matter what happens that a merged Viagogo and StubHub is going to take some time to ramp back up.
They haven’t had a chance to do too much for 18 months because of the pandemic, the regulators, and the debt in place for the deal.
What impact are those factors in merger failures potentially going to play?
“The Winner’s Curse” could mean that pricing and fees become a problem. A culture clash could hamstring any new innovations or market entry efforts. And, we have no way of knowing how the partnership could create new value, minus scale and giving Viagogo access to the US market…but we don’t even know how much of an impact that’s going to have because we don’t know how the branding is going to work out.
Nor, do we know the negative impacts on the StubHub brand from the pandemic.
Second, the market dynamics have shifted.
I keep coming back to a few things:
More than half of tickets were selling below face value before the pandemic.
The pandemic has changed people’s buying habits.
There is likely going to be too much inventory on the market for a while.
These market dynamics are likely to create more trouble for the newly merged business because looking at these factors, we are more likely than not to see an environment where prices are forced down over the next few years than forced up.
This means that fees will go down if prices go down…and that could create a new environment or one that kneecaps Viagogo’s ability to get their new American business on stable footing.
Or, it could lead to a whole new business model.
Honestly, it is still too early to know.
Finally, we still don’t know anything about what regulatory actions could be coming or be imposed from the UK or, even, from the US.
As I pointed out, the Biden administration seems to have a much different viewpoint on competition and antitrust enforcement than any administration in the last 40 years. This could put the deal back in the crosshairs at any moment as well. Even if the smart money is on the Biden administration focusing on Amazon, Facebook, or Live Nation before even coming close to Viagogo and StubHub, you can never count out politicians taking an easy win when it comes at no cost to them.
Ultimately, I never would have imagined that this deal would still be working its way through the approval stages 18 months later. But we also wouldn’t have expected a pandemic either.
So what do any of us really know?
4. WWE’s IP strategy has potential…wait, where have we heard some of this before?
Big Ideas:
Pearl Jam, The Dead and Company, Tottenham Hotspur, and the WWE are all using network effects to grow their businesses.
Unique value helps people feel special and they’ll pay for it.
People love merch!
Oh my, I love these stories because I’ve wanted to use wrestling for a while now.
Why?
Because my cousin was a famous wrestler in the golden era of wrestling, Crazy Luke Graham.
This means I used to get to do fun wrestling stuff as a kid when he would come to our town!
More than that, I like the idea of more creative thinking around your IP strategy.
I know I’m a broken record here on this stuff because this is basically a similar concept to what has been going on with examples like:
The Trailblazer’s charity poster program.
Pearl Jam’s fan club and merch table.
NFTs and many digital stars.
As I was mapping out this story, I got around to three ideas:
People love merch.
People also love special editions or unique souvenirs.
This is about network effects.
I don’t watch as much wrestling as I did as a kid, but I do still do enough stuff to recognize that people love merchandise and love to show off their interests and passions.
In looking at my desk right now, I see a few things that prove this point with me:
My Tottenham Hotspur tea mug
A Trillium Brewing Miir cup
The Baltimore Orioles t-shirt I’m wearing
The Teenage Mutant Ninja Turtles mug that holds my pens
That’s four pieces of merch in my eye line to show off something about me.
This is an opportunity because, in a world where so much stuff can feel the same or where everything becomes more cookie-cutter, we want to express our individuality. This often happens through the lens of our interests.
That’s on display in the wrestling story but applies across the board.
Second, the unique value of selling items that can only be purchased at a specific location or time.
I’ve got several concert posters, t-shirts, and other memorabilia that I didn’t need but it captured a moment in time for me.
On Friday, I was marching in search of the merch stand for the Wilco show because I “needed” a t-shirt and wanted to see the show’s poster because every show has its own poster.
My son has a scarf from the time we went to see Tottenham and Chelsea play at Wembley a few years back.
It marks a moment in time.
That matters because:
It plays on nostalgia
It is often an impulse purchase
It often creates a positive feedback loop
Finally, there is a certain network effect that goes into all of this.
A working definition I use with folks about what a network effect means is an environment where more people are using or involved with something, giving it more value.
When you are thinking of bands, teams, or events this should be obvious because you want more people at a show, a bigger tribe of fans of your team, and a community that grows out of the connection to the event, venue, or team.
What does any of this mean for us?
First, we need to know that we don’t define the value our customers do.
So we have to be closer to them to recognize what they want and give it to them.
Second, unique value is important because people want to feel like they are part of something special or unique.
As simple as it seems, a t-shirt, pass, or one-time-only piece of merch can have that impact.
Finally, recognize that there are network effects at play and that the larger the community around a band, event, or team becomes, the stronger the network effects are.
And, giving people symbols to express that pride can enhance the network effects and create more opportunities to grow your revenues.
That’s a huge driver in the Messi to PSG story.
Look around you and think about this stuff, then let me know what you see when you think about this.
I’m curious if this hypothesis holds water.
5. Some links to close the week:
Caeser’s and the Fiesta Bowl come together on a sponsorship: How wild is it that gambling is just no big deal now in sports business?
College athletics has changed its business model due to the pandemic? I’m not sure if I would go that far yet.
R/GA partners with Australian football to build their brand: Australian soccer seems to be on the upswing. Like the A-League is likely to face similar headwinds to MLS in the quality of play needs to improve before it can completely command the attention of the market.
China gets a centralized ticketing system: This will help with the monitoring of ticket sales and is considered a way to limit the secondary market.
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