groundbreaking reporting from A1 of washpost:
Is the Ticket Biz Out of Line?
Consumers Find Many Events Hard to Come By, And Afford, in a Market Changed by Technology By Paul Farhi
Washington Post Staff Writer
Friday, November 9, 2007; A01
After attending Bruce Springsteen concerts for more than 20 years, Ron Collins is facing the music: He can no longer afford to see the Boss.
When several weeks ago Collins went looking for tickets for Springsteen's sold-out shows this Sunday and Monday at Verizon Center, online resellers were asking anywhere from $400 to more than $2,000 per seat. "We were prepared to suck it up and just pay the scalpers, but I can't justify these prices," says Collins, 58, a legal writer and scholar in the District.
Collins isn't just disappointed, however -- he's suspicious. Years ago, he says, "you waited in line, you came early enough, you could get tickets at face value. . . . Now, the whole system seems corrupt."
Similar gripes have been ricocheting across the country for months, driven by soaring prices and increasingly aggressive efforts by resellers to sweep up tickets. Fans who strike out on the initial sale of seats to popular shows have found themselves confronting heart-stopping prices on hundreds of reseller sites -- often only minutes after promoters have posted "sold out" signs. Markups of as much as 10 times the face value are not uncommon for popular concerts, sporting events and Broadway shows.
The complaints became a collective shriek in recent months when thousands of tween-age fans and their parents were shut out of a sold-out "Hannah Montana" concert tour featuring Miley Cyrus, who plays the title character on the mega-popular Disney Channel show. The complaints have prompted investigations and lawsuits by officials in three states, each alleging some variation on this question:
Is the ticket market stacked against the average consumer?
The answer depends on whom you ask in the complex marketplace of ticket sales and resales. Each party blames another for manipulating supplies and pushing up prices. The major players include:
�¿ Ticketmaster. The ticket powerhouse, which last year sold 128 million tickets, worth more than $7 billion, contends that the armies of independent ticket brokers corrupt its public sales. In particular, Ticketmaster claims that brokers have gained an unfair advantage over the public by using automated phone-dialer programs and software, known as "bots," that are capable of generating multiple ticket-buying requests at once -- practices in violation of the company's stated terms of use. Many of those tickets end up resold on the Internet via hundreds of ticket resale sites, the company says.
In April, Ticketmaster sued a Pittsburgh-based software company, RMG Technologies, to stop it from licensing its ticket-buying software to clients. A federal judge last month sided with Ticketmaster, issuing a temporary injunction against RMG.
�¿ Ticket agents and brokers. Known more notoriously as "scalpers," professional resellers counter that Ticketmaster's claims about bots are exaggerated, if not baseless. Like all commodities, they say, the price of tickets reflects supply and demand. Brokers contend that Ticketmaster is seeking to restrict the reselling of tickets to capture more of the thriving secondary market for itself via its own resale Web site, TicketExchange.
�¿ Concert promoters, artists, tour sponsors and arena managers. The people who produce the events have long controlled the supply of tickets sold to the public. Their power to manipulate supply drew new suspicion in September when Ticketmaster revealed that only 4,200 tickets were sold to the general public for a "Hannah Montana" show in Kansas City, Mo., at Sprint Center -- an arena that holds 11,500 for concerts.
The balance went behind a series of "velvet ropes" that the public never had a chance to get past. Another 4,200 tickets were sold to dues-paying fan-club members (including some ticket brokers). The arena's suite-holders got first dibs on an additional 1,200 seats. And the event's promoter, AEG Live, claimed 1,800 tickets, which were given to VIPs and distributed as promotional giveaways. Prices soared for the limited number of tickets available to the public.
Why were so many tickets held back from public sale? Ticketmaster says that's up to the event's promoter. "Ticketmaster makes available to the public what our clients give us to sell," says Sean Moriarty, chief executive of Ticketmaster, in a statement provided by the company. " . . . There's no hocus-pocus."
