Eventbrite announced to staff on Wednesday (April 8) it is laying off 45% of the company — most of which will come from the music division, sources tell Billboard.
The cuts are expected to reduced the company’s annual expenses by $100 million and include unspecified cuts to executive compensation. According to a proxy filing with the SEC, chief executive Julia Hartz received a salary of $390,000 in 2019
The layoffs come less than three years after the ticketing company bought competitor Ticketfly from Pandora for $200 million. Pandora had unsuccessfully tried to incorporate Ticketfly into its streaming app, but gave up after less than two years and sold Ticketfly at a 40% mark down.
A year after the sale, a hacker took the Ticketfly system offline for more than a week, causing significant disruption to Ticketfly’s clients and worsening tensions between venues and CEO Julia Hartz and her husband and co-founder Kevin Hartz. In September 2018, just a few months after the hack, Eventbrite moved ahead with its long-planned IPO, but financial statements the company released in the days leading up to going public revealed it had lost approximately $40 million a year in 2016 and 2017.
In 2018, the losses ballooned to $64 million and in 2019 the company closed the year with a $68.7 million in losses, driven by spikes in costs for product development, sales and marketing and administration.
Ticketfly and Eventbrite competed in ticketing’s “middle market,” of mid-sized independent venues between 1,000 to 5,000 seats as well as independent festivals. Like most other ticketing companies, Eventbrite has become a de facto bank for its clients like festival organizers who couldn’t get traditional loans from banks and lenders. It’s common practice in ticketing for companies to pay a recoupable advance to promoters who signed up for their service. The better capitalized company could buy more business, but inevitably some clients defaulted, like the 2019 Roxodus festival in Canada, costing Eventbrite $4 million in losses.
In May, Ticketfly founder Andrew Dreskin left Eventbrite, telling Billboard, “I absolutely believe that Eventbrite will be well-situated with the best music ticketing product on the market and a bunch of crappy competitors to compete with.” But those crappy competitors were making inroads with Eventbrite’s clients — Etix had signed Denver’s Cervantes and Monqui Presents in Portland, Oregon, the AEG-owned AXS signed the Bomb Factory and Canton Hall in Dallas and See Tickets North America grabbed the Largo in Los Angeles and the popular Pitchfork Festival in Chicago. Eventbrite even lost Washington DC’s I.M.P. to Ticketmaster — years earlier I.M.P’s owner Seth Hurwitz sued Ticketmaster’s parent company Live Nation for anticompetitive claims and Hurwitz testified against the two companies merging at a 2010 congressional hearing.
In recent months, Eventbrite has backed away from offering six and seven figure advances, even for renewing clients, and South by Southwest’s cancellation and subsequent shutdown off all events in North America forced the company to delay payouts to its clients. The financial crisis caused by the coronavirus pandemic, coupled with the total shutdown of its clients, created a liquidity crisis at the company, causing a more than 60% drop in the share price since Feb. 21.
Sources tell Billboard Julia Hartz made the layoff announcement Wednesday morning in a companywide meeting and told employees those cut would receive phone calls. The cuts are believed to impact about 450 employees in Eventbrite’s San Francisco office, as well as employees in the company’s Nashville office. Besides the music team, Eventbrite also laid off staff in its Nashville office.
Eventbrite confirmed the layoffs to Billboard and released the following statement:
“As a company whose mission is to bring the world together through live experiences, Eventbrite has been significantly impacted by the COVID-19 global pandemic, alongside the entire live events industry.
“To ensure the long-term durability of our mission, we have made the difficult decision to reduce our global workforce by 45 percent. This is a harsh reality to face and we are saddened to see many of our team members depart the company. We are committed to taking care of impacted employees during this already difficult time and in addition to severance, we are providing extended health benefits and dedicated job replacement support.
“This is a challenging time for communities all over the world and while we can’t predict when the pandemic will pass, we are committed to providing a strong platform to help creators rebuild their businesses and enable the return of live events when it’s once again safe to gather.”