This Saturday will be a historically significant date for the Anschutz Entertainment Group, as it will mark the beginning of AEG's eventual migration from TicketMaster. With back-end technology developed by Outbox, a company in which AEG is both a client of and has an equity stake in, the nation's second-largest promoter will now be able to gain control over its own ticketing operations, with the introduction of a new white-label ticketing platform that's part of the company's burgeoning Axs brand.
Right now, this move, which was enabled by the TicketMaster and Live Nation merger, is really more significant historically, and to AEG as a company, than it is to ticket buyers as a whole, as it represents a sizable, dedicated shift by a viable competitor away from TicketMaster, which has dominated the ticketing business until now. From a consumer standpoint, though, the service fees will ultimately be comparable to those of TicketMaster -- although Axs will not charge ticket buyers a fee for printing their tickets at home.
Eventually, AEG will be making a global transition, with all of its venues on board by the end of next year, but Saturday's initial rollout is focused exclusively on the Denver market. Specifically, it will affect ticket sales at the Ogden and Bluebird theaters.
We had a chance to speak with Todd Sims, AEG's senior vice president of digital, yesterday about AEG's relationship with Outbox, the migration, the timetable, what it means for consumers, and why Denver was selected for the initial rollout.
Westword: What prompted the founding of this service?
Todd Sims: This goes back to the Department of Justice decree -- what, a year and a half ago -- when TicketMaster merged with LiveNation. We're a client of TicketMaster and obviously a competitor of LiveNation, so from the anti-trust perspective, they determined that that wasn't a great idea. So they essentially had us embark on this. We had a five-year window to launch an alternate ticketing platform.
Seven months ago, we announced our relationship with Outbox, which would essentially form the back-end technology for our ticketing platform, and today we're announcing the launch of Axs, which is a broad based platform. Ticketing is a major piece of that and will be powered by the Outbox platform. So that's sort of the history of it over the last eighteen to 24 months.
When you say "they," who do you mean by "they," when you say "they" didn't think it was a good idea?
The Department of Justice. It was an anti-trust issue between the number one music promoter buying the number one ticketing company. We were obviously at risk from something like that, as others were in the industry, as well. So we had a window -- I think we were essentially decreed to be the competitor, from a ticketing standpoint. So that really put the wheels in motion -- and again, we announced our relationship with Outbox about seven months ago.
So was this a federal mandate from the DOJ?
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The DOJ gave us the opportunity to start our own ticketing service. Two of the things they did allow us to go forward with is this: One, they were allowing our existing venues out of their TicketMaster contracts, on our time table, within a certain time range. The second thing is they allowed us the ability to license -- or use -- their software.When we started a ticketing company, if we did, if we needed software to do it, we could use what they have. It turns out that we decided not to. We bought into Outbox, and we prefer that.
So you had the opportunity to use TicketMaster software if you wanted to?
And you feel that this other technology through Outbox is superior?
Yeah. They're a proven technology. They have a track record of handling large on-sale events, complex ticket purchases like season tickets, things like that. So we're really confident that that platform can give us the sort of innovation that we're looking for.
You say they have a track record. Who else have they worked with?
They got started by doing all of the ticketing for Cirque du Soleil, so they had a pretty good track record of doing international events. Basically, anytime that Cirque puts a tent down, Outbox had been handling those ticketing situations. Further, the Montreal Belle Center, which is a sort of must-play venue in Montreal, has again, you know, the Canadians hockey team, and most major tours go through that building. So they have a lot of experience dealing with those big on-sale events.
So Outbox is the one providing the technology, but it's actually going to be rebranded as "Axs," is that correct?
Yeah. So, well, actually, let me explain a little bit more there. The Outbox platform is a white-label platform, enabling their clients, like us, to brand it and sell it and market it however we want. So we're doing that in a couple of different ways. First, we're launching Axs, as a platform, as a brand, but also, we intend to allow our venue brands to use the platform as well. So consumers, if they're at the venue brands, they can buy the tickets, sort of in that brands look and feel through the entire process. So for us, it's both launching a new brand and empowering our existing venue brands.
So the Axs brand is going to be a national brand -- that will kind of be the brand that everyone refers to. But locally, to make it local-centric, it's going to be like -- in our case, we have the Ogden and the Bluebird -- so it will be with a presence that's distinctively Ogden and Bluebird, then, is that correct?
Correct. And I would just correct that to say global. AEG is a global company. We've got assets across the world, and Axs will serve as AEG's primary consumer brand.
So the plan is to incorporate this globally across all AEG properties, then?
Correct. Although there are some complications, Asia, for instance, and China. So as we talk about rolling all of our venues onto the Outbox and Axs platform, there are some instances, for instance in China, where that might happen immediately. So it's the vast majority of our venues.
