Ticket sales as an industry, have never been more controversial. Because the secondary ticket market is where the majority of tickets are purchased - through ticket brokers like StubHub, TicketMaster and other online sites - fans are often left with one of two options in seeing their favorite band or act: pay far above face value for the tickets, or stay home.
As an example, tickets to the upcoming Rolling Stones 50th anniversary tour were being listed as high as $10,000.
The result has been a number of start-ups launched to try and capitalize on the appetite for sold out shows, but also the secondary market for tickets. One has even managed to combine buying tickets online with giving to charity, a unique combination that has grown into a successful venture in just five short years.
Tickets for Charity was created in part by founder Jord Poster, a man that helped start Priceline.com, who had a vision to turn buying into giving. In 2007, Tickets-for-Charity became a "lab experiment," according to current CEO Jay Whitehead, to create a new type of ticket buyer, one that wanted to do something good while also making a purchase. The concept was pretty simple, yet powerful: Recruit large corporations like JP Morgan Chase, Exelon and HP to donate corporate tickets that can then be sold at face value, with a portion of the proceeds going to one of 100 different charities - including Habitat for Humanity, the Boys and Girls Club of America and Autism Speaks. Customers get tickets and a charitable tax write off, making it a "no-brainer" or sorts.
The results thus far have been impressive for the Boston based firm, including raising about $10 million for charity over the course of 10,000 events last year alone. The company has also proven to itself and others that it can change buying into giving with ticket sales and corporate donations.
In truth, it's a win for all parties involved. Customers get access to tickets to major events that wouldn't otherwise be available, a corporation gets to write off a donation of tickets that would have gone unused, and the charity of choice gets a donation it would not have seen otherwise. And of course Tickets for Charity takes a processing fee to cover the overhead costs and to make a profit. It also has proprietary technology that allows a ticket stub to have a "bifurcated receipt" printed, that allows the portion donated to charity to also be written off as a tax deduction by the purchaser.
There are actually a number of ways tickets can come to Tickets for Charity and be sold, all with money going back to charity. One is for the high demand ticket where the amount over face value goes to the charity. In that case the premium that would typically go to a scalper or ticket broker actually goes to a worthy cause. Another is for a distressed ticket that could be donated and resold. In that case the entire price of the ticket less the service charge goes to charity. Another is for a distressed ticket whose owner wants a portion of the price back in cash, with the balance going to charity and a small service fee to Tickets for Charity.
That begs the question, what exactly does the corporate ticket market look like? How many tickets purchased by corporations each year go unused?
According to Whitehead, "Corporations buy 13 million tickets for pro sports and major concerts each year and between 30 and 70 percent of them go unused each year. That means the addressable market is between 4 million and 9 million unused tickets potentially re-deployed to raise money for charity." Those numbers are for US ticket sales only.
Not surprisingly, the biggest challenge at the start was getting tickets to sell, Whitehead said. "Actually, the acts got Tickets-for-Charity immediately, but had too few spare tickets to completely supply us. So while the artists loved us, we still had four high hurdles to jump."
Those hurdles were acquiring large supplies of donated tickets, generating a big ticket-buying audience in each market, enduring the passing of Post in August, and raising enough money to invest in the talent, technology, patents and charitable-donation compliance licenses it needed to succeed. It has succeeded in clearing nearly all of them.
The company hasn't yet made a profit, but that is on the short list of goals for the upcoming year. By year-end 2013 the company is focused on building a ticket-buying audience of three million members, which should be enough to accomplish the profitability goal.
"Our next success metric is making a profit, which happens in mid-2013 when we sell at the 250,000 tickets-per-year pace," said Whitehead. "At that point, we’ll be raising about $10 million a year for our charity partners. Then the next goal is selling one million tickets in a year, which will net about $40 million annually for charity."
As for advice to other area small businesses and start ups, Whitehead had this to say, "Keep two balance sheets: one showing your financial capital, the other showing your human capital, which means the total of the talent your business can access. The contents of those two balance sheets will determine your destiny."
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Jason Keith has been working for and with small businesses in the New England area for more than 10 years, specifically small, micro businesses. Born and raised in Massachusetts and a former journalist, he provides a unique perspective on the issues facing small businesses locally and nationally.To reach him directly email firstname.lastname@example.org.
This is a personal blog. The opinions expressed here are the author's alone.