Pandora bought Ticketfly for a hefty $450 million in October of 2015 in the hopes of being able to directly market and sell tickets to users while pocketing a percentage of those sales. It's interesting to note that last week when Pandora laid off 6% of its staff, no one from Ticketfly was impacted. And as Pandora readies its on-demand streaming service, Pandora Premium, the opportunities for targeted ticket sales will likely increase.
Founded in 2013, Lyte bills itself as a fan exchange that enables music lovers to safely sell and buy tickets for sold out shows. Ticket prices are set via automated pricing software that scans around 500,000 online pricing data points each day to determine the market value, with Lyte claiming that the majority of its tickets are sold at or just above face value, aggressively undercutting secondary market vendors and, in turn, driving down their profits. Client venues and promoters can also cap prices, with Lyte saying that ticketholders (i.e. sellers) accept their price offers 80 percent of the time
Buyers gain access to sold-out shows by requesting a ticket for a performance and entering a reserve queue. Sales are automatically fulfilled when tickets become available, with all tickets containing seat information. Featured ticket exchanges currently listed on Lyte include Run The Jewels at The Beacham in Orlando, BottleRock Napa Valley festival and Newport Folk Festival, while the service has previously partnered with Mumford & Sons and hip-hop star Future. Lyte makes money by pricing ticket purchases lower than sales and pocketing the difference.
“Being the clearinghouse means we take all the financial risk. It also gives us the flexibility to buy and sell tickets at cost or a loss if that is what it takes to fill a room. We can do these things - and be really profitable for each event - by cutting out expensive middlemen and disrupting the unregulated marketplaces where they operate,” Antony Taylor, Lyte founder and CEO, tells Billboard.
He says that Lyte’s business model reduces the size of the secondary market at its partner events by at least 40 percent, while reducing no-show rates by 65 percent on average. “That means a more packed houses for venues and artists and more revenue for the bar and merch.”
“This addresses a fundamental flaw in the market in that there are countless real fans who buy a ticket to a show and are unable to make it for whatever reason,” adds Andy Donner Ticketfly VP of business and corporate development. “There is just too much friction and pain in the market right now using existing secondary ticketing solutions: ‘How do I price? How do I communicate with a buyer? Is there trust on both sides?’ Particularly if a ticket is less than $25. Very often that ticket just does not get used and the promoter and venue owners don’t have a packed house. What we’re seeing is that no-show rates are too high because there is too much friction in the process.”
Of course, ticket exchanges are nothing new. Twickets, the U.K.’s leading fan-to-fan ticket resale platform, is the official resale partner for Adele, Mumford & Sons, One Direction and The 1975 and recently raised £1.2 million ($1.5 millino) via a crowdfunding campaign to help it expand to mainland Europe and the U.S. Non-profit ethical ticket exchange ScarletMist has been trading since 2004, while Ticketmaster also runs its own fan-to-fan resale marketplace, providing buyers with tickets re-issued in the buyer’s name.
Donner says that Lyte offers an alternative “simple, safe, transparent and verified system whereby real fans can pass a real ticket on to others real fans” with the added benefit of being integrated within a primary ticketing service.
“When fans buy a ticket I truly believe that they have the right and the privilege to resell that ticket. Where the industry has fallen short is that there hasn’t been a very simple exchange that allows that to happen,” he states.
“Most fans don’t want to be resellers,” adds Taylor, expressing his belief that as the live market evolves there will be a greater convergence of primary and secondary vendors with more businesses following the Lyte fan-to-fan exchange model.
“I think we’ll see that soon become the standard and if there’s still people out there who want to be resellers then they can still do that, but it’s going to be a hell of a lot harder to find a margin.”