The music business long has used show tickets as currency for friends and industry contacts - usually they are some of the best tickets in the house.  Most time these days they aren't free - "no comp" tours are the norm.  If you are "privileged" enough to be invited from the tour, often you are asked to fill out a form and fax it or email it with your personal and credit card information.  And the good folks from the tour who process these forms have no idea that they are conducting millions of dollars of commerce in probably the most risky and non-compliant method imaginable, putting them, their VIPs, and their credit card processor at great risk for fraud, fines, and other compliance issues. 

PCI Rules Apply to VIP Ticketing

But VIP ticketing for tours is not subject to PCI regulations, right?  Not on your life. According to Eric Drago, a Portsmouth-based NitroSecurity, a security information and event management solutions company, tours processing VIP tickets are subject to compliance rules:

"Any entity that stores, processes or transmits payment card data, must be in compliance with the PCI Data Security Standard (PCI DSS), or risk fines and losing its ability to process credit card transactions. PCI compliance isn't limited to those businesses conducting sales through an e-commerce Web site. If your business collects credit/debit card data written on paper, or holds credit/debit cards then PCI compliance applies to your business as well."

"PCI compliance isn't limited to those businesses conducting sales through an e-commerce Web site"

A Wall Street Journal article stated that over 80% of credit card breaches occur at small businesses and that Visa levied over $3.3MM in fines in one year.  The article also discusses a case study of a Lodi Beer, a small California micro-brewery.  When their data was breached, Visa and MasterCard fined Abanco, the restaurant's merchant account provider, $27,000. Abanco then in turn passed that fine onto the restaurant. In addition to the fines, this merchant has spent over $50,000 in remediation costs, legal fees, upgrades, etc. That is a huge amount of money for a small business.

The recent release of the Beatles catalog on iTunes made me think - what did a ticket to see them at their live peak cost?  Answer: a prime seat to see the Beatles in Chicago 1966 cost $5.75 - in today's dollars this is $37.60 - almost ten times less than what you would pay for a huge act today.

Things were different then of course - touring was done mainly to promote record sales and tickets were priced below market purposely to make sure shows were safely sold out and to reward fans for their record-buying loyalty.  This produced what economists call a consumer surplus.  Some of that surplus was soaked up by the secondary ticketing market.

Then things changed last decade as recorded music revenue declined, bands toured more, and ticket prices went up - dramatically. According to Pollstar, in 2000 the average ticket prices was $41.  In 2008, it was $67 - a 40% increase in just 8 years.

Normally when a price increases that much you'd think demand would go down.  But the total revenue for the concert industry kept going up - exploding, really. A couple explainations: 1) tickets were  underpriced 2) demand for concerts was relatively inelastic.  (Economists call demand inelastic when people's demand for things isn't that sensitive to the price - like beer and cigarettes.)

Plotting Pollstar data of the average ticket price vs. total box office gross from the years 2000 - 2010 revealed an interesting total revenue curve:

Last week Ticketmaster CEO Nathan Hubbard shocked the industry by not only creating TM’s first blog but issuing some honest mea culpas regarding their oft-derided pricing policies - the amount and the timing of the “service charges” that can often be as much as 50% of the face value of a concert ticket.  He promised to reform those practices.

Great job.  But people are still pissed and Mr. Hubbard and TM don't control all the parts of the puzzle. The live music industry needs to go much farther to improve relations with fans.  Let’s start by doing one thing - go away.

I don’t mean the artists.  But I do mean pretty much everyone else (unless you are a venue that brings in traffic regardless of artist).  People want to see artists and have a good experience.  They don’t give a rat’s ass about anybody else.  It’s about the talent and the venue, not everyone that put on the show.

Promoters, booking agents, ticketing companies, tour management software companies and everybody else plays a HUGE role in conceiving, producing, and operating a show.  But they are not the brand that the consumers connect to.

Eventric co-founder and President sits down for an emotionally revealing portrait for Crain's Chicago Business.  Paul discusses how you can succeed even if you are the drummer in a Irish alternative folk band that's not from Ireland!

Here's the video:

EVENTRIC LAUNCHES NEW LIVE ACCESS BRAND FOR VIP AND INVITATION-ONLY EVENT TICKETING

Chicago, IL – January 20, 2010 – Eventric, a leading provider of software and online services to the live entertainment industry, today announced the general availability of its new Live Access VIP and invitation-only guest ticketing application.

Live Access is a web-based system that permits ticket managers to manage VIP, guest list, and non-public tickets. Formerly known as MTDTICKETING.COM, Live Access is being used successfully by some of the most well known tours and acts in the industry, including Britney Spears, Jonas Brothers, Bon Jovi, Nine Inch Nails, Umphrey's McGee, and Jack Johnson. Live Access makes sure that ticket requests are managed properly and efficiently, ensuring that valuable ticket assets are maximized. 

Live Access is targeted to ticketing managers for music acts, live entertainment, festivals, sports teams, private corporate events, club owners, arenas, and theaters.

I came across an interesting graphical analysis published in Rolling Stone about ticket service fees from Ticketmaster and where the fees go. The optics of these ticket fees are way out of whack – when you start calling something a "ticket fee" and it approaches 50-80% of the ticket price, of course people's expectations are not met. When expectations aren't met, you get anger and resistance. All-in ticketing and/or lower fees are the answer. 

As a "commercial" for our Live Access invitation guest ticketing application, our fees are usually 50% to 90% lower than what is charged by the big ticket processors – and our tickets usually are the best seats in the house. Our tickets can ONLY go into the hands of the fans so 100% of the tickets we sell bypass the secondary market.