Scalping for Profits

AEG has partnered with StubHub during a ticketing controversy.

(from Billboard Magazine, November 24, 2012)  The recent partnership between AEG and StubHub appears to be both a business and a political decision.  Beginning in 2013, AEG’s AXS ticketing service will direct ticket buyers to StubHub when tickets are no longer available at face value.  By facilitating access to the secondary market for AEG, StubHub expects to see a sizable increase in traffic as AEG owns over 30 venues worldwide, including the Staples Center in Los Angeles.  While StubHub President, Chris Tsakalakis, states AEG is “a chunk” of their business, he says it is not responsible for more than 10%.

Receiving a share of the secondary ticket market isn’t the only benefit to AEG and its venues.  eBay’s ownership of StubHub stands to increase revenues for AEG also.  AEG’s music merchandise company, BandMerch, will begin featuring more than 135 artists on the eBay marketplace.  Additionally, eBay-owned PayPal will become a payment method for AXS.  “eBay’s experience in mobile commerce can also help,” Tsakalakis says, “AEG could create a mobile app that allows concert-goers to purchase merchandise from vendors that use a point-of-sale system integrated with PayPal.”

The AEG/StubHub partnership stands as a counterweight to Live Nation-owned Ticketmaster in the controversy regarding the secondary ticketing market.  The issue is how to prevent automated programs from purchasing tickets for the purpose of scalping.  Ticketmaster supports the nonprofit, Fans First, which seeks to control paperless ticketing.  Fans First currently supports a bill in the Tennessee State Legislature, the Fairness in Ticketing Act, which would require resellers to register with the state, publish the ticket’s face value, disclose the exact location of the seats, and confirm the ticket is in the broker’s possession.  On the opposite side, StubHub supports Washington D.C. nonprofit Fan Freedom Project which believes in the ownership and transferability of paper tickets.  AEG also introduced the online waiting room to ensure fans the opportunity to purchase their choice of seat.  Tsakalakis confirms the AEG/StubHub partnership will not be used to divert blocks of tickets from AXS saying, “We don’t strike deals with promoters as a distribution channel.”