Cool Internet Business Model - StubHub.com

Stubhub.com is, at first glance, just a glorified and more flexible ebay that focuses on only ticket sales. They facilitate the sale of tickets for any event – sports, concerts, events, etc… but – dig a little deeper and you find what's seemingly a monster money maker – in a very large niche, with consumers willing to spend money – and actively seeking you out!

The business is completely information based. No hard product, but they do receive the tickets from the seller and forward them to the buyer.

They charge both the seller and the buyer a small fee based upon the sales price of the tickets – and end up making 25% on every dollar that goes through the site. When the average ticket price seems to be around $100 – and an alexa ranking of 3,309 – they're making some serious cash!

Where's the beef? Plenty of beef here – this is a double-quarter pounder with cheese…

• 10% charge to buyers of tickets, in addition to the ticket price and shipping
• 15% fee to sellers of tickets, only charged if the tickets sell

After browsing the site for a while, I don't think it's conservative to say that there is higher than $100 average sales price for each ticket. With an Alexa ranking of 3,309 (very roughly estimated 30,000 daily visitors) and an online average 2.5% conversion… here's the (fuzzy) math:

$$ Breakdown
30,000 daily visitors
x 2.5% average e-commerce conversion rate
= 750 daily ticket purchasers

750
x 2 nobody ever goes to a concert or game alone…
x $100 average ticket price
= $150,000 daily revenue

$150,000
x 25% stubhub take
= $37,500 total daily gross

= $13,350,000 yearly gross

Reasons for success

• proven niche with affluent consumers
• listing your tickets for sale is free – pay nothing unless you get your price
• very flexible sales terms
  • set price – seller determines the price they want, and that's it
  • declining price – seller sets the amount they'd like to get for the tickets, and then the minimum they'll accept. Stubhub slowly reduces the price of the tickets from the high end to the low end.
  • auction – seller sets a minimum bid amount and a reserve price, and let's the auction determine how much they go for
• good marketing!

What kind of marketing do they do?

• PPC - they're #1 on a google, yahoo or msn search for "sports tickets"
• Radio – I hear their ads on AM radio sports stations very often
• SEO - the google query "site:www.stubhub.com" returns a whopping 340,000 results! They've published a quality textual based page for every major sporting team in every major league. They've published a page for every arena, every concert hall, and every band. Every state, major city, and Canadian province. They've even got pages for overseas locations.

How to steal this idea
I think the keys to this type of business are threefold:
1. big niche – everybody knows about it/goes to it
2. absolute expiration date
3. something you can't easily get

• vacation rentals – lots of vacationers, a set vacation time frame, nobody knows about places to stay away from their home
• cigars – proven consumer, expiration date, cigar shops sell only major brands
• ???

The data and analysis in this blog are complete guesses, not remotely researched, and should not be taken seriously.  This is meant only to show the basic business model of the site, and why I think it rocks.  If I've royally screwed the pooch, feel free to let me know, and I'll acknowledge my stupidity in a future post.

 

 

Gig-a-blog: life is good!

life is good!

Sailing back from Catalina

Why Info-based Internet Business Models?

I am going to try to routinely review an internet business model that's based purely on delivering information, or digital services. I am deeply interested in learning about these types of businesses, and what makes them so valuable to their customers – and in return – profitable for their owners. I will learn so much from my research that I may someday build my own successful endeavor.

What is an info-based internet business model? What is the source of profit?

• By my definition, an info-based internet business model is a web site that sells information, or community, or digital services.
• The source of profit is dicated by the type of service that's provided. If it's software, it might be a recurring monthly fee (Sales Force, Basecamp ). If it's services, it might be a transaction fee (E-trade, Legal Zoom). If it's pure data it might be subscription based (porn, Wall Street Journal) or affiliate based. Other cool models have no apparent money aspirations (Delicious, Wikipedia), other than to be bought out by a huge company. I'm intrigued by these more for the buzziness and traffic generating aspect – perhaps I'll figure out how to mash their coolness up with some path to profitability.

