The Ticketmaster Turnaround Tour rolls into New York ready to rock. The audience on this fine day in mid-May is a who’s who of local clients including the Yankees, Madison Square Garden, and Blue Man Group, here to see if the live show is any different from what they’ve heard for, literally, decades. Hell, they can’t believe Ticketmaster is touring. Throughout its history, Ticketmaster’s executive team did not come to you. Call it the Sympathy for the Devil Tour, if the Rolling Stones hadn’t already used that moniker.
The road show, 10 cities in four weeks, is CEO Nathan Hubbard’s idea, as is the black T-shirt he’s wearing: TM on the front, dates and cities on the back, evoking a concert keepsake. But like any new lead singer of a band that everyone knows, Hubbard (who at 36 is as young as the big, bad ticket giant is old) faces skepticism from every corner. He can’t even get his new bandmates, the company’s COO and the heads of its data and marketing teams, to don the shirt. Undaunted, Hubbard takes the stage at the Westin hotel in Times Square to detail the changes he has made to transform the brand that sold 120 million tickets worth $8 billion last year.
That night, after an employee dinner, Hubbard takes the stage again. This time, he’s got a set list instead of a slide deck. He’s wearing a plain black shirt. His audience at the Bitter End, the legendary Greenwich Village nightclub that’s hosted everyone from Bob Dylan to Lady Gaga, has no idea that the soulful singer-songwriter playing the impromptu acoustic set runs the most despised brand this side of BP. At the Westin, Hubbard described how he wants to bring artists and fans together. Twelve hours later, he’s doing it, in a role no one could imagine of a CEO, much less the CEO of Ticketmaster.
Hubbard has never run a global business with 3,000 employees, 11,000 clients, and $1.2 billion in annual revenue. He hasn’t managed a company one-fifth Ticketmaster’s size. North American ticket revenue declined 11% last year, the biggest drop in company history, and Hubbard is unproven as a turnaround artist. But, says Michael Rapino, CEO of Ticketmaster’s parent, Live Nation Entertainment, “behind that baby face is a wealth of experience. He has the greatest credentials in the business,” one that is complex, highly fractured, and controversial.
Rapino’s gamble: Who better to reshape Ticketmaster than the guy who spent the past half-dozen years punching holes in the giant’s armor? Hubbard learned the music business from Coran Capshaw, the manager of the Dave Matthews Band and one of the industry’s most influential innovators. As CEO of Capshaw’s Musictoday, Hubbard doubled revenue and helped Matthews, John Legend, and several hundred other artists sell tickets (and merchandise) directly to fans, a lucrative alternative to Ticketmaster and the labels. Before Live Nation merged with Ticketmaster, Hubbard launched Live Nation’s ticketing business, turning Ticketmaster’s biggest client into its biggest competitor in just two years.
And like a car designer who has raced Formula One, Hubbard knows live events as few executives do, from both sides of the stage. Between graduating from Princeton summa cum laude and earning an MBA at Stanford, Hubbard spent more than two years touring in the acoustic duo Rockwell Church (Joti Rockwell is his musical cohort since first grade; Church is Hubbard’s middle name), playing 200 or so shows a year. With the help of a Dave Matthews producer, they recorded five CDs.
Hubbard didn’t set out to be CEO of Goliath Inc. “You’ve gone from being a Honduran rebel to being George Bush,” a music buddy told him. To which Hubbard replied, “I’m still a Honduran rebel. I’m just in the White House.” One music executive warned Hubbard early on, “You can only lose.” But after helping integrate Live Nation’s ticketing business into Ticketmaster after the companies merged last year, Hubbard told Rapino that running Ticketmaster was something he had to do, and Rapino and Live Nation Entertainment executive chairman Irving Azoff, himself a former Ticketmaster CEO, gave him a tryout. “Any artist who cares about this industry,” says Hubbard, “would die to be in my chair and try to make sweeping changes.”
He scored some early wins, retaining clients after the company experienced embarrassing defections the previous year (arenas in Denver, Utah, and Cleveland had all left because Ticketmaster wasn’t responsive to their needs). More important, Hubbard developed a vision for Ticketmaster as a fan-centric e-commerce company rather than merely a transaction engine for live-event venues and sports teams. Ticketmaster, he discovered, is already a top e-commerce site — according to financial analyst Brett Harriss at Gabelli & Co., it’s up there with Amazon and eBay in terms of gross merchandise sales — “but it hasn’t thought of itself that way.” Now there’s no need for Rapino and Azoff to bring in a more experienced hand. “It became evident he’s the guy,” Azoff says.
