March 2 (Bloomberg) -- Live Nation Entertainment Inc., the world’s largest concert promoter and ticket seller, is using Bruce Springsteen’s tour to push paperless tickets, a move that may weaken StubHub’s lead in the $4 billion resale market.
The company set aside a fifth of the seats at Springsteen’s New Jersey concerts next month for paperless transactions. Its Ticketmaster unit sold conventional tickets for the New York shows, as state law requires. The result: EBay Inc.’s StubHub.com lists 63 percent fewer tickets for those sections at the New Jersey shows, Live Nation said in an e-mail.
Live Nation says paperless tickets keep prices lower and give fans a better chance at good seats. The technology also may help the company extend its control over live entertainment and wring more profit from events, by letting Ticketmaster steer resales to its own TicketExchange, a StubHub competitor. Paperless tickets are tougher to exchange on other sites.
“Springsteen is an interesting test,” Michael Rapino, Live Nation’s chief executive officer, said in an interview. “With paperless, the lack of availability at secondary sites is staggering.”
Paperless tickets, which aren’t meant to be exchanged outside of Ticketmaster’s sites, require a buyer’s credit card or mobile phone for admission. Customers purchase online, and must provide identification to gain entry for themselves or guests. That creates barriers for brokers who use StubHub and other sites to resell tickets.
To transfer a paperless ticket, the seller might, for example, have to meet a buyer at the venue, according to Beverly Hills, California-based Live Nation.
“Of course there are fewer tickets on StubHub or the secondary market in general because they are not allowing resale,” Glenn Lehrman, a spokesman for San Francisco-based StubHub, said in an e-mail. “Now the same company that made ticket purchasing miserable in the first place is trying to destroy the secondary market by claiming paperless tickets are for ‘real fans.’”
Ticketmaster has long battled unfavorable publicity related to fees such as “convenience charges” and its dominance of the ticketing industry. In the mid-1990s, Pearl Jam canceled a tour in protest of service charges, only to return the the following year.
Live Nation acquired Ticketmaster in 2010, becoming the world’s largest ticket seller and adding to its concert business and management of top acts including the Eagles. Regulators approved the deal with conditions that included a 10-year ban on retaliating against concert sites that hire competing ticket sellers, and a moratorium on bundling ticket services and concert promotions.
Springsteen, nicknamed The Boss, opposed the merger, saying it would give the company too much power in concerts and ticketing. Ticketmaster angered Springsteen and fans in February 2010, a month after the deal was approved, by steering buyers to TicketsNow, another resale site it owns, where prices were as much as four times higher.
After the incident, Ticketmaster reached a settlement with U.S. regulators to stop the practice, which Springsteen called “scalping.” The company agreed to stop linking to TicketsNow from the Ticketmaster website for a year and to limit advertising of the resale site.
Marilyn Laverty, a spokeswoman for Springsteen, declined to comment.
In the 20 percent of Springsteen seats designated as paperless, StubHub lists 131 tickets for April 3 and April 4 shows at the Izod Center in East Rutherford, New Jersey, according to Live Nation. At Madison Square Garden in New York, 355 tickets in comparable sections were available for shows April 6 and April 9.
“Where we use paperless, the results have been spectacular,” Rapino said. “Paperless is an artist-friendly tool.”
Ticketmaster had $1.19 billion in revenue last year, or 22 percent of Live Nation’s sales. The worldwide secondary ticket market is roughly $4 billion and StubHub is the biggest broker, Gary Bongiovanni, Pollstar magazine’s editor, said in an e-mail.
“We don’t want to really be in the StubHub business,” Rapino said on a Nov. 18 conference call. “We want to be in the business of taking that $4 billion and putting it back on the right side of the column where the artist or the teams participate. We are in business with most sports teams through Ticketmaster, and most artists.”
The effort to corral a bigger share of revenue, which has led to experiments like dynamic pricing based on real-time ticket demand, also includes alliances with more musicians.
John Mayer said on his website paperless tickets will be used where possible for his tour, starting April 9. Tickets, which go on sale today, may be resold on TicketExchange, with prices capped at 20 percent more than face value. Where paperless isn’t permitted, steps are being taken to make transfers and resales difficult. The best seats aren’t transferable and tickets must be picked up the night of the show.
In addition to limiting resales, paperless tickets for Springteen’s Wrecking Ball tour are commanding less money in the secondary market than regular tickets for comparable seats elsewhere.
“If this e-ticket tactic with Bruce Springsteen is successful, the TicketsNow platform could drive interest from artists and sports teams looking to keep secondary prices lower while capturing more revenue for themselves,” Rich Tullo, an analyst at Albert Fried & Co., said in a report today.
At Madison Square Garden, sellers at StubHub as of Feb. 29 were asking as much as $9,500 for lower-level seats near the stage that have a $120 face value. At the Izod Center, where similar seats are paperless, prices range as high as $4,500.
Live Nation also sold paperless tickets to Springsteen shows in Atlanta, Los Angeles, Detroit, Boston, Washington, Tampa, Florida, and San Jose, California.
Live Nation lost 1.5 percent to $9.19 at 1:38 p.m. in New York. The shares had climbed 12 percent this year before today.