Monday, January 14, 2013

Apple # 619: Ticket Sales & Resales

With all the football games that have been going on lately, regular Daily Apple reader Joachim and I were talking about buying tickets to football games, and about how hard it is to get tickets to a game at Lambeau Field, but that some people were selling them on StubHub. But then, we wondered, since we've heard so often that it's illegal to re-sell tickets, how can StubHub be legal?

But why is it even illegal to resell your tickets anyway?  You can resell your books, or your house, or a car, why not tickets to an event?

And speaking of places where you can buy tickets, what about that whole Ticketmaster antitrust debacle that Pearl Jam raised?  What's up with that, and how come Ticketmaster isn't illegal either?

So, a whole host of questions about tickets.


Packers tickets. Very hard to come by, but supposedly not impossible. Well, no one's going to be buying tickets to a Packers game anymore this year. Thanks a lot, 49ers.
(Photo from Packersnews.com)

Ticket Sales


That's a lotta tickets.
(Photo from The L Magazine)

  • It is of course legal for the venue itself to sell tickets.  Say your favorite group, the Hokey Pokeys, are doing a show at the Miracle Ballroom down the street.  The Miracle Ballroom can sell you those tickets, they can decide if they need to add any surcharges like building fees, or if you want them  mailed to you a delivery fee, etc.  This is all legal and well and good
  • But say your friend in Hawaii wants to go see the Hokey Pokeys at the Miracle Ballroom with you.  You just went down there to get a ticket for yourself, you don't feel like going there again because their ticket office is hardly ever open, so you say to your Hawaiian friend, "Can't you buy a ticket online?" This is where things start to get just a touch more complicated.
  • The Miracle Ballroom is a tiny non-profit venue; they can't afford to run their own ticketing website and handle all that stuff.  So they signed a contract with a ticket agent service to handle the web sales for them.  This service gets a batch of official Miracle Ballroom tickets to sell, they answer questions about seating charts at the venues, they handle the transaction and shipping the tickets to your friend in Hawaii (and anyone else who wants to buy from their website). Ticketmaster is an example of a ticket agent (more on them later).  All this is also legal; now there's a middle man in the deal, that's all.
  • As the date of the Hokey Pokeys' concert approaches, your friend in Hawaii realizes that she can't make it after all. Her jet-powered surfboard broke down so she can't make it to the mainland.  So your friend has this ticket that she can't use.  You don't know anybody who likes the Hokey Pokeys so you say to your friend, "Why don't you see if you can re-sell it online?"  We have now entered the realm of ticket re-selling, and here is where the questions about legality start to fly.

Ticket Re-Sales


Usually when people talk about reselling tickets, they mean scalping, and often that means selling for a profit--but not always. 
(Photo from boston.com)

  •  All sorts of factors determine whether re-selling tickets is legal.  
    • 1. Laws governing the reselling of tickets assume that you want to sell them for more than face value.  If you sell your tickets for less than face value, nobody cares.
      • There's an important caveat to this: a prosecutor could argue that you tried to sell your ticket for more than face value but for whatever reason couldn't (not enough demand perhaps). The fact that you tried to scalp your tickets but failed could still get you into trouble, and it's possible that a given state could consider any re-selling illegal, whether you made a profit on it or not.  So exercise caution here.
    • 2. Laws about re-selling tickets for more than face value (scalping) vary from state to state. 
      • Some states ban it completely (Michigan).  
      • Other states say it's OK, but the re-seller has to pay the state a fee to be licensed (Alabama, among others). 
      • Other states say only certain types of people are allowed resell tickets (Virginia: religious or charitable organizations reselling tickets for fundraising)
      • Other states say for certain types of events, no re-selling is allowed (Hawaii and Indiana: reselling tickets to boxing matches is illegal; Wisconsin: reselling tickets to the state fair is illegal). Reselling tickets to any other types of events is OK.
      • Other states impose limits on what amount greater than face value the ticket seller can charge (no more then $3 in Georgia)
      • Other states limit where the ticket reselling can take place (Louisiana: only on the internet but Louisiana law also says that all ticket reselling is illegal and they've prosecuted people who've sold tickets online so who knows; New York: not within 1,500 feet of a venue that seats more than 5,000)
      • Still others pass the buck to the city or county level and let them decide what's legal (Ohio)
      • Many states have some combination of the above requirements 
      • Some have no ban on scalping at all (Florida; but they limit how many tickets you can buy in order to prevent hoarding & driving up the price)
    • 3. On top of state laws, other laws prohibit unsanctioned scalping in specific situations, including
  • NFL games
      • Auto raceways
      • Certain events will say on the ticket that it's illegal to resell it.
      • On stadium or venue grounds (this is why you see scalpers holding up tickets outside the venues)
    • 4. In addition to all this confusion, the law generally only goes after the re-seller, not the buyer.  And when they say "reseller," they usually mean a large reselling service rather than an individual.  
  • So before you go setting up shop as a scalper, either on the street or online, familiarize yourself with your particular state's laws.  You'd better not rely on some internet summary of them, either, but read the actual law because some of them can get pretty detailed and convoluted.
  • Back to our example.  If your friend in Hawaii posted a notice on her facebook page that she had a ticket to the Hokey Pokeys to sell, she probably wouldn't get in trouble.  (If she lived in Louisiana, though, she might.)  
  • If she couldn't sell her ticket online, mailed it to you, and you tried to sell it at the concert, if you sold the ticket outside the Miracle Ballroom, you'd probably be OK.  If you sold it just inside the door of the Miracle Ballroom, you'd probably get busted.
  • If your friend used a reselling service or a secondary ticketing service, she might or might not get in trouble. StubHub is an example of a secondary ticketing service. But before I start talking about them, it's important to understand:

Why So Many Laws?

Counterfeit tickets to Patriots games. The first giveaway is the Ticketmaster logo on them. Ticketmaster doesn't put its logo on Patriots tickets. Other clues are typos, seats that go with a different stadium, the wrong face value price, etc.
(Photo from the New England Patriots, sourced from boston.com)

  •  Some people think, as I do, that a ticket is a good that can be bought and sold like anything else.  Once you've purchased it, it's yours to do with as you please, and if you can find somebody who will pay you $200 for that $10 Hokey Pokeys ticket, good for you.
  • But that's on an individual basis.  The problem arises when brokers buy up scads of tickets to an event, so many that the public can't buy a ticket from the venue, they have to go to these brokers and pay them exorbitant amounts. The venue doesn't see any of that profit, the fans get gypped, and the broker walks away laughing and rubbing his hands with glee.  Tickets Galore, ABC Tickets, and Vivid Seats are examples of ticket brokers.
  • But wait, the brokers say. We're not evil just because we can afford to buy up tons of tickets and make a profit. We're just being capitalists. Besides, we might have bet wrong on any event. We might have bought thousands of tickets to that Hokey Pokeys show at Madison Square Garden, but it turned out only 1500 people wanted to go, and we couldn't even sell the tickets at face value, so we lost our shirts on that one. The marketplace is a brutal enough regulator.
  • Ah, but there's yet another problem. Some ticket brokers are selling counterfeit tickets. With internet ticket sales, this is getting even more prevalent. Ticket holders are showing up at events only to discover that their ticket won't scan right by the agent at the door, and they can't get in.  If the ticket holder goes back to the broker, the broker usually shrugs and says, tough luck, no refund, you're out the $1,000 you paid, tell it to the wall.
  • So the states hope that by imposing various regulations on the reselling of tickets, they can put a damper on some of that ticket fraud and exorbitant pricing. 

Secondary Ticket Agents

StubHub logo. They might not give a thumbs up to this entry.

  • Now I'm ready to talk about the secondary ticket agents. Unlike brokers, they're not selling the tickets themselves, they are facilitating the sale of tickets that someone has already bought and wants to re-sell.
  • StubHub is probably the best-known of these services.  It's actually owned by eBay--they're providing a portal for you to sell your tickets the same way you might want someplace to sell the T-shirt you got at that last Hoke Pokeys show.
  • On StubHub's site, you can post a notice that you want to sell your ticket for whatever amount you decide.  But StubHub can decide to limit that amount (though reports seem to suggest that they don't).
  • StubHub does charge a commission on each ticket sold.  They get a percentage from both the buyer and the seller.  It's only about 10%, but that amount can add up quickly if they sell enough tickets.
  • And you can sell NFL tickets through StubHub.  But up above, it says that's illegal, so how does that work?
  • StubHub signs contracts with the NFL, MLB, NBA, NHL, and NCAA that allow them to resell official tickets to those sporting events.  They pay a lot of money up front in the hope that, as the only place allowed to sell those tickets legally, they'll be able to make up their investment.  So they're sanctioned scalpers.  Legal.
  • But problems have crept in here too.  Even though StubHub has all kinds of guarantees that you can get your money back if the tickets are counterfeit, that's really not much of a consolation if you pay all that money to fly from Hawaii and travel to the Magic Ballroom and go to a Hokey Pokeys exclusive tailgate party ahead of time only to find out that your ticket is no good (or it never arrives) and you can't see the show.  Or the Green Bay Packers game. Or the Oregon Ducks game. Or the BCS Championship game.  Or whatever the case may be.
  • To be fair, they've recently been investing in a lot of sophisticated analytics to catch fraudsters. So people might start having more reliable experiences with them in the future.

