It's an event so hot that eBay
Last night's announcement that eBay was acquiring StubHub in an all-cash deal makes perfect sense. If you won't listen to me, listen to the Piano Man.
You may be right, eBay may be crazy
Billy Joel will be down here in Miami next month. It just may be his last touring hurrah. I've already got my tickets, but I decided to compare StubHub to eBay for this particular concert at the American Airlines arena.
Over at StubHub, there were 168 listings for tickets available for that night's show. At eBay? I counted all of 32 auctions. To be fair, eBay's listings are up for no more than the length of the auction (between one and 10 days), while StubHub keeps its offerings up until they sell. However, there is a reason why the masses flock to StubHub.
It's not the fees. On completed transactions, StubHub actually takes a bigger 15% bite before handing the proceeds over to the seller. However, it should be noted that StubHub doesn't charge any actual listing fees. As long as the scalping laws are kind in your state, list away and hope for the best.
Still, StubHub has become so popular because it's playing off the same network effect that made eBay a star. Buyers flock to where the sellers are to get the widest selection, while sellers flock to where the buyers are to reach the widest audience. In the niche of ticket-swapping, StubHub really has no online equal.
You had to be a big shot
The refreshing thing is that StubHub never simply rested on its laurels. If eBay is humble enough to take notes, it may learn a lot from its latest "Buy It Now" acquisition.
Because StubHub specializes only in tickets, it's got the process down to a science. Once a pair of tickets is sold, StubHub emails a FedEx shipping label to the seller. Only after the buyer confirms receipt of the tickets does StubHub release the money to the original owner.
Can the tickets be bogus? Maybe, but StubHub's got a credit card on file for every seller to back up its FanProtect guarantee. So yes, even the pessimistic cynics can still go to the big game, play, or concert.
StubHub also allows sellers to set a declining price range, gradually cutting the offering price on their listed items with every passing day they go unsold. Yes, there are reverse auction sites out there, but this has never been in the eBay playbook. Maybe StubHub can open new doors for eBay on that front. Of course, it's more lucrative to watch bids go up, but reverse auctions are a more powerful -- and attractive -- tool for items that might otherwise ultimately go unsold.
Only the good die young
If StubHub is so great, why did it cave in to eBay's charms? It's obvious that eBay bathes in new-economy pheromones, the way it attracts dot-com juggernauts like Skype, PayPal, Shopping.com, and Half.com.
If StubHub had wanted to stay single and go public, it would have been one of the more intriguing IPOs of 2007. But it would also have faced several challenges on the horizon. Promoters such as Live Nation
Down here, Ticketmaster has a portal for Miami Heat and Florida Marlins season ticket holders to resell their unneeded tickets. Now that Florida's scalping laws have been eased, I don't want to tell you how much my $10 Heat tickets to the Lakers game on Christmas Day went for. I will tell you that Ticketmaster has to be making a mint, since it's skimming some decent coin in the reselling process.
Should StubHub be worried? Let's see. The Miami Heat is hosting the Dallas Mavericks next weekend in a rematch of last year's NBA Finals. StubHub has 281 listings for the game, but Ticketmaster's exchange is no slouch, with 209 sets of tickets available.
When it comes to concerts, promoters like Ticketmaster are becoming more aggressive in offering up VIP packages, choice seat auctions, and presale opportunities.
So maybe StubHub blinked. It probably never saw much of a threat in the cumbersome maze of free listings on Craigslist or Google
If so, is eBay making a mistake? I don't think so. If anything, this may be eBay's attempt to follow Amazon.com's
There is no reason why eBay shouldn't be making each of its areas more specialized. Why should folks looking to sell domain names deal with the exact same interface and features as those looking to snap up used video games or a baby stroller? There's simplicity in uniformity, but maybe seeing how StubHub was trouncing it in ticket sales will open eBay's eyes to the true power of focused categories, instead of being the flea market for the masses. Now that's an eBay I'd pay good money to see from choice seats.
Longtime Fool contributor Rick Munarriz is a satisfied eBay user, with 170 positive feedback ratings to show for it. He does not own shares in any of the companies mentioned in this story, and he is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.