Monday, December 10, 2012
The Story Behind ScoreBig's Live Entertainment Tickets, with Adam Kanner
Story by Benjamin F. Kuo
Every consumer out there who goes to live sports, music, and other events is used to the drill: pay lots of money to a ticketing site, pay lots of extra fees, or have to hassle with a shady ticket broker, or pay extra to get a seat to the event you want to get to. As an executive at the National Basketball Association (NBA), Adam Kanner saw those issues--plus the industry's own desire to sell its unsold inventory--so he created ScoreBig (www.scorebig.com), an online marketplace aimed at connecting consumers with awesome deals on below-face value, live entertainment tickets. Kanner tells us how his startup is trying to both help consumers get a straight deal on the live event tickets they want, and at the same time help sell all those unsold tickets for the industry.
Explain where ScoreBig fits into the event ticketing market?
Adam Kanner: We are here to solve two problems. The first problem is that the live entertainment industry has a tremendous amount of excess capability. The challenge is how to deal with that excess, and sell unsold tickets. An estimated 40 percent of tickets go unsold. But, how do you do that in a way that doesn't cannibalize your full price tickets and screw up your brand? On the flip side, over the last several decades, ticket prices have appreciated every year. Most major events now are somewhere on an average of $60, $70, or $80 a ticket, which effectively outprices the casual consumer, and even the typical fan. They can't afford to go to events, except infrequently. Those two issues are inter-related. ScoreBig is the value market provider for ticketing, in the same way that there are value markets for ever other retail industry on the planet.
An example of that is in travel and hotel chains, where there is full dynamic pricing. They rely on Priceline, Hotwire, and others to create an opaque way of moving that unsold inventory, in a way that is not disruptive to their core, retail channel. It's no different that what Gilt, or Rue La La have done over the last several years for fashion. Value markets have existed forever, in the form of outlet malls, TJ Maxx, Marshalls, and places like that.
There's a reason you have to drive 45 minutes away to an outlet mall, and there's a reason why you don't know exactly what will be on the shelves, in what size, or what color. What you do know, is once you go there, whatever you do find you will find savings on. That's the same thing that we do.
Can you explain how that works for you?
Adam Kanner: Let me paint a picture of the ticketing world for you. The retail channel is dominated by Ticketmaster and Telecharge and Outbox, and a whole bunch of others. That's your retail channel. That's where you go to buy the widest selection of seats, at a fair price, and pay the associated fee. If they're sold out, there's a wonderful thing called the secondary market, which is dominated by Stubhub, TicketsNow, and places like that. Effective, that's where someone buys a ticket, and if there is a sold out show, can charge you more for it. You can always sit courtside, because there's always someone willing to sell for more. That's effectively the premium channel, the access channel. It's built to take advantage of the difference in pricing on the high end. That said, there are a very small percentage of tickets available on places like StubHub, which are actually sold for less than face value. For someone who is paying full price for a ticket and reselling it, the business model is not to resell it for less. It's legalized gambling. Sometimes, people do have to sell for less, perhaps a season ticket holder who can't make a game. Those are peer-to-peer exchange marketplaces.
With ScoreBig, every ticket we sell, we work directly with the supplier of that ticket, a sports team promoter, a Broadway show, and in addition we work with ticket brokers, anyone with unsold inventory. We bring it all together with a promise to the consumer, that every ticket is below box office price. And, better than that, we don't charge any fees. The way we make money, is through the supplier of the ticket, not the consumer, and delivery is always free. However we get you that ticket, whether it's via FedEx, or pick up at Will Call, or having your print it at home, it's all free.
How does this work for the consumer?
