What a sell-out: How ticketing companies deny our property rights and monopolize markets

Suhail Khan Institute for Global Engagement
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In America, one of the most fundamental liberties supporting our society and driving our economy stems from the Fifth Amendment — the right to own private property. This freedom ensures we own what we buy, and no institution or person can deprive us of that property, or control how we use it.

This right applies to everything from our businesses to our homes, cars, and barbecue grills. It means that as owners, we have the sole right to rent, sell, or give away any portion of our property at a price we determine. This holds true for essentially every good or service we buy as consumers. Except, bizarrely, for some tickets to concerts and sporting events.

When it comes to the tickets for our favorite live events, companies like Ticketmaster want to control our property and dictate what you can do with it. They do this by issuing restrictive “paperless” tickets, which require the original purchaser to present his or her credit card and government-issued photo ID at an event in order to gain entry.

By tying tickets to the purchaser’s credit card, these companies are in effect stripping you of basic ownership rights. Most paperless tickets are nontransferable, meaning you can’t sell them to a colleague if you get tied up at the office; if there’s a family emergency and you can’t make it to the game, you won’t be able to give the tickets away to friends; you can’t even give paperless tickets as gifts (at least not without using the recipient’s credit card, as Ticketmaster suggests, and what kind of a gift is that?).

When companies and venues do allow restrictive tickets to be transferred, they force consumers to use a single, designated marketplace. These exchanges often require both buyers and sellers to pay fees — even to give away tickets for free. And if these controlled marketplaces aren’t already an affront to the free market, ticket companies sometimes even impose price restraints. Following the London Olympics ticketing fiasco, where thousands of tickets for the most popular events went unused, the entire world has seen firsthand what happens when the powers that be try to eliminate a free, legitimate secondary market: inventory is allocated poorly, with willing fans unable to purchase tickets for empty seats. Meanwhile, the black market thrives on overpriced and often fraudulent sales.

Laughably described as a “convenience,” restrictive ticketing is simply and obviously a way for a dysfunctional industry to monopolize the resale market. Having long enjoyed near-monopoly control of the primary ticketing market, Ticketmaster and the sports teams, artists, and venues it represents have always resented the secondary market. Rather than embrace rational pricing mechanisms that let the market determine the price of tickets, they are trying to repeal the laws of supply and demand.

In baseball, for instance, large stadiums, long seasons, