In Part 1 of this two part interview series, Ashish Hemrajani, Founder of online ticketing site BookMyShow spoke with us about. In Part two, he talks about the impact of regulation on his business, how open is BookMyShow for a DIY platform for small event organizers, on the offline component of the online business and building the ticketing ecosystem, cancellation of tickets, ticket pricing, why he raised VC funding, and his views on potential competition from Ticketmaster in India.

MediaNama: What’s the impact of regulation on you? You’ve had that situation in Andhra Pradesh, and now a case in Mumbai.
Hemrajani: Sometimes, decisions are taken by the government either politically, or out of ignorance. Can you imagine regulating the MakeMyTrip’s and Cleartrip’s? Can you imagine going to IATA and printing booklets of tickets? In Indian Airlines and Air India, you had to go and get a token number for tickets. Can you imagine going back to those days? The fact is that this is unstoppable. We have got a favorable verdict in Andhra Pradesh. We won that case in the High Court. We have started our services. In Maharashtra, it is subjudice. We pay service tax to the government. We don’t provide entertainment. It’s an optional service – you can go to the Box Office to buy a ticket. My pricing for the customer is transparent, and I’m paying the government for it. Under any stretch of the imagination, it cannot be incorrect. 8-9 years ago when I went to the government of Maharashtra, saying that I want to start this business, they issued a GO in my name, saying we should take permissions from the collectors office and the police commissioners office. We have all the permissions. And then suddently, they turn around and say you can’t. Then the only recourse is to go to court.

MediaNama: Why do you think this is happening?
Hemrajani: I feel some of this could be political or ignorance. Someone can say – I had to pay extra for a movie ticket. Why should I pay extra when the entertainment tax is being collected. I’m not charging for the ticket. There is an entertainment tax being paid by the cinema. I’m providing a convenience and as service. I come under the IT Law. I come under service tax, for which I’m complying with the law.

MediaNama: Is there a push-back from the theaters on the convenience fee?
Hemrajani: Not at all. The theaters are pushing back on the government, not us.

MediaNama: Can BookMyShow automate the process for allowing new organizers to enlist with them?
Hemrajani: We have a product which allows you…from a maturity curve perspective, the volumes are still not there, and event organizers need a lot of handholding. We’re not a listing site. We’re a ticketing platform. We list events, but (unlike Eventbrite) we only list events we sell tickets for. In India, we don’t have permanent venues. You need to security print those tickets, allow for gate entry, validation, ushering, and bookmyshow does all of that. For Formula1, we have 900 people on the ground on the day of the event. At IPL matches, we have 150-200 people who are validating your ticket, exchanging them for the box office. BookMyShow runs print-on-the-go, print-on-demand. Everything is automated. But you still need to enter an arena, still need to get it validated, and get ushered. There’s a lot more that goes on behind the scenes, even for a micro event. Over a period of time, it will become a reality. I don’t think it is practical, as of today.

MediaNama: What’s your take on offline issues that online ticketing sites face, and why should an online ticketing site even be involved in the offline process?
Hemrajani: Today, why is IPL successful? It is entertainment, and a short format. But what you forget is that families never really went for Cricket. It was mostly male. The reason was that toilets were bad, the food was bad, people would fall sick. Today, food counters, the water, the toilets, everything is clean. From our perspective, I have a contract with you. What is my contract with the ticket buyer? I have an obligation to provide you what I’ve promised you: I have to give you information which is fair, transparent and open; I’m telling you this is the seat you’re going to sit on, there’s a contract document which is a ticket for which I’ve taken money from you. I am responsible for that. I have to make sure that you get into the arena, there is no duplication, no one else has copied your barcode. Also, earlier when you used to go for matches, two goons would be sitting on your seat. Today, if you have Row J, seat 14, 15 and 16, I will guarantee that seat for you. I can guarantee it when my people are there and they can validate your ticket. I complete my contractual obligation with you, and give you the entire experience.

MediaNama: That must be a massive cost overhead for you.
Hemrajani: It is. But that is what people don’t understand when they see that BookMyShow is doing so well. We really bust our backside to achieve that. It is a huge cost for me, but I run it because I am building the ecosystem. You might argue that guys like Flipkart are doing cash on delivery and all that, but don’t you agree that it’s changed the face of online ecommerce in the country? The same thing is what we’re doing for our category. If you bought a ticket from me and the guy doesn’t give you the ticket at the box office or you don’t get an entry, or there’s a duplicate ticket, or two goons are sitting on your seat…what are you going to do?

