Brown Paper Tickets Takes On Ticketmaster

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Brown Paper TicketsPhotograph by Hayley Young

In many ways, what Brown Paper Tickets CEO Steve Butcher and CTO William Scott Jordon are attempting is a Sisyphean affair at best.

Dethrone Ticketmaster? Fat chance. It grossed $372 million in the fourth quarter of 2009 alone, providing tickets on a global scale for just about any major act coming to a town near you. Ticketmaster is so huge now, it focuses only on big game: the U2s, Rolling Stones and Kenny Chesneys of the world. This is the same company that practically doubled in size in 2009 when it announced a merger with its closest contender, Live Nation, making it the largest promoter/ticket-seller in the world.

Unseat the leviathan? Never happen.

But that’s not what Butcher wants. While Ticketmaster, in the wake of that megamerger, zeroes in on Mick Jagger’s lips, Brown Paper Tickets, a company of close to 70 employees, is gleaning the remnants and launching a creative online offense.

“When the Department of Justice was doing research for allowing the merger, they called us and we spoke to 35 lawyers at one time,” Butcher says from his office in Fremont. “They asked what we thought, what we anticipated. At first, we thought it would be a big, powerful company, but on the other hand, it was a strategic retreat for them.”

Ticketmaster’s decision to merge actually helped shape Brown Paper Ticket’s business plan. Butcher knew that if the merger went through, his company would have the selling advantage with club owners using Ticketmaster’s competition for ticketing. The angle? Charge a smaller service fee, which would leave “millions of dollars a year in the pockets of ticket buyers and event producers,” Butcher explains, embracing the notion that ticket buyers would use that leftover cash to pay for more shows.

While Ticketmaster locked up the regnant stadium events, Brown Paper began scooping up smaller shows. Lots of them, ranging from shows in midsize theaters to, quite literally, home events. One customer on Long Island went through Brown Paper to service regular dinners for eight. That range, Butcher says, has allowed Brown Paper to open up a market that didn’t exist before, where smaller venues are afforded a platform from which they can broadcast their events—without having to attach excessive service charges.

One of Brown Paper’s priorities was to reduce those sizable service charges most customers have simply gotten used to—ironic, considering it now takes a nanosecond to produce a ticket for a customer online. Yet the charge is still there and increases in accordance with the price of the seat. Want a floor seat to U2 at Qwest Field next summer? That’ll be $253.50, please, not including Ticketmaster’s $23.55 service charge. Nosebleed seat? Add $5.95 to the $33.50 ticket. Watching the Broadway smash Wicked in an orchestra seat at the Gershwin Theatre in New York City will set you back $262.25; the service fee is $11.

Brown Paper, in fact, got into the ticketing game in 2000 because of what it considered high service fees. The new firm wasn’t alone. Six years prior, Stone Gossard and Jeff Ament of rock giant Pearl Jam tilted against the Ticketmaster windmill, speaking before Congress and labeling the ticketing giant a monopoly. Pearl Jam even went so far as to attempt the ticketing for its own shows at venues where Ticketmaster had exclusive deals, such as KeyArena. By controlling those venues and associated promoters, Ticketmaster had “left most bands without any meaningful alternative for distributing tickets,” Gossard told Congress.

But it didn’t work. Pearl Jam ultimately relented. Butcher appreciated that David vs. Goliath effort.

“I loved what they tried to do,” he notes. “It was especially risky for a band to come out from behind the curtain and say, ‘This part of the business isn’t working for us. We want to improve it, especially the services fees.’” Brown Paper charges a 99-cent flat fee (plus 3.5 percent of the face value of the ticket) for all events it tickets. Though the figure is comparatively small, it’s a revenue stream that continues to grow. In the company’s 10-year history, it has averaged 250 percent growth annually, discounting the first two years when it saw almost four-digit growth, according to Butcher.

“Up until this year, we’ve kept ourselves right on the line of profitability,” Butcher says. “Now that we’ve crossed the line of profitability and we’re scaling much more efficiently, we expect to see about 200 percent growth in sales for 2011 and profits climbing fast.”

Compared to the flash of Ticketmaster’s website emblazoned with dynamic features and the faces of the famous, Brown Paper is subdued and simple. There are no ancillary ads or pop-ups. Instead, it has a utilitarian Craigslist feel, which, Butcher says, makes it easier to use with a smartphone—which is what he’s is counting on. “You get a lot more clicks per purchase and efficiency of checkout,” Butcher explains. “We don’t want to get in their [customer’s] way.”

And so far, the company has steered away from apps. Butcher says Brown Paper didn’t want to create something people would have to download to use, hoping the simplicity of the site itself would suffice. Still, in January, the company unveiled the most extensive upate to the website interface in ten yeas—making it more socially interactive and with added server capacity to handle on-sale spikes.

The next phase of the ticketing industry, Butcher says, is event discovery, making those who might be interested in attending something aware of an event in the first place.

That aspect, he says, will be achieved through linking to social networks, such as Twitter and Facebook so that producers can create communities around events, which can lead people to Brown Paper.

