The new AEG/Cirque du Soleil/Outbox joint venture is well positioned to make inroads in the volatile ticketing market through its combination of content, venues, credibility and innovative model. But that doesn't mean it will be easy, as Ticketmaster remains in a dominating position with enviable assets.

Key players in the deal say the JV simply offers a viable alternative in a marketplace increasingly crowded with options. "Some people will see this [announcement] as a shot across the bow of Ticketmaster, [but] it's not," AEG CEO Tim Leiweke tells Billboard.biz. "The fact is, this was expected by Ticketmaster."

Since Live Nation and Ticketmaster completed their merger in January 2010, AEG has been licensing Ticketmaster's ticketing software under one of the conditions set by the U.S. Department of Justice in its approval of the merger. Under that provision, the DOJ required that AEG have the ability to license the software for up to five years to help it establish its own ticketing business and preserve competition in the market.

So why ramp up now, with four years left? "We are going to have an existing relationship with Ticketmaster and Live Nation, and we want to make sure we don't burn any bridges here, we take our time, we take a little bit of pressure off them and us on the transition, and we have time to make sure this is done in a way that won't disrupt our relationship with our customers or the buildings," Leiweke says.

A Live Nation senior executive who wished to remain anonymous calls AEG's move "no surprise, since AEG were required under Justice Department decree to exit the Ticketmaster system over time. We were hoping it would be sooner than later and [are] thrilled with their choice of partner."

Not only will AEG's new venture with Outbox sell tickets at AEG venues and events as the venture is rolled out over the next two years, it appears they will compete aggressively for new ticketing contracts as existing contracts with Ticketmaster and other companies expire.

"For the first time in 20 years there will be two serious competitors in the ticketing marketplace, with two distinctly different business models: one a white label model where the building is in control of their destiny and their data, and one a middleman model," Fredric Rosen, Co-CEO and president of Outbox Enterprises with Outbox founder Jean-Francoys Brousseau. "This is just competition, no more, no less."

The Outbox ticketing concept is based on a "white-label" model that allows the venue to brand its own ticketing operation and have more flexibility on how tickets are sold. The buildings control such things as service fees, inventory management, and the use of data, and sell tickets from the venue website. The Outbox platform already handles ticketing for Cirque du Soleil, the Montreal Canadiens and the Bell Centre in Montreal, and the Kodak Theatre in Los Angeles.

The key, according to Rosen, is for fans to be able to buy tickets at the venue website. "If you recognize a website as real estate, our solution enables facilities to make their websites much more valuable," he says. "Because once the transactions reside there, the sponsorship opportunities become significantly more compelling. It keeps you much closer to your consumer as opposed to a third party having access to the data."

But will that be enough to steer clients away from Ticketmaster? Ticketmaster says it is the third largest e-commerce site in the world, and has unparalleled distribution through its own site and a deal with Wal-Mart. The Ticketmaster database and its evolution into a marketing partner are also formidable obstacles for any competitor.

"Most of these people fail in this business and have never competed well against Ticketmaster because they sell software as a solution, as opposed to being ticketing people who provide software solutions and have knowledge of the industry," says Rosen, who, as CEO of Ticketmaster from 1982 to 1998, helmed the company during its most rapid period of growth when the company brought computerized ticketing into the mainstream and transformed ticketing from a cost center to a revenue producer for venues, promoters and sports teams through the use of service fees and rebates.

AEG expects to begin selling its tickets through Outbox in the next six months, and have its global venues running through the system within the next two years, according to Leiweke. AEG's collection of 105 buildings it owns and/or operates is impressive, including the Staples Center in Los Angeles, the Target Center in Minneapolis, the Best Buy Theater in New York, Sprint Center in Kansas City, MasterCard Center in Beijing, Acer Arena in Sydney, and the O2 arena in London.

AEG's business alone will make Outbox a force in the ticketing business. "The uniqueness of this partnership is we give them 10 million tickets, they become the second largest ticketing company in the U.S. because of our business," says Leiweke, adding that he expects their ticketing venture to grow through new AEG facilities, new ticketing accounts, and acquisitions.

Though Outbox remains largely unproven as a major international ticketing player, Leiweke says, "They could do Staples Center tomorrow, they could do the O2 tomorrow." Still, he admits there is much work to be done in building the venture, including creating "some functionality that currently they don't have the software to do. We want to provide the best service humanly possible to our fans and our buildings and that's going to require some time, some money and some more people."

For more analysis of this deal, see this week's Billboard.

Questions? Comments? Let us know: @billboardbiz

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