When the U.S. government approved the Ticketmaster-Live Nation merger in January 2010, the fear was that the marriage of the world’s largest ticket seller (that also managed hundreds of artists) with the world’s largest concert promoter (that also ran venues) would exacerbate each of the company’s worst traits and strangle the business. It’s a delicious irony, then, that Hubbard is in the thick of transforming Ticketmaster from a notoriously slow and inflexible organization into one that he hopes is innovative, responsive, and, yes, beloved — okay, he’ll settle for respected. “If we don’t disrupt ourselves, someone else will. I’m not worried about other ticketing companies. The Googles and Apples of the world are our competition.” Hubbard’s oft-cited mantra: “Like Amazon.” As he tells his road-show audiences, “I set out to evolve this company into everything that I wanted it to be as a client and everything I was candidly afraid it might become when I was a competitor.”
But Hubbard is dragging three decades’ worth of Ticketmaster ill will behind him, the noxious reputation he used to exploit. Ticketmonster. Ticketbastard. The Death Star. Joining the enemy made Hubbard so uncomfortable at first that when he arrived at Ticketmaster headquarters in Los Angeles, he says, “I couldn’t look the logo in the eye.” (And that logo was everywhere: Even the planters were branded.) Early on, he traveled to Dallas to persuade the NBA’s Mavericks and the American Airlines Center to re-sign, and to get the NHL’s Stars to join the arrangement. “It was a disaster,” Hubbard recalls. The Mavs and the arena were so unhappy they were looking at competitors. Meanwhile, the Stars wouldn’t have anything to do with Ticketmaster. Geoff Moore, the Stars’ EVP of sales and marketing, lit into Hubbard. “I’ve hated Ticketmaster for 20 years,” Moore says. “I didn’t believe they were going to do the things they said.” That was Hubbard’s first taste of Ticketmaster-fueled rancor. (Live events inspire even more intensely personal vitriol from music and sports fans: “If Ticketmaster were a person,” one tweeted in May, “I would punch it in the fucking face.”) As he walked out of the Dallas meeting, he thought, This is even harder than I imagined.
Hubbard’s strategy, says Frank Roach, who teaches entertainment management at the University of South Carolina, is “180 degrees from where they always were before.” The question, then, is this: Between Ticketmaster’s own flaws, the damage inflicted by Hubbard previously and other competitors, and the industry’s resistance to change, is Hubbard too late?
IT’S THE FIRST NIGHT of Hubbard’s tour, and he and his band — COO Jared Smith; John Forese, head of a new data group; and Jackie Wilgar, the new marketing chief — are in what can only be called Hubbard’s rock-star suite at the W hotel in downtown Atlanta. Floor-to-ceiling views of the city. An ornate chandelier in the dining room as if it were in a private estate. Hubbard, a fundamentally decent guy who’s a self-effacing perfectionist, is understandably a bit self-conscious about the surroundings. “They’re a partner,” he says sheepishly.
Amid the glitz, something’s missing: the group’s rhythm. The first day in Orlando, Florida, wasn’t as polished as Hubbard would have liked. So he is eager to review the Orlando presentation before tomorrow’s event, just as he used to critique audio immediately following a show. Over takeout pizza and wine, Hubbard and the others obsess over the PowerPoint slides again. He reclines in a chair, rewriting in a notebook and listening to a colleague on speaker through the BlackBerry resting on his chest. He wants to hammer home at the end the ways that Ticketmaster is changing, he says, something like, “Delivering products when we say we will.”
Someone suggests a title for the new slide: “Curtain call.”
Nice touch. Hubbard loves it.
Ticketmaster is damned by its competition as “enterprise software” — how rock and roll is that? What’s sexy is serving fans, and Hubbard is here to sell clients on the idea of putting the fan first in service of boosting overall attendance. Spend any time chatting with ticketing execs and two stats get drummed into you: 40% of tickets go unsold and 60% of event-goers would attend more shows if they knew they were taking place.
As part of Ticketmaster’s reorganization, “we’ve rolled out more products in the last six months than we’ve rolled out in the last six years,” says Smith, an eight-year veteran. A new, interactive venue map puts fans in control of choosing from all available seats rather than Ticketmaster choosing “best available.” A third of customers using the map are actually buying more — and pricier — seats. Some clients are testing a version with photographic views from each spot. Ticketmaster is also installing kiosks in 1,200 Walmarts and has added the ability to buy tickets on iTunes. Hubbard needs to build up goodwill with consumers, because, he says, “companies that have a good relationship with fans have permission to innovate and fail from time to time.”