Mobile ticketing is on Brown Paper’s radar, too. It’s possible for event producers to use a smartphone as a ticket scanner and for buyers to distribute purchased tickets by smartphone through Brown Paper’s Transfer-to-a-Friend technology.

“The whole point is to get the tickets into the hands of the people who will be the loudest earliest,” Butcher says. “That’s your best marketing.”

But Ticketmaster isn’t taking any of this competition lying down. The giant has overhauled its website, adding more social networking capability and individualized tables, such as a Facebook gadget, seat-specific ticketing so you can sit near friends (you know they’re attending because the Facebook gadget informed you), fan reviews and previews.

While Brown Paper is determined to incorporate social networks into its growth strategy, Butcher was quick to add he doesn’t want to do anything that would compromise customer privacy, an activity that might lead to a viral exodus.

“There are lots of things that allow people to be touched by the producer, but we’ve always wanted to honor people’s privacy—more than people even wanted, which is a little old-fashioned in that respect,” Butcher says. “We give ticket buyers the power.”

Making the Consumer Connection

Making the Consumer Connection

How three new companies are reinventing the shoe, the bicycle and the children’s play fort.
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Billy Price struggled nearly 20 years to find a better, easier way to put on his shoes. August Graube was convinced kids would love bigger, snappier building blocks. Kartik Ram wanted the bicycling public to help produce a sleeker, sexier electric bike.

By putting new twists on old products — using zippers to secure footwear, snap-together panels to build play forts, crowdsourcing to inform design — three of the newest consumer-product companies in the Puget Sound region are creating a buzz around ideas that, in one sense, are hardly new, while, in another, are revolutionary.

They are also creating their own playbooks, borrowing from successful retailers, high-tech firms and online businesses to forge their own paths. They’re building virtual teams and hiring people who possess the expertise they lack — be it in distribution, marketing or manufacturing. And they’re tapping alternative funding sources for startup capital, including crowdfunding and business competitions.

These entrepreneurs are not interested in being one-hit wonders and are working on additional products for their markets. Like many other inventors and entrepreneurs, they share the gift of optimism, a penchant for risk taking and the patience required to continually refine their ideas and products.

AN OPEN-AND-SHUT CASE FOR ZIPPER SHOES

Function and Fashion: Billy Footwear cofounder Billy Price, left, wants his line of zippered shoes
to be stylish enough to appeal to a wide audience. 

Paralyzed from the chest down in 1996 after breaking his neck in a three-story fall, Billy Price longed to put his on shoes by himself. It’s something he struggled with for years. He also wanted shoes more fashionable than the adaptive ones available on the market for people with spinal cord injuries. 

A project manager for the Federal Aviation Administration who lives in Seattle, Price kept thinking about making stylish shoes that could be worn not just by those with disabilities, but also by young children, older people and anyone else who might have difficulty with conventional footwear.

Price found a partner to bring his vision to life in late 2011 when he became reacquainted with Darin Donaldson, a childhood friend who, as luck would have it, had attended Port Townsend’s Shoe School and gone through the process of creating a woman’s boot. Price already had a shoe idea in mind: a riff on a slip-on shoe that he modified. With more tinkering, the pair created a shoe that incorporates a zipper that goes around the front of the shoe, allowing the upper portion to flip open to one side so the wearer can essentially step into the shoe and then zip the top closed.

Taking advantage of connections Donaldson created while developing his unsuccessful woman’s boot, they quickly developed a prototype. “It came back in very good quality and was functional, considering it was the first prototype we made,” says Donaldson, a serial entrepreneur. 

Price adds, “When that prototype came in and we showed it to people, they would just shake their heads in disbelief because Darin just nailed it.” 

The self-funded shoe company has seven styles for sale on its Billy Footwear website — billyfootwear.com — as well as at amazon.com. The shoes are made in China. The company has applied for a patent on its distinctive design.

Price and Donaldson still work full time at other jobs and are raising money to create more designs, add more sizes and increase inventory. They hope to introduce a more supportive but still fashionable line for older adults. Billy Footwear has already hired several employees to handle logistics and sales.

The company recently raised more than $32,000 through a successful Kickstarter effort, which augments personal funding Price has provided. Donaldson says the company plans a private offering later this year. In the meantime, Billy Footwear is hitting the road with an eye toward having its zipper shoes available in stores next year.

“I’ve been in a wheelchair for half of my life,” Price says, “and half my life, I couldn’t put on my own shoes. Now I can.”

Price also likes that his company’s creations don’t stigmatize the differently abled.

“This,” he says, “is truly a shoe that appeals to everyone.”

CULTIVATING A CHILD'S IMAGINATION IS A SNAP

"Luckily, Kids Love It": August Graube tried 165 prototypes before hitting on the right formula for Fort Boards.

Seeing how children loved building with giant Lincoln Logs gave August Graube the idea to create Fort Boards, a set of large, flat building panels he began selling late last year.

