Originally posted on the Public Citizen Consumer Law & Policy Blog. By John Breyault, Vice President of Public Policy, Telecommunications and Fraud When Beyonce recently announced her highly-anticipated “Mrs. Carter Show” tour, fans waited eagerly for the moment tickets went on sale. But at the magic moment, thousands of fans were disappointed to learn the show had sold out in seconds. Was this just a simple case of too much demand for too little supply, just luck of the draw since not everyone could “win” in the contest for a limited number of tickets? But the reality of today’s ticket marketplace is neither that simple nor that fair. In fact, the ticketing procedures for the multibillion dollar sports and entertainment industry have become the antithesis of the fair marketplace that consumers have a right to expect, especially when so many concerts and games take place in taxpayer-subsidized facilities. Instant sellouts like Beyonce’s occur in part because a large number of tickets are set aside for paid fan club and premium credit card “pre-sales” and for industry insider VIPs, leaving thousands of regular fans disappointed each time. Sometimes, those pre-sale and VIP tickets are the ones that end up on resale websites. And ordinary fans are left with the sinking feeling that they never did have a chance to buy those tickets at face value in the first place.
In Nashville, for example, an investigative news unit revealed that only 1,001 of 14,000 tickets were offered to the general public for a recent Justin Bieber concert. The overwhelming majority of the 14,000 seat arena was earmarked for pre-sales, available only to privileged premium credit card holders and paid fan club members. Often, professional scalpers sign-up for multiple fan club memberships or use multiple American Express cards to gain access to pre-sale tickets to sell on the secondary market. What's worse, the investigation found an entire block of tickets held back from the public were then resold above face value by Bieber's own tour, or as the local news headline put it: "Documents Show Bieber is Scalping His Own Tickets."
The practice doesn’t stop with Bieber. Singer Katy Perry two years ago garnered unwanted publicity when the Smoking Gun website revealed that the standard rider for her concert tour reserved the option to hold back tickets and provide them to “resellers” for “distribution to the public” on the “secondary market,” the quantity and location of the tickets to be determined in each case by Ms Perry’s personal manager. Or, as one pop culture website put it, Katy Perry Reserves the Right to Scalp Her Own Tickets, to her own fans at a price higher than the face value.The phenomenon of holdbacks and artists scalping their own tickets is neither new nor unique to just a few bad apples on the pop music scene. A March 2009 Wall Street Journal article cites Neil Diamond scalping his own tickets on the Ticketmaster resale site, then flatly reports the following: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. That includes recent tours by Bon Jovi, Celine Dion and Van Halen, and a current tour starring Billy Joel and Elton John. No wonder then that it is almost impossible for ordinary consumers to buy tickets at “face value” when the tickets go on sale to the general public – and no wonder that venues, entertainers, promoters and the ticketing giant Ticketmaster are all loath to disclose to the public just how many tickets they are actually making available to the general public at the moment of the initial on-sale. Yet once you do buy a ticket with your own money, the entertainment industry wants to control what you do with it. More and more concert tours use restricted ticketing to limit your ability to resell or even give the ticket away. Under that system, you have to show up with the credit card you used to buy the ticket, or your entire party has to show up at the same time, in order to gain entry. If the goal is to limit the role of professional scalpers, why not deal with the problem at its source instead of inconveniencing every fan? Consumer activism about what appears to be an unfair market has spurred legislators around the country to seek ways to level that playing field, and to prevent those who benefit from the unfair system from cementing their control over the secondary market. In New Jersey, bipartisan groups of lawmakers are considering transparency legislation that would require ticketing agencies to disclose how many tickets to an event are actually available when they go on sale online to the general public. Other proposals would prohibit “bot” technology, software programs that grab large blocs of tickets before the general public has a chance to buy them. Michigan legislators are considering similar proposals targeting software “bots” as well as proposals to ensure fans own the tickets they buy, barring the use of restrictive tickets that would limit fans’ ability to transfer those tickets whether as a gift or through reselling. Minnesota’s House approved legislation last year to ensure ticket buyers own those tickets, and can transfer them or use them as they wish. The bill has been reintroduced this year as well. In Tennessee, four legislators who originally co-sponsored a Ticketmaster-backed bill – called, with no sense of irony, the Fairness in Ticketing Act – that would restrict secondary market rights for ticket buyers, rescinded that support when they realized that consumers’ rights were being attacked. The industry’s attempt to restrict the market in ways that benefit the entertainment and ticketing giants to the detriment of ordinary consumers extends to sports as well. Both the New York Yankees and the Los Angeles Angels recently opted out of Major League Baseball’s deal with StubHub as the official resale marketplace, instead negotiating their own partnerships with Ticketmaster to establish, for example, the Yankees Ticket Exchange for reselling Yankees tickets. Unlike the secondary market managed by MLB and StubHub, however, the new Yankees Ticket Exchange will have price floors, limiting both the ability of fans to buy cheap tickets and perhaps the ability of ticket holders to offer their seats for sale at a low market price if the team still has unsold tickets. Since many season ticket holders can only afford their seats by being able to lay off those games they do not want to attend, they could be left holding tickets that will not be used if the floor is imposed. Already, it has been reported that ticket prices on the new Yankees Ticket Exchange are higher than on StubHub. Consumers can benefit in many ways from secondary markets that allow them to buy and sell tickets, as long as those markets are transparent, competitive and consumer-protected. Consumers need to make our voices heard so that decision makers understand we want a fair market and an even playing field. That is why the National Consumers League has joined with advocates and others, including StubHub, to support Fan Freedom (fanfreedom.org), which is fighting in states across the country for a fair deal for fans. Consumers have a right to expect a fair and transparent marketplace.