The Lyte Bankruptcy and What It Reveals About the Ticketing Industry
The Lyte bankruptcy highlights the growing challenges in the ticketing industry, where margins are shrinking, partnerships are strained, and strong technology is crucial. Learn how these shifts are reshaping the market and what they mean for the future of ticketing.
Lyte Bankruptcy and What It Reveals About the Ticketing Industry
Op-ed by True Tickets CEO, Matt Zarracina
While I was surprised by the sudden shutdown of Lyte, others I know in the industry were not (see above). That said, the recent news of the bankruptcy of Lyte, a ticketing marketplace once hailed for its innovative approach to fan-to-fan ticket exchange, has sent shockwaves through the industry. I am not privy to the internal workings of Lyte, but from the outside, Lyte’s collapse does seem to signal how the ticketing industry, as we know it, is changing. My take is not one critical of Lyte or how it was managed; rather, my take is about what it signals for ticketing at a macro level. It seems there are several key takeaways here that highlight the significant changes happening in the ticketing industry — changes around where you play in the ecosystem, who you play with, and how you bring your products or services to market. In fact, the situation with Lyte tells us much more about how the dynamics in ticketing are changing than most people realize.
1. Where You Play: Marketplaces Are Facing Margin and Business Model Pressure
StubHub was the first of its kind in the early 2000s. It leveraged new technology (the internet) and regulatory changes (the loosening of ticket resale laws) to bring ticket resale into the mainstream. Others (VividSeats, SeatGeek, and, more recently, Lyte) followed suit. But like all industry life cycles, it seems ticket resale marketplaces have gone from the growth stage to fending off decline. Staying competitive is becoming increasingly difficult. A blockbuster 2023 for live events did not translate to a positive impact on Vivid Seat’s stock price and StubHub’s IPO remains delayed. All this, coupled with the collapse of Lyte, highlights how hard it is to be a pure resale ticketing marketplace today.
“quitely scalping tickets”
Lyte’s original business model, which allowed fans to resell tickets ethically and seamlessly, was a compelling solution – and it still is. However, it seems over time that the financial challenges of succeeding as an ethical resale marketplace may have driven them to act unethically by “quietly scalping” tickets. Ethical considerations aside, three main factors seem to be driving the economic pressure faced by pure ticket resale marketplaces.
- The growing cost of customer acquisition. As more companies vie for the attention of concert-goers, marketing costs have skyrocketed. Digital ad spend, influencer partnerships, and promotions to attract both buyers and sellers have created significant financial pressure.
- Technology is restricting access to ticket inventory. Event organizers and ticket issuers have long craved more control of their ticketing, and the digitization of ticketing now allows for it. Before, event organizers and ticket issuers had to choose between ticket control and ticket distribution; now they can have both.
- The regulatory environment is tightening. As marketplace costs have increased, the opaque fee structure some use to offset the expense is now facing regulatory scrutiny.
The tailwind ticket resale marketplaces leveraged 20 years ago (lower customer acquisition costs, technology, and a changing regulatory environment) have seemingly and ironically become the headwinds they now face.
2. Who You Play With: Strategic Decisions Can Have Outsized Consequences
Lyte’s decision to expand into primary ticketing was a pivotal moment in the company’s history—and one that likely contributed to its downfall. Initially focused on facilitating fan-to-fan resale, Lyte’s entry into primary ticketing signaled a significant shift in strategy. While this move was likely driven by pressure to increase revenue streams amid marketplace difficulties (as highlighted previously), it came with major consequences as it turned their clients into competitors overnight.
“collaboration across primary systems, marketplaces and vendors”
In the world of ticketing, there is a surprisingly significant amount of collaboration across primary systems, marketplaces and vendors. When an organization man ages to establish itself, the industry seems to create a new equilibrium around how all the players work together as well as compete against one another. By expanding into primary ticketing, Lyte shifted from being a neutral third-party marketplace to becoming a direct competitor to its own partners—event organizers and promoters. The fallout from this strategic decision strained relationships and created a conflict of interest, as event organizers were forced to choose between working with Lyte or competing against them.
While Lyte struggled to shift within the ticketing landscape, other companies like Seat Geek have been able to navigate the transition from pure resale marketplace to combination marketplace/primary ticketing system successfully. And other systems have successfully done the reverse of Seat Geek by adding a marketplace capability to their primary system. As dual ticketing system/resale marketplace options proliferate, the situation with Lyte does highlight a critical concern with any closed loop ecosystem (e.g. where the primary ticketing system is also the sole resale marketplace) – they are ripe for manipulation.
3. How You Bring Your Products to Market: The Importance of Technology and Infrastructure in Ticketing
Business fit and technology fit are not the same thing. On paper, coupling a credible marketplace with a primary ticketing system makes a ton of business sense, as there are a number of synergies that appear achievable via a vertically integrated business model. But one of the most overlooked aspects of Lyte’s downfall is the importance of robust technology in ticketing systems. While ticketing may seem like a straightforward transaction process, the reality is far more complex. Data models, data architectures, code bases, code quality, all play a critical role in a ticketing platform’s ability to seamlessly handle large volumes of transactions, integrate with multiple systems, and manage data efficiently.
Lyte’s acquisition of Festicket, a UK-based ticket operator, serves as a prime example of the risks involved in overlooking technical due diligence. While Festicket had a history of financial troubles – owing millions to promoters when it collapsed – more critically, its technology was reportedly inferior, and its integration into Lyte’s platform caused significant problems. This acquisition added layers of complexity to Lyte’s already challenging technical infrastructure.
Implications for the Ticketing Industry Moving Forward
Ticketing is changing.
Lyte’s bankruptcy offers several signals for exactly how it is changing and what that means for the various players in the space – from the pressures on marketplace margins to how each player fits strategically in the industry to the importance of maintaining robust technological foundations. As the industry becomes more digital and consumers’ demands for seamless digital and in-person experiences increase, balancing growth with sustainability, maintaining strong partner relationships, and investing in sound technology are all crucial elements for survival in this increasingly competitive and complex market. Lyte’s fall was not just a failure of one company – it was a reflection of the evolving, and often unforgiving, dynamics of the ticketing industry.
Matt Zarracina is co-founder and CEO of True Tickets, a B2B enterprise SaaS start-up providing secure contactless digital ticketing for live events. Prior to co-founding True Tickets Matt served as a Director of Innovation in Thales Group’s “Thales xPlor.” He applied Design Thinking concepts to identify, assess, & develop disruptive innovations for broader commercial applications (Blockchain & DLT, AI, Autonomous Vehicles, Augmented Reality, & Big Data). Prior to xPlor, Matt was a Senior Manager at Deloitte Consulting where he led growth, M&A, and innovation projects. Matt also served as a helicopter pilot in the U.S. Navy.
About True Tickets
True Tickets is a secure contactless digital ticketing service that puts venues and event organizers in control of their tickets and in communication with their true audience. Currently available to Tessitura Network members, True Tickets’ business-to-business solution integrates with primary ticketing systems, empowering its partners to leverage the advantages of digital-native tickets to ensure extraordinary live experiences for their guests. With True Tickets, ticket issuers can set rules and track ticket custody, limit the excesses of the secondary market, and restore direct relationships between their audiences and the live events they love. For additional information, please visit True-Tickets.com or follow True Tickets on Twitter or LinkedIn.
