Ticketmaster: scalp hunting

Is a ticket to a football match a piece of property? Or a licence that grants certain rights? Two of the world's largest ticket sellers, Ticketmaster and StubHub, differ on the answer. StubHub runs a marketplace for reselling tickets; Ticketmaster is a primary seller. The difference is not academic. StubHub sued Ticketmaster (and US basketball's Golden State Warriors) after season ticket holders who resold on StubHub were barred from buying subsequent season passes.

The ticket business is worth fighting over. The US resale market sees about $5bn in transactions a year, twice the level of five years ago. Fees on online sales (both primary and secondary) come to $4bn a year, thinks IbisWorld. Ticketmaster, owned by Live Nation, saw ticketing revenue rise 10 per cent last year to $1.6bn. StubHub, owned by eBay, does not report revenues, but estimates hover around $3bn in transactions annually. Its "take" is between a fifth and a quarter - hundreds of millions of dollars annually, large enough that StubHub's financials will be broken out after the eBay/PayPal split.

StubHub pioneered online ticket scalping (secondary sales, if you prefer). But now the market is getting more crowded. Ticketmaster is selling secondary tickets, and has a big advantage: being part of Live Nation, a live-events company that also handles artist management and sponsorship. Content drives ticket sales. Live Nation reports big losses on its concert segment, but the concerts help drive profits in ticketing and sponsorship. Ticketmaster accounts for a third of Live Nation's operating income - the rest is sponsorships.

Major venues and sports teams are also becoming more proactive in deciding how their tickets are sold and resold - often demanding a cut of the fees. StubHub has an agreement with UK soccer club Tottenham Hotspur, for example. But Live Nation's network of venues and artists still far outweighs StubHub's. In this battle, content may be king.

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