That’s the Ticket

Ticketmaster—loved by some, hated by many and used by nearly all—has long reigned over ticket sales.

Many have tried to take it on, including rock star Eddie Vedder, only to find themselves defeated or purchased. Now yet another challenger has arisen. “Los Angeles-based AEG, the sports and entertainment empire that owns Staples Center, Nokia Theatre, L.A. Live, the Kings and a minority stake in the Lakers, is . . . now selling concert tickets at its trio of L.A. Live venues via its 18-month-old AXS ticketing platform,” the Los Angeles Times reported today. “It’s the company’s attempt to build a national rival to Ticketmaster and challenge the traditional concert business, including battling scalpers.”

Ticketmaster was founded in 1976, and its breakthrough came when it offered venues payment—rather than receiving payment—in exchange for handling their ticket sales. The costs would be borne by the customer.

In his book Innovation and Entrepreneurship, Peter Drucker spoke of “ecological niches,” two closely related examples of which were those of the “specialty skill” and the “specialty market.” A specialty skill niche, according to Drucker, was achieved by “developing a high skill at a fairly early time” and making it “hardly worth anybody’s while to try to challenge” it. And a specialty market niche was achieved by “looking at a new development with the question, What opportunities are there in this that would give us a unique niche, and what do we have to do to fill it ahead of everybody else?”

Ticketmaster filled both of these buckets. It has relied on little more than a good computer program for ticket sales (its specialty skill) and a convenient service in a specialty market (tickets for live events). And it has done very well for 30 years.

But, Drucker warned, there are still disadvantages to the “specialty” approach. With reliance on a specialty skill, the hazard is that “it inflicts tunnel-vision on its occupants.”  Perhaps this is why journalist Steve Knopper asserted in a 2012 article in Wired that “Ticketmaster is notoriously slow to innovate.”

As for its reliance on a specialty market, the hazard is success. “The greatest threat is when the specialty market becomes a mass market,” Drucker warned. That’s when serious competitors show up. If they’re good, they’re a big threat. Indeed, Drucker pointed out that species occupying a niche, “as biology teaches, do not easily adapt to even small changes in the external environment.”

Is this the beginning of the end of Ticketmaster?