StubHub is considered a secondary market for event tickets. A secondary market refers to a platform where tickets are resold by ticket holders, rather than the primary seller. On StubHub, individual sellers list tickets for sale that they can no longer use. Buyers can purchase these secondhand tickets through StubHub instead of buying directly from the venue or promoter.
What is a Secondary Market?
A secondary market, also known as an aftermarket, is a marketplace where assets and financial instruments are traded after their initial sale. Secondary markets allow investors to sell assets they no longer want and enable new investors to purchase assets later on.
For event tickets, the primary market is the first sale of tickets directly from the venue or promoter to the public. The secondary market refers to any subsequent sales and purchases of those tickets by other parties. StubHub operates as a secondary ticket marketplace, facilitating ticket resales between buyers and resellers.
Key Features of Secondary Markets
- Assets are resold rather than issued for the first time
- Prices fluctuate based on supply and demand
- Provides investors an exit option and liquidity
- Enables price discovery outside of primary markets
- Allows new buyers to purchase assets they couldn’t get initially
By providing a platform for ticket resales, StubHub takes on the role of a secondary market in the events industry. Sellers can re-list tickets they can no longer use, while new buyers can shop for tickets not available directly from the venue.
How StubHub Operates as a Secondary Marketplace
StubHub serves as an online secondary marketplace for tickets to sports, music, theater, and other live entertainment events. Here is how StubHub exhibits key traits of a secondary market:
Resells Existing Tickets
StubHub does not issue or sell any tickets directly. All tickets listed on StubHub are posted by individual sellers who purchased tickets previously and now aim to resell them. StubHub simply facilitates these secondary market transactions between independent buyers and sellers.
Prices Fluctuate with Supply and Demand
Ticket prices on StubHub are not fixed. They vary based on market conditions and the interplay between supply and demand. For hot events, prices often exceed initial face value. For less popular dates, prices may decrease below face value when demand is low. This dynamic pricing is a signature trait of secondary markets.
Provides Sellers an Exit and Liquidity
StubHub gives sellers a way to exit their ticket positions and unlock their tickets’ latent value. Without a secondary market, initial buyers would be stuck with unwanted tickets. StubHub creates a liquid resale market that incentivizes buyers by allowing them to recoup value for unwanted tickets.
Enables Price Discovery
Secondary markets like StubHub reveal what the market clearing price is for assets like tickets outside of their limited primary market availability. If promoters underprice tickets initially, secondary markets expose the true market value. This price discovery helps promote more optimal future allocation and pricing of tickets.
Grants Access to New Buyers
By listing tickets that were previously sold, StubHub opens up availability to new buyers who missed out on the primary on-sale. This gives consumers more opportunities to purchase tickets and helps balance supply and demand across the marketplace.
Trait | How StubHub Exhibits Trait |
---|---|
Resells existing tickets | Seller-listed inventory, not direct sales |
Dynamic pricing | Prices fluctuate with supply and demand |
Liquidity for sellers | Lets sellers re-list unwanted tickets |
Price discovery | Prices reveal true market demand |
Access for new buyers | Tickets relisted available for purchase |
The table summarizes how StubHub functions as a quintessential secondary marketplace across several dimensions from inventory to pricing and buyer/seller liquidity.
Benefits of StubHub as a Secondary Marketplace
Operating as a secondary ticket marketplace provides several advantages and economic benefits:
Increased Market Efficiency
By facilitating transfers between willing buyers and sellers, StubHub fosters a more optimal allocation of tickets. Tickets end up in the hands of buyers who want them the most rather than those who were simply fastest during the primary on-sale. This improves overall market efficiency.
Price Discovery and Information
The dynamic secondary market prices on StubHub reveal valuable information about real supply and demand. This enables all parties to make better pricing and inventory decisions going forward based on real-time market feedback.
Consumer Choice
Consumers benefit from having both primary and secondary markets. If they miss out on the primary on-sale, StubHub gives them second chance access. Having only primary sales would restrict options and availability.
Monetization for Sellers
StubHub allows season ticket holders, brokers, and everyday fans to recapture value from unwanted tickets. This makes initial buyers more willing to take risks on ticket purchases overall, spurring more primary market activity.
Reduced Counterfeit Tickets
StubHub authenticates all tickets and offers guarantees for buyers. This reduces risks of counterfeit tickets which are more common in informal secondary markets without centralized oversight and accountability.
Overall, the benefits of StubHub’s formalized secondary marketplace enhance the functioning of the entire ticketing ecosystem from end to end.
Common Secondary Market Platforms
StubHub is not the only player operating as a secondary marketplace. Here are some other major secondary marketplaces:
Stock Markets
Public stock exchanges like the NYSE and Nasdaq are secondary markets that allow trading in company shares after initial public offerings.
Online Resale Platforms
Websites like eBay, Craigslist, and Facebook Marketplace enable secondary sales for used goods of all kinds.
Ticket Resale Sites
In addition to StubHub, other ticket resale sites like Vivid Seats, Ticketmaster, SeatGeek, and TicketIQ operate secondary marketplaces for event tickets.
Collectibles Markets
Cars, coins, art, antiques, and other collectibles are commonly resold through auction houses, dealers, shows, and specialty online platforms.
Real Estate
Existing home sales comprise the secondary real estate market where property changes hands after initial construction and sale.
While details vary across sectors, these markets all share similar secondary market characteristics for trading aftermarket goods.
Criticisms of Secondary Ticket Markets
Despite their benefits, secondary ticket marketplaces like StubHub also face some common criticisms:
High Fees and Charges
Large commissions, service fees, and processing fees associated with sites like StubHub can drive up costs for buyers and sellers.
Perceived Lack of Transparency
Opaque pricing and ranking algorithms make it hard for users to know if they’re getting good deals or seeing all available inventory.
Arbitrage and Speculation
Professional brokers scoop up tickets during primary sales with the intention of reselling at a higher price. Some see this as unethical scalping behavior.
Possibility of Fraud
As with any online marketplace, occasional instances of fraud through fake tickets or bogus sellers can occur despite protections.
While StubHub has made efforts to improve transparency and deliver more value, secondary marketplaces remain controversial in some respects.
Conclusion
In summary, StubHub clearly operates as a secondary ticket marketplace where fans can resell and re-purchase tickets for live events. The site exhibits all the classic traits of a secondary market, providing benefits like increased liquidity and market efficiency but also facing criticisms around fees and speculation. The advent of large-scale secondary markets like StubHub has fundamentally transformed event ticketing for both better and worse. Going forward, further innovation and competition may help refine secondary marketplaces to better serve both buyers and sellers.