StubHub's Scott Cutler Looks Beyond Resale, Talks Growth: 'We've Only Touched Our Opportunity in Music'

Ticket Scalper
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With the resignation of Chris Tsakalakis as CEO of StubHub a year ago, the live entertainment industry wondered who would lead the world's largest secondary ticket marketplace as it evolves from disruptor to legitimate player in a primary industry, where StubHub remains a polarizing presence. Enter Scott Cutler, who was tapped by parent eBay to lead StubHub and its team of 800 employees in April. Cutler came to StubHub after nine years as an executive vice president at the New York Stock Exchange, where he was responsible for over $1 trillion in capital raised and helped take some of the world's iconic brands in the last decade public. Prior to his career at the NYSE, Scott spent several years in investment banking focused on the software and internet industries. He started his career as a corporate securities lawyer, and has a BS degree in Economics from Brigham Young University, and a Juris Doctor from the University of California, Hastings College of Law.

An athlete, Scott has completed more than a dozen marathons, has crossed the Alps on skis, and rode several stages of the Tour de France. Based at StubHub's headquarters in San Francisco, Scott is an avid Giants fan. He has been married to his wife Melissa for almost 19 years, and they have four kids. His favorite eBay experience was "buying a pair of GS racing skis on eBay and then beating former World Cup alpine ski racer Phil Mahre in a televised amateur ski race."

Today, Cutler faces what many would term an even tougher challenge: further integrating StubHub into an industry where many view the secondary market in general as parasitic, profiting from an entertainment ecosystem without investment or risk-taking. Cutler aims to nurture the relationship between StubHub and the mainstream industry, continuing to blur the lines between primary and secondary markets. He envisions a world where StubHub is viewed as a powerful distribution channel in an open ticket marketplace.

BB: What was appealing to you about the StubHub job?

SC: I've spent the last decade at the convergence of technology and commerce, in the case of the New York Stock Exchange, at the center of the world's financial market. What really excited me about StubHub in particular is it is a marketplace, and it is at a super interesting pivot point in its 15-year history. It's such a significant player tin the entertainment and technology space, and it's a pivot point because I view the opportunity to be part of a larger ecosystem, where we play a more meaningful, relevant part of the community, as a tremendous opportunity for us. We're really just now starting to take advantages of tailwinds that the rest of technology has experienced in mobile and social, and an e-commerce globally that StubHub is positioned to -- but hasn't yet -- taken advantage of.  We are such a meaningful part of the industry, but we can't operate independently from the industries in which we participate. There's this great connection we have with fans and consumers that come to our platform, over 20 million unique visitors every month, [and] we're finding new ways to be able to connect those consumers with the artists, with the teams, with the performers. We have to be a builder, a connector, not just a disruptor.

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Today music represents about 40 percent of StubHub transactions, and sports about 60 percent. Would you like to see a shift more to the music side?

I would. I think we have a tremendous opportunity in music. If you look at the 160 partners that we have out there, we have very few broad scale partnerships in music, and we have a tremendous opportunity to the extent the industry starts to pivot well, to connect more directly with data and fan experience back to the artist in a more meaningful way. I actually think we've only touched our opportunity in music, even though we're North of a billion dollar business in music today.

The primary beef about the secondary market in general is basically you have people profiting from a show without investing in the show or the infrastructure around it, or taking any risk. What's your answer to that?

This is an industry that needs to move from the on-sale, the initial sale, to be able to interact and transact with consumers on any channel, any platform, at any time, on any device. That's what's happened in every other industry, and hasn't happened yet in this industry. We think about wanting to sell out in a minute and wanting to have all the economics fixed at the very beginning, that's different than how most other industries think about distribution, gaining access to customers wherever they are. If you think about it, StubHub is not a platform that exists just because of a secondary market, it's a platform that now exists because consumers now know they can buy a ticket to any event anywhere any time on StubHub, and we've sort of enabled that transaction to happen. Does that need to happen independent of the industry? Absolutely not, and that's where I think there's opportunity.

Clearly the consumer has accepted StubHub as a place to purchase tickets. Is there a perception battle for StubHub to win with the mainstream concert industry, the promoters, agents, managers, and venues?

Absolutely. That disconnect is where I started from, we can't exist as something independent from the industry, we'd like to be viewed as part of the industry. Where our unique value proposition lies is how strongly we are connected to their fans, their listeners, their consumers. We have a tremendous opportunity to connect those worlds in a more a more differentiated way, but the industry has to look at the world differently than viewed from the position of the industry as simply single channel.

