The Major Broadway ticket seller Ticketmaster ended their ticket affiliate program in 2010 forcing some Broadway theaters to switch to Telecharge. Ticketmaster could do this again and the industry could go crazy.
Ticketmaster, the ticketing giant that dominates the event ticketing market and also handles ticketing for everything from the hottest concerts to the biggest Broadway shows, made a dramatic change in 2010 to their operation of their affiliate program. They cancelled it.
Ticketmaster processes ticket orders by phone, over the internet, and in-person at special kiosks. In order to expand its reach, Ticketmaster has depended on an online affiliate program that pays companies that pass ticket sales through to them from their web sites. Ticketmaster granted its affiliates approximately 1-3% commission on any ticket sales resulting from the link. The Ticketmaster affiliate program provided a wide-reaching advertising and marketing program for its various concerts, events and Broadway shows.
Ticketmaster Dismantled Its Affiliate Program Through 'buy at' (A division of Digital Window Ltd)
In the summer of 2010, Ticketmaster affiliates received an unexpected email announcing that they were making cuts to the Ticketmaster affiliate program, including discontinuing its relationship with affiliates and no longer providing commissions on ticket pre-sales. This announcement turned out to be the foreshadowing of a much bigger blow. On October 7, 2010, affiliates received an email informing them that the affiliate program was being discontinued completely, as of October 15, 2010. With barely over a week's notice, affiliates were stunned. Though Ticketmaster is apparently still allowing a few of its largest affiliates (who are actual sponsors) in on the program, it has otherwise completely discontinued all ticket sales affiliate programs.
Almost comically, Ticketmaster concluded it's email announcement by saying "Despite this decision, we realize that many affiliates may still benefit from the information and content available via our extensive event database. As a result, we will continue to offer our affiliates access to our creative database, product feeds, as well as our real time tracking and reporting in the Ticketmaster affiliate program." In other words: We won't compensate you, but please continue to advertise for us for free, we are more than happy to make sales, we just won't be paying for them.
Although Ticketmaster wasn't decent enough to offer an explanation for the decision, it is well-known that its recent merger with Live Nation has done it no favors, as Live Nation's stock has been steadily tanking and its senior management have been clamoring for drastic cuts and other measures to pacify the descending stock value. Obviously saying goodbye to the affiliates was simply a quick way of saving themselves the money they've been spending on commissions in the short term, but waving goodbye to the longer term ticket sale revenue. Ticketmaster isn't worried about losing sales from these affiliates because they figure as they are the only game in town, it's not necessary for them to actively promote their clients' products. Ticketmaster's thinking might be that since they are the only outlet for so many live events, the customers will automatically come to them anyway, regardless of diminished outside marketing and advertising.
An internal accounting team at Live Nation ran the numbers and discovered that although they will make fewer sales for their clients, Live Nation's and Ticketmaster's short term cost savings are too significant to pass up. Although the long term damage to Ticketmaster and Live Nation's brand and effectiveness were a consideration, the cost savings won out. Ticketmaster believes that it can make up any shortfall by working with social media sites instead, but the problem with social media sites is that they are for social media, not for selling Broadway tickets - poor results are anticipated because Facebook users do not like being pitched to in their social media universe, therefore they are notoriously negative at any pitches on their social media platform, despite what the pundits are saying. To coin a phrase from Jim Cramer's Mad Money TV show "Facebook is the world's greatest photo sharing website, with little else to keep the user there"
Ticketmaster Affiliates Look to Alternative Revenue Sources
Following the surprising news that the Ticketmaster affiliate program was coming to an end, independent web site owners discussed it on internet message boards, and most determined to no longer feature Ticketmaster links, deciding to go instead with affiliate programs offered by secondary market ticket sellers such as StubHub or Ticket Network. Ticketmaster's competitors didn't waste time taking advantage of the situation:
Ticketfly.com posted this message soon after the Ticketmaster announcement:
This is a real big “slap in the face” to a lot of the best Broadway show sites, bloggers, and fans on the internet that we all love and rely on to find out about shows, and more importantly to all of those hard-working venue owners and promoters who are going to have to work a lot harder to get their shows out there and sell tickets. As if they had any time to spare! Ticketfly launched an "Affiliate Network" last week and we will gladly welcome any Broadway show lovers out there who want to sell tickets for our clients.