Why do I have such a passion for Internet business models that operate only on information, or digital services?

• Because they're new and shiny and creative. And I have shiny object syndrome, and I'm jealous of creative people. By their very newness, the undiscovered potential is immeasureable. The ability to be creative and start something that nobody else has done is very exciting!
• They're often automatable – you can set up a digital process that runs itself.
• They're global – data goes places boxes don't (very quickly). It doesn't cost nearly as much to set up a web site in French as it does to put a building there!
• They're cheap to operate, and easy to get started. You can set up a new info-based business in your spare time with a web-host, a little creativity and some brain-grease. —> not money, investors, contracts, lawyers, or commitments —> This is not to say that you shouldn't utilize traditional resources when setting up your online business – but you don't have to!
• When you put up a web site – you get the same amount of space as Wal-mart. You get the same real estate as IBM. Your ability to start something that people want, and that nobody else has done before will drive visitors, and customers. Google might step in and build it bigger and better than you – or buy you out – but either one would be an honor for me!
• They're measurable. Every 1 and 0 that passes across your servers can be stored for later analyzing. You can do this with an online retail store as well – but definitely not with a brick and mortar operation. I can track and A/B test my advertising ROI, my conversion rates, my visitor location/language, click paths, blah blah blah. There's too much measuring available to mention. The most important thing to know is that I can test advertising on a small scale and then roll it out big once I prove the ROI. A newspaper ad or television commercial doesn't do that.
• The marketing buzz available on the Internet is very powerful, and growing each day. Bloggers are a powerful army. A mention on the del.icio.us popular page or digg front page can bring down a server, it can drive news, it can replace PR —> or it could kill you if negative. The blogger attention directly results in search engine exposure, to reach a much bigger audience, and can also drive traditional news to explode the cycle bigger and bigger.
• It's got a long-tail. Links, search engines, press releases, articles, etc… all last a long time. I have sites from 1997 that no longer exist that still have links pointing to them!

Why don't I want to sell hard goods via the internet?

• Warehouses have been around for a long time – and I have no desire to do fulfillment.
• Drop shipping is now an option – but you should always control your product. If you're drop shipping, not only do you not have control of the product, but there are probably 97 other places on the Internet selling the same thing.
• Selling hard goods just doesn't seem as creative, or as fun as delivering value with information that people are willing to pay for. A wise man once told me that money won was twice as sweet as money earned – and I feel like shipping boxes is earning it, and being smart enough to have people paying me for data is like winning it.

Why am I writing about the coolest Internet biz models I can find? Being a programmer by trade, and an entrepreneur by passion, I always look to blatantly rip someone else off before I try to be creative enough to come up with something new myself. Now, this might be viewed by some as a cowardly way out of thinking very hard – but I have always programmed faster when using someone else's code snippet, and made more money by emulating something that I already know works. By learning how companies are currently successful by selling information, and digital services, I can also learn how to be successful at it myself. Who knows – maybe I'll be able to come up with something that no-one else yet has… an automatic uber information delivering, buzz-worthy, value-delivering, self-sustaining money tree!

is that too much to ask?

Where are Internet business models going? I'd love to hear feedback about where everyone thinks internet business models are headed. 5 years ago people knew the internet would be big – but how many people predicted that community sites like Wikipedia and My Space would rule the roost? Who really thought that search (Google) would be redefined as the most amazing money maker on the planet? What comes in the next 5 years – or – what kind of site are you going to start?

Self-discipline

Sorry... but for some reason I'm really into the self-help section these days!

 

This is a snippet from a very comprehensive page titled "Formula for Human Genius and Creativity".  I'm totally down with making myself do something I hate - just because I hate it.  It's like saying, 'ok, brain - I'm running this show, not you!'  ... which is very ironic if you think about it, but that's really all self-discipline is.

