Music Ally

In the fourth of a five-part series on self-service ticketing we speak to Steve Butcher, CEO of Brown Paper Tickets, originally based in Seattle but recently launched in the UK. Brown Paper Tickets is claims to have the lowest service fees in the market and doesn’t charge extra to mail a physical ticket out to a customer in the UK.

Steve’s comments can be found within a feature in last week’s Music Ally PDF Report alongside insights from executives at companies including See Tickets, Clubtickets and EVentbrite. If you’re not yet a Music Ally subscriber you can sign up for a two week trialin a matter of minutes to read the original article as well as stories dating back nearly ten years.

Meanwhile, for the Q&A with  Steve Butcher, CEO of Brown Paper Tickets, continue reading after the jump…

Q: How did Brown Paper Tickets come about?

A: Our founder William Scott Jordan allowed people to list their events on an aggregation site called Eventnation that started in 1998.

That gave William a perspective on people trying to market their events and most of them were unhappy with the tools that were available. For the most part at that point you had to have a big enough budget or be interested enough for a “real” ticket company to help you. At that time there weren’t many makeshift tools. So he started developing another service that would become Brownpapertickets. That was started by taking all the needs and wants of ticketing and making that the diagram for the business plan.

The clincher is: can you deliver all that and still make money? And that’s what we’ve been working on. It turns out you can. And that is what we’ve been working on.

When I became involved we decided that it would be important to test the system by putting it through the hardest events and that turned out to be theatre events. They have all the pitfalls that require a lot of service: an older clientele, season passes, assigned seatings, group buys, discounts presales, will call, physical tickets.

The great thing about the theatre groups is that generally they get by on the skin of their teeth. If you help them sell more tickets they might be able to do one more show. Often the people who work in non profit theatre also do something else, such as music shows or tours or film festivals. So that’s how we grew – we didn’t do any marketing, we still haven’t done any marketing or PR…it’s all been word of mouth.

Q: How are you funded?

A: We’re still growing after eight or nine years with no venture capital – we’re a private company, it’s all bootstrapped, we did not want to take VC money, didn’t want to sell the company, didn’t closely associate ourselves with a Google / eBay / Yahoo. We’re an open source company so 98/99% of our software is open source. We felt it was important to be independent in an era when companies are notorious for being born to be bought.

We’ve been growing 200-300% a year since we started and it’s been picking up more especially when the recession started as promoters shop around more.

Q: What are the costs for your service?

A: We do free events for free  – we do will-call with no phone support – you can do a free event and pay us and we’ll handle tickets and phone – a zoo does a big free tour and it’s mayhem, 10000 tickets and it’s mayhem, they pay us for that. They pay the service fee.

We’re not charging the producer anything for the service – we’re not digging them on credit card processing. The ticketbuyer they have their 99p and the 2.5% charge – that covers any way to buy the ticket and any type of ticket – will call, physical ticket, they can switch back and forth order online or in person or over the phone.

Here in the States, we’re moving our pricing model for under $10 to 99 cent flat. If it’s over $10 it’s $1.99. If they go over the $100 ticket price we can get them a custom merchant account; we’ll help arrange it so they have a good rate it’s their own merchant account, they can have us handle the refunds any way they like, it’s cleaner with that much money.

Q: Some of your competitors, like Eventbrite, allow producers to have the cash as it comes in. Is there anything you can do to help event promoters get their money in advance?

A: If they need the money before the event happens, we can work something out, it’s essentially a loan of their own money we have to follow the bank rules and the credit card rules – but anyone’s welcome to create a custom merchant account and have the money delivered to their bank account.

Q: Your fees are quite a bit cheaper than using a conventional ticket provider, and you send out paper tickets by first class post at no extra charge. How do you do it?

A: We’re a little bit more efficient – from the stats we’ve found with how many minutes on hold people wait or what our turnover efficiency in buying a ticket is. Also happiness in using the website because they don’t have issues with it. All of those issues make people choose the most efficient way of buying a ticket in the first place.

Wee can profitable at the eighth ticket on average. Compare that to Ticketmaster. They don’t touch events that are only eight tickets – that’s nothing for them.

We try to do everything ourselves – we don’t have to answer to shareholders or VCs or someone who has a deadline. Sometimes we take too long but we can take our time to get things right. Because we don’t have deep pockets we spend more consciously and try to be wise.We are more efficient internally than other companies. It’s about efficiency, about volume and we try to be frugal about how we spend. If it adds to efficency or customer service then that’s where we’ll spend. This year we’ll do close to 50,000 events worldwide so if there’s enough volume for efficient reductions we don’t have to spend money on marketing. I jump up and down when someone calls from a magazine, that’s wonderful, but we don’t go out looking for it.

Q: So why do you think the giant ticket providers get away with their ticket service fees?

A: To defend them some degree I think they’re dinosaurs, one of the most inefficient companies, their mechanisms are inefficient so it costs them more than it would someone like us. They’re focused on maximising profit so they have to spend money to make money. That’s snowballing into service fees that are very large.

I can’t go too much further than that. The service fees it almost goes without saying it can’t be warranted.