For some web entrepreneurs who have built web sites deliberately to attract ticket buyers and have put significant time and money into the development of
their sites, this blow could be disastrous if they have long depended on the program as a single source of income. Fortunately for them, these other options should help pick up some of the slack, especially since many of them offer a better percentage than Ticketmaster did.
What Does The End of the Ticketmaster Affiliate Program Mean For Broadway Shows?
The Ticketmaster affiliate program from "buyat" was especially valuable in driving Broadway buyers to Ticketmaster. Most Broadway ticket buyers are unaware of who the ticketing agents are for the various Broadway shows, so they go to theater and Broadway-specific web sites such as Playbill and nytix.com to find this information. As a result, the affiliate links provided a valuable service to Ticketmaster by delivering Broadway ticket buying customers to its virtual doorstep.
Broadway web sites that previously drove traffic to Ticketmaster under the affiliate deal are expected to link to Broadway ticket brokers or promote Telecharge based Broadway shows instead. Broadway ticket buyers will suffer the most as a result, since the secondary market generally charges more for Broadway tickets than Ticketmaster, which, as an official Broadway ticket seller, cannot sell above a set price.
Ticketmaster Charges More and Does Less
The changes put added pressure on Broadway show producers and marketers. They had previously relied on Ticketmaster and its affiliates to get the word out about their shows through Ticketmaster affiliate program, but by axing the program, Ticketmaster is essentially cutting a significant proportion of its marketing work, leaving Broadway producers to work overtime themselves to market to potential customers. Ticketmaster is not lowering its ticketing fees accordingly to match their marketing savings. So what exactly does Ticketmaster do to deserve their hefty commission? Well, it seems like it's less and less after each round of cuts. At this point, it appears Ticketmaster just prints or emails the ticket and charges a hefty commission for it without providing any other intrinsic value other than the new "seat chooser" application, that allows you to choose your exact seat on a map of the theatre, much like an online airline seating map.
Ticketmaster - The Minor Player on Broadway May Become Further Marginalized
Ticketmaster isn't the only game in town for Broadway show ticketing. Ticketmaster's rival on Broadway is Telecharge, which currently owns 75% of all Broadway show ticketing, making Ticketmaster the minor player in the Broadway ticketing game. Telecharge has a healthy and active affiliate program currently in service. The changes at Ticketmaster may foretell a future where Ticketmaster no longer has a presence on the Broadway ticketing market. Telecharge is already kicking Ticketmaster's butt in many areas, including a better "Broadway tailored" ticket system, better way of handling discount ticket sales, and a less clunky checkout experience for its clients. Ticketmaster does have one big redeeming factor: its "select-a-seat" graphical interface is a huge hit with ticket buyers (It allows you to see the exact location of your seat on a ticket map), but Telecharge is scheduled to launch their own version of the same in the coming months and their version promises to also have an actual picture view of the stage from that very seat, effectively one-upping Ticketmaster's system.
The marginalization of Ticketmaster on Broadway may be by design as Broadway only accounts for tiny amount of Ticketmaster's overall sales revenue, so the loss of Broadway ticketing for Ticketmaster may be an orchestrated "acceptable loss" that the Ticketmaster management will happily endure to cut costs and improve the Live Nation stock price.
Broadway Theatres Face Hard Choices
The Broadway theaters currently using Ticketmaster - which include the all-powerful Disney on Broadway - may grow weary of Ticketmaster's cost-cutting measures and finally switch to Telecharge or perhaps, given their size and revenue, create their own ticketing system. Union agreements and contracts for each of the theatres have handcuffed many Broadway shows to the Ticketmaster model, but the increased cost and reduced service from Ticketmaster may provide the tipping point for Ticketmaster to get out of the Broadway business, as Ticketmaster may no longer offer a viable service to Broadway producers.