The global event ticketing industry is worth as much as $46bn, of which almost 26% is pocketed by scalpers. Thousands of transactions also occur within an oligopoly whose few players define the market's rules.
In Spain, a group of young entrepreneurs who worked for several years in the event ticketing industry saw the potential to change such market dynamics forever. They launched Tracer in 2017 to bring more transparency and fairness to both artists and fans.
The company generates tickets for events in the form of dynamic QR codes that change every
“It's like putting geolocation tech in the ticket,” says Tracer’s CEO and co-founder Jorge Díaz Largo. “This way, you know where the ticket is, who has it and how much he paid for it. The artiste goes from being a passive player to one who controls what's going to happen.”
Tracer also uses distributed ledger technology (DLT) to give ticket issuers an opportunity to retain control over each ticket journey, as well as real-time access to customer data. Ticket issuers, whether artists or official promoters, also determine the rules on how many times tickets can be resold, by whom and at what price.
It's an idea that has become very popular in the entertainment industry. Executives such as the General Director of Sony Music, the VP of Universal Music and the Boston-based VC Pillar have backed Tracer with over $1m, along with creatives such as James Murphy (LCD Soundsystem) and Richard Jones (manager of The Pixies). Tracer was accelerated by TechStars Music Los Angeles in 2018.
The problem of duplication
Secondary event ticketing platforms controlled by more than 50 touting outlets account for millions of tickets sold. “That business model is not going to go far,” Díaz says. “If there’s a way [for sellers] to control the tickets, that’s bad for buyers.”
The downside is that touts’ sales account for 80–90% of seller revenues and this is why third parties play a crucial role in the game. Tickets on paper or PDF format can be easily duplicated. Moreover, those tickets purchased through secondary sales usually end up being much more expensive than the original ones due to the touts' exclusive jurisdiction over price dynamics.
That's where blockchain technology came into play. "We have no plans to do an ICO, and no plans to sell any tokens," says Díaz. “We’re focusing more on the problem the industry has and how that can be solved with blockchain.”
Blockchain ensures that all information included in a ticket is unique and registered in a decentralised database built on network consensus, which insures security and transparency in the process. Buyers pay online in euros, US dollars or sterling pounds.
The ticket QR code is associated with the user's mobile number and their device, allowing it to be traced. It doesn’t require an app download and can be easily stored on any smartphone. It was a solution enthusiastically welcomed at its launch (and successful first use case) in June 2018 at The Cambridge Club, an event hosting 9,000 people.
Foundations in the ticketing world
Tracer was initially bootstrapped with $300,000 from Díaz, who had sold his ticketing startup Ticketbits to eBay for €165m a few years previously.
“We wanted to help normal people who were unable to go to a concert and wanted to get rid of their ticket,” said Diáz. However, in every market where [Ticketbits] was operating, there was a marketplace for ticket touts in which they controlled the tickets and set the prices.” Díaz led the growth team in Ticketbits for over six years, setting up the business across 48 countries.
Tracer’s other co-founder and the COO is Alberto Martínez, former general manager of Every Mundo, a travel startup based in Miami. Eduard Korkhov is Tracer's Moscow-based CTO and was previously founder and director of the corporate reputation management company Polecat.
The team also counts on a group of online marketing and communication experts that previously held executive positions in Ticketbits. They include: Carmen Navarro, former Manager of the global PR team and now Tracer’s Business Development lead, and David Di Bartolomeo, former Head of Global Paid Performance and now Tracer’s Head of Marketing.
"It might seem ironic that part of the team comes from a resale company and that now we have built technology to end that, but that has happened precisely because we know the industry and the bad practices affecting it,” says Díaz.
Revenue and future
Tracer relies on different revenue streams. On the B2B side, it offers clients in the entertainment industry the possibility to control ticket resales through its smart ticketing system.
On the B2C side, it counts on a proprietary global marketplace developed years prior to Tracer’s launch. This represents a huge distribution channel for nearly any type of event. Moreover, through APIs, the company grants distributors the access to an events inventory owned by the startup.
With revenue of about €6m expected in 2019, up from €2.7m in 2018, Tracer is looking to expand its workforce across its three offices located in Madrid, London and Moscow. It's also preparing to launch a Smart Tickets system by the end of 2020 designed specifically for sport teams.