StubHub is an online ticketing marketplace that connects third-party sellers and buyers. Founded in 2000 by former Stanford Business School students Jeff Fluhr and Eric Baker, StubHub was created to fill the gap in the traditional "scalping" market for sports and entertainment events. From its inception, StubHub’s main objective was to provide online services for buyers and sellers of tickets for sporting events, concerts, theater shows and other live entertainment events at fair market value.
StubHub’s aim was not to become a ticket broker, but rather an intermediary service provider. The business model’s main function was to connect fans and brokers who wished to sell their tickets at fair market price or above, and fans looking to buy them.
At its inception, StubHub adopted a partnership strategy to market its services instead of using large scale and costly advertising campaigns. StubHub’s partners include the New York Yankees, Washington Redskins and the University of Southern California, along with a total of nearly 60 other teams in the NFL, MLB, NBA, NHL and NCAA, as well as companies such as ESPN and AOL. (2010 Annual Report)
StubHub was acquired in January 2007 by eBay, the online shopping auction website, for $310M[i] after a three year run as one of the fastest growing private companies in the United States. StubHub reinvented the secondary ticket market back in 2000 and continues to lead through innovation. The company's unique open marketplace, dedicated solely to tickets, provides all fans the choice to buy or sell their tickets in a safe, convenient, and highly reliable environment.
Today, StubHub is the world’s largest ticket marketplace. “StubHub set sales records in 2010, driven by demand for World Series tickets and concerts.” (2010 Annual Report)
the secondary ticket market
The secondary ticket market is growing while the primary market is declining. Although there is no central source for tracking secondary ticket market sales due to non-monitored ticket scalpers, evidence of the growing market is clear in the increased competition and growing traceable sales within the market. Before delving into a competitive analysis, it is valuable to examine a variety of environmental factors that significantly impact the market.
The political environment surrounding the secondary ticket market varies upon the laws prevailing in each US state. Although secondary ticket sales are not generally illegal, they are in many cases, regulated, by who can sell the tickets and by how much. Many of these regulations fall under anti-scalping laws which control where the physical ticket can be sold and exactly how much the seller can sell above the printed ticket price. In general, state and local laws control the perceived ethics surrounding the trade. Since secondary ticket sales are estimated as being a multi-billion dollar market, the Federal government has not restricted or taxed this market as of yet. Any Federal restrictions could pose a great threat to StubHub’s business.
The targeted customer in the secondary ticket market is the individual who is seeking ticketed seats at an event for fair market value. The market allows for price premiums to be paid for availability of hard-to-get seats, guaranteed delivery, and ease of transaction. These cost factors are important considerations when investigating the current, short, and long term economy considerations when targeting this market. For example, ticketed events such as sports and entertainment sales rely heavily on a consumer who has sufficient disposable income in which to spend on the event. To drill deeper into this analysis, one would also have to look at the secondary costs of attending an event; costs such as transportation, food and drink, parking, and other expenses that are incurred after the ticket sale is made. Although the ticket seller does not have a direct concern with the...