A deal that pairs the world's second-biggest concert promoter and the world's second-biggest e-commerce company could unlock value for artists, managers and the promoter -- and further legitimize secondary ticketing.
AEG has partnered with StubHub, a secondary ticketing service owned by eBay, to add tickets from StubHub to listings on AEG's AXS ticketing service beginning in the first quarter of 2013. In terms of sales volume, eBay ranks behind the world's leading e-commerce company, Amazon.com, and ahead of the third-largest, Live Nation-owned Ticketmaster.
But the partnership goes well beyond secondary ticketing. AEG's vast sports and music business will benefit from the relationship with StubHub's owner, eBay, by finding untapped revenue streams. AEG's music merchandise company, BandMerch, will begin to expand its roster of over 135 artists to the eBay marketplace. eBay-owned PayPal will become new payment method at AXS.
The partnership could eventually expand to include new technologies. Devin Weng, president of eBay's marketplaces told the Wall Street Journal the two companies could buy startups together and create new services that allow consumers to buy merchandise on a smartphone before, at or after a concert.
The partnership also expands StubHub's footprint. StubHub will become the office fan-to-fan marketplace for more than 30 AEG facilities worldwide, such as the Staples Center in Los Angeles, the Sprint Center in Kansas City, BBVA Compass Stadium in Houston and the Warfield in San Francisco. StubHub will serve as the official secondary ticketing partner of Staples Center, the Los Angeles Kings and the Los Angeles Galaxy starting with the 2013-14 seasons for each franchise. And the deal will seek to integrate venues internationally as StubHub expands internationally.
Secondary ticketing has long been a touchy subject in the music business: The services are seen by many as bad actors that hurt the fan experience by snapping up tickets on the primary market and selling at a premium on the secondary market. The issue is often who keeps the profit, not the price of the ticket. Many artist management companies have long used secondary ticking services to sell tickets. Ticketmaster has used dynamic pricing at a very small number of concerts to capture the value that would otherwise go to the secondary market.
As for Ticketmaster, the StubHub-AEG partnership draws a greater distinction between the top companies in the promotion and ticketing business. StubHub and Live Nation-owned Ticketmaster not only have a temperamental relationship, they are on opposing sides of the paper vs. paperless ticketing issue and lobby for legislation that impact their business interests. StubHub supports the pro-paper Fan Freedom Project while Ticketmaster supports the pro-paperless Fans First coalition.
Live Nation chairman Irving Azoff criticized StubHub at last weeks' Billboard Touring Conference for having "no skin in the game." The secondary market, he said, employs automated programs -- or bots -- that jump in front of fans to buy tickets online. "We believe the first ticket should just go to a fan who just wants to go to a show."
But secondary ticketing is here to stay. In fact, Live Nation has owned a secondary ticketing service, TicketsNow - which has partnerships with numerous professional sports teams such as the Balitmore Ravens and Jacksonville Jaguars -- since 2008.