With the news last week about the Trump administration’s plan to cut funding for the arts, the Internet has exploded missives about how various groups and individuals are preparing to battle back. Plans to oppose the cuts will come from all walks of society, from wealthy patrons who support the arts to the people whose jobs rely on the arts. Some of the early criticism has come from Daryl Roth. In addition to being the producer of Kinky Boots, Roth is also the wife of Stephen Roth, a New York real estate scion and Trump adviser. While the extent and location of the cuts is still to be determined, the solutions to cover shortfalls are equally undefined. While Ms. Roth has made a career of selling tickets for shows that costs hundreds of dollars, she may get help from an unlikely source: Cheaper Broadway tickets.
At roughly $20 million in weekly gross sales for Broadway’s 25 shows, Broadway tickets are roughly a billion dollar marketplace. Unlike most other marketplaces with a billion dollars in value, Broadway has yet to fully leverage technology. Over the next few years, Shubert and Ticketmaster, the two biggest ticketing companies on Broadway, will begin to roll out technology for the box office in ways that will not only save consumers time and money, but also put more money back into the theaters themselves. While it likely won’t make up for what the Trump administration takes away, in the current environment, it’s a model of cultural sustainability that is more relevant today than ever before.
The Shubert Organization was founded in 1900 and is a recognizable name to anyone who frequents theater. They own numerous theaters around the country, as well as Telecharge, the ticketing platform used by those theaters. Unlike other organizations in the ticketing business, the Shubert Organization has a single shareholder, the Shubert Foundation. Founded in 1945, the Shubert Foundation’s mission is to give to back to the arts via grants, primarily for theater, but also for dance. In 2016, according to Playbill, the Shubert Foundation gave away $25 million in grants to over 500 local productions or theaters. Most of those are small grants on $25,000 to $150,000, which is similar to what the NEA provided. For the Shubert organization, profit is a means to that end, not the end itself.
Over the last 20 years, ticketing has been characterized by the battle between the primary and secondary market. Open marketplaces are different from secondary marketplaces in that inventory can come from multiple sources, from the team or primary holder to secondary sellers, whether fans or brokers. Seatgeek’s deal with Sporting KC and StubHub’s deal with the 76ers are both based on the open marketplace concept and have the goal to optimize revenue for the rights holder. While ultra high-demand events like the Super Bowl could end up being more expensive in an open marketplace environment, the majority of events will be cheaper, including Broadway. For this to happen, though, technology is needed for fans to find those tickets at all.
With the exception of Hamilton and a small handful of other shows currently running, like Dear Evan Hansen, Broadway is almost always a buyers market. The below data from Telecharge, Ticketmaster and TicketIQ illustrates why. According to Telecharge, 85% of shows on their platform have unsold inventory on the day of the show available online or at the physical box office. According to Shubert, 62% of their shows have primary market tickets available under $50. Joint data from Ticketmaster and Telecharge peg the average price for tickets on the primary market at $95. According to data from TicketIQ, which aggregates 90% of the secondary ticket market, the average listing price for Broadway tickets on the secondary market is $252. While the average sale price is closer to $200, it’s still a 100% premium to the true market value.
One benefit for teams of an open marketplace is that fans never actually know if the event is truly sold out. Broadway, on the other hand, wants the world to know that it’s very much not sold out, and their version of ticketing 2.0 will make that much clearer. Without incentive to pad attendance numbers for sponsorship sales, Broadway has much more to gain than lose if everyone knows that there’s a great deal likely available at the box office five minutes before the show. The problem is that in our over-scheduled and hyper-planned world, such serendipitous commerce can’t compete, or scale.
Instead, people are left to assume that the tickets available on Stubhub and Broadway.com are an accurate reflection of ‘the market,’ when the reality is that they’re much more a reflection of the consumer information gap that has resulted from a lack of open market technology. Entire ticketing companies like TodayTix have launched and thrived on this single market opportunity, and many more will do the same in the years to come.
A core tenant of ticketing 2.0 is open access to inventory via APIs that will allow tickets that had historically been stuck behind the box office to find their way onto sites like TicketIQ and others. The logic behind open access is that it allows the teams and rights holders to compete more effectively. Rather than letting third parties capture value on the backs of the risk being taken by producers, open access will allow rights holders and producers to sell anywhere they want. For team and leagues, that will mean that millions of dollars previously running through the secondary market will now funnel back into their coffers and used to sign big free agents that may be the difference between winning and losing. With the pending cuts to arts funding now on the table, the stakes for Broadway and theater arts are much higher than won-loss record. It may very well be a matter of survival.