Two years after buying Ticketfly, Eventbrite is considering a return to the DIY model, saying the financial damage created by the coronavirus pandemic is forcing the entire independent music space to rethink the way it does business.
“Can you imagine our country without independent live music venues?” asks Eventbrite co-founder and CEO Julia Hartz while speaking on FaceTime Friday from her home office alongside husband and co-founder Kevin Hartz. “We’re staring right into the face of that potential reality if we don’t bring some serious relief and impact to this group.”
Nothing has been finalized, but after a brutal week that included layoffs of 45% of Eventbrite’s workforce, the Hartzes say the company remains committed to serving independent music venues. They’ll just have to do it without 90% of their music team.
“We are not planning to exit music and we’re committed to serving independent creators,” says Julia Hartz.
As difficult as the quarantine has been on both Eventbrite and its clients, it did grant the company more time to figure out its next move, with Julia hinting that Eventbrite could be pivoting back to a self-service ticketing product.
The company doesn’t have the personnel for a full service ticketing model with hundreds of sales reps, customers service pros and event specialists. And after cutting $100 million in costs, it’s likely that company execs are losing their appetite for the large upfront fees and advances promoters expect to be paid. Moving to a low cost do-it-yourself model, with promoters using the same tools as event organizers and party planners, seems increasingly likely.
“Eventbrite has always had a self-service ethos,” says Julia Hartz. “We’re taking this time of dislocation to double down on making our platform better.
Kevin Hartz adds that DIY merchant technologies like Shopify and Etsy have dramatically dropped costs for vendors and improved ease of use.
“But it does require some change in behavior, which can be difficult,” he says.
That might not go over well with the company’s indie promoter clients, who have complained they have been kept in the dark about the company’s plans. Julia Hartz says the company is planning to reach out to clients individually and is working through that process now. In 2019, 949,000 creators used the Eventbrite platform and by most measures Eventbrite is one of the ticketing businesses’ great success stories. The purchase of their former competitor Ticketfly made Eventbrite the second largest ticketing company in North America, with a $2 billion valuation when it went public in 2018.
“A lot of Eventbrite’s problems have been how they communicate with their clients,” says Phoenix promoter Stephen Chilton of Pysko Steve Presents and venue the Rebel Lounge, which utilizes Evenbrite. “Eventbrite never valued the longtime personal relationships and their missteps have been because of their lack of attention to those relationships.”
When asked whether the layoffs were an indication that the music ticketing model was not financially viable, Julia Hartz is unwavering in her insistence that disruption to their business was the result of the mass cancellation of events caused by the COVID-19 crisis. Like many businesses, Eventbrite is facing the prospect of having no revenue for the spring months and potentially the rest of the year.
“We enacted the layoffs because of the unprecedented shutdown of the global economy, which has had a devastating effect on all creators,” she says. The inability to stage events spread like a contagion to Eventbrite, which then made the difficult but necessary decision to lay off hundreds of employees, as compassionately as possible, to save the larger venture.
“Eventbrite unilaterally and without discussion changed their agreement with us, declaring that they would no longer pay us our ticket sales monies in advance, prior to the show playing. We have always received our ticketing monies in advance in any ticketing agreement I have had in the past 15 years,” says Allen Scott owner of The New Parish in Oakland, California. “With the layoffs and the policy changes regarding advance payments at EB, we have serious concerns about their ability to properly and securely sell tickets for us moving forward.”
Julia Hartz says the changes to the payouts were made to address the crisis caused by the sudden mass cancellation of all events, that the company’s financials are audited by accounting firm PwC and that client accounts are completely separate from the company’s operational funds.
To soften the landing for those who are laid off, the company spent $7 to $10 million on severance, which allowed most employees to earn the equivalent of five weeks of paid salary, and the company allowed terminated employees to keep their laptops. Julia Hartz chose to forgo all of her $390,000 annual salary and the layoffs reduced the company’s operational costs by approximately $100 million dollars.
“The layoffs were tragic and it feels awful to let go of 500 employees,” says Kevin Hartz, who has a long history in technology as an early-stage investor and advisor to more than a dozen companies including PayPal, Pinterest, Uber and Airbnb.
Crises often bring about opportunities, but disruption caused by the COVID-19 crisis could come at a great cost. Right now the couple says they are doing their best to mitigate the damage.
“It’s heartbreaking to see so much destruction in the path of this crisis, but our actions define us,” Kevin Hartz says. “We feel very strongly when this is all over, and one reflects on Eventbrite, we’ll have done the right thing.”