“I come from a line of entrepreneurs, and I always knew that was what I’d like to do,” says Baker. “But you can’t just wake up on Saturday and say, “hey, today I’m going to start being an entrepreneur.” I really had the moment of inspiration when I got the Lion King tickets. I thought this system isn’t working, there has to be a solution. I already had the drive, and this was the spark.”
Baker and a fellow Stanford student set up StubHub, the concept for which was an online ticket exchange for people to buy and sell tickets for live events. The concept was clearly proven when, in March 2007, the company was sold to eBay for $310m, and was at that time trading tickets worth $400m a year.
Baker left Stubhub in 2004 (while retaining a 10 per cent share, allowing him to cash in on the eBay deal), and several months later came to the UK, with a view to setting up a similar company for the European market.
Local markets
“The fundamental concept of ticket resales has been around since the days of the gladiators. But the important thing was to align myself with people who understood the local markets,” continues Baker. “You can’t just come over and say this is how it works in the US, so this is how it’s going to be here. I could come over and say, “the Chicago Bears did this with us.” To people over here, the Chicago Bears might as well be an animal act.”
Baker’s business plan proved persuasive, and with the backing of some heavyweight partners including Brent Hoberman, founder of lastminute.com, Ian Todd, president of IMG, and German media mogul Dr. Herbert Kloiber, Viagogo was launched in August 2006.
Again, it is an online secondary ticketing exchange, where every transaction is guaranteed. In return for providing a “safe and secure environment” in which to buy tickets, Viagogo takes 15 per cent of the ticket price from the seller and 10 per cent from the buyer.
Although not the first into the market in the UK, Baker has differentiated himself by the size and scale of the operation, and the partnerships he has brokered.
He has exclusive deals with Manchester United and Chelsea, which overcome anti-hooligan laws preventing the resale of tickets, and mean that Viagogo is the only means by which season ticket holders can legitimately resell their tickets. Other topflight football and rugby clubs have since followed suit.
Viagogo was also the first reseller to do a deal with a record label – Warner Music Group, and the first in with a concert promoter – Live Nation. With a keen eye on his target market, Baker has also tapped into the Facebook phenomenon, with an application that allows users to align their Facebook and Viagogo accounts.
“Anyone can put up a web site, and obviously there were people who were reselling in online broker sites,” says Baker. “But when you have the experience to be able to cut the right partnerships, which increases size, it makes it very difficult for people to copy you and overtake.” As the mantra goes, the bigger you get, the faster you grow…the faster you grow, the bigger you get.
Since its launch under two years ago, Viagogo has traded around £50m worth of tickets, and doubled its revenue every quarter in 2007. This year should bring more of the same, according to Baker. “We are continuing to see absolutely blistering growth. It’s off the chart and we don’t see any reason for it to slow down.
We have built this leadership position and it’s very hard for smaller outfits to compete.”
Driving factor
Baker ’s leap into the world of secondary ticketing was driven by his own poor experience, and he is keen to sell himself as “fan-friendly” or “working for the fan.” But ask about the inflated prices at which some tickets are sold, and there is a quick reality check. “We are not about communism, we are about an efficient market,” says Baker. “Efficient markets drive prices down, give people transparency and the ability to buy safely and securely. I don’t mean that we work for the fan in that we are looking to give away all our money to them. I mean they are our customers and we have to do a good job for them or we will go out of business.”
With only one month into 2008, prospects are looking very good for Viagogo and the secondary ticketing market.
Having secured significant funding, the company is launching in the US, where it will cross swords with StubHub. Back in the UK, Baker is celebrating the findings of the Culture Media and Sport select committee report into ticket touting.
Despite lobbying from the music industry, the committee found that up to 40 per cent of tickets were being sold on the internet and that it was “neither practical nor in the interests of consumers” to ban ticket sales through the secondary market.
The response from the ticketing industry was immediate. Having previously stated that the unauthorised resale of tickets at more than face value should be a criminal offence, US giant Ticketmaster has hurriedly acquired UK secondary ticket sellers, Get Me In. It’s a clear case of if you can’t beat ’em, join ’em….
Baker is delighted. “It’s amazing to see. In 2006, no-one knew what secondary ticketing was. Now it’s been adopted by our major partners, and big companies like Ticketmaster are fighting to find anyway to get into this space.” And “this space” looks like a very good place to be right now.
