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Entertainment

stubhubStubhub is the leading secondary ticket marketplace in the US. The amount of ticket volume that it moves is incredible, and with a small tweak it could process even more highly profitable transactions. Stubhub takes 15% commission from the seller and charges at 10% buyers fee, plus on electronic tickets, it charges ~$5 per transaction for delivery. While this is a healthy margin, it’s only fair to point out that when you add in 3% for credit card processing fees, a new 2-3% rebate for their Stubhub Fan Rewards loyalty program, and large seller discounts of up to 5%, the gross margins aren’t as high as they’d initially seem. When etickets are uploaded by the seller for instant download, or the tickets have been dropped off at a Last Minute Tickets location, the listings (as of recently) stay up until the event start time. Previously etickets would have a cutoff time of two hours prior to the event, presumably for Stubhub to service customers who have run into issues before the start of the event.

I have watched many event pages over the two hours leading up to the start time, and I can confirm first-hand that a large number of sales are processed during this time. So while there may be a tradeoff of a small handful of customer issues that arise, there is a huge upside from all the additional transactions that occur in the last couple hours.

I propose that Stubhub continues to keep listings up after the event start time. There are often a fair amount of tickets remaining at the start of the event, and my hypothesis is that many of these tickets ultimately go unused. I understand that Stubhub promises that tickets will be delivered prior to the start of the event, and this makes sense in the context of buying tickets in advance. However, anyone who purchases tickets after the start time could be presented with a popup warning that the event has already started and will not be able to proceed without clicking a button to confirm. It has a similar process in place for listing tickets now that the end time of the listing goes until the start time. It’s hard to quantify how much this would be worth to Stubhub, but I think it would see a similar amount of activity in the 30 minutes after the start as it would over the last 15 minutes prior. This adds up across the thousands of events that they have listed.

The extended listing makes even more sense in the context of concerts, where frequently the main act doesn’t come on for a good 60-90 minutes after the opening act begins performing at the start time. In these instances I could see a lot more activity. The exception would be cases like MLB where Stubhub is the official secondary marketplace for the league and the teams are able to dictate the end time. This past season, only a few teams like the Giants chose to list up until game time, while others chose to cut off sales, trying to protect walkup sales.

One additional tweak that Stubhub could make to facilitate and encourage last minute mobile purchases is to help buyers overcome the significant impediment of printing electronic tickets. Most last minute buyers are in the vicinity of a venue are not near home or an office where they can print tickets. In the context of MLB or other direct partners, this could involve either including a will call option with the team or an integration with iPhone’s Passbook or the Android equivalent. It gets a little more complex when regular printing is involved, but I could see rolling out a partnership with locations nearby big event venues where buyers could easily send tickets to be printed via an app or mobile browser.

The beauty of both these product enhancements is that they both could be tested fairly easily in a contained environment with a limited number of venues where they could be monitored closely. If the tests show an uptick in sales, Stubhub would continue with the rollout. If they don’t move the needle, it could simply shut the projects down with minimal investment. The potential upside greatly outweighs the costs.

Eventbrite logo

It’s no secret that Eventbrite is killing it this year. In June they crossed the $1 billion in total sales mark, and as of August they have sold over 83 million tickets cumulatively (just check their homepage for the latest count). Operating 174 different countries, it is expanding rapidly. Eventbrite provides a plug and play ticketing solution to event organizers, taking a modest cut of the ticket sales. While there is still plenty of opportunity for additional growth in pulling in new event organizers, Eventbrite has some big opportunities to add revenue streams from their existing organizers.

The first opportunity is around helping organizers promote their events. Eventbrite already does a good job of leveraging Facebook to surface events for users that their friends are attending and also has an algorithm to recommend events of potential interest. What if Eventbrite offered premium placement of sponsored events on both the website on their email outreach on upcoming event? I could also see a lead generation scenario where organizers could enter a revenue share agreement with Eventbrite with a similar structure to the deal sites in which a promo code is offered to entice users. As an event organizer on the platform myself via Bottlenotes, I would gladly welcome this type of promotion, as it’s something we do anyway outside of the Eventbrite system. Why not leverage their 20 million person user base?

Will this hurt the integrity of the recommendation engine? Not if it’s done in a way that the sponsored events are simply being more prominently placed for people who would have it recommended anyway. Additionally users are accustomed to this type of sponsored placement on sites like Google and Yelp.

Another opportunity that Eventbrite is uniquely positioned to address is the secondary ticket market. Stubhub owns this space for larger events, but often does not even list smaller events that fall in Eventbrite’s sweet spot. The advantage here is that since Eventbrite is the ticket issuer, it can validate sellers’ tickets and re-issue them to the buyers, similar to how Stubhub handles Major League Baseball tickets. Users would be able to post tickets directly from their accounts. The fee structure could include the 15% commission on the seller side, like Stubhub, and could be split with the event organizer in some fashion. The buyer fees would be the same structure as with a regular purchase only relative to however the seller sets her price. To address organizer sensitivity to secondary sales if the event is not sold out, Eventbrite could allow the organizer to opt-out of listing a secondary market place, or to put a floor on prices.

Creating the secondary marketplace would benefit all parties involved. The attendees would be able to more easily and safely be able to sell unneeded tickets. The organizers and Eventbrite could capture a cut of secondary sales which would happen anyway through other channels such as Craigslist. Lastly, in the case of sold out events, the organizer can collect valuable demand data via the secondary market clearing prices, allowing them to improve their pricing strategy for future events in the same market.