The secondary market drives everybody crazy, except perhaps ticket brokers. Also known as ticket agents or scalpers (or touts in England), these entrepreneurs are willing to take the risk of buying tickets in hope they can sell them for a profit. And although brokers may leave many such tickets unsold, we all have experienced (if not firsthand at least in the press) the inordinate amount of money the brokers make. It is that spread between the face value and the final ticket price that certainly drives artists and promoters as well as fans a bit crazy. While admitting that no one holds a gun to the head of the ticket buyer when purchasing a Taylor Swift or Rolling Stones ticket at an eye popping price, there seems to be something inherently unfair going on.
The live music industry from the artist through the promoter with stops at Live Nation, AEG and Ticketmaster have tried to deal with the apparent unfairness of a free market pricing system.
Dusty and Brando Rich
Enter two brothers who were really bummed when Phish announced a breakup. Although the fan community was saddened, Brando and Dusty Rich in particular were devastated when the band reformed in 2009 and ticket prices approached $5000. CashorTrade was born.
I recently spoke with Dusty Rich (CMO and co-founder), who provided an under the hood look at a business model that puts a very tight cap on buying and selling tickets on the secondary market.
In the wake of being fully bummed at the Phish secondary market, the brothers decided to take on the fight. They went from town to town setting up a tent in parking lots where bands were playing. The brothers rallied support and garnered sufficient confidence to set up a website, the only platform of its kind where tickets were exchanged strictly at face value.
Early analog days, testing the proposition
Despite that valiant effort, it quickly became apparent that a sustainable business model needed to be established. Dusty explained that a freemium model was the direction to go. The casual user can use the CashorTrade platform for free, with the buyer paying the lowest commission in the industry, a mere 10%. Ticket prices are strictly limited to face value or below. For the more devoted fan, a subscription at four dollars per month is available for gold membership, providing early access to tickets. Subscribers are promoted as being the Pioneers and founders of the “Face Value Movement.”
Although CashorTrade gathered steam, Covid dealt a severe blowback across the entire live music industry. But during that forced break in the action, the brothers built up some capital. They also built an impressive advisory board with representatives ranging from Ben & Jerry’s co-founder Jerry Greenfield and executives who have worked at companies like AEG, Ticketmaster Music, CEG Presents, HearFirst, SoundVision, Red Light Management, Amazon, Live Nation, NBA and Warner Music.
Dusty proudly mentioned that CashorTrade now has 30 staff members, all music fans. The platform has grown to include 400,000 app members and another 1/2 million in their social network ticket trading groups. Dusty described that the company Is built on four pillars: trust, transparency, community and face value. Their site has become a place for fans to meet.
Indeed, CashorTrade has become a place where no other part of the secondary market dares to tread: users are not only afforded the ability to create profiles, but there is also a messaging social network as well.
These elements are diametrically opposed to the opaque secondary market currently in existence. I have had various conversations with brokers in the secondary market and they were happy to speak off the record. All these conversations were fascinating in trying to understand the incredibly dynamic and often mysterious permutations related to pricing availability and the consumer’s mindset. Computer-driven bots gobble up tickets during the initial on sale, before many fans are even able to make a purchase. Most brokers make huge profit from the top 1%, leaving many unsold seats. The broker often buys a slew of tickets comprising a few choice seats and many back of the house seats. Dusty also brought up the bad optics of empty seats, especially if the show is a sellout. Although the artist was paid for those seats, neither the artist nor the fans like it as much when the house is not full.
CashorTrade also differs from the click and buy process of the rest of the secondary market; sellers must accept an offer before a transaction is finalized. Buyers commit to purchasing, while sellers review their fan score (based on reviews and connections) similar to how hosts on Airbnb or Uber approve guests. Advanced algorithms detect broker activity and can revoke their access. Even artists and partners use the CashorTrade platform for ticket drops and presales, ensuring tickets go directly to real fans rather than ending up in the hands of resellers.
Dusty emphasized that CashorTrade is really a grassroots movement. “We are more a movement than a Silicon Valley unicorn,” he said.
I did a quick comparison, using Dead & Co. Having seen them a couple times at Sphere, I recall the scene outside the venue with folks looking for a miracle. On my birthday in a couple weeks StubHub shows a ticket in Section 206 for $1298 and a few in Section 107 for $899. CashorTrade lists a handful of tickets in those sections….at or below face value. What’s not to like?
The company has an impressive and growing list of artist partnerships including Tyler Childers, String Cheese Incident, Goose, Billy Strings and most poignantly Phish.
The brothers hope to expand into sports. Although I forgot to mention it with Dusty, I’ve always been intrigued with the dichotomy of sports and live music; it seems to be a badge of honor to show how much you’ve paid on the secondary market for Super Bowl tickets, whereas that sentiment is rarely seen in the live concert sector.
Attesting to the platform’s growth, Dusty proudly mentioned that the platform was responsible for $30+ Million in face value transactions in the last 12 months.
We also discussed past efforts to address high ticket prices, such as dynamic pricing. Although all consumers have become accustomed to price differentials with airline tickets, hotel reservations and car rentals, live music fans feel duped with fluctuating prices during the primary on sale. “That is why Taylor Swift turned it off,” Dusty reminded me.
We also discussed how Garth Brooks would steadily add more nights as the on sale was occurring, thereby meeting demand and signaling a risk to buyers intending to resell the tickets for a profit.
Dusty spoke about how ticket buyers who can’t attend can put their tickets up for less than face value in order to recoup at least some of the original cost, with any shortfall being directed to a charity. That is a commendable function.
As to competition for CashorTrade, it seems evident only the brokers stand to lose. If the initiative gains traction everyone else in the food chain would benefit. As to growth strategy, Dusty indicated that continuing to partner with artists and event holders as well as primary ticketing companies remains front and center.
If the brothers are successful, brokers and scalpers will pretty much go the way of the traditional travel agent.
Most recently in his strategy of headline-inducing executive orders, Trump dusted off the magnifying glass on the secondary market. Prior administrations, both at a national and regional level, have attempted to address the seeming inequity of skyrocketing ticket prices.
As we began to wind up our conversation, I asked Dusty about his statement in a recent press release:
“The executive order is a step forward, and as fans vote for transparency, predatory platforms supporting brokers armed with bots will become a thing of the past. It’s time to turn the page and usher in the next generation,” says Dusty Rich. “We are hopeful that this call to action will enforce fan first legislation, steering ticketing away from scalping models to peer to peer platforms.”
Dusty reminded me of the Better Online Ticket Sales (BOTS) Act during the Obama administration. “Legislation is a tool, but not the full answer. Bringing visibility is the answer,” asserted Dusty. That subtly and astutely aligns with opponents of such legislation, who ask rhetorically where is the harm to consumers in the free marketplace of a secondary market that uses the invisible hand to set pricing.
Today’s press release from CashorTrade points out the platform already delivers what Trump’s executive order is pushing for:
- Face value
- No scalpers
- Verified community
- Transparent pricing
- Fan-protected transactions
I came away from this discussion with Dusty that the unique nature of CashorTrade as a grassroots movement coming from the fans themselves and leaving government out of the picture might be the most viable path forward.
Check out the 99 second sizzle reel here.
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