Facebook Inc (FB) earlier this week announced a partnership with Ticketmaster Entertainment, Inc., the event ticket sales and distribution company owned by event promoter Live Nation Entertainment, Inc. (LYV). By the end of April, FB users will be able to purchase tickets to a small number of live events, without the need to leave the Facebook platform to complete the transaction.
According to BuzzFeed, “To start, the buy-on-Facebook option will be limited to a select group of general admission events,” but that’s expected to grow to a larger number of events and venues in the future.
How far into the future, though, remains to be seen.
The partnership between Facebook and Ticketmaster should benefit both companies … but certainly not evenly.
How Will the Partnership Generate Revenue for FB?
Per BuzzFeed, Facebook will collect a nominal fee from Ticketmaster for every event ticket sold through its platform. Users needn’t worry, however, because “there won’t be any added fees just for purchasing via the social network.”
Just how much revenue the arrangement could make for Facebook can’t be determined at this time, as the amount that will be charged to Ticketmaster has not been disclosed. Plus, the potential success of this endeavor is questionable.
It does stand to reason, though, that Ticketmaster will likely pull in a strong number of sales via Facebook, especially once the word gets out to the bulk of the ticket-buying public.
Last year, Ticketmaster sold more than 530 million event tickets with a gross transaction value of $25 billion. Considering that the Facebook smartphone app accounts for 13% of the time most Americans spend on apps, partnering with FB is a very wise choice for Ticketmaster.
As Fortune put it, “For Ticketmaster, the partnership is all about being available where consumer eyeballs — and fingers able to make purchases — spend most of their time.”
For FB, the obvious benefit is user retention. Regarding the Ticketmaster partnership, “It also keeps you on Facebook longer rather than having to head elsewhere to complete the transaction.”
Dan Armstrong, vice president and general manager of distributed commerce for Ticketmaster, explained, “By putting the ability to buy tickets directly within Facebook we hope that we’re going to provide a more seamless purchase experience and sell more tickets.”
What This Means for FB Stock
Although the partnership with Ticketmaster was a wise decision that will likely benefit both Facebook and Ticketmaster, it’s unlikely that the arrangement will generate revenue that is significant enough to move the needle for FB stock even a little bit.
Ticketmaster, despite consistent growth and record revenue for Live Nation, isn’t a popular enough destination for the majority of Facebook users. Considering the tens of millions of FB users, purchasing live event tickets just isn’t something that most of them will ever do.
That being said, the partnership could definitely be a boon for Ticketmaster and LYV, and the affiliate fees collected by FB would be just another secure — although minimal — revenue stream in the long run.
As of this writing, Greg Gambone did not hold a position in any of the aforementioned securities.
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