Things like venue fees – that’s different. We’ve been talking to the bigger venues – cities that own stadiums and they have to charge a venue fee. Let’s say that Chicago has a stadium owned by the city of Chicago and they bring in a management team for that venue and they’re renting it out to car shows and maybe a football team. So when those people put on their event they need to pay a venue fee for each person that comes. That charge has to be transparent so the fees are clear to the consumer…it’s not a fictitious service fee like the “service service fee”.

Q: What about where promoters or bands are given rebates – in other words a slice of the service fee? Do you offer that?

A: Some of the ticket companies, certainly the bigger ones they pull a percentage of the gross – a U2 tour may get 2-4% of the gross pulled out from the sales. Then there’s the service fees let’s say they’re 20%, some of that comes automatically as a pre-arranged agreement, some of it is a reward for signing the contract anew…it’s a very grey area.

We don’t do it and we lose quite a lot of business because of it. We had a fella who had twenty-something clubs; he liked the service, thought it was good, he needed $3.50 back on the service fee. We said you could raise the price and include the service fee in the raised price but he said he couldn’t get past the $10 ticket level.

We really value the transparency – people prefer transparency. They’d love it if it was a single fee, we offer that you can charge $12 flat and we get a buck twenty five inside it – customers just want that.

Q: If I was a big promoter I might be wondering whether your service is robust enough to handle my events. What is your response to that?

A: We have our internal benchmarks based around service levels…every once in a while we get an event that tests us. We have three call centres so that gives us a daytime 24 hour clock on everything. We add people quickly and our systems for selling the tickets are really fast – 30-45 seconds faster than most ticket call centres.

In terms of volume, having something hit us really hard, if we suddenly had Ticketmaster say tomorrow “can you sell the U2 tour tomorrow?”, our servers can handle quite a bit, we’ve had some really big intensely sold events, but we’re probably not up to that scale.

The important thing for a promoter is: do you have all the services I need? Do you have all the basics, the 200 things you’ve got to have – yes, we have everything and more as far as features.

We integrate with Salesforce as well as various marketing services so you can plug into Facbook, Twitter, MySpace…but as long as we can stay independent we’ll partner with nayone and our API is really robust and ready for all sorts of integration  and application writing – we’ve seen some interesting things come out

Q: What other new features are you shouting about?

A: We now have an event marketing department that markets the events we have – so if you’re a comedian on tour doing US, UK and Canada we can push press releases, help out on group buys for local weekly newspapers, it’s having a second or a third publicity dept working in your corner.

The second thing we have is a sponsorship matchmaking service – we’ve done it in a way that’s really egalitarian. The smallest or biggest events can buy for the same money from the same sponsor. Any sponsor (be they a pizza company or Budweiser) can shop the same list of events as anyone else.

Q: And you have an interesting feature than enables guests to queue for sold out tickets. How does that work?

A: The scalping of tickets and the secondary market is a hot topic. We’ve been going back and forth with this and we’ve watched it become legal thanks to the lobbyists…we’re stuck with it unless we want to change the law…The basics are that we want to work within the law to increase the service and the quality of the secondary market. We want to give the power and control back to the producer of the event. It’s up to them if they want to have the event scalped. We’ve created a suite of tools that makes it difficult for an event to be taken over in an arbitrage way – they can’t jack the prices up.

The producer can select all will call, they can limit number per purchase, they can limit the time period before a ticket can be sold limit one sale per IP address, there are a dozen tools…..then the next thing we did is create our own reseller network as ultimately the only way to guarantee the ticket is genuine is for the ticket company to be the one reselling it.

If customers want to buy the ticket they will go to the place it’s marketed – our website – and if right there it says “general tickets have ended but there are four tickets on the aftermarket”, we’re taking responsibility and have given the producer a chance to make more money. We’re coming out of the cake for the first time with this anti scalping feature. It’s a bit of a campaign. We’d like all primary ticket companies to do what we’re doing or do it better and really clean up the issues we’re having in the industry. As a not-just-for-profit company we care more about the industry than making the most money. We can’t do this alone: everyone has to take responsibility and allow producers to take care of their customers.

Q: What are your plans for worldwide expansion?

A: We’ve been fully operational in the UK for a few months…it’s been four or five months. It’s been a staggered process getting our offices around the world launched. We have three offices – Las Vegas, Seattle, Edinburgh. There was some logic to the location. We started getting a fair number of customers in Seattle and at about the same time we were realising that we needed to have multiple language support for the call centre (French and Spanish to begin with). Then we thought that we should decentralise our offices to increase redundancy in case of bad weather or a downed phone system. In order to handle international custom you have to have either residency or a relationship with another country – so the EU was the worthy first target – Canada we can handle from the US. Spanish America is a target and certainly the UK but we haven’t yet pushed the French call centre. We can offer localised producer and ticket buyer support, a localised website and the currency will be localised in and out,

Q: Who do you see as your competitors? Are you going against the big guys like Ticketmaster or the new online providers like Eventbrite?

A: There are different levels in the ticketing market. There are the big ticket company levels, there’s a fairly chunky volume of ticket companies in the middle and then at the bottom, the sites that deal with the amateur events. I think we’re the only ones that play at all three levels – we’ve just reached into the big stuff but we’re still doing the mid and low levels.

Tags: brown paper tickets, brownpapertickets, self service ticketing, sell tickets online, steve butcher

This entry was posted on Thursday, December 24th, 2009 at 1:44 pm and is filed under Interviews. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.