Nathan Hubbard has spent the past year gearing up for perhaps the biggest challenge of his career.
Actually, make that two challenges: one, launch what will soon become the world's second-largest ticketing company, and two, begin the process of transferring the inventory of the world's largest live-event promoter to the new ticketing platform without any catastrophic glitches.
So far, so good. As CEO of Live Nation's ticketing unit, Hubbard oversees the company's ticketing and e-commerce initiatives. He's been with Live Nation since 2006 when it acquired Musictoday, where as CEO he had been tapped by founder Coran Capshaw to run the company's primary ticketing system.
Hubbard's experience supervising that business as well as Musictoday's direct-to-fan e-commerce operations have come in handy as he oversees the launch of Live Nation's ticketing division following the promotion giant's much-publicized split last year from Ticketmaster. Not only will Live Nation Ticketing service the company's own clubs and amphitheaters, it will also provide ticketing services for third-party venues and has entered a ticketing partnership with leading venue management firm SMG.
Given the narrow margins of concert promotion, Live Nation seeks to develop new revenue streams through its ticketing business. As the company's ticketing platform evolves, Hubbard and Live Nation Ticketing are charting a course that will have a big impact on the company's future and could alter the way fans buy tickets.
Billboard: How's the ticketing business?
Nathan Hubbard: It's holding up. We just underwent the largest ticketing migration in the history of the business and we're still standing. We're not taking any victory laps yet, but we feel really good about the system we have in place and we feel really good about the sales. We've put some big shows on the system and it has held up very well.
We really tried to focus ourselves on the fact that every other ticketing system in the history of the world has had one client called the box office manager. We really get to be the first ticketing company that can focus on the fan and in order to do that we had to get to par. Our objective was to try to replace what we had and get to par, and then from there we could really start to innovate and use this platform to change the industry.
BB: What have you learned in the ramp-up of Live Nation Ticketing?
NH: You really get underneath and understand what a complex e-commerce challenge e-ticketing is. It's not like selling something on eBay or an airline or hotel ticket. You've got 500,000 people who want 5,000 pieces of inventory that are all unique and that all go on sale at the same time at 10 a.m. on a Saturday morning. That is a very difficult, complicated challenge. The last year for us has been about not yet reinventing the wheel but building a wheel that looks about the same so we can figure out how to take it apart and put it back together again.
BB: Is the Saturday morning on-sale model going to be relevant for the future?
NH: I don't think so. I think Saturday at 10 a.m. is not the best time to put tickets on sale. It's a legacy of a time when people were working and couldn't go to their retail outlets or pick up the phone and call. One of the things we're going to do is attack the notion of a 10 a.m. Saturday on-sale and that first-come, first-served approach to getting tickets, only because that isn't always the most equitable way to get the right ticket at the right price in the hands of the right fan.
BB: Where are you now in terms of converting to your own ticketing system?
NH: We have 80 venues converted now. All of our amphitheaters are flipped over. We sold out the Dead at Shoreline [Amphitheatre in Mountain View, Calif.], we've put Dave Matthews shows on sale, we've put some big Killers shows on sale. We've sold thousands and thousands of tickets, with heavy pressure on-sales.
BB: Are you progressing in terms of third-party venues?
NH: We are. We see a lot of opportunity out there. Right now we're focused on our biggest client, Live Nation, but we have Roseland Ballroom [in New York] and Musictoday services John Paul Jones Arena [in Charlottesville, Va.], and we have some SMG venues in the not-too-distant future that we're working with.
BB: How is the Live Nation Ticketing model similar to existing models in terms of rebates to venues, service fees, etc.?
NH: The good news is we have complete flexibility. One of the reasons we made gains at Musictoday, and frankly one of the reasons I think we were such an attractive partner to SMG, was that we really weren't wed to the old model. We're going to try a lot of things with our own business - we're the world's biggest guinea pig and you'll see us test a variety of different fee presentations and customer experiences and the like on our own venues. From a third-party venue standpoint, if what they want is a traditional ticketing system and the same way it's always been done, we can work that way. If they want to work in a licensing or different way, we can work that way. We've built at team of great people who are able to have those conversations. I've got a lot of people from across the industry who understand the old model but also understand what's flawed and can work with an individual client to built a deal structure that works for them.
BB: Flexibility is one thing, but treating each show independently is a pretty labor-intensive proposition.
NH: You'll see us have some standards, for sure. But if we know one thing about this business it is that artists are different, their fan bases are different, their needs are different. So first and foremost we're going to have a platform that services them. From a third-party perspective, in a lot of cases we're serving a different client, the venue, and they have a different set of needs. In a lot of cases with these venues we actually book a lot of shows in there, so upfront we can try to work with them to give the artists some flexibility to do some different things when they play their venue, to present fees in a different way.
BB: In a best-case scenario, would you prefer an all-in pricing model?
NH: All the data we have tells us that is what the fan would like us to do. The fan wants transparency, he wants to know upfront what the value of that ticket is.
BB: There are a lot of moving parts to the equation, some of which could be out of your control as a ticketing company.
NH: So again, flexibility is key. We came out of a situation where we didn't really have control. You will see us jealously guard the right to optimize for the fan, because that's ultimately trying to serve on behalf of the artist, and work with the artist to do what's right for their fan.
BB: Arenas have come to be dependent on ticket rebate revenue received from their ticketing company.
NH: You can't look at each fee or ticket price in a vacuum. We're trying to bring some transparency to what the fan is paying overall and how that money should be divided by the artist, the promoter, the venue and the ticketer and all the other parties in the value chain.
