TicketMaster Ain't Ebay

Kevin Laws, who recently wrote a guest piece for VentureBlog, demonstrates that there is no honor amongst venture capitalists and moves to upscale quarters over at Due Diligence. Kevin's new piece, which I recommend, makes the counter-intuitive point that expecting artists to make money from concert venues rather than CDs, throws them in the arms of a bigger monopolist -- Ticketmaster. The piece makes an analogy to Ebay, although I don't think the situation is as gloomy as Kevin points out.

At Ebay, a large number of relatively undifferentiated sellers go to sell relatively commoditized, mostly physical products. Ticket sales are at the extreme opposite end of the spectrum -- they are heavily branded and differentiated virtual products. Ebay becomes a global mall and merchants must rent store space there on a transaction basis because, if they don't, somebody else will sell them the same product or one that's close enough. In the Ticketmaster case, I won't go to the site to buy Simon and Garfunkel tickets and then end up with Pearl Jam since the venerable duo didn't sign up with Ticketmaster. In fact, I'll be sure to visit Simon and Garfunkel's web site and swipe my card whether the transaction is completed via Ticketmaster, Amazon, or Fandango. The Internet neatly separates Ticketmaster's control of the marketing channel (phone numbers and retail outlets) from its control of the fulfillment channel, and that makes it easier to bypass the latter without worrying about the loss of the former.

As my colleagues David Hornik and Kevin Laws point out, Ticketmaster will be hard to unseat. It has long term contracts with the venues, locks them in with installed point-of-sale software, and gives kickbacks from its ticketing fees to keep things the way they are. But at the end of the day, it's a middleman for a product that customers will buy directly, regardless of who fronts it.