Much of Hubbard’s fan strategy is built around social media. “You go to shows with friends,” he says. “We should tap into that.” Though rival platforms also allow for people to notify their friends when they buy a ticket or even want to see a show, Ticketmaster’s scale gives its social-ticketing initiatives more power. Facebook touts Ticketmaster’s alerts as one of its top commerce apps, and Ticketmaster reports that each one generates $5.30 in additional revenue. A forthcoming Facebook app will pinpoint where your friends are seated. “Since Nathan took over as CEO last year, we’ve seen them invest more and more resources into building out social experiences,” says David Fisch, who heads commerce business development for Facebook. Similarly, a new partnership with Groupon, expected to launch this summer, should help fill unsold seats. Says Groupon CEO Andrew Mason, “We think it’s going to be a historic deal for us.”
Hubbard ultimately wants Ticketmaster.com to be the top portal for events whether the company handles the tickets or not. It would link fans to wherever they need to go, even rival companies — think the Hulu of tickets. (No wonder Hubbard hit it off with L.A. neighbor and Hulu CEO Jason Kilar when they met at their kids’ school.) Hubbard wants to expand the definition of a ticket beyond access to a two-hour event, offering exclusive content to tap the anticipation beforehand and the memories afterward. “We’ve got to make the show cooler,” he says. “Or else.”
AFTER FIVE HOURS of talking to clients and employees in Atlanta, answering questions, and telling everybody the story of the new Ticketmaster, Hubbard is flat on his back on stage. He’s beat, his voice ragged. The CEO-who’s-his-own-worst-critic thinks his talk lacked the usual passion. “I was distracted,” he says. He sits up and confides that he was blindsided by a blog that morning. Music-biz gadfly Bob Lefsetz ripped into the 2010 compensation packages of Live Nation’s executives, especially after such a bad year (the company lost $228 million). “Nathan Hubbard making $5.7 million,” Lefsetz wrote, “is like a wannabe band getting paid the same amount.” Ouch.
“Guys, I didn’t make anywhere near $5.7 million last year,” Hubbard says. He leaves the flashy lifestyle to his bosses, Rapino and Azoff. Once, Rapino invited Hubbard to a party with Jay-Z and Beyoncé, and Hubbard watched the whole thing unfold from the sidelines like a TV episode. Hubbard interviewed Azoff at an employee town hall at the Hollywood Palladium in April, encouraging him to share the craziest stories he could muster, to connect his employees to the concert business and not the enterprise-software racket. (Many of them center around the Eagles’ Joe Walsh destroying hotel property.) “I’m a bit of an outsider,” Hubbard says. “You get wedded to that stuff and you become worried about overturning the apple cart.”
The public conversation about Hubbard’s compensation package upset his suburban acoustic-nerd persona and Dudley Do-Right propriety. He and his colleagues debate whether he should correct the story — Hubbard’s 2010 salary and bonus was $1.3 million, but valuing stock options that haven’t yet vested (and may never be worth anything if the stock doesn’t move up) is where the $5.7 million number comes from — but they decide, in effect, that no one will feel sorry for Darth Vader. A week later, when I catch up with Hubbard again in Los Angeles, the episode appears to have blown over. “It was one of those country-boy-in-the-city moments,” he says.
Hubbard’s inexperience can get him into a bit of trouble, but mostly he uses it strategically and to great effect — as in his challenging of the status quo regarding Ticketmaster’s fees. Last fall, he launched a Ticketmaster blog and immediately took on the elephant in the room. “We get it — you don’t like service fees,” he wrote in the opening post. He has persuaded a third of venues to eliminate the truly shameless $2.50 TicketFast charge for the service of letting you print your own tickets. And he has worked to move fees to the first page of a transaction because springing them on customers at the end is wrong. The change, he says, “never would have happened if I’d asked permission from the industry.”
Indeed, the new policy initially caused “a shit storm” among many promoters and venue owners who feared that disclosing the fees so early would discourage buyers. A lower price lures them in, the thinking goes, so that they’re invested by the time they discover the fee. “I had clients say, ‘What are you doing? We’ve been doing it this way for 35 years,’ ” Hubbard recalls. “I told them, ‘You sound like the record labels.’ ” Hubbard fired back with data: Ticketmaster’s conversion rates went up after the change. (The reward for his candor? A day’s worth of depositions in a class-action suit relating to fees against a premerger Ticketmaster. The case was settled in January.)
Hubbard is also talking loudly about the event industry’s dirty secret, revealing that promoters, venues, and even artists who boast about keeping prices low for fans take a cut of those service fees. “Enough is enough,” he says about Ticketmaster being the sole heavy. Typically, sources say, Ticketmaster keeps about 50% of the fees, but larger venues can command up to 75% (promoters and artists then negotiate their cut with the venue or add an additional fee). “Most of our major clients are making more on service fees than we are,” Hubbard claims.