How can StubHub add value to the equation?

We have a tremendous amount of information, of consumer data, of preference data, of pricing data, of purchasing data. We have a tremendous opportunity to connect with artists, fans and promoters through direct distribution. If you're in the business of selling a block of tickets today, we have a unique opportunity to be a channel for a certain part of that distribution. We think the opportunity for multichannel distribution partnerships is a tremendous one. This is true across the live entertainment landscape, this is the opportunity to move away from just exclusive relationships, single-channel, to multichannel, where we can connect this unique fan base that connects with us in a unique way with those artist, teams and performers that want to connect with our consumer.

So are you talking about getting into the primary market and becoming a more traditional ticketing company?

Yes. The simple fact is we are a ticketing company, and today in the United States, it's largely secondary, resale, but there's nothing that prohibits us in terms of our ability to sell through primary inventory. That distinction between primary and secondary is starting to grey. We've built, for example, technology platforms that allow integration with primary supply to be able to connect that primary supply directly to our consumers, who don't necessarily think about the differences between primary and secondary, they just want a ticket.

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Who would your client be in such a situation?

In that case, we'd be the client of the content rights holder, or the promoter, or the venue, that today is largely making the decisions around how tickets are allocated or distributed.

So you don't want to see one company lock down the ticketing for a given venue, tour, artist, promoter, venue. You'd like to see a more open marketplace, but primary market ticketing companies would counter, "we've spent decades and invested millions in building an infrastructure to figure this out, we don't want to share it."

I don't know of any example in distribution to consumers where single channel has been the best model for innovation, pricing or competition. No doubt there are players in the industry that would like to have control over the entire thing, but if you're thinking about how to access consumers wherever they are, whenever they are, there are platforms out there that exist and are going to come into play where you need to be able to find those consumers. Yes, we do need to break down the centers of power and create more opportunities for competition, and that comes from the original content rights holder making decisions in a multi-channel environment. That's a huge opportunity. There's clearly billions of dollars of economics available to the industry that today they've essentially partly ceded to some consumers who have been able to take advantage of the opportunity to sell tickets at different pricing. That doesn't necessarily need to be on just the secondary market.

There are those that would say such a scenario would create confusion in the marketplace, a "wild, wild West" of sorts.

That's not true at all. This is an industry that used to be "wild, wild West," and today is a transparent, open marketplace. Other places would like to think, "if we have a closed loop and total control, that eliminates the notion of a wild West," but, guess what, we have on our platform less than one half of one percent of fraud, the lowest in the digital goods marketplace. We've been able to establish a marketplace that, first and foremost, is centered on trust and confidence that what you buy is what you're gonna get. We've been able to eliminate that friction via the technology platform we've been able to build, so the notion of one place being verified, one place being trusted, that went away with the dodo bird.

Are you out there messaging StubHub's desire to be involved as a channel for the primary marketplace, and if so, what's the reception?

I'm at the beginning of my tenure here, and that's been the consistent message I've been speaking about. It is a new messaging for the industry and, quite frankly, a new messaging for StubHub. So we've got to both break down the barriers we might have in certain places in the industry, as well as the perception people may have as to how willing is StubHub to participate in the industry. My message in every single venue and every single communication is open, transparent and multi-channel.

So in a best-case scenario, where would StubHub fit into a plan as band X prepares to launch a tour and go on sale?

StubHub could absolutely be a place where a certain amount of primary inventory at on-sale should be able to find a home, and provide execution. And, frankly, at market prices. That's a tremendous opportunity for the promoters and the artists to really get connection directly to that industry, so, as you're thinking about making that distribution decision, I would caution you [not] to make that with only one channel of distribution.

So is StubHub prepared to put in marketing dollars, create awareness, and do all the things ticketing companies, promoters, and others in primary historically have done?

Absolutely, we spend hundreds of millions of dollars on marketing, and that marketing is [towards creating] awareness that fans can come to our platform directly to transact at any time. We're probably one of the largest spenders directly to consumers to raise awareness, as well as to create transactions.

In your opinion, who owns the ticket?

