Preserving Resale Rights and Promoting Transparency for Event Tickets

by on June 10, 2009 · 24 comments

miley-cyrus-paperless-ticket-tourRecent developments have the events ticket market going paperless (tickets) and creating a paper trail (via proposed legislation).

First, there’s Ticketmaster’s efforts to push “paperless tickets” into greater use. On Monday the Wall Street Journal reported on how the upcoming Miley Cyrus (aka Hannah Montana) tour will sell only paperless tickets.

I’ve previously blogged about paperless tickets here, here and here and continue to maintain that they are not about consumer convenience. Why? Well, at the venue you have to present the credit card used to purchase the tickets, which means everybody in your party has to arrive at the same time. And if you can’t go you won’t be able to resell your tickets or even give them away. Ticketmaster won’t give you a refund, that’s for sure!

With paperless tickets, Ticketmaster says it is trying to stop scalping, but why? As yesterday’s Los Angeles Times opinion piece cogently argues:

Secondary markets are important. They help overcome the inefficiencies in primary markets, while giving purchasers a safety net. If “paperless” tickets are the only option for consumers, there will be no secondary market unless Ticketmaster provides one. That’s quite a power grab for a company that’s awaiting the Justice Department’s approval for a blockbuster merger (with Live Nation, the country’s leading concert promoter).

The reality is that Ticketmaster knows that secondary markets are important, which is why it owns TicketExchange. It’s common practice nowadays for artists to bypass the box office. According to a Wall Street Journal article from a few months ago:

Virtually every major concert tour today involves some official tickets that are priced and sold as if they were offered for resale by fans or brokers, but that are set aside by the artists and promoters, according to a number of people involved in the sales.

Understanding how all this works and how many tickets are actually available is difficult. But it’s important, given the rhetoric we often hear from legislators and “consumer advocates” that would restrict and cap prices on ticket reselling. Which is why a bill introduced last week by Congressman Pascrell (HR 2669 — “Better Oversight of Secondary Sales and Accountability in Concert Ticket Act of 2009″) may actually be helpful even if it micromanages distribution and disclosure rules.

Among other things, this bill requires primary ticket sellers to reveal the number of total tickets offered for sale and the percentage going to the general public. This would give the market more information, which would allow consumers to better determine appropriate prices. However, the bill imposes some burdens on the secondary market, such as forcing secondary ticket sellers to register with the FTC and imposing a blackout period where resellers could not buy tickets until 48 hours after the initial ticket sale.

Perhaps what this all gets down to is the issue of consumer access. Access to information and access to tickets on both the primary and secondary markets. To the extent that paperless tickets restrict access, then this is a bad thing.

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