A few years back Anderson Bell, then a promoter for local nightclubs like Reserve and Crescendo, tried to buy a Pearl Jam ticket through Ticketmaster. "I was on a limited budget," he says, "and the service fees were kind of a deal breaker for me. It was something like 30 percent of the face value of the ticket. . . . It just woke me up to the fact that something is really wrong with the system."
For many consumers, there's no realistic way to opt out of Ticketmaster's formidable fees except to opt out of the concerts the company services—no sensible person would show up at a Pearl Jam concert hoping to buy a ticket straight from the box office. And opting out of the show is what Bell ended up doing.
That experience was a big part of what motivated Bell, who has a bachelor's degree in marketing from Georgetown, to develop an alternative to the Ticketmaster model. In March he filed a patent for his idea (it's still pending), and in September he launched an Internet-based ticketing service called FanFueled based on that idea.
Like Ticketmaster it's a centralized operation that sells tickets for venues or promoters and tacks on fees to make money. But unlike Ticketmaster it sets aside half of the fees it brings in—and out of this pool of money it makes small payments to buyers, rewarding them for driving further sales by promoting the event via social networks.
The process of purchasing a ticket through FanFueled is pretty much identical to that on most ticketing websites, except at the end of the transaction buyers are offered buttons to create posts on Twitter and/or Facebook that include a link back to the event's FanFueled page. When someone purchases a ticket through that link, the original buyer gets paid a portion of that ticket's service fee, ranging from 7.5 to 20 percent. If a third person buys a ticket through the second buyer's link, both of the first two buyers get payouts—and so on. The amount FanFueled kicks back is bigger for direct referrals and for smaller shows; for the biggest concerts the payouts continue to the sixth degree of separation, so Bell has prudently set the rate of return low in such cases. The sums involved are modest, but they can snowball fast. The money is deposited into the referrer's account, and once the total reaches $10 it can be cashed out in the form of a check or PayPal transaction. Soon it will be possible to put the money toward another FanFueled ticket or donate it to charity.
"Ticketmaster's model is completely antiquated, and it's kind of a cancer to the industry," Bell says, calling from the Billboard Touring Conference and Awards in New York City, where he's promoting FanFueled. "It's sucking out a lot of the resources without putting anything in for the ecosystem."
FanFueled determines its fees according to a transparent system: $1.49 for tickets under $25, $2.49 for tickets more than $25 but less than $100, and so on up to a maximum of $4.49 for tickets that cost more than $200. (The service is free to organizers of free ticketed events.) If you've bought a ticket lately through Ticketmaster or any of its affiliates, like Live Nation or TicketWeb, the first thing that will strike you about these numbers is that they're small. Ticketmaster tacks a $12.15 service fee onto a $149.50 Sade ticket, for instance; FanFueled would charge $3.49. Tickets to Atreyu's House of Blues date next week have a face value of $23, but Live Nation adds a $2 facility charge and a $9.05 convenience fee—which compares pretty unfavorably with the $1.49 FanFueled would charge.
Sales of recorded music have fallen by roughly 50 percent in the decade or so since Napster arrived, and for much of that time the conventional wisdom has been that live performances were where artists (and the music biz in general) could still make money. But the concert industry, which grew throughout most of those years, is now flagging too, presumably a victim of the lousy economy. In July the New York Times reported that total revenue and number of tickets sold were both at five-year lows, down 17 percent in the first half of 2010 compared to the same period last year. Bell points to the trend of venues and promoters offering deeply discounted last-minute tickets as evidence of the industry's increasing desperation.
Nonetheless, it may be a good time to get into the ticketing business. Earlier this year the Justice Department cleared Ticketmaster's merger with behemoth promoter Live Nation, and though the combined entity has promised not to do anything nefarious with the information Ticketmaster accumulates in the process of selling tickets for Live Nation's competitors, many of those competitors aren't buying it. The local Jam Productions filed suit against Ticketmaster last week in Cook County Circuit Court, looking to nullify an exclusive contract that wasn't supposed to expire until next year. Bell says he thinks Jam may win, and he suspects that lots of other promoters will likewise sever ties with the new behemoth. Needless to say he hopes FanFueled will pick up some of their business.
FanFueled is still a small operation—at press time it had only paid out a little more than $600 to fans, and it had 19 events listed before the end of the year, mostly in Illinois but also in New York, Ohio, Tennessee, and California. (It's hard to get a feel for how many concerts Ticketmaster is handling in Chicago through December because its website will only display 500 results at a time.)
But he's thinking ahead. "The whole industry would be healthier" if his model were standard, says Bell. "We look at Ticketmaster as a kind of a pollutant and we look at FanFueled as clean energy." It's his hope that FanFueled's users willtake the money they make from referral sales and put it back into tickets, band merchandise, drinks at the show, and so on. He says that venues, promoters, and artists could also benefit from the site's potential to target superfans, who could turn FanFueled into something like a game, competing to rack up the most referral sales in order to earn perks like VIP passes or meet-and-greets.
Charles Festa, community manager at Threadless—another Web-based company that relies heavily on social networking and crowdsourcing—thinks Bell is onto something. "Whenever we do something at Threadless and whatnot some people will be into it and some people aren't," he says. "The ones who are into it are more likely to write about it and tell their friends. Giving rewards to the ones who are most involved, it's brilliant. Someone at FanFueled might not be the most excited about a certain event but you have thousands of people who are excited about it who can spread the word."
The trick for FanFueled, of course, is to attract promoters. The users won't come en masse until there are enough compelling events to attract them. So far the highlight of FanFueled's roster is the Chicago Bluegrass & Blues Fest—not exactly the hottest ticket in town, but not a bad get.