The data is in — it’s a tough time to be a music fan.
If you’ve tried to snag tickets to see your favorite artist but found yourself priced out of the market, you’re not alone.
Since 2011, concert ticket prices have soared 67%, outpacing inflation by 26 points.
It’s hard to believe today, but if you wanted to see a band like Pink Floyd on their 1988 tour, tickets would probably cost around $40-50 (inflation-adjusted).
In comparison, average prices to see Taylor Swift have climbed to hundreds, even thousands of dollars per ticket.
And it’s not just concerts seeing ticket inflation. Prices for other live events like sports games and Broadway shows are soaring too.
These high prices are ultimately the result of a flawed market structure.
The ticket market is broken, and if we can figure out a way to fix it, we might just be able to get prices back under control.
Today, we’re looking at a company addressing these underlying problems: IdBase.
Along the way, we’ll explore an opportunity for you to help fix the ticket market and make a difference for millions of fans (and potentially get your hands on some exclusive tickets too.)
Note: This issue is sponsored by our friends at IDBase. As always we think you’ll find it very informative and fair.
Let’s go 👇
Table of Contents
Is Ticketmaster/Live Nation to blame?
If you ask the US government who’s to blame, they’ll say Live Nation.
Last month, the Department of Justice announced an antitrust lawsuit against the company, which controls over 60% of the top concert venues in the country.
Moreover, since Live Nation’s 2010 merger with ticketing behemoth Ticketmaster, the combined entity now controls over 80% of major concert ticketing.
According to the DOJ, Live Nation’s dominance of ticketing constitutes a monopoly, with the company having sufficient market power to drive prices up for profit.
This is most evident in the add-on fees that Ticketmaster slaps onto base ticket prices. One government report estimated that these fees add ~30% to total costs.
So, is Live Nation actually a monopoly?
Ultimately, that’s up to the courts to decide.
But here’s the thing — even if the DOJ succeeds in breaking up the company, ticket prices likely won’t fall.
Why? Because the ticket industry’s fundamental problem isn’t actually primary sale prices, it’s resale prices.
Resellers and ticket bots are the real problem
There are actually two markets to buy tickets to live events:
- The primary market, where you buy tickets directly from the promoter, and
- The secondary market, where you buy from fans who are reselling tickets they purchased in the primary market.
If you’re buying tickets directly through an event’s website (usually Ticketmaster), then you’re buying on the primary market.
Platforms like StubHub are part of the secondary market.
Secondary markets aren’t necessarily a bad thing. When they’re fairly run, they let ordinary fans to recoup their money on tickets they suddenly can’t use.
But problems arise when resellers start taking advantage of the secondary market.
Unlike regular fans, resellers buy tickets on the primary market that they never intend to actually use (often with the help of tech).
Then, they turn around and immediately flip those tickets on the secondary market for a profit.
Considering that many artists and sports teams deliberately underprice tickets on the primary market to ensure that fans can afford the cost of attendance, resellers couldn’t care less, and profit at the expense of everyone else
And in the age of digital tickets, the reseller problem is dramatically magnified with the rise of ticket bots.
Bots are custom software programs that resellers build to scoop up as many tickets as possible as soon as they’re released. This is what causes top events to sell out in minutes..
Thanks to bots, it’s not just difficult for regular fans to get tickets at a fair price, it’s basically impossible.
(Psst, to win this battle, we’ll need to fight software with software).
Platforms and regulators can’t stop resellers
Primary ticket sellers and regulators aren’t ignoring the problems that resellers cause. They’ve taken genuine measures to try and stop the practice.
Ticketmaster, for example, bans the use of bots, and has implemented captcha tests to try and ensure humans are buying tickets.
But all this does is create an arms race between the bots and the platforms. Platforms create more advanced detection tools, so resellers create more and more advanced bots. Round and round we go.
If recent history is anything to go by, the resellers are winning. This might be unsurprising, given that AI bots can now evade captcha tests.
When industry is unable to solve its own problems, the government tends to step in with new regulations.
In the US, the 2016 BOTS Act actually outlawed the resale of any tickets purchased using bots. In 2019, the EU did the same thing.
So, if bots are already illegal, why are we even talking about this?
Because using ticket bots is “illegal” in the same way pirating movies is illegal. Yes, the practice is banned on paper, but it’s so difficult to track and enforce that the law is basically ignored!