 

Self-discipline: Lack of self-discipline aggravated by stress and lack of sleep is the number one cause of reduced productivity worldwide. In essence, it explains why capitalism appears to be economically superior to communism today. If you develop self-discipline habits early, your life is likely to take an entirely different course. If you believe you are lacking in this fields, try the following exercise: as soon as an activity comes to your mind that you really are unwilling to do, do it. Your rational brain must be the master of your body, not the other way around. Stand over a pool of cold water. Do you hate jumping in? The more you hate it, the sooner you should jump. And in the end you will love it. Cold shower is a minor inconvenience once you experience the volitional power of the brain. You need to master the skill of a perfect execution of your own plans. The more precise your plan, the harder it is to execute, yet the most tangible the results. Learn to delay gratification. If you focus on your long-term goal, your daily inconveniences will by far be more bearable. A strenuous quest towards the goal is the best reward to a genius mind. Minor awards of laziness do not befit a true genius. Think of self-discipline daily. Even strongest minds can relax it all too easily. Remember about stress and sleep (two previous points). Stress and sleepiness are chief factors that undermine self-discipline

5 Steps to Build Self-Discipline

I attribute all the ideas, and much of the text from the post below to Steve Pavlina, and his wonderful six part series on building self-discipline.

http://www.stevepavlina.com/blog/2005/06/self-discipline/

 

Also - Steve just published a pretty (current school) contrarian piece on how he built his blog to over 700,000 visitors a month ... I read this post with much interest!

 

And, on to the main course!

The first step in building self-discipline (and therefore the ability to accomplish your other goals) is to accept where you are at right now, whether you feel good about it or not.  Surrender yourself to what you have to work with - it is what it is.

The second step in building self-discipline (and therefore the ability to follow through on plans) is to harness your initial burst of willpower to set the stage for your later success.  Willpower will wane after the inital burst, so use that willpower to create an environment, processes, and tools to be able to follow through easier.  Don't use willpower to attack the problem directly.  Use willpower to attack the environmental and social obstacles that perpetuate the problem.
 - this is especially applicable for me.  I get all gung-ho, go all out for a little while and then fade quickly once the inital burst of excitement wears out.

The third step in building self-discipline (and therefore the ability to finish things others can't/won't) is to work hard.  Sounds simple, but very few people are actually willing to work hard to accomplish anything.  The greater your capacity for hard work, the more rewards fall within your grasp.

The fourth step in building self-discipline (and therefore becoming more productive with your time) is to be industrious.  There are many problems in life where the solution is largely a brainless time investment, and industry is required to comlpete them.  Industry is personal productivity at it's core.  Personal productivity creates space in your life to do all the things you want to do: eat healthy, exercise, work hard, deepen relationships, have a wonderful social life, and make a difference.  In the long run, your results will come from action, and industry is all about action.

The fifth and final step in building self-discipline (and therefore never quitting what you've started) is to be persistent.  Persistence is the ability to maintain action regardless of your feelings.  Persistence of action comes from persistence of vision.  When you're super-clear about what you want in such a way that your vision doesn't change much, you'll be consistent in your actions.  And that consistency of action will produce consistency of results.

What I learned today

to become an early riser, get up at the same time every morning
http://www.stevepavlina.com/blog/2005/05/how-to-become-an-early-riser/

• let your body determine what time to go to sleep at night
• no negotiation, no second thoughts, just throw the covers off stretch, and get out of bed the first time the alarm goes off
• if you do this for one month straight, you will condition your brain to get up at this time every time, and it will never be a problem again

there are some pretty cool alarm clocks out there…
http://www.axbo.com/infactory/1_home_en/news_list.jsp.html

• my favorite are the ones that sense your sleeping cycles via a wrist strap, and wake you up when you're sleeping the lightest
• you set a drop dead wake up time, and an amount of time before this that the alarm can go off when it senses you're ready to wake up

to avoid procrastination, find motivation, set goals, break down big goals into achievable chunks
http://www.stevepavlina.com/articles/overcoming-procrastination.htm

• this is the same stuff that you read over and over
• but there's a reason for that
• because it's true! if you can master this simple idea, there's a lot of reward for it…

On-site Duplicate Content Issues

I've been researching issues with duplicate content on a single domain.  It's easy to put up a spammy, keyword replacement type site, where each page is pretty much the same.  For example, one page would say "Get an American Express Card Today", and another would have the same text, but would instead say "Get Your Visa Card Today".  But what do the search engines think of that?

