Ticketmaster’s Auction Model

    March 13, 2007

TicketMaster, a near monopoly which hated ticket auctions in the past, now auctions seats for a premium. You can bid on an auction for row 1, and if the minimum bid drops below the required amount to win they will automatically drop you into an auction for row 2, and so on.

Imagine if 1 minute before the end of the auction you thought you were in row 1, and then in the last 5 seconds of the auction a network of scalpers bid and you got a notification that you were in row 4. Paying $500 for row 4 tickets could feel a bit salty, but I imagine that many flat priced commodities will eventually move to an auction model that finds a way to squeeze money out of people bidding on the most expensive item even when they lose. It makes them more efficient, but will also frustrate many consumers.

eBay the largest general auction site, bought StubHub, a leading ticket reseller site, earlier this year for over $300 million. SnapNames recycles domain names. Google makes billions hand over fist as an ad auction (and likely eventually a content auction and an attention auction). What other businesses do you see becoming more efficient or growing due to a web auction based model?