In fact, in the 8 years since the BOTS Act was passed, the FTC appears to have brought just one single enforcement action, where it collected less than $4 million in penalties.
With the BOTS Act clearly not going far enough, US representatives recently introduced new legislation to Congress last year, known as the BOSS and SWIFT Act.
The BOSS and SWIFT Act, though, appears to focus mainly on transparency and information; basically improved disclosure over what the face value of tickets are, and whether a transaction is on the primary or secondary market.
While this additional disclosure is valuable, it’s hard to see this legislation making a dent on bot activity even if it’s approved.
And at the end of the day, as long as reselling bots are allowed to run rampant, the ticket market will remain broken.
But all hope isn’t lost. IdBase is rolling out a novel approach to tackle the bot problem, inspired by a pretty old-fashioned approach to ticketing.
IdBase: Ending bots for good
Buying a ticket to a live event used to mean long hours spent standing in line and praying tickets wouldn’t run out before you got to the window.
Now look, nobody is proposing we return to the “wait in line” model for live events. But this approach did have one huge advantage over digital purchasing…
It’s only possible to wait in line if you’re a real, living person! Robots weren’t allowed.
The switch to digital ticket purchases gave us speed and convenience, but it was costly. Now tickets can be purchased anyone actually checking that the buyer is human.
And as the troubled history of bot-detection captchas has shown, any measure that fails to ask for robust evidence of humanity will always be exploited.
At its core, this is what IdBase is proposing: a digital infrastructure layer that brings back the living proof of humanity we lost when ticket sales went online.
With biometric ID verification, IdBase is betting that we can both:
- Keep the benefits of digital ticketing that we gained, while
- Reintroducing the advantages of human verification that we lost.
How IdBase works
IdBase’s flagship technology is their authenTICKET, an Identity Based Access Control System (IBAS) for concerts, festivals, and sporting events.
Basically, AuthenTICKET matches your biometric profile (including a facial recognition scan) with your government ID to confirm that you really are who you say you are.
The process works in three stages:
1) Enrollment
When you sign up for IdBase, you scan your ID and take a liveness selfie (basically a facial scan) to confirm your identity and show that you’re an actual person.
IdBase stores the biometric template associated with your info, but not the actual scan itself (in the database, the biometric template just looks like a sequence of numbers).
2) Ticket purchase
IdBase is planning to partner with ticketing platforms to integrate authenTICKET into the purchase process.
When tickets go on sale, only verified profiles will be able to buy them, period. This completely blocks reselling bots who can’t pass verification.
3) Event access
Finally, when you go to the event, you’ll be able to do a proximity-based mobile check-in.
By taking another selfie verification on your phone (similar to Apple’s Face ID) you’ll verify your ticket. Then, your ticket is scanned at the gate for you to enter into the event.
It’s worth highlighting how seriously IdBase takes security — always critical when working with biometric data.
Since IdBase only stores biometric templates (not your face or voice recording themselves), it’s impossible for anyone to steal your face or voice.
If you’re not comfortable with having your face scanned, IdBase also offers the option to use voice recognition, an industry first.
What’s more, IdBase’s two main biometric and documentation partners (AWARE and Regula) work on a ton of government contracts — meaning the base systems we’re talking about here have been thoroughly vetted and secured for high-consequence work.
Still, it’s understandable that not everyone will be comfortable with having their biometrics scanned, which is why this system is completely opt-in.
If you want to attend an event without going through the authenTICKET verification, you’ll just need to pick up your tickets at will call and present your ID there (just like you can do today)
By working with ticketing platforms and venues to incorporate human verification, IdBase completely squashes the possibility for bots to snap up tickets en masse – resulting in fairer prices and equal access.
This problem is worth solving.
The business model
IdBase’s core model is centered around a 1% transaction fee built into each ticket sold on partnered platforms (up to a $1 cap).
With the global events market valued at about 5 billion, the TAM here is enormous.
Down the line, IdBase is planning to roll out their VERIFid system, which leverages the biometric technology they’ve developed to facilitate identity-based transactional infrastructure.
But according to CEO Alan Gelfand, who we had the chance to sit down with last week, the company’s early focus is on their authenTICKET pilots – including with Tickets.com, a subsidiary of Major League Baseball that facilitates more than 80 million ticket sales annually.