The content rights holder is making the decision as to how and where their tickets and their rights are ultimately transferred. We believe the marketplace should be open, that once individuals buy a ticket that they should have the opportunity to give that to a friend. That's pretty common, and also has been an industry that has existed for years, where people, if they can't go or if they want to sell their ticket, they should be able to. At the same time, we recognize that the rights holder wants to know who the end purchaser is, and also to participate in the economics of those transactions. And if you sell all of that through one channel, you cut off the opportunity to connect with those consumers, and so that openness that we're trying to create in the industry is a tremendous opportunity to actually create greater connection to the fans that are actually going to the event.

To take that a step further, who owns the data generated in the transaction?

The data exists on any platform where any of these things are transacting. If the data is to the transactions itself, it's owned by the platform, so for us we have a great opportunity to unlock that data so that it can be used and leveraged for the artist, and we're probably the only platform of our size and scale that's out there saying we're very much open and willing to share that data. That's a new positioning for StubHub in the industry.

What can you tell me about where StubHub inventory comes from?

It is all over the place. It may be split between a professional broker and a season ticket holder in sports; in theater it's a little bit different, and in music it's also very different. It's probably split that way between broker and the season ticket holder or consumer in music, as well. But we also have supply that's now coming directly from primaries. We've done that with music festivals, we've done that with sports in Europe, that's very much how everybody thinks about distribution. So, we're already starting to see a blending as that supply comes online.

How's business?

Our business for the year is up. The growth in our business, particularly in the last quarter as we've made pricing changes, is significantly faster than the rest of the industry. We actually see the competitive position of our platform strengthening, not weakening, despite the fact that we see probably more competition than we've ever seen in our business before.

What is StubHub's position on legislation that requires fans to have a ticket in hand, with an i.d.?

When you have legislation that is way behind the marketplace, we hope to be able to drive the marketplace. Very much like in the past, people thought about the resale market as a scalping market that was happening in alleyways and street corners, today it's an open and transparent marketplace. Consumers are buying those tickets and in many cases never even printing out a physical copy, being able to stand in line at an event, buy a ticket, have it downloaded to your mobile device, being able to present that at the access control, have that verified, and be able to walk in that experience. We even have fans being able to buy upgrade tickets while in stadium after the event has started, and all of that is enabled by technology. So we'd really like to see legislation continue to follow the trends in technology, which is "this is a digital good that's available on any device, any where, any time, and that's the way consumers actually expect to be able to transact in e-commerce today."

Is "scalper" a term that raises your hackles?

When people talk like that I just kind of shrug my shoulders and laugh it off, you've sort of missed the last 10 years of e-commerce. That's a term you'd think about when you watch Fast Times At Ridgemont High, not today.

What could StubHub's role be in artist discovery?

Historically, the artist has had very little connection with StubHub, and largely that's because I don't think that the industry has realized the opportunity and "how do I do that?" I think that's principally at the very beginning, when you're thinking about the economics of tickets and ticket distribution, the opportunity to connect with fans on various platforms. Those forward-thinking promoters or artists will think about that multi-channel opportunity, and we would be happy to be able to work with them, provide data, provide analytics, provide access, and, ultimately, a tremendous transaction experience with those fans. That's something that is new to the industry and new to StubHub, and that in music is critical for our continued success.

What's the next growth area for StubHub?

We're largely a U.S. business, but we have a big ambition to be more global than we are today, so you will see us continue to make announcements in that area. The other thing you've seen from us is we've had big initiatives around discovery, finding better opportunities for fans to discover the events that they like. We've done that through unique personalizations in music, where we've scanned music libraries, where we've had preference clouds where individuals have been able to highlight the bands and artists they want to follow. We're moving into a world where we're also going to highlight, through our technology, direct recommendations of tickets that have value, a sort of value orientation to our platform, which I view as an extension of what we're doing in personalization and discovery.

Is the polarizing nature of StubHub challenging when you're looking at potential partners?

In the last 15 years, maybe the strategy was more arced toward disrupting the industry than being part of the ecosystem. That's one of the things we're changing very dramatically around our positioning in the industry, so, yeah, there is probably going to be a lot of historical views, because we've been so disruptive. But, think of the value we've created for the industry in terms of access, of consumer awareness, of sell-through, of, quite frankly, the economic opportunities, because we're now such a significant player. We can't continue to exist as a disruptor, so it's really important for me to be viewed as a partner, as being part of that ecosystem, and adding value to that ecosystem. I have to say that, and we'll be saying that for years to come.


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