PC4Media: The Future of Media

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November 18, 2005

The Future of Media

I just read this post by Seth Goldstein and then got up from my chair. My first response was, "Wow". I've been in fairly regular communication with Seth and Greg Yardley of /Root Markets, so I had a general idea of what they are up to. Although, I couldn't blog about it. But, the more I learned about what they were doing, the more I thought it to be a bit scattered. Seth has a way of bringing it all back together. Every move he makes seems to have meaning, even the fact that their offices are located between Wall Street and Madison Avenue. With this post, everyone can see the complete picture. And if it works (I think it will), he and his team are on the verge of building something very big and something very meaningful.

I am looking forward to seeing how events figure into all of this. On one hand, attendance at events is one of the best indicators of attention. So, providing the tools to consumers to share where they are going, like upcoming.org and meetup have pioneered, is an important indication of attention, like clickstream data is.

On the other hand, events is a BIG BIG business where the marketing and advertising of events is extremely broken and expensive. This is true, despite the fact that selling attendance at an event to the right demographic is an easy sale. Therefore, the market is thirsting for ~~liquidity~~ greater efficiency.

The interesting part about what Seth is doing with the mortgage lead business (they just acquired this business), is the parallel to what we are trying to do with events. It is just that the event busines is nowhere near ready for the same innovations. There are lots of relatively new companies trying to supply the tools to consumers and aggregate their "event" attention. (Like there are lots of companies trying to collect mortgage leads.) And there are a bunch of existing companies that supply tools to event planners. But, there is a disconnect between these two types of companies. The consumer services mostly rely on advertising of other things (besides events) as their revenue stream. One of Evite's largest advertisers is an ecommerce gift provider. Go figure? Ticketweb, citysearch and ticketmaster all drive traffic back to evite so that people will create evites for bigger shows. But this is a bit backwards. Of course, evite therefore, relies on these consumers to drive *other* consumers back to ticketweb and ticketmaster. But, it is a haphazard circumstantial process. Certainly not a marketplace driven by traders and investors. Further, the majority of other entreprise-like event software service providers supply tools to organizations and event planner that enable retention-style direct marketing and automation of event organization (ie collecting responses, information and facilitation transactions). But, they don't supply a mechanism for event organizers to reach out and pay affiliates for new customers or "leads".

So, WhizSpark is one of a very few companies that is trying to supply the consumers to the event planners in a marketplace. Albeit, we are doing it through connectors/promoters/affiliates (whichever word you prefer). The problem we have is that we haven't aggregated enough buyers YET. But, that'll change. And with the buyers, the network effect will bring the promoters and the consumers AND more buyers. And given that acquiring media to reach young consumers is very inexpensive and further that these consumers spend the majority of their expenditures on entertainment and socialization, I am confident that this will be a market that can be made a lot more efficient. Transparently.

(Update: I've clarified a few things.)

Posted at 10:07 AM | Permalink

Comments

You know, I'm a bit curious about who takes the risk in event promotion / hosting and whether there's an opportunity to be had in shifting the risk / reward opportunity from parties who'd prefer more stable revenue to speculators. If you can convert from a spot to a forward you can build a market... we should talk more about this, it'd be a good intellectual exercise.

Posted by: Greg | November 18, 2005 at 12:24 PM

Greg. I'd love to run this through your analysis engine.

Here's some thoughts...

In nightclub and other local small events, the clubs/venues assume all of the risk. Opening a new club is a big risk. Planning a new club night (or event) isn't a big risk.

In larger events, the game changes. Enter the middle man: the concert promoter (show organizer). In concert promotion, the concert promoters assume all of the risk.

So, concerts are probably the best example given what I know and the huge upfront risk. One of the biggest line items for a concert is the talent. There are a handful of large concert promoters (AEG, Clear Channel, House of Blues + another 10 or so big players) that vie for the bigger talent. I've been told that something like 80% of concert tickets sold are for the top 30 acts. So, the acts don't have any risk. They know that the rights to their tours will get bought by concert promoters. The promoter assumes the risk that they will sell out the tour. The problem is that promoters bid so high to get the business, that they don't often make their money back. And it is public information that Clear Channel's entertainment division, the biggest concert promoter, loses (has lost) a lot of cash operating this way. Their modus operandi has been to get the top talent at whatever price. And it hasn't been working.

Another big problem is lack of data. The problem exacerbates (and opportunity increases) when you get into smaller shows (approx 1-10k). Very few acts can draw a crowd everywhere. And very few concert promoters know which acts draw what crowds - where. So, the market gets very fragmented - very quickly.

Ticketing companies (especially the big ones) generally horde customer data and use it as a direct marketing tool. But, concert promoters, who buy the talent and put all the money into advertising the event, don't have access to the data for mining purposes (business intelligence) or marketing purposes. But, the irony is that the ticketing companies do very little to make the event successful. And they assume very little risk. But, they keep a nice fat margin for themselves. Of course, they give kick backs to promoters when online sales are made. But, that does little to reduce risk for the concert promoter.

So, the reason concert promotion is a tough busines to make money in - is because of the huge upfront risks involved. And the lack of data to make intelligent decisions. And the inability of concert promoters to really drive ticket sales through data driven marketing/advertising.

We certainly aren't addressing the upfront risks. Nor are we going after big shows, as ticketing is controlled by a monopoly, propped up by a concert promotion oligopoly. But, we are hoping to hedge risks for small and medium sized events by improving business intelligence and by applying CPA advertising.

Posted by: Peter Caputa | November 18, 2005 at 01:03 PM

Pete, this discussion gets me thinking about how concert-goers' attention gestures (listening to songs and buying music, researching dates, purchasing a ticket, etc.) could be integrated into their overall "attention cloud." which would go a long way toward providing sufficient data to make better decisions by promoters. I expect Greg and his colleagues at Root will have some ideas in the near future, if they don't already, but I hope you'll A) keep asking the folks working on attention to provide the data you need in the events biz, and B) think about potential attention services that entities like Root could be providing. Hope all's well.

Posted by: Ed Batista | November 19, 2005 at 05:01 AM

Great post, which I only found because of your comment on seth's post! Since seth first started describing /root to me, i have found the whole thing absolutely fascinating. I need to spend some time in an overstuffed chair wrapping my head around his latest post and yours here. I hadn't thought about event promotion in this context at all, but of course it makes perfect sense.

Posted by: Dick Costolo | November 19, 2005 at 05:10 PM

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