Other parties aren’t ready to have that conversation. Take Scott O’Neil, president of Madison Square Garden Sports, a Ticketmaster client for more than 25 years. He applauds putting fees at the front of the transaction process as “complete transparency.” So is he okay with Ticketmaster being transparent about who gets those fees? “I don’t know,” O’Neil says. “I have to think through that a little bit.”
“It’s all Fred Rosen’s fault, and you can quote me on that,” says Azoff, the legendary manager of such acts as the Eagles and Christina Aguilera. “He set up the business as a bribery. Meaning, ‘I’ll be the cover.’ ” Rosen, who was Ticketmaster CEO from 1982 to 1998, responds, “I did. Because Irving [Azoff] took all the money for his acts. The only thing he couldn’t control was the service charges.”
To explain, in the 1980s, when Ticketmaster was the insurgent and Ticketron was the behemoth, Rosen, a former stand-up comedian turned lawyer, flipped Ticketron’s model on its head. Instead of the venue paying Ticketron to sell and distribute tickets, Ticketmaster paid the venue for exclusive rights to handle all the tickets. How? By adding on a small convenience fee that appeared separate from the ticket’s face value, which remained unchanged. That irresistible deal won Ticketmaster clients and helped it build an unbeatable infrastructure that could handle the initial crush when tickets go on sale.
But Rosen’s innovation has since metastasized to as much as a third or even more of the ticket price. Hubbard claims that the largest line item in his P&L is distributing the millions in fees to the other stakeholders. “We don’t get paid enough to be the bad guy anymore,” he says, adding, “Why do we even need a bad guy in the industry?”
But Hubbard can’t wish away 30 years of bad juju. The day before the road show, he sits in a small bare-bones TV studio in Orlando, staring into a camera and waiting for CNBC anchor Tyler Mathisen in New York to ask his question. He tries not to squirm as Mathisen says, “We’re not talking about the UPS fee or the FedEx fee.” This is Hubbard’s first CNBC appearance — his first live TV interview, period. “I’m talking about whatever markup you put on those tickets,” Mathisen continues. Hubbard holds his tongue and waits. “Why don’t I see that fee early in my experience of your website?” And waits. “Oh, my goodness, I’m paying $175 for the ticket and now you’re going to hit me with this?” Mathisen’s rant, which ignores Hubbard’s now months-old push to move the fees to the front of the transaction, takes up 40 seconds of a four-and-a-half-minute interview. Maybe Bono had it right when he told Rapino that he should rename Ticketmaster.
THE PURPOSE OF HUBBARD’S TV debut was to announce a new way to price tickets and adjust them over time, akin to how the airline and hotel industries price their products — a major change and another foray into untapped revenue. “Our industry is the last Wild West of American business,” says Hubbard, echoing comments he made to me almost five years ago for a story on Musictoday. “It’s totally unsophisticated.” Promoters and artists set ticket prices, not Ticketmaster, and they too often rely on instinct. Face value is either too high, which contributes to unsold tickets, or too low, which helped build the $4 billion legal secondary market. “What we’re doing is quantifying gut,” says Jon Vein, cofounder and CEO of MarketShare, Ticketmaster’s new pricing partner, which factors in everything from the artist’s prior album sales to the unemployment rate. For concerts, the aim is to find the optimal ticket price up front. “Given that 40% of tickets don’t sell,” Vein says, citing that haunting statistic, “I suspect that there are going to be more tickets that have lower prices.”
Not everyone shares this view. Hubbard presents dynamic pricing — and paperless tickets that function like electronic boarding passes — as fan-friendly innovations that turn the clock back to when a 16-year-old Hubbard could buy front-row tickets to see Lyle Lovett rather than have those tickets gobbled up by brokers. In reality, these innovations are more likely to kneecap rival StubHub and other resale markets (even Ticketmaster’s own TicketsNow). “Dynamic pricing isn’t going to win Ticketmaster any customer-satisfaction awards,” says Thomas Smith, an economist at the Goizueta Business School at Emory University, predicting that prices will only rise. Ticketmaster’s new pricing tools are already in place at Live Nation-owned venues, a test lab for Hubbard.
He also sees an opportunity to develop a revenue stream around data. After taking over, Hubbard discovered that the company wasn’t taking advantage of arguably its most significant asset: information on 200 million previous customers and the 26 million monthly visitors to Live Nation’s sites. He hired John Forese, a former Silicon Valley colleague, to create LiveAnalytics, an independent team charged with innovating around the company’s data. “I told him, ‘You’re a startup, I’m the chairman of the board, you’re in charge, just go,’ ” Hubbard says.
