Ecommerce & Mergers and Acquisitions 12 Jan 2007 01:10 am

eBay Buys StubHub.com

by Sean Hackbarth

StubHub.com logo

Ebay bought online ticket reseller StubHub.com for $310 million. This purchase of this tech company should accomplish more for eBay than buying Skype for $2.6 billion in 2005. An S&P analyst says eBay bought StubHub.com for a good price, three times its 2006 revenues. (Michael Arrington pushes a rumor that the price was 30-times EBITDA and describes the “dirty but lucrative” business of ticket reselling.) And unlike Skype to use the service a customer has to shell out some cash.

Jim Goodman, the founder of Ticketmaster.com wonders,

The other thing that really comes into question for me is how long these businesses are going to last (the electronic secondary market that is)? I am obviously very familiar with a Ticketmaster contract, having negotiated a few in my day :-) . Basically what it says is that Ticketmaster is the exclusive computerized ticketing source. Not to mention the rules printed on the back of a season ticket (which are often sold in the secondary market), which often states that it can’t be resold.

One of these days, contracts/rules, etc. are going to be enforced and there are going to be a lot of invalidated tickets out there. There are going to be a lot of very angry customers. And legitimate businesses that were doing hundreds of millions of dollars in revenue will be left with very little. The secondary market is a very, very fine line!!!

We’ll soon see a day where tickets have RFID tags to prove they’re legit and to prevent reselling. When that happens fans will have a cow and politicians will hold hearings.

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