Mar 17, 2011 9:30 PM

Young CEO Seeks to Reset Ticketmaster With Tech and Transparency

Fifteen years ago, Nathan Hubbard and his band Rockwell Church played Austin’s South by Southwest music festival, the gathering of industry insiders and plain ol’ fans who meet each year to catch some of the 2,000 bands that descend upon Austin in search of fame and fortune. On Friday, Hubbard returns to SXSW once again […]

Image may contain Coat Clothing Overcoat Apparel Suit Human Person Face Tie Accessories Accessory and Performer

Fifteen years ago, Nathan Hubbard and his band Rockwell Church played Austin's South by Southwest music festival, the gathering of industry insiders and plain ol' fans who meet each year to catch some of the 2,000 bands that descend upon Austin in search of fame and fortune.

On Friday, Hubbard returns to SXSW once again -- only this time as Chief Executive Officer of Ticketmaster.

In Austin, Hubbard will face music of a different kind, directed at one of the most loathed companies in America.

Now 35, Hubbard's career has shot up faster than a Vassar Clements fiddle-solo. After graduating from Stanford Business School in 2004, Hubbard worked at Musictoday, then Live Nation, before last year's merger with Ticketmaster.

That combination created a three-headed entertainment colossus made up of an artist management division, run by Irving Azoff, a concert promotion division, Live Nation, run by Michael Rapino (who also is CEO of the Live Nation parent), and a ticketing division, Ticketmaster, which Hubbard now runs.

On paper, Hubbard looks good for the role: he's young, a musician and a Stanford MBA.

Wired.com sat down with him in New York this week, ahead of his appearance at SXSW for a discussion about Ticketmaster, the role of technology in the concert business, and what it means to become what he calls a "life-long fan."

In a wide-ranging and candid interview, Hubbard detailed plans to introduce dynamic pricing, paperless tickets, social media tools, and what he called "the science to set the right ticket price."

Hubbard had harsh words for secondary ticket market StubHub, which he accused of waging a "propaganda war" against Ticketmaster.

Finally, he addressed the sensitive and controversial topic of ticket fees, saying it is "critical" that the industry heed calls by consumers that all fees and charges be displayed "right up front in the buying process."

In contrast to some of the music industry's Baby Boom-era titans -- who ran the industry by God-knows-what-logic -- Hubbard is among a new generation of entrepreneurs and executives using science and technology to try to transform hidebound companies and industries.

At the center of Hubbard's focus, naturally, is ticket price, and he made it clear that the time has come to move beyond the industry's traditional approach to ticket pricing, which he called "very unsophisticated."

"We price a bunch of inventory below the intersection of supply and demand, and the preponderance of unsold inventory teaches us that we price a lot of inventory above the intersection of supply and demand," Hubbard said. "As a rule in our industry, the good inventory is priced too low and the bad inventory is priced too high."

Heading into the summer tour season, consumers should expect to see as many as 8 to 10 seat price choices and 'dynamic pricing'A typical arena or amphitheater concert has three price points, Hubbard said, in contrast to sporting events, which can have as many as 10 to 15 price points. Heading into the summer tour season, consumers should expect to see significantly more seat price choices for concerts -- as many as 8 to 10 -- in a move designed to price tickets more efficiently.

Consumers can also expect to see "dynamic pricing," which uses data to calibrate the price of a ticket based on supply and demand, a fairly revolutionary development for the concert industry. Airlines and hotels use dynamic pricing to adjust ticket prices, but Hubbard says Ticketmaster won't go as far as those industries, where prices fluctuate on a minute by minute basis.

Hubbard said that within the next few months, Ticketmaster would roll out "demand forecasting tools that use predictive models to spit out a recommendation for what each seat should be priced at."

Hubbard said the company would be using dynamic pricing on about 50 percent of its amphitheater shows this summer. "In some cases that's going to mean moving inventory across price points as demand ebbs and flows," he said. "We engage more fans through better pricing and we get more butts in the seats."

One of the more controversial initiatives that Hubbard is spearheading is paperless ticketing, which is fiercely opposed by secondary markets like StubHub, for obvious reasons: paperless tickets are non-transferable and cannot be resold, because the buyer has to swipe their credit card at the entrance to the show.