MediaNama: Why is it that more people don’t do this?
Hemrajani: It is not as easy as people think it is. We are 24×7 on call. On the weekend, when the whole of the country is partying, we are working, because our business is a weekend business. Our teams, on Saturday and Sunday, across the country, when systems are down, connectivity is down, payment gateways fail, how you back up. It’s easy to run a regular cyclical business. For us, it is relentless. It’s great for business, but there’s a lot of effort to manage the expectations of people.

MediaNama: Just going back to that point about why others aren’t doing this – is it also down to the fact that it’s your ERP that is managing theaters?
Hemrajani: Cinema’s are free to sign up with other providers, and some of them have done this. But the way we function – the effort we put into dissecting what the customer wants, and today you might be a movie customer, but you also go to concerts, plays and watch a Cricket match. We give you that broad spectrum of options. Those aren’t just limited to online tickets.

MediaNama: What would be the market size right now?
Hemrajani: We’re trying to build the market. We’re operating in the realm of unknown. The online ticket market will not be larger than 50-60 million tickets, at best. The addressable market is 400-500 million. This is movies plus events plus plays plus everything.

MediaNama: You said you raised funding from Accel when you didn’t need it. Why did you raise funding?
Hemrajani: The best time to raise funding is when you don’t need it. We went when we were absolutely stable and didn’t need the money. The second was that we wanted to build a warchest. We don’t know where the market will go. We need money for acquisitions – we acquired a company called TicketGreen in December. It had about 100 screens in Tamil Nadu. We had no specific plan for utilization of funds, unlike e-commerce ventures, where clearly the utilization is cash burn.

MediaNama: Or if Ticketmaster tries to enter the Indian market
Hemrajani: Well, they have tried many times in the past. We compete for contracts. They don’t recognize that in India, the market is too fragmented and it’s not an easy market. The way it works with arenas in the US, is that it is a steady infrastructure, with ticketing systems. The venue has its own people and manages things. In India, when you have a concert, when there’s an event, it’s in an open field. How do you create infrastructure? We have mobile turnstiles, people that stand there. Ticketmaster and many of the foreign players don’t understand that ecosystem. In places like New Zealand, when the sun is out, movie ticket sales drop. In India, people prefer the indoors when that happens. The foreign players don’t understand this, they don’t understand Cricket. You need to customize things for the Indian customer, keep a very low cost. We run a very tight ship.

MediaNama: Have you considered going offline with Movie Tickets, to aggregate more demand?
Hemrajani: We do it for the non movies content, where we sell tickets for hundreds of outlets for IPL, NH7. The movie market is a very impulse decision, and a planned purchase. You decide to watch a movie, then you call up people to plan it.

MediaNama: Not very different from concert tickets, which are also planned.
Hemrajani: But there is a finality to it. It’s a single day, and your window of purchase is far greater. Concert is one week away, one month away. Movies are far more immediate. And for different sets of customers (for events), the outlets change.

MediaNama: It’s not something from the theater side that they don’t want offline distribution?
Hemrajani: I don’t think that over a period of time, we’ve tried it. It doesn’t justify the presence or the cost. Most people prefer to buy online or on the mobile. Mobile is going to be the new driver.

MediaNama: Where do you go from here? Where’s an exit for you?
Hemrajani: I get asked this question a lot. It’s all a part of the maturity curve. We raised money because there was a clear strategy behind it. It will be at that maturity curve. We will take a call that justifies our decision. An exit is when your motivation is money. Money is a byproduct for us. If you get an exit, then what will you do? As long as I can continue doing what I do, and Monday morning is as happy as Friday evening, why will I change?

MediaNama: We had some more reader questions: Why can’t bookmyshow offer more advanced visibility on booking of movies? Most theaters don’t offer tickets until midnight on a Wednesday.
Hemrajani: It is a law. You can only open your advanced sales at a particular time. The cinema also wants to sell his ticket. Why would he hold back?The moment we can put it up, we do. We do have pre-book on bookmyshow, where we take the big movies, and to take away the pain of planned purchase, we have a facebook app which allows you to buy a ticket and invite your friends to book seats next to yours via facebook. But, the fact is, that it’s not a concert. That has a finality. In case of a movie, if you don’t watch it tonight, you can watch it tomorrow, at a different cinema. The law doesn’t allow you to open advance sales beyond a point.

MediaNama: Another reader asks why you don’t allow ticket cancellation for a fee
Hemrajani: Again, it’s a law issue. I’m more than happy to do bell curve pricing, S curve pricing, start low, go high, drop prices, keep increasing prices based on demand, do cancellations, refunds, exchange – all of this is not permitted by the law. Once a ticket gets generated, there is a ticket number that cannot be canceled. The only case of a refund in a movie theater is if the lights go off, it is the cinema’s prerogative. We have 2D barcode, 3D barcode, but the law requires that you have stamped tickets on the day of the event at the cinema. You need to keep an audit.