Adam Kanner: We have a name-your-own price model. Essentially, it's a reverse auction. A consumer tells us what they're willing to pay, and we're able to look at the inventory we have, dynamically price it, and can match up what we can sell you with what you want to offer for it. Clearly, however, we're asking the consumer to be flexible. There are several things you don't know. One, is you don't know what the exact price is. You have to tell us what you're willing to pay first. Second, is although you cannot price an exact seat, you can pick a general area. You need to have a little flexibility in where you sit. Third, is we don't tell you how many tickets are available. You have no idea if there are two or 20,000 tickets, so you can't, as a consumer, figure out where the deepest pain is. The last thing, is you don't know the source of that ticket. You don't know if you're getting it from the venue, a broker, or some other source. What you do know, is every ticket is not only guaranteed, and not only authentic, but we'll provide live customer support. People call if they have any issues. We guarantee you will actually save money, and we guarantee those tickets are actually authentic. In summary, there are three channels - you can pay retail by going to a Ticketmaster. If they're sold out and still want to go to a favorite event, or you want a specific seat, Stubhub is terrific. But, if you're flexible, and want to save money, we have a place called ScoreBig, where you're guaranteed to save. We even provide seats months out--it's not last minute--but you do have to be flexible, but you'll save sixty to seventy percent on stuff you otherwise wouldn't be able to afford, or you wouldn't see the value of spending money on.
Talk a bit about your background?
Adam Kanner: This is my fourth company. I've been doing startups for awhile. But, before this particular company, I was at the National Basketball Association. I was running relationship marketing, including digital and direct marketing, as well as ticketing and a bunch of other things. Ticketing and league development rolled up under me. In that role, I saw the firsthand challenge of how to help our teams sell all these empty seats, but not do it in a way that was overtly discounting, and which was not a Groupon, where we're not sending out emails about having our tickets discounted fifty percent. Every day, some company came to us at the NBA, and said, here's our deal, we have millions of people on our email list, we'll send our an email and to a million people, and sell a couple thousand seats. It will all be incremental to you, Mr. Team. Aren't you excited? The problem is, that might work for you if it's a mom-and-pop pizza chain, and you're already discounting. I get it, no one knows about you. But, if you're a half-a-billion sports franchise, guess what, I'm not going to have you market to millions of people saying our product is on sale, just for selling a couple thousand tickets at 25 cents on the dollar. That's not a very compelling offer, and that doesn't work for us. The majority of ticket revenue for teams is driven by season ticket holders. We don't want to show them that we're discounting. Our problem, as a team, is we want to move seats, but we can't do it in a way that jeopardizes our most important customer, who is buying a season ticket to 41 games at the start of the season. Another massive problem we had to deal with on the property side when I was at the NBA, is that every other revenue stream we had flowed off seats. You had to get people in the building to get local sponsorships, for broadcast rights, and all kinds of other things like merchandise and parking. So new fan development was a critical thing. You want them to go and enjoy the live experience, and make them want to come back. Getting them in the door is important. But, more importantly, if you outprice them, less and less people come in the door. We didn't have a channel, as an industry, to do that, which is when I left to found ScoreBig. ScoreBig is a channel play. We're not e-commerce or retail in the traditional sense, but we do create a channel to help the live event industry move unsold inventory, in a manner that doesn't hurt or cannibalize seats.
Did that background in sports help in getting this off the ground?
Adam Kanner: Of course. Three out of four of my startups have been in the sports world. I built what's now BofA's credit card and loyalty card, and the NFL's credit card loyalty program. I did another business around sports production and direct marketing, working with teams in Boston, all the league in getting footage. I've been involved, obviously, at the NBA dealing with over fifty different teams, and with the WNBA, and so on. So, I'm intimately familiar with all of the ticketing contracts, which was critical. That background is unique, in that I'm not only an industry expert but an entrepreneur. I've actually also raised capital before, and this is my second, venture backed business that I've run. I've built teams, scaled companies, and it was natural place to be here.
What's been your biggest challenge so far?
Adam Kanner: There are hundreds of little challenges, which every startup has to deal with. But, our business challenge with this marketplace, is that marketplaces always have two sides: inventory, and consumers. We are making sure every day that we have enough inventory to satisfy consumers, but that we're also continuing to grow consumers so that we're moving enough inventory to make those providing the inventory happy. That's an everyday challenge. The good news, is that seems to be working pretty well. This year, we've grown about 600 percent from last year, and just had our biggest month ever.
Frankly, one of our biggest challenges in this business, to quote my head of marketing, is that we have an unbelievable proposition. The challenge is, because people are so used to paying fees and paying more for tickets, most people have no idea that you can actually save on this stuff, and particularly on name brands.
We want to be a hero brand, and be the consumer champion. We also want to be a champion in the industry, to solve their biggest problem, and build a bridge between unsold tickets and lack of affordability in live entertainment.