AEG Greets Outbox

Anschutz Entertainment Group, Live Nation’s largest competitor and one of Ticketmaster’s biggest clients, announced Feb. 3 it will one day be in charge of its own ticketing.

The news surprised nobody. AEG flirted with the idea on the smallest of scales many years ago and, when Live Nation merged with Ticketmaster, one of the concessions that had to be made was to give AEG the opportunity to run a white-label version of TM.

The only thing that may have surprised anyone was their choice: Outbox Enterprises, an upstart company.

Outbox may not have the brand recognition of a Paciolan or even a Ticketfly, but it doesn’t care.

“To the public, we don’t exist,” Outbox co-CEO Fred Rosen told Pollstar. “When you go to Ralph’s, do you know who makes their sandwiches? It’s not important.”

The company is front-loaded with talent – Rosen (former Ticketmaster CEO) and Jean-Francoys Brousseau (former Ticketmaster chief technology officer). It’s also got two things all new companies need – sales and marketing – with Neal Gunn (former Ticketmaster senior VP of venue relations) and Don Orris, who left TM in December to join his former boss, Rosen.

It also has a polished track record, selling tickets for owner Cirque du Soleil, which will now partner with AEG in what will likely be an exponentially larger venture. And, to hear the principals tell it, Outbox has the technology required for the future. TM’s trove of servers has served it well over the years but Outbox will be open-source – it’s just a matter of AEG investing in the backend for the transaction of 10 million annual tickets.

There is a reason why Live Nation first quit Ticketmaster and then wanted to buy it: Ticketmaster does not share its customer data with its clients. It considers ticket buyers to be Ticketmaster clients. That is the dominant reason why Live Nation (and, possibly, AEG at one point) wanted to buy the company – to get their hands on that proprietary data.

And that was one of Outbox’s selling points.

“We don’t own the data,” Rosen said. “We don’t collect the data. All the data is fully accessible to the clients.”

AEG President Tim Leiweke pretty much said that was key as he talked with Pollstar at AEG’s office at LA Live, the AEG entertainment complex that includes Staples Center, Nokia Theatre and a proposed new football stadium.

“We spent $3 billion to build this campus,” he said. “Then we come in and take all the risk on almost every piece of content that occurs on this campus, whether it be basketball games or hockey or, in particular, concerts. And then we turn around and tell the fans that want to enjoy our entertainment district, and our music, or whatever we’re promoting, to go to a third-party site who is going to do the transaction and who is the moment of truth to bring them into the campus.

“And that third-party site is out there selling a credit card sponsorship and they have a whole agenda. I’m looking at them going, ‘Wait a minute. You don’t have a skin in this game. You took no risk on the show. We’re the promoters. You put no money into the $500 million it took to build Staples Center, the $100 million to build Nokia Theatre, so explain to me, one, why you were the guys creating my moment of truth with my consumer and, if you do something wrong they’re going to be pissed off at me, not you and, two, why are you out there selling all these other services for two products that you have absolutely zero risk for, whether it be the venue or the content playing in that venue?

“If I own the manifest, why did I give those rights away to you? Outbox is going to fix that for us.”

Neither AEG, nor Outbox, will have a centralized ticketing site. Tickets will be sold through various AEG entities, like the websites of its 100-plus venues worldwide (outside of Germany).

Industry commentator Bob Lefsetz was not sold on the idea.

“We don’t want to go to a plethora of sites to buy our tickets, we want to go to one,” he wrote. “We don’t want to go to to purchase ducats for a downtown show and for tickets to the outdoor show and for shows by the beach. We want to go to ONE site! They call it”

Leiweke, and the rest of AEG, obviously disagree.

“To some extent Bob wasn’t all wrong. We’re not going to spend an enormous amount of money building the Outbox brand, because the brand will be regional,” he said, noting that 90 to 95 percent of ticket purchases come from the 50-mile radius of the venue.

“It’s the brand in that region that will drive this, and whoever owns that brand that’s going to make decisions about what are the service fees and what are the applications they want to build into this ticketing system.”

Citing the fact that kids no longer know, or care, what label their favorite artist is on, Leiweke dismissed the need for a branded ticketing service. When AEG Live / Goldenvoice’s Coachella festival sold out in record time early this year, the vast majority of customers went to – not – for their purchases.

“It was shocking that 85 percent of people went there,” he said. “It’s changing that quick.”

Not long after the company announced its new venture, ArenaNetwork wanted to know if the service charges would increase. Leiweke figured they’d be the same or less because there will be other ways to increase the bottom line.

“The way we’re looking at it with the new technology is there are new ways to generate revenue from the ticketing business – sponsorships, early onsales, VIP ticketing, fan club ticketing, merchandise, links into content, downloading content. There are a lot of other things that Outbox technology will be able to allow us to do.”

The new ticketing system will be rolled out over the next six months to two years. Rosen suggested this will occur as Ticketmaster contracts expire; Leiweke stressed it was so the technology can be implemented correctly.

“I’ve learned a lesson – don’t ever underestimate your competitor,” he said. “And in the case of Ticketmaster I have high respect for [Live Nation’s] Mike Rapino and Irving Azoff, and they’re not just going to let all of this fade away. They’ve done a pretty smart thing by combining a management company with a promotion company with a ticketing company – so the leverage of their content is going to make people think twice about leaving Ticketmaster. So, in all due respect to Fred, there are going to be a lot of people who are going to be afraid to pick that fight. That’s the nature of the beast.”

There are still more questions than answers, but one thing is for sure: the landscape will change. It’s just a matter of whether it’s drastic.