StubHub is so exercised about paperless tickets that it recently sent out an ominous email to all of its customers warning that paperless tickets "could deprive you of your essential rights as a fan." The company urged its customers to join what it calls the "Fan Freedom Project" to protest the injustice of paperless tickets.

Hubbard said StubHub is waging a "propaganda war" based on scare-tactics to try and protect its own interests.

"I am incredibly disappointed in how they are approaching the paperless issue," Hubbard said. "I think it's fan-unfriendly, and I think it works against the interest of the fan. It's just unfortunate that StubHub and some of the scalpers have decided to take the industry backwards with a propaganda campaign."

In a lengthy statement emailed to Wired.com, StubHub spokesman Glenn Lehrman said the company "supports innovation and technology; we are simply opposed to anti-consumer uses of technology."

"We welcome the use of paperless tickets that utilize bar codes and smart phones instead of paper," Lehrman said. "But when new technology is used to solely benefit primary ticketing agencies, venues and owners and harm individual consumers, the public and our legislators should be wary."

"Primary ticketing agencies like Ticketmaster utilize paperless ticketing under the guise that it gives real fans the opportunity to purchase premium, sought-after seats, but that's just putting lipstick on the real problem, which is why aren't those seats available in the first place," Lehrman added. "Unlike StubHub, primary ticketing companies aren’t transparent with their inventory. There is no public manifest, and no way of knowing how much inventory is being made available to the public and how much is being held back for the artist, venue, promoter, label, fans clubs, etc."

'These are not mutually exclusive concepts, the secondary market and paperless ticketing,' Hubbard says. 'They should co-exist. They need to co-exist.'For his part, Hubbard was emphatic that there is "absolutely a role for a vibrant secondary market." He even cited the example of his father, who is a Washington Redskins season ticket holder, but every year can't go to some night games because they end too late.

Hubbard's enthusiasm for secondary ticket markets shouldn't be surprising, given that Ticketmaster operates its own secondary market, TicketsNow -- a StubHub competitor -- which Ticketmaster purchased for $265 million in 2008.

"These are not mutually exclusive concepts, the secondary market and paperless ticketing," Hubbard said. "They should co-exist. They need to co-exist."

Hubbard said that at least in the short term the company would pursue a multi-pronged strategy, in which dynamic pricing, paperless tickets, and secondary markets would all play a role.

Looking ahead, Hubbard predicted that eventually the primary and secondary ticket markets would merge, though he said: "I don't think the industry is ready for that yet, but we're building for the day when it will be."

For the moment, Hubbard has more pressing concerns, like addressing widespread consumer confusion and frustration with Ticketmaster's sometime baffling and inexplicable ticket fees.

"We get that fans don't like fees," Hubbard wrote in a follow-up email after the interview. "The reality is that as talent costs have gone up, fees have become an extension of the ticket price, and many parties in the value chain participate in them. While we always tell fans what they will pay, fans tell us that when we show them how much money we are asking them to pay right up front in the buying process, they are more likely to buy a ticket. So that's what we want to do."

"But we cannot do this alone," Hubbard added. "We work for our clients and artists, and need them to buy into this. We have seen some real visionaries willing to take steps in this direction, and we are hopeful that the rest of the industry will follow. It's not just good for us – it is critical for the industry as we try to improve the fan experience with live events across the board."

Despite his emphasis on technology, Hubbard knows that fancy predictive models and paperless tickets alone won't address a larger challenge that faces Ticketmaster: its reputation as one of the most loathed companies in America.

So he's on a mission to re-orient the company's focus to make music fans -- and the development of what he calls "life-long" fans -- an absolute priority at Ticketmaster. Hubbard says he wants to leverage the combined force of Live Nation's three giant divisions to make that happen.

"You've got to walk the talk," Hubbard said flatly. "Part of the point of the merger was that between our artist management division, our concert promotion division, and our e-commerce division, which is Ticketmaster; when you put those things together, you ought to be able to accelerate the rate of change."

Hubbard talks a good game, and his background lends credibility to his comments. But make no mistake: Hubbard is no longer strumming down-home tunes in warm bars for college kids. His number one responsibility -- and fiduciary duty -- as the chief of a major division of a $2 billion public company is to the shareholders, who want a return on their investment.

And given Ticketmaster's abysmal track record on fees, transparency, privacy and customer service, it's going to take more than a sweet jam to change the public perception of the ticketing giant.

See Also: