Orgs struggle with e-ticket transfers, reselling, scalping

So-called paperless ticketing is fast becoming a battleground in the multibillion dollar secondary ticket market, and amid charges and countercharges of ticket scalping and predatory pricing, two nonprofit orgs with soundalike names — the Fans First Coalition and the Fan Freedom Project — stand at well-financed ends of a bitter debate.

The Fan Freedom Project, established in the spring, was provided with initial funding by leading ticket reseller StubHub. The Fans First Coalition was supported in the beginning by Live Nation Entertainment, and counts the affiliated Ticketmaster among its members. Both orgs can also claim neutral support — Fan Freedom boasts involvement from the National Consumers League, while Fans First also encompasses a number of artists and such direct Live Nation competitors as Jam Prods. and Red Light Management.

Yet that hasn’t stopped watchdog groups from calling both essentially astroturf advocates for their respective companies.

At issue is the practice of paperless ticketing, in which concert and sports tickets are sold in an entirely digital form. Such tickets require the buyer to present the same credit card used for purchase at the venue on the day of the event, thereby preventing the tickets from being resold on the open market.

Tangled up in this fight are a number of sticky issues: the campaign to stop increasingly sophisticated scalpers from snatching up the most desirable tickets within seconds of their availability; the ability of secondary market brokers like StubHub to retain their position in the business; the often controversial alliance between Ticketmaster and its subsidiary secondary-market seller TicketsNow; and the epistemological debate over whether tickets constitute personal property to be given away or sold at the buyer’s discretion, or are merely guarantees of access for their buyer, like airline tickets.

Yet all of these big-picture arguments may obscure just how significant an issue this really is.

“We’ve been doing paperless ticketing for years, and it represents one 10th of 1% of the total ticketing we do,” says Ticketmaster CEO Nathan Hubbard. “That type of ticketing is not right for all events, and we don’t think it’s usually right for all tickets in a given event. It’s just one option for an artist who wants to make sure that the kid who buys the $30 ticket that’s worth $700 in the open marketplace is the same kid that gets through the front door. This is not a massive business for us — it’s not even a small business.”

For his part, StubHub’s marketing director Ray Elias doesn’t dispute the small percentage of tickets currently sold paperlessly, but argues that restrictions on them could set an unfair model going forward.

“I think it’s the way it’s being used,” Elias says. “If people are able to freely transfer, sell and gift paperless tickets the way you can with regular tickets, then that’s great. But as long as it’s being restricted by Ticketmaster and its clients, then we don’t think it’s a good thing.”

Ticketmaster owns secondary market site TicketsNow, and for many paperless tickets, the only way to transfer or resell a ticket is through that site, with transactions often subject to fees or price floors.

Calling the restrictions on paperless tickets “a power play,” Fan Freedom Project topper Jon Potter points to the potential for abuse.

“The inherent challenge is when you have Ticketmaster controlling TicketsNow,” Potter says. “It’s like when you read a crime novel: there’s motive, and there’s opportunity. It would almost be too easy for them.

“The beauty of the secondary market is that it automatically sets fair prices, whether that price is $3, $30 or $3,000,” Potter adds.

But Hubbard replies that if that model is followed to its logical conclusion, it will mean one set of rules for rich buyers, and another set for poor. Laws on ticket reselling can vary widely from state-to-state, with New York recently passing a StubHub-supported bill requiring ticket sellers to provide consumers with a choice between paperless and traditional tickets. (Elias notes that StubHub plans to continue to lobby for such legislation at the state level.)

The state legislature of neighboring New Jersey got involved back in 2009, when ticketbuyers for a Bruce Springsteen concert were directly rerouted from a malfunctioning Ticketmaster site to TicketsNow during the Saturday morning onsale.

That incident — which has yet to be repeated — raised questions over the alliance between the two companies, a union that would theoretically be strengthened if paperless ticketing expands. Yet the fact remains that the market for such tickets is still quite small, and Ticketmaster claims no intentions of making such ticketing a primary option.

“Nobody is advocating taking our paperless ticketing and rolling it out across all shows and all venues. … If you make the whole house nontransferable, nobody would buy,” Hubbard says, noting that the paperless option hasn’t caused furor “in any community except the scalping community.”

Potter notes that the paperless ticketing fight is also part of a larger campaign for transparency in the number of tickets that are available to the general public at a given event. “We don’t think that a lot of tickets are made available at the onsale itself,” Elias says.

Oftentimes, consumers have no idea how many tickets are actually up for sale, and how many are withheld for fan clubs, certain credit card holders, venues or even the artists themselves, who may turn around and sell the tickets at a markup.

The existence of the latter practice was long something of an open secret in the industry, but it was finally confirmed in June when a leaked tour rider from pop star Katy Perry’s management specified that a certain number of tickets be set aside for sale on the secondary market. In that case, the vendor named in the rider was StubHub.

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