Forese’s 14-person group is developing algorithms that mine customer databases and grade prospects for ticket packages or season tickets. His team is also trying to crack a perennial mystery: If the average purchase is for 2.7 tickets, who’s going with the buyer? Forese is scouring clues such as Facebook and Foursquare check-ins to find out.
LiveAnalytics shares some data for free, creating an incentive for clients to re-up with Ticketmaster. But it charges for richer findings. “If you get 1,000 clients to pay $50,000 a year,” Rapino says, “that’s a nice business,” setting an ambitious goal for Hubbard’s in-house startup. Hubbard’s take: “If we can take everything we know about the fan and make it digestible and useful, that’s going to be hard to beat.”
ONE NIGHT IN MAY, Hubbard is flying (coach) from the Dallas tour stop to one in Chicago, writing another all-hands email about the progress they’re making. During the Q&A that day, the Stars’ Geoff Moore, the same exec who had ripped into him in early 2010, got up to speak. Hubbard shares that Moore had told everyone, “ ’When we met, I didn’t believe a word you said. I have to say, you’ve won me over.’ ” Moore later confirms the tale, saying, “They’ve been very creative, which we haven’t seen before.”
Moore counts himself as a “converted apostle,” and he isn’t the only one. “They are definitely showing that they’re paying more attention to ticket purchasers, the fans,” says Harvey Jones, who runs operations for Rogers Arena in Vancouver and who renewed his contract after considering alternatives for the first time in 15 years. At the Atlanta event, Chris Dawson, IT director for UniverSoul Circus, a client for 18 years, sums up the changes: “They have really heard us.”
Hubbard can see some progress on Ticketmaster.com as well. BizRate, which surveys customers, reports that post-purchase online satisfaction is now 8.2 out of 10, the highest since it began measuring in 2006.
Brand sentiment, though, lags far behind. Ticketmaster is a regular in the vote for worst companies on Consumerist, the online offshoot of Consumers Union. As long as Ticketmaster’s fees are visible, the company remains an easy target. “You’ve got to see this,” Hubbard tells me one afternoon in New York, scrolling through email on his BlackBerry. He pulls up a letter from yet another incensed fan. “Dear Assholes,” it begins. Even better, the writer closes with a photo of his middle-finger salute. “We contacted him and upgraded his seats,” Hubbard says. “He couldn’t believe it.”
Hubbard favors a flat price, without fees broken out, like virtually every other product or service. Apple wouldn’t be Apple if it charged music fans 69¢ for a song and then tacked on another 30¢. Oh, wait, that’s exactly what it does, but consumers don’t see iTunes’ surcharge every time they buy. “The way the [event] industry presents pricing is Byzantine,” Hubbard says. “We don’t break out the rent for the venue or the gas it took to bus artists to town.” People have been following Hubbard ever since he was elected class president in high school three years in a row, but he’s struggled thus far to lead the industry in this direction.
Not even Azoff, considered the most powerful man in the music business, can force artists to accept flat pricing. “I’ve been saying, ‘Please, do this’ to the Bruce Springsteens of the world until I’m blue in the face,” he says. “Everybody wants to be able to say it’s a $95 ticket, not $125.”
AT THE L.A. FORUM one night in April, Hubbard is just another fan who can’t believe Prince is playing 21 shows in town. Eighty-five percent of the tickets cost $25. Total. No separate fee.
Hubbard is there with Rockwell, his former bandmate, and they marvel at Prince’s virtuosity as a guitarist and vocalist. (Another night, Hubbard spots the Foo Fighters’ Dave Grohl standing in the crowd singing along to “Purple Rain.”) He sees three shows, each one both an unforgettable experience and a reminder of what Ticketmaster at its best enables. “Dude, he blew my mind!” Hubbard gushes like a fanboy after his first concert. “He played four hours. Then he did, like, 12 encores.”
As fans finally file out, his CEO side reemerges. He asks fellow diehards what they think about the ticket price — the result of the artist, venue, promoter, and Ticketmaster all sacrificing a little for a greater good. “People are so grateful,” Hubbard says. “There’s not the entitlement of the guy who pays $800. It’s, ‘Wow, I just saw Prince for $25.’ ”
It’s a good night for Ticketmaster and Hubbard. Not that anyone would know it: Hubbard doesn’t tell fans where he works. He knows how that conversation goes.
[Photo by Benjamin Lowy]