In our conversation, Alan identified a few more reasons to be optimistic about IdBase’s business model…
Limited competition
The idea of biometric ticketing has been around for a while now, but no one is doing it quite like IdBase.
Here’s why: competitors like Wicket or Blink Identity don’t just use your face to verify your identity – they also use your face as the very ticket itself.
The idea behind this approach is to have a biometric matching kiosk determine whether you’ve purchased a ticket or not, so you don’t need to carry a ticket in your wallet or on your phone.
But the problem is that this type of one-to-many matching is still a few decades away from being secure and reliable.
Trying to scan a single face against a database possibly comprising millions of biometric profiles is fraught with false matches or false rejections — and errors can be more pronounced among minority groups.
Unfortunately, this usually means competitors need to sacrifice on security for convenience, since their focus is on getting people in the door.
But IdBase is doing biometrics with a one-to-one matching – just your face against your government ID, and it’s all done prior to the gate, so no delays getting in.
By using biometrics in a way that emphasizes reliability and accuracy, rather than as an all-in-one solution, IdBase doesn’t need to sacrifice security for convenience like competitors do.
Regulations may mandate this technology
As we’ve seen, regulations already technically ban the use of ticket bots – but enforcement hasn’t been possible.
Now that IdBase is building the next generation of identity verification ticketing technology, existing laws might actually have some teeth.
As a result, it’s not outside the realm of possibility that governments mandate platforms to use tools like IdBase in order to comply with regulations.
Alternatively, fear of ticket holder lawsuits due to lax security measures might spur platforms to sign up with identity verification partners.
Either way, the trend toward increased regulatory action is a positive signal for IdBase adoption.
It’s not just about profits — it’s about security
Insecure ticketing technology can lead to far worse outcomes than high prices.
In recent years, we’ve seen a wave of horrific terror attacks carried out at public events, including the Manchester Arena Bombing and the recent Crocus City Hall theater attack in Moscow.
Heck, just recently, a potential mass shooter was arrested for targeting a Bad Bunny concert in Atlanta.
In these incidents, it’s often discovered that perpetrators performed reconnaissance in and around venues before ultimately carrying out their attack.
If a solution like IdBase can make it easier to keep civilians safe by tracking exactly who is attending public events, then the technology might end up playing a far more important role than just nullifying ticket bots.
And here’s the thing — insurers are the ones that ultimately pick up the tab on the economic cost of rebuilding venues after an attack.
The industry might be headed to a place where insurance companies require venues to perform ID checks on all attendees in order to get reasonable insurance rates.
Before IdBase, achieving that level of venue security wasn’t really possible – but now that it is, it might end up becoming mandatory.
Investing in IdBase
While IdBase is still in its early stages, they’ve already completed major technology pilots and have signed NDAs to launch infrastructure experiments with major industry partners in North America and Europe.
For that reason, they’re raising capital now to rapidly scale up product development and help meet the demand currently in the pipeline.
Details:
- Investment type: Regulation CF
- Investor restrictions: None, but non-accredited have SEC-defined investment limits
- Min investment: $510
- Investment type: Units consisting of 1 share common stock and 1 warrant (exercisable at $0.60)
- Price per unit: $0.40
- Max. raise: $1,235,000
- Valuation: $13.9 million
- End date: July 27, 2024 (9 days left)
There’s also a major perk available for the first 1,000 investors who commit at least $1,000 – the Priority Ticket Club.
Once IdBase has established its first venue revenues, they’re aiming to start sourcing tickets to high-demand events through their industry relationships.
As a member of the Priority Ticket Club, you’ll be first in line to get these tickets before they start coming online — a rare opportunity to get access to exclusive events usually reserved for VIPs.
That’s it for today.
See you next time,
Brian
Disclosures
- This issue was sponsored by IDBase
- Neither the author, nor the ALTS 1 Fund, nor Altea holds any interest in IDBase
- This issue contains no affiliate links
This issue is a sponsored deep dive, meaning Alts has been paid to write an independent analysis of IDBase. IDBase has agreed to offer an unconstrained look at its business, offerings, and operations. IDBase is also a sponsor of Alts, but our research is neutral and unbiased. This should not be considered financial, legal, tax, or investment advice, but rather an independent analysis to help readers make their own investment decisions. All opinions expressed here are ours, and ours alone. We hope you find it informative and fair.
