Can SeatSmart Change The Secondary Ticket Market?

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Ask any sports fan or concert goer why their attendance might have fallen off, and in addition to the sheer expense of the ticket price, you’ll frequently hear a lament about the substantial fees often tacked on to the purchase price.

Enter SeatSmart, a just-launched San Antonio startup which bills itself as “the only direct broker-to-fan ticket marketplace,” and promises to eliminate that dreaded markup.

SeatSmart is getting off the ground with $500,000 in angel investment from Lew Moorman and Pat Matthews, formerly of Rackspace, as well as investment contributions totaling $250,000 from ten large traditional ticket brokers. (The seed round of financing, which SeatSmart expects to close with $1 million in funding, remains open.)

The bottom line for customers is that buying directly from SeatSmart can save between five and 50 percent of a ticket price, when compared to Internet marketplaces like StubHub, TM+, and SeatGeek, according to SeatSmart. SeatSmart’s CEO Brett Cohen points out that the price difference is on the exact same seats, so it’s an apples-to-apples comparison. See screen shots below of Spurs tickets available from StubHub and SeatSmart.

 

Spurs tickets available for $444 at SeatSmart. Lily Casura

Spurs tickets available for $444 at SeatSmart.

Spurs tickets available for $553.15 at StubHub.

Spurs tickets available for $553.15 at StubHub.

SeatSmart’s goal is not just happier customers who are saving money, but apparently more satisfied traditional ticket brokers as well. Turns out that while fans may have been grousing about paying tacked-on fees and costs, brokers have had their own frustrations with the marketplace as well. They’ve been paying fees as well to list their inventory, had their prices change at a moment’s notice and without their input, and basically lost touch with the customers who are purchasing their inventory.

A little history might explain the predicament. Traditional ticket brokers are small companies, maybe even family businesses, generally located in brick-and-mortar buildings, with a predominantly regional reach, who like many service providers look to build long-term relationships with their customers. An example would be Best Tickets, with two offices in San Antonio and one in Austin. They can get you Spurs tickets, or tickets to the symphony, and if you want to go to Hawaii, they can use their connections to get you tickets to events there too.

Their main selling points? Ticket brokers can offer a “huge selection of tickets, insuring that quality seats are available, and verifying the authenticity of each ticket sold.” (The last item becomes significant if you’ve ever been ripped off by buying from a disreputable source or individual.)

Best Tickets at 9000 Wurzbach Rd.

Best Tickets at 9000 Wurzbach Rd. Photo via Yelp.

Before the Internet, local ticket brokers were customers’ main option for purchasing tickets to sporting events, rock concerts and the like. But with the Internet, gigantic ticket marketplaces and ticket aggregators, some even calling themselves “fan-to-fan marketplaces” sprung up, taking autonomy away from ticket brokers, changing ticket prices on a moment-to-moment basis, according to a complex pricing algorithm invisible to brokers and customers alike, charging fees to brokers and customers on every transaction, and preventing brokers from knowing who their end-customers are. Apparently this has turned into a problem worth solving to ticket brokers frustrated with the status quo.

“What we’ve done is to rework the model,” says SeatSmart’s CEO, Brett Cohen. “For one that’s so big and so customer-facing, it’s unique that there’s not a lot of transparency about how it works. Our goal is to educate the consumer, and sort of pull back the curtain a little bit for them.”

While ticket brokers are technically the middlemen between venues and promoters and fans, the current Internet model has added an additional layer between the brokers and the customers. This is the layer that SeatSmart has eliminated, and brokers seem enthusiastic about this development. Watch the two-minute SeatSmart video below to see how the model works.

“Given the lack of transparency in the ticket marketplace right now,” says Cohen, “if people watch a quick two or three-minute video, it will really give them some perspective into what’s going on.”

In addition to the 10 large ticket brokers who have become investors in SeatSmart, another 250 are currently applying to list their ticket inventory with the fledgling company, which is in the process of vetting their applications.

“We’re helping ticket shoppers save money, and we’re helping brokers build their business,” says Cohen.

SeatSmart’s model charges a membership fee to brokers to list their inventory, and a shipping fee for sending tickets to consumers. Currently they boast $100 million in preferred inventory tickets, as provided by participating brokers. The focus currently is on North America, but it has the potential to enlarge globally, according to Cohen.

“In a price-sensitive market, better ticket prices will attract cost-conscious consumers, many of whom are tired of paying excessive fees to industry incumbents,” says angel investor Pat Matthews.

SeatSmart is led by four co-founders: Brett Cohen, CEO, and Jerome Cohen, chairman of the board. (Jerome Cohen is the longtime owner of local ticket agency, Best Tickets, and Brett is his son, who’s been expanding their Internet presence.) Aaron Pearson is SeatSmart’s chief technical officer, and Andrew Powell-Morse is chief marketing officer.

The first round of capital investment will be used to “fuel expansion, support its growing broker member community, build the (management) team, continue product development and market the service,” according to a press release prepared by the company.

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