They hate it.  You could get away with this type of web site a couple of years ago, but no longer.  You have to be a little sneakier now, adding more dynamic content pulled from rss feeds, newsgroups, re-worded and scraped materials, etc... And you might still be found...

Most people agree that onsite dup content will cause G to filter out all the duplicated pages – showing none of them.  Some have mentioned that if a certain percentage of a site is considered dup content, it may begin to apply a penalty to the domain.  I've read that each page must have at least 12% original content to not be considered span – I've also heard that it's currently a higher percentage than that (but not able to get specifics).

It's hard to find a consensus on anything seo related, but I've found recurring themes, from respected sources.

Posted by tedster - a WebMasterWorld administrator on Jan 3, 2006

"And if the algorithm sees many pages on the same domain that are essentially duplicate, the algo might well smell an attempt at spamming and decide not to show any of those pages."

Posted by caveman - a WebMasterWorld moderator on Sept 25, 2005

"Within a single site, when pages are deemed too similar, G is not throwing out the dups - they're throwing out ALL the similar pages."

If you want to beat the search engines at their own game, you've got to be very smart these days... and willing to experiment until you find the secret sauce.  Once you find the secret sauce - it's just a matter of time until you're on their radar and they de-sauce you.  But, hopefully you made a million dollars before that happened... ha!

 

Good luck,

Travis

Movie Premiere at Mann Chinese Theatre

There's a big movie premiere at the Mann Chinese Theatre this weekend...  maybe I'll go down and try to get a shot of Martin Lawrence.

 

Please be informed that Fox Studios will be holding the premiere of "Big Momma's House 2" at the Grauman's Chinese Theater on Wednesday, January 25, 2006 at 7:30 PM.

  

Does Delicious tagging get you out of the sandox quicker?

This blog post by Wolf Howl seems to suggest that it might!

 

http://www.wolf-howl.com/?p=126

 

But, the trick is... you have to do something that's worth of a bunch of tags in delicious.  Put out something of interest to a lot of people.  Write something controversial, or humorous, or both.  Good stuff.

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>> There are only 10 kinds of people in the world - those that know binary and those that don't.

New SE algorithm's are using trustworthiness and semantic matching

The word is out that number of links no longer matter.  The right links matter - links containing and surrounded by text similar to the content on the linked page, and hopefully residing on a site easily categorizable and trusted for giving out good links.

 

Factors that may determine how important a link is to your page/site:

1. How trustworthy of a site is the linking site?

  - Is it an .edu, .gov domain?

  - What kind of a neighborhood is it in?  i.e. What kind of sites link to it, and how important are they?

  - How accurately can the referring site be categorized?  Right now, del.icio.us tags are easily deciphered and trusted.

2. How closely does the content and the link text on the linking page compare to the content on the page being linked to?

  - Semantic analysis between pages.

  - Articles and press releases, and blog postings are better than recipricol link farm pages.

 

 

 

 

Excellent Interview with Todd Malicoat

This interview with Todd Malicoat is worth a read.  Todd Malicoat is a person to know and respect in the SEO industry. After you get past the mutual back-patting, there is really some excellent content toward the bottom.

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>> There are only 10 kinds of people in the world - those that know binary and those that don't.

Buying Text Links

A good site to buy text links for driving traffic.  The SEO benefit is questionable, since search engines are focusing on, and cracking down on, text links these days.  I may give them a shot soon and see what comes up.

 

http://www.text-link-ads.com/

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>> There are only 10 kinds of people in the world - those that know binary and those that don't.