December 29, 2006, 12:00 AM

Big Ticket Items

Event and movie tickets: Why wait in line when you can go online?

Today, instead of having to stand in line-sometimes for hours-or wait on the phone to buy tickets to events and movies, many people are sitting comfortably for just a few minutes purchasing tickets online. And a steadily increasing number of event attendees and moviegoers are doing so as they become more comfortable with buying online and become aware of some advantages to securing tickets via the Internet.

In addition to the speed and ease of buying online and an array of sophisticated web tools like seating charts and images of venues, one advantage web buyers have, for example, is the chance at getting the best seats for events. This is because huge blocks of tickets are reserved for artists, promoters and others, all of whom commonly sell many unneeded tickets-for some of the best seats in the house-in the secondary ticket market via the web.

The growth of the web sales channel for tickets and the opportunities to be a player in the secondary market by leveraging the Internet have profoundly changed the face of event and movie ticket selling, experts say. The past three years have been marked by great decentralization of the tickets industry, says Don Vaccaro, CEO of TicketLiquidator.com, a secondary market seller.

“A few years back, the majority of tickets were controlled by a couple companies,” Vaccaro says. “The Internet has helped new players build a presence and acquire more and more tickets from those companies; it has enabled more competitors to take root in the market and grab market share. Now there are many players battling against each other and consequently becoming extremely efficient.”

Advantages like giving consumers access to better seats, more personal customer service and the ability to resell tickets they cannot use are giving secondary market sellers, many of which are web-only, an edge over the more established primary market ticket brokers, the handful of behemoths that are first in line when tickets are issued, many industry observers say. Although primary market brokers sell the most tickets and to the widest array of events, their monolithic customer service is being challenged by smaller, secondary sellers, showing that just like in Internet retailing and other industries, bigger is not necessarily better.

The primary market giants, however, are not blind to the changes in the industry. They are responding with a variety of tactics aimed at competing with secondary players on their own turf. Primary market multi-channel seller Ticketmaster, for example, recently launched a secondary market pure-play online seller, Ticketexchange.

“We are at the beginning of the middle of a huge change in the ticket selling industry,” says Ticketmaster president and COO Sean Moriarty. “There is no question that all signs are pointing to the online world of reselling tickets to meet the clearly huge consumer demand. The trend has been established. The consumer has spoken.”

For event tickets, industry experts estimate about 70% are sold in the primary market and 30% in the secondary market. There are more than 1,000 licensed secondary market event ticket brokers in the country, ranging from hole-in-the-wall record shops that still carry vinyl of Foghat to entertainment-specific web stores. (There is no secondary market for movie tickets because of the immediacy of movie ticket use.)

These secondary event ticket players are scooping up the aforementioned great seats and others and charging a bit extra for them to gain a profit. They’re countering the increased price with practical, personal and entertaining web features; a strong focus on customer service; and efforts to build binding long-term relationships with customers-something many secondary brokers contend the monoliths cannot do well, citing the size and often subsequent impersonal nature of the big businesses.

An ideal fit
Ten or so years ago, the secondary market more or less consisted of money-hungry scalpers and the hole-in-the-wall record shops manned by Grunge-beguiled kids. It was the blossoming Internet sales channel that came along and created what is today’s secondary market for tickets, says Jim Okamura, senior partner at retail consulting and research firm J.C. Williams Group Ltd. Ticket sellers were among the earliest adopters of web commerce-their product simply is an ideal fit for the online channel, he adds.

“The convenience and the immediacy, and later on benefits like online display of venue seating and other web tools, quickly were recognized by consumers,” Okamura says. “This made the existing ticket retailers become aggressive in the early development of their web channels and simultaneously created opportunities for entrepreneurs in the secondary market.”

Counting both markets and all sales channels, the event tickets market reaped about $30 billion in 2005 and the movie tickets market hit nearly $9 billion, according to the U.S. Commerce Department and J.C. Williams Group, respectively. By comparison, the retail industry as a whole raked in $4.4 trillion in 2005, according to National Retail Federation research.

The market in 2005 for all tickets purchased online hit $4.1 billion; it is expected to grow 24.4%-mirroring e-retailing’s 25% growth rate-to $5.1 billion in 2006, according to The State of Retailing Online 2006, a Shop.org study conducted by Forrester Research Inc.

In 2005 event ticket sales reached $3.4 billion, and they’re expected to jump 27% in 2006 to $4.3 billion, the study reports. Event ticket sales accounted for 82.9% of all online ticket sales. In 2005 moviegoers spent $700 million online for film tickets; this represented 17.1% of all online ticket sales. Online movie ticket sales are expected to rise 15% to $800 million in 2006, the Forrester research predicts.

When it comes to who is spending these millions on the web, 22% of men and 16% of women purchased tickets to events and/or movies in the six months prior to September, according to the September 2006 Online Ticket Market Study by J.C. Williams Group. 19.2% of all individuals were 18 to 24 years of age, 21.9% were 25 to 34, 24.3% were 35 to 44, 20.7% were 45 to 54, and 10.3% were 55 or older.

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