| Type | Private |
|---|---|
| Industry | e-commerce |
| Founded | London, UK (2006) |
| Headquarters | London, UK |
| Key people | Joe Cohen, Founder & CEO |
| Products | online secondary ticketing, online ticket exchange |
| Website | www.seatwave.com |
Seatwave is an online ticket exchange service operating in the European market.[1] It was founded by Joe Cohen in 2006 with the aim of offering consumers a safe and transparent way to buy and sell tickets to live events including music, theatre and sport.
To ensure that tickets sold on the Seatwave site are legitimate and accurately represented, sellers are not paid for their ticket sales until after the event has occurred and buyers have gained entrance.
Buyers and sellers never have contact with one another — Seatwave acts as the middleman — but crucially the site guarantees all tickets. If a buyer pays for tickets that never arrive, Seatwave will find replacement tickets or issue a full refund. [2]
The company offers two consumer protection guarantees. TicketIntegrity guarantees that all tickets come from legitimate sources only.[3] Its TicketCover insurance, a joint venture with Mondial Insurance, refunds the full cost of tickets purchased on the site (including postage and packing) if an event is cancelled or if the ticket holder is unable to make it to the venue for a variety of reasons including motor breakdown, injury or jury service.[4]
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Seatwave was founded by Joe Cohen, formerly of Match.com and Ticketmaster, in May 2006 and began online trading in February 2007.[5] The company secured $25 million in February 2008 in a Series C funding round led by Fidelity Ventures and including existing investors Atlas Venture, Mangrove Capital Partners and AdInvest.[6] On 1 June 2009, Seatwave announced it had raised $17 million in fourth round Series D of funding.[7] taking the company’s funding total to $53 million / €38 million.[8]
By the end of 2010, Seatwave had recorded cumulative losses of €40 million. This left Seatwave in a negative cash position with current liabilities exceeding cash and accounts receivable. As a result, the company was forced to restructure. SW fired numerous employees and drastically cut expenses. In addition, Seatwave was forced to call upon its existing investors for a $4 mm emergency line of credit to cover its cash shortfall.[9] Part of SW’s recent financial difficulty can be attributed to the recently publicized issues with its financial controller. According to court filings the controller was fired after being “the victim of a fraud when approximately €1.7m was lost from its German bank account” [10]
Seatwave was featured on Media Momentum's "Ones to Watch" list in 2008 and in 2009, won their "Fastest Growing Company Award & Best Management" Award.[11] Seatwave was awarded Online Business of the Year award in the Fast Growth Business Media Awards 2009 and scooped the top spot in the inaugural Tech Media Invest 100 in 2009, in association with The Guardian, PricewaterhouseCoopers, Kemp Little and Europe Unlimited for its’ innovation, creativity, team experience and investment.[12]
In early 2009, Seatwave appeared to be bucking the trend despite the global downturn. Seatwave Founder Joe Cohen boldly stated at the time:
"Many investors are hammering companies to cut burn and run at bare minimum Opex levels. That's a trap. You may survive but you won't have a business that's worth much on the other side.”[13]
Seatwave went on to launch a national advertising campaign across radio and print media and in March 2010, launched its first ever TV ad.[14] in a bid to raise awareness of the brand and attract new customers.[15]
The company’s decision to invest millions of pounds into national TV campaigns could help explain how the company burnt through all €38 mm of its venture funding and is now dealing with a cash shortfall.[16] Unfortunately in February 2011, the Advertising Standards Authority (ASA) concluded that the ad breached the UK Code of Broadcast Advertising and banned Seatwave from airing the advert in its current form in February 2011.[17]
Marty Pompadour joined the company as a non-executive director in 2008 but resigned on 23 June 2010.Seatwave's annual report, 31 December 2009, P4
Board members also include Fred Destin, a prominent blogger who often writes about Seatwave. [18] Destin was a partner at Atlas Venture’s London office when the firm made its initial investment in Seatwave back in 2006. In 2010, Atlas Ventures closed its London office and Destin relocated to Boston.[19]
To prevent hooliganism, the resale of football tickets in the UK was made illegal within the Criminal Justice and Public Order Act 1994.[20] Resale of football tickets is only legal when expressly permitted by the individual club. By establishing these partnerships, all the benefits of a free secondary ticketing market are made available to members without contravening any anti-hooligan measures.[21] As of 2011, Seatwave is the approved secondary ticket partner of Fulham FC.[22]
Seatwave has partnered with Grand Union Management who manage artists including The Enemy and Reverend and the Makers. The deal will mean that Grand Union artists can earn fairly from the secondary market whilst providing a better experience and greater access for fans of the bands.[23]
Seatwave has often positioned itself as defending the fan against the monopolistic ways of incumbent industry giants. The company’s goal appears to be to free fans from the shackles of the status quo. In attempting to stop these monopolistic practises Seatwave CEO Joe Cohen, railed against the merger of Live Nation and Ticketmaster. He said at the time:
"We continue to believe this merger will lead to higher ticket prices for fans. We'll wait to see if the US Department of Justice choose to stand up for fans or give them a lump of coal."[24]
Cohen, having been unsuccessful in preventing the deal, continues to act as a spokesman for the ticket market, most recently in the area of paperless ticketing. At a recent online marketing conference he expressed concern at the merged company’s intentions in this area:
“From a consumer stand point it (paperless ticketing) is fantastic, if you have ever used it is great but given the history of Live Nation and Ticketmaster you have to say that they are going to use that power for evil rather than good.” [25] [26]
Cohen, however, was a fan of the Live Nation / Festival Republic announcement on May 2, 2011 that they were going to begin posting tickets to customers “as soon as possible” breaking from the head scratching tradition of waiting until 7–10 days before the event before sending out tickets. Cohen said on his Seatwave blog: “LN and FR’s actions seem to offer a glimmer of hope for customer-centric changes to this industry. Knocking over late delivery and Osama Bin Laden (OBL) in the same day makes it a pretty good one!”[27]
Cohen has been a frequent commentator on the ticketing approach for London 2012 and has frequently debated the issue of the resale of Olympic tickets in the press:
“I’ve tried campaigning against it, I’ve even made suggestions on how to prevent it. But there’s no political will to push for a safe, transparent, floating price exchange. It’s like live entertainment is the last industry where it is wrong to make money from solutions.”[28]
London 2012 will be operating an official face value ticket exchange, however Cohen predicts a strong black market for the London 2012 Olympics, stating that a fixed price is not an “accurate reflection of the market and therefore there will be very little liquidity and very little trading on that exchange.