BB: In general, when you talk to these third-party venues, are they cautious as to whether you guys can pull it off?
NH: I don't really think so anymore, and that's a testament to two things. One is our partner, CTS. They sell 60 million tickets in Europe. They did the World Cup. There's not really a lot of debate over whether the system works.
The other thing is, we are the world's largest guinea pig and we put our money where our mouth is by putting our entire amphitheater and club business on this system. The fact that we're doing that - and we've done that so far with good results - I think is all the reassurance that those venues need. The last point is the SMG [deal] sent a good signal to the rest of the industry.
BB: Amphitheaters are presumably where you have the most control in how you operate ticketing, so what will we see there?
NH: I don't want to overstate it, we work with the artists, our job is to service them, and we're not forcing a lot on that artist. That really is what kept us from achieving our goal under the old model. You'll see a couple of things from us. First and foremost you'll see us move to a single upfront fee. We think it is a better way of creating transparency for the fan around the overall value of the experience. Secondly you'll see us put in place the Select-A-Seat model, which we think is a big step forward in creating that transparency for the fan who doesn't just want a ‘best available' algorithm, they want to know what's available and where to pick from. And I think you'll see us really look at ways to change the way the value is presented to the fan and where that gets will be dependent upon the artist clients' appetite for that change. We've done a lot of listening to fans and we think we have a pretty good handle on what they want to see.
BB: In terms of revenue producing for Live Nation, the amphitheaters seem like a good opportunity.
NH: We finally have full control of our inventory and our pricing in partnership with the artist, so now we can make decisions around how we price it, how we distribute it, what we do with it, how we get access to it, in ways we haven't been able to do before.
BB: Talk about harnessing the secondary market.
NH: We are determined not to make the same mistakes that the recorded-music industry made when it came to file sharing and [digital rights management]. Right now there is a massive industry that is building itself on the backs of artists and their partners without taking risk. The secondary market isn't just about making more money than face, it's about pricing the inventory properly and optimizing the way you do that. We're not going to put our heads in the ground and pretend it will go away, we're not going to try and legislate it to death, we're not going to try to rest all of our fortunes on the hope that we can invent a technology that can keep them from exploiting the arbitrage opportunity. We are tackling the secondary market in a variety of ways through technology and process. There's a bunch of value being created that the artist isn't participating in and we want to help them participate in that.
BB: So if the artist is willing, in your amphitheaters, where you control all the inventory, is there is any reason why you can't transparently take a certain amount of the inventory and put it on the secondary market and allow the market to determine what the price for the ticket should be?
NH: Let me be crystal clear: That is only at the artist's discretion. Our job is to get the right ticket at the right price to the right fan.
BB: Ultimately could livenation.com be a secondary marketplace?
NH: We think it could be a marketplace for the ticket that the fan wants, yes. But today the secondary marketplace to me implies that the artist isn't participating. We're only interested in finding ways for the artist to participate, if he so chooses.
BB: Talk about the importance of data captured in the ticketing transaction.
NH: We believe very passionately in the artist-to-fan direct relationship. There are some great examples out there of artists who have built that up through time, and their touring history and their year-over-year ticket counts reflect it. Dave Matthews Band, Kenny Chesney, Jimmy Buffett, these are all artists that are models of how to build a strong, not just touring business, but artist business directly with the fan.
In our case, we work with thousands of artists in doing 10,000 events a year, so we're now putting our toe in the water of being a consumer brand and being a brand that can help fans learn about new shows and connect them with artists they love. That data for us is extremely valuable as we try to use it to help the next artist who's going to play the arena or amphitheater get known, and help our existing artist clients not just sell tickets but sell merchandise, or VIP packages or just connecting with fans. It's a very important piece of the puzzle for us in being a better partner with the artists.
We've invested a lot of money in building this platform and we will use that data for a variety of ways to help our artists and our business. We understand our customer and the artist's customer better than we ever had before. We're a vertically integrated pipeline between the artist and the fan, that sits fallow if not fed by the artist. Our job is to create a better mousetrap for the artist so we can look that artist in the eye and say we can help them sell more tickets, build longer-lasting, more loyal, more meaningful, more profitable relationships with their fans.
BB: At the same time you're a business trying to build revenue.
NH: We can only do that if we service the artist.
BB: You have this huge sandbox now, with a merch company, fan clubs, sponsor relationships, etc. What kinds of things can you synergize?
NH: The possibilities are endless, that's why the data is so valuable. Certainly within the ticketing transaction there are some opportunities, but even more so we finally have the ability to have an ongoing consumer relationship that doesn't have just two interaction points, Saturday at 10 a.m. and night-of-show. Now we've got a 365 day a year relationship that can [include] before the onsale, when they buy the ticket, the period in between purchase and show, night of show, and then after the show.
BB: Do these opportunities grow with multi-rights deals?
NH: They do from the standpoint of we have more products to sell. We're in complete lockstep with the artist in growing his or her business, and it does open up more possibilities there when we control ticketing.
BB: Much has been made of the Live Nation/Ticketmaster "clash of the titans" scenario, do you view it as such?
NH: We just don't look at it that way. I commend what Ticketmaster did in bundling the fee on the Eagles tour, we think that's a great direction for the industry to head. We are focused on our own business. We're a concert promoter at the core and now a vertically integrated provider to the artist, and we're focused on our business and innovating as much as we can with the tools we have available.
Nathan Hubbard has spent the past year gearing up for perhaps the biggest challenge of his career.