These rationed tickets, known as "holdbacks," might be the one thing in the ticket business that hasn't changed significantly. But several important things have.
During Ron Collins's youth in the mid-1970s, when a ticket to see Bruce Springsteen and the E Street Band could sell for as little as $5, the channels for buying and reselling tickets were limited. Now, fans are competing not just against people in a ticket line; they're up against thousands of people manning phones and computers around the world. Ticketmaster spells out the potential arithmetic in a form letter it sends to frustrated buyers: "If 500 fans are simultaneously buying four tickets each, 2,000 tickets can be sold in a matter of seconds! It's the same reason why a typical 18,000-seat arena can sell out in a few minutes."
In other words, online buyers in Chicago or Los Angeles or Dallas might have purchased the three tickets to the Verizon concerts that Collins wanted. These buyers might have flipped the tickets, offering them for sale on such resale sites as Craigslist, eBay's ticket site StubHub, TicketsNow or Ticketmaster's TicketExchange.
Legal restrictions on ticket reselling have been repealed or relaxed over the years in most parts of the country, including the District, although five states -- Massachusetts, Kentucky, North Carolina, Michigan and Rhode Island -- limit per-ticket markup, says Gary Adler, general counsel for the National Association of Ticket Brokers. But enforcement is "very, very rare," he says.
Members of Adler's organization range from big players such as Russ Lindmark, whose Overland Park, Kan., company, Ticket Solutions, handles 27 million ticket sales a year, to one-man operations such as Randy Levenberg of Encore Tickets in Chevy Chase.
Brokers get tickets from sources as varied as public sales, walk-in customers and other brokers. They also buy from auction sites such as eBay.
For brokers, the real challenge is knowing when to sell, Lindmark says. To figure out what's moving, brokers continuously monitor the auction sites. They also track the supply held by large consolidators. Ask Lindmark how many tickets are for sale on the secondary market for, say, the Dec. 2 Redskins game against the Buffalo Bills, and he can give you an up-to-date read by checking a broker database: "1,138."
Since the Internet makes it easy for consumers to compare prices, brokers say, sellers must constantly compete to offer the best deal to buyers. Sometimes brokers must unload their inventory below face value, particularly as showtime approaches.
In its lawsuit against RMG, Ticketmaster essentially argues that the free market isn't all that free. In court filings last summer, Ticketmaster says that RMG's clients used bots to purchase, for example, 5 percent of the tickets to a Beastie Boys concert, and as much as 40 percent of the best floor seats to a show by comedian Kathy Griffin, denying the public a chance at these seats. Ticketmaster accused one broker of using the software to buy 45,000 tickets since 2003. Ticketmaster has since taken countermeasures to prevent such "assaults," but executives say automated buying still occurs.
Brokers say that exaggerates the impact of RMG's technology. Lindmark notes that it's exceptionally rare for more than 10 percent of any event's tickets to be for sale on the secondary market at any one time, so "I'm not sure how good [the technology] is. They're not exactly cornering the market."
Ticketmaster is trying "to misdirect the public by focusing on brokers," says Jay M. Coggan, RMG's attorney, who says only a small number of tickets have been bought using the software. Coggan says Ticketmaster's real aim is to drive resellers away to protect its own reselling site.
Nonsense, replies Ticketmaster's Moriarty: "We believe resale has to be done legally [and] respect the rights of event providers and consumers. . . . Using bots to acquire tickets is not fair to consumers and, as the courts have ruled, is illegal."
All of which does little to help music fans such as Collins, who'd like to snag some Springsteen tickets for less than a monthly paycheck. Lawsuits and bots notwithstanding, he probably shouldn't hold his breath.
"There never has been a level playing field" in the ticket business, Coggan says. "Even if RMG went out of business tomorrow, there will still be a secondary market. You'll still pay $500 for a great seat. It's always been that way, and it probably always will be."
