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.

  • Ryan Radia

    Why should official ticket sellers be forced by law to reveal anything? There are lots of cases where private firms decide against revealing certain kinds of information to the public for competitive reasons. To state the more information makes markets work better is an oversimplification; plenty of information is kept secret from the public for entirely valid reasons.

    With regards to event tickets, I'm inclined to think that government should stay neutral. As long as contracts are enforced to ensure fraud doesn't occur, I think the market is fully able to sort out skirmishes between consumers, ticket resellers, and official ticket vendors.

    While secondary ticket markets can promote efficient allocation of tickets, they often seem to leave a sour taste in consumers' mouths, making it harder for consumers with limited incomes to get access to tickets. Official ticket sellers have myriad business considerations. While ensuring those who demand tickets the most can get ahold of them is an important objective, maintaining an equitable–or, at least, seemingly equitable–distribution system appears to be quite popular among consumers.
    We should allow ticket sellers to balance all these concerns on a case-by-case basis and let the market work any kinks as they arrise.

  • mbhweiss

    So it seems that, in seeking to thwart secondary markets, what Ticketmaster would like to do is appropriate monopoly profits, which is what they effectively do if they create a secondary market.

    In a similar vein, try reselling unused ski tickets sometime … many resorts do not allow this. I tried selling some unused Vail tickets on eBay and was the recipient of a nastygram (OK, a cease and desist message) from resort personnel. So squelching secondary markets is not without precedent in the ticket business — in this case, it was (apparently) supported by Colorado law.

  • bradencox

    Ryan, your right to put faith into the marketplace. But we can't let companies get away with doublespeak — calling something “convenient” when it really isn't, saying we're fighting “scalping” but really just trying to dry up competitors in a secondary market. It may be legal, and it may be the market working. But it isn't the market working to the benefit of most fans!

    An interesting fundamental issue here is whether a ticket is purely a license, or is it something more? If only a license, promoters and venues can create a lot of restrictions (as do the ski resorts in mbhweiss's comment, though it sounds like they had legislative help). But does the license extend to limits on resale? Should it? What burns me up is that a lot of times these venues are publicly financed and subsidized — and now they're telling me I can't give my ticket to a friend if suddenly work gets in the way?

  • bradencox

    Ryan, your right to put faith into the marketplace. But we can't let companies get away with doublespeak — calling something “convenient” when it really isn't, saying we're fighting “scalping” but really just trying to dry up competitors in a secondary market. It may be legal, and it may be the market working. But it isn't the market working to the benefit of most fans!

    An interesting fundamental issue here is whether a ticket is purely a license, or is it something more? If only a license, promoters and venues can create a lot of restrictions (as do the ski resorts in mbhweiss's comment, though it sounds like they had legislative help). But does the license extend to limits on resale? Should it? What burns me up is that a lot of times these venues are publicly financed and subsidized — and now they're telling me I can't give my ticket to a friend if suddenly work gets in the way?

  • bradencox

    Ryan, your right to put faith into the marketplace. But we can't let companies get away with doublespeak — calling something “convenient” when it really isn't, saying we're fighting “scalping” but really just trying to dry up competitors in a secondary market. It may be legal, and it may be the market working. But it isn't the market working to the benefit of most fans!

    An interesting fundamental issue here is whether a ticket is purely a license, or is it something more? If only a license, promoters and venues can create a lot of restrictions (as do the ski resorts in mbhweiss's comment, though it sounds like they had legislative help). But does the license extend to limits on resale? Should it? What burns me up is that a lot of times these venues are publicly financed and subsidized — and now they're telling me I can't give my ticket to a friend if suddenly work gets in the way?

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