So is it Legal?

Something else to keep in mind: if the person you sold your game ticket to gets drunk, misbehaves, and gets kicked out, you could lose your season tickets.

While reselling your tickets might be legal, and it's kind of less illegal to buy re-sold tickets, you could wind up losing not just a chunk of money but also the chance to see a pretty good game. Or concert. Or race. Or state fair. And I hear those Hokey Pokeys play a wicked accordion.  You'd hate to miss that.

Ticketmaster


Ticketmaster and its new partner, Live Nation
(Logo from Offbeat)


 I almost forgot; I said I would talk about Ticketmaster.
  • They don't resell anything. They're an agent working on the venue's behalf, and the tickets they sell are they sell are the original seats. 
  • They make money on the fees they charge. Some of the fees on top of the venue's ticket price are assessed by the venue, like a building charge. But other fees like processing or handling, that's Ticketmaster's cut.
  • When Pearl Jam brought its suit against Ticketmaster, they said that the fees Ticketmaster charged were exorbitant and that since they kept buying up all the smaller ticket agents, they had no competitors to force them to charge less, and the band was also forced to have its tickets sold to its fans through Ticketmaster.
  • Then Pearl Jam tried to organize a tour that went to places that didn't use Ticketmaster, but they got into arguments with each other, and they wound up cancelling the whole tour. They blamed Ticketmaster; Ticketmaster said it wasn't their fault.
  • Shortly after that, the Justice Department said it found that Ticketmaster did have competitors, so they were dropping the investigation, and that was the end of that. For a while.
  • Ticketmaster recently merged with a concert promoter company called Live Nation (They're now officially Live Nation Entertainment).  Once again, the Justice Department looked into the possibility of antitrust infringement, and they said, Go ahead and merge, but you have to create a pair of rival companies to compete with you.
  • So they agreed to allow another ticketing company, AEG, access to Ticketmaster's software, and Ticketmaster sold off a subsidiary called Paciolan to Comcast Spectator, which sells sporting event tickets.
  • The DOJ is hoping this will do the trick, for both music and sporting events.
  • I offer these statistics in reply:
In 2008, Ticketmaster sold more than 141 million tickets worth more than $8.9 billion and had a market share of more than 83% for major venues, according to concert-industry tracking publication Pollstar. Its next-biggest competitor's share was just under 4%.  (LA Times)

OK, I think that covers everything. Whoof, I'm beat.  Got just enough juice in the tank to see how much tickets to the next Hokey Pokeys show are selling for. . . .


Sources
WiseGeek, Is Ticket Scalping Illegal?
CT General Assembly, Office of Legislative Research, Ticket Scalping, December 18, 2006
Arragon Perrone, Ticket resale laws and anti-fraud legislation in the U.S. and United Kingdom, Ticket News, Feb 7, 2012
Michelle Kaminsky, "Who Needs Tickets? Is Ticket Scalping Legal?" LegalZoom, September 2006
LSU cracking down on student ticket scalping, WAFB
TicketLiquidator.com, Ticket Broker FAQ
StubHub FanProtect(TM) Guarantee, and StubHub and MLB Advanced Media Renew Secondary Ticketing Partnership, December 10, 2012 Richard Sandomir, "That Season Ticket on eBay? It Could Cost Seller the Seat," The New York Times, September 24, 2006
Chuck Philips, "U.S. Drops Ticketmaster Antitrust Probe : Entertainment: Abrupt closure of investigation lifts cloud of uncertainty over firm, catches others in industry off guard." Los Angeles Times, July 6, 1995
Dawn C. Chmielewski, Ben Fritz and Randy Lewis, "Ticketmaster-Live Nation merger gets Justice Department's approval," Los Angeles Times, January 26, 2010

No comments:

Post a Comment

If you're a spammer, there's no point posting a comment. It will automatically get filtered out or deleted. Comments from real people, however, are always very welcome!