This is rolling out in Denver this weekend at those two particular venues. Is there a time frame that you're looking to expand this across the board?
We hope to be done with this migration at the end of 2012. That's a hundred-plus venues, again, worldwide, that will take us eighteen months or so to migrate, and we're starting with Denver.
What made you choose Denver?
You know, it's a great market for us. They're two incredible venues. Both the team and the consumers are innovative. They're forward-thinkers. They're tech-savvy. So we felt like that would be a great market to start in.
So Denver was chosen specifically over other markets for those factors?
Now what does this represent to you? Can you speak at all to the fact of how much this is costing as opposed to the new revenue stream that it's creating for you?
Well, look, we're in the live event business. We intend for this to be a part of that offering, but I can't speak specifically to the cost that we're putting in to developing the platform, nor to the P&L, essentially, of that initiative. To us, it's a strategic move. Ticketing is a critical part of the consumer experience around live events, and for us, it's more about control and being able to provide great experiences around that life cycle of the event.
Right, but there's an inherent element to it that's generating a new revenue stream for you while at the same time cutting out some of the overhead associated with having to pay ticketing fees to TicketMaster. So do you expect it to increase the business end of things, in terms of revenue?
I guess I'd put it this way: Here's an opportunity for us -- because of our equity interests in Outbox, here's an opportunity for us to not only participate in that revenue, but to grow with the asset value in Outbox.
Now, do you guys own Outbox outright, or are you licensing the technology?
We do not. We formed a partnership with Cirque du Soleil and the management team. So we are an equity partner in Outbox Enterprises. And that's how that deal is structured. So we do have an equity stake in Outbox. So we're both an equity owner and a client of Outbox.
That being the case, if this proves to be largely successful for you, will you be able to license the technology to other smaller promoters?
That would really be Outbox's role in this. It's their business to go sign up new clients, new venues and those kinds of things. So we're supportive of them and their effort. And I'm sure the industry is watching how they fare with AEG, but we're confident of them, and we're supportive of them.
In Denver, AEG, of course, does a lot of work with Kroenke Sports, which has TicketHorse. How is this going to effect your relationship with TicketHorse in the future? Obviously TicketHorse is only responsible for selling tickets at Dick's Sporting Goods and the Pepsi Center. Clearly this would not affect shows at the Ogden and Bluebird, but how do you anticipate this affecting that relationship in the future?
AEG is both a venue owner and operator and a promoter. So that happens today: We promote a lot of shows in non-AEG buildings. We're able to maintain those relationships on a national scale, so I don't see any issue with us promoting events in non-Axs ticketed buildings.
So would that preclude -- and obviously we're speaking hypothetically here, because this is not directly affected by the impending launch on Saturday -- but would that preclude TicketHorse from selling tickets to your events?
No, not at buildings like the Pepsi Center or Dick's Sporting Goods.
So it would be like Axs had exclusive...
No, the ticketing is determined at the venue level. So what's exclusive is the Ogden and Bluebird. They will only sell tickets on this platform, the way they've only sold traditionally on TicketMaster. Now as a promoter, we want to promote acts in various venues, and those venues will make the decision on what ticketing platform to use. So the relationship with TicketHorse is a good one, and we'll continue to book acts in those venues that will be ticketed by TicketHorse.
Right. Now what is the immediate benefit to the consumer? Are there any changes that they can expect to see, and if so, what are they?
Well, the main difference at the local level is really the relationship with the venue becomes much stronger, again, due to that white label technology. We really launched this with an emphasis toward mobile and social, and both of those are increasingly - particularly in Denver with that market - of interest to those buyers, being able to buy tickets with their mobile device, being able to share and learn about events through social networking. Those are elements that we put front and center, and again, why we wanted to introduce this in Denver. We felt like that market would receive those two pieces very well.
Now, is this a ticketless type of environment, where they bring their smart phone or print out some sort of barcode or something like that?
Mobile ticket delivery is not yet. We look forward to that in the coming releases, but that will not be available for Saturday.
So it's not on the initial release. In terms of printing the tickets, is it still a ticketless environment in that aspect: when they purchase tickets online they can print that out and bring it to the box office?
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Pragmatically, from a consumer standpoint, it looks like you're going to be very upfront about service fees and that sort of thing, can you expand on that a bit?
Just that we... look, we want to - and this applies to not only ticketing but how we are introducing this service - we want to be very consumer-friendly. One of the aspects of that, with respect to ticketing, is being very upfront with all of the fees and expenses. So we've just made a conscious effort to make sure that that is upfront and center for the consumer. With respect to these two venues in Denver, we've also made the commitment not to charge extra fees for printing at home. So again, this is part of our commitment to be consumer-friendly, to listen to our consumers and this is a beta, so it will evolve over time.
Are the fees, at this point, comparable to what fans are use to paying through TicketMaster?