The former employee of Pacific Studio, a Seattle-based creator of exhibits, was working on a children’s exhibit for the new home of the Museum of History & Industry in 2012 when he saw how much fun children have building large structures. He knew kids would love a product that could allow them to build large forts — and anything else their imaginations might conjure — at home.

It took Graube three years and, by his count, 165 prototypes to arrive at a winning combination. He discarded six iterations of a huge Lincoln Logs-style product made of plywood; it cost too much and would have been dangerous. He then tried 60 versions of a smaller flat board made of extruded polypropylene, but it was too flimsy and didn’t work well. He liked the size of the smaller board but knew it had to be constructed of a different material, so he progressed through nearly 100 more iterations of a smaller flat panel made of injection-molded plastic, which he 3D printed.

The end product is a flat piece of plastic about the size of a sheet of paper. Each panel snaps easily to the next and is locked in place — either flat or at a variety of angles — by a snap-on hinge. Kids use the hinges and plastic pieces to build igloos, airplanes, castles and other shapes. Graube recently received a utility patent for Fort Boards, which also is trademarked. 

Like many inventors, Graube took a big risk, paying to build the final prototype without kid testing it because the upfront tooling costs forced him to jump-start production, which takes place in Indiana. “Luckily, kids love it,” Graube reports. “It’s intuitive, with only two interlocking parts, so it’s easy to learn.” 

Schools, children’s museums and hospitals have snapped them up as teaching tools, interactive toys for play spaces and small-motor-control therapy aids. “Children’s museums have told us they’ve never seen more engaged dads,” adds Graube, who says specialty toy retailers will soon begin carrying Fort Boards.  

One pack of Fort Boards panels and hinges costs $125. Graube, who lives in Seattle, has hired marketing and logistics help for his South Lake Union venture, which has been funded by friends, family and $20,000 from winning the grand prize in this year’s Microsoft Small Business Competition. 

“Seeing people’s creativity with them has been amazing,” Graube says.

Like Price and Donaldson, Graube is already at work on his next product, another activity-related children’s product that works with the Fort Boards. He expects to start selling it late this year or early next.

PUTTING A CHARGE INTO BICYCLE DESIGN

Charging Ahead: The Zeitgeist X City Bike, left, weighs less than 50 pounds
and incorporates a slim lithium battery that fits into the frame's down tube.

Kartik ram approaches his startup as a student of business. Make that many businesses. He hopes to tap into the mindset of people who shop at Apple and Nordstrom. And then there’s the Whole Foods shopper. And the Uber rider.

He wants to grab a page from Tesla’s playbook, copying the launch of the Roadster, which broke the electric car mold. Ultimately, he wants to be the Warby Parker of electric bikes, selling mostly online (at zeitgeistmobility.com) but not avoiding retail shops entirely. In time, in fact, he wouldn’t mind selling his Zeitgeist bikes at REI.

Above all, Ram doesn’t want the Zeitgeist to be something that sits in the garage as an afterthought.

“We want to make it so you just don’t leave home without it,” he says.

The Zeitgeist X City Bike is a $4,000 carbon-fiber, motor-assisted bicycle designed in partnership with award-winning Danish designer Brian Hoehl. It weighs only 44 pounds. (A less expensive “S” version made of aluminum alloy weighs just over 50 pounds.) 

Most electric bikes are clunky and heavy, saddled with large motors and with what Ram says are cheap parts. The Zeitgeist, manufactured in China, is lean and sleek and contemporary looking. It has a high-end Shimano drive train with a 500-watt Bafang motor that helps when climbing hills. The Tektro hydraulic disc brakes make stopping a sure thing, and the Alex 36-hole alloy rims and Schwalbe tires make the ride a smooth one. A 36-volt battery, hidden inside the  frame, uses high-density lithium-ion technology similar to the batteries powering Teslas.

The bike can travel between 80 and 100 miles — depending upon the conditions — on a single charge, and Ram regularly beats cars traveling up Queen Anne hill, passing cars on his Zeitgeist as drivers struggle up the steep hill.

Zeitgeist’s co-founders are Ram, a veteran of Alibaba and Singtel (short for Singapore Telecommunications) and also managing partner of Fashion Fund, a crowdfunding platform for the fashion industry; and Gregg Stewart, formerly of AOL, Telegraph Media Group and others. They don’t want to sell electric bikes to biking enthusiasts but to people who haven’t ridden a bicycle in years, who want a better travel option as city traffic creates gridlock, and who don’t want to perspire too much during their commute.

Zeitgeist recently sold its bike through the Crowd Supply fundraising platform to test the market and as a way to get buyer feedback so it can then improve the design. Ram says the company is cash-flow positive and that it will take only a few hundred bike sales to make the company profitable. With subsequent designs, Ram and Stewart plan to apply for multiple design and utility patents.

Each bike is profitable on its own, and the first iteration, like Tesla’s Roadster, is designed to test the market and make sure the business model works. “We’re selling a better-quality bike and can get higher margins selling it direct,” Ram says. “We don’t have to allocate 40 percent of our costs to paying for real estate.”