So if anyone has a 100 meter final ticket to sell, they are going to sell it on the black market,” Cohen said. “They are not going to sell it for 750 pounds if it’s worth 5,000 pounds. The tickets will find a buyer who is willing to pay the market price, regardless of what LOCOG wishes to do.”[29]
It’s simple economics that whenever you have a situation where demand exceeds supply and you have a price cap, a black market is created,” he sighs. “It is just going to open millions of people up to being ripped off.” [30]
Seatwave has been a frequent commentator on the subject of dynamic pricing. This has been a topic of much discussion in the music industry. Joe Cohen recently commented at a conference of online marketers that dynamic pricing was too difficult a problem to solve in ticketing:
“I don’t know what it means to dynamically price an on sale. When something sells out in 7minutes, how do you dynamically price it? I just don’t understand I am not smart enough to figure how you would do this effectively....”
Cohen continued:
“I don’t think that anyone is going to figure how to effectively price this space for a very long time if ever..... It is a thin margin business for most people, so do where does the investment come and how do you get a return on invested capital that makes sense. It is out there to do but I guess I am not smart enough to work it out.” [31]
By bringing together a large number of sellers of tickets to any given event, he Joe Cohen provides buyers with an efficient market and more transparency on what they should fetch. In this way, prices are forced down [32]
As a result of Seatwave’s ongoing efforts to move the resale of tickets to market-based, rational pricing, consumers have purchased tickets for over 250 events at prices below face value. A significant number of tickets to Britney Spears, Madonna, Six Nations, Twenty20 World Cup, Oasis and Take That were all exchanged for less than their original prices [33]
The secondary ticket market is estimated to be worth around £1 billion in the UK and up to £5 billion across Europe.[34][35] The secondary ticketing market is more mature in the United States with many states repealing their anti-resale legislation, but the European market is catching up quickly.
In 2007, the UK’s Department for Culture, Media and Sport appointed a Select Committee to investigate the secondary ticketing market and outline recommendations on legislating the industry. On 10 January 2008, the Select Committee published a report which summarised their findings.[36] They identified a number of key benefits for consumers including:[37]
Seatwave bore testimony at the inquiry where Joe Cohen presented his view on the secondary market. Other attendees included Mr Paul Vaughan, Commercial Director of the Rugby Football Union and Mr Harvey Goldsmith CBE.[38]
Harvey Goldsmith spoke out against the secondary ticket market, as did many of those invited to give oral evidence before the committee
In April 2008, the government responded to the Select Committee’s reports supporting the findings that legislation should be a last resort, identifying a need for the primary ticketing market to be improved and urging all players in the industry to work together to develop a voluntary code of principles.[39] Seatwave has declined to join any trade association connected with secondary ticketing in Europe ( ASTA - EUSTA) citing fundamental differences.
Many academics have undertaken research into the secondary ticketing market to determine the effects of legislation on the industry.
Connolly and Krueger of Princeton University argue that the secondary market exists because of demand uncertainty and that, in many cases, if the tickets were not under priced to begin with, the secondary market would not exist.[40] Elfenbein, of Washington University, suggests that regulations offer scalpers (touts) the opportunity to charge a high mark-up on tickets.[41]
Live Performance Australia, the trade body for Australia’s live entertainment industry, investigated the effectiveness of regulation on the secondary ticket market and found, based on other countries experiences, criminalization is largely ineffective in preventing scalping for live performance events.[42]
Dr Eamonn Butler of the Adam Smith Institute, a free market think-tank, wrote a piece suggesting that the government should steer clear of the secondary ticketing industry, recommending that the free market is the best mechanic to ensure that tickets end up in the hands of those who most want them. Butler wrote in favour of the decision by the Sport, Media and Culture Committee to reject heavy restrictions of the secondary ticket market saying "An open and secure secondary market has got to be good for fans".[43]