The Daily Caller

The Daily Caller
              Jeongmi Lee and her boyfriend Mark Lee show their tickets as they leave Downsview Park after a stage collapsed prior to a Radiohead concert in Toronto, Saturday, June 16, 2012. The top of a stage being set up for a concert collapsed, killing one of the stage workers preparing for the event which was canceled. (AP Photo/The Canadian Press, Toronto Star, Tara Walton)

Ticketmaster’s paperless ticketing is a loss for consumers

Photo of Zack Christenson
Zack Christenson
Research Fellow, American Consumer Institute

Paperless ticketing is a relatively new concept in the live events space, one that’s been increasingly implemented more and more over the years — from theaters to sporting events to concerts. In some cases, this appears to add a level of convenience to consumer lives — the need to remember your tickets or the worry of losing them is eliminated. While this may seem fine, there are many pitfalls to this new system that can sometimes leave the consumer worse off than being able to hold a traditional ticket.

So what problems are cropping up with this new system? Paperless ticketing puts limitations on ticketholders’ ability to give away, donate and resell tickets, and it requires everyone in the group to entry the event at the same time. You must have identification and the credit card used to purchase the ticket to enter the event, which could create problems, if you change or lose your credit card, or if it expires.

Also, since Ticketmaster runs a “shot clock” at the time of purchase that forces consumers to decide quickly to buy a ticket, some consumers do not realize that they have agreed to these restrictions when buying a ticket online. Taking the time to read the fine print could mean losing the purchase and missing the show.

There is an antitrust issue with paperless ticket that also poses risks for consumers. Ticketmaster controls roughly 85 percent of the ticketing market. While paperless tickets may seem innovation, it may be something much more nefarious going on. For instance, as implemented by Ticketmaster, the secondary market for tickets has been severely restricted — and what’s left of it being restricted to Ticketmaster’s own resale site, where huge fees are assessed.

The elimination of consumer choice and competition are two of the consequences of this policy. What happens when you buy tickets, but want to sell them to a friend or give them as a gift to a relative? Paperless ticketing eliminates the ease of transferring tickets and only with Ticketmaster’s own platform if the artists and venues consent. On Ticketmaster’s transfer platform the recipient of a transferred paperless ticket has to enter their credit card information in Ticketmaster’s system to receive the ticket.

There are ongoing battles in many states designed to regulate the sale of tickets and their secondary markets. Legislation is currently pending in Michigan, Florida, Tennessee, New Jersey and Rhode Island. These bills are attempting to move one way or the other, either opening up over regulated markets or attempting to further restrict secondary markets. Legislation in Michigan, HB5018, would allow “people or companies who buy tickets to have the right to resell them at market value.” Florida has also seen some action in its legislature, legislation introduced that defines in law that a ticket is a revocable license that can be rescinded at any time, for any reason, which gives ticket sellers the legal authority to implement paperless ticketing.

The value of the secondary ticket market is huge, populated by companies including StubHub and TicketsNow that help consumers find buyers for tickets they’re unable to use. It’s currently a competitive market, with several brokers available to consumers and even the availability of online classified sites like Craigslist — or even posting to Facebook!

By implementing a system that locks consumers into one website, a ticket company or venue can monopolize the entire market. Ticketmaster appears to be doing just that — not trying to help consumers, but to eliminate competition or funnel secondary resale traffic to itself. Due to this monopoly, one study has shown that resold tickets are $93 higher on average on Ticketmaster platforms than on other secondary platforms. And because Ticketmaster controls the primary market, they can ensure that secondary market ticket prices don’t fall below of their own current primary ticket market. According to some estimates, these higher prices and fees could lead to a loss of $2 billion by consumers each year.

While attempts to stop ticket scalping are appreciated, limiting consumer choice and handing a monopoly a new market to monopolize is the wrong choice. Legislators should resist the temptation to fall in line with this ill-thought idea.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research