Why eBay will acquire StubHub

Here’s another episode in my “this-is-probably-going-to-make-me-look-stupid” series of predictions. I should really stop this habit… Anyhow:

I went to the Yankees-Mets game last night. It was sold out with an attendance of 56,205. However, we were able to get four tickets just a few hours before the game started, thanks to StubHub which is a marketplace for buying and selling tickets between people.

The StubHub service is really great – they have a solid feature set, the site is good, information on the events and venues is very good, the ‘Buyer’s Guarantee’ makes you comfortable buying there, etc, etc, etc.

So would eBay acquire StubHub for all the great features and expertise they have developed around person-to-person ticket buying and selling? I bet you eBay doesn’t give a shit about any of that.

What does matter in the world of online person-to-person marketplaces is becoming the de-facto marketplace of choice for buyers and sellers. Once you become that, it’s a very defensible position that’s almost impossible for other marketplaces to win because of a simple law – buyers won’t come to a marketplace that doesn’t have much inventory, and sellers won’t list their inventory in a marketplace that doesn’t have many buyers. This catch-22 is what makes de-facto marketplaces so defensible… even the best feature set in the world from the best known brands can hardly dent this law (ask Amazon and Yahoo, both of which tried launching eBay-clones in the past).

It seems that growingly StubHub, not eBay, is perceived as THE go-to place for buying and selling tickets to events. Once that perception is established, even mighty eBay will find it almost impossible to win back the leadership position in this category (and again – in the marketplace business if you’re not the leader, you’re almost by definition not a player).

eBay cannot afford to cede such a core category to another player, and will not be able to win this battle through R&D, and therefore I predict that once this is realized, eBay will acquire StubHub.

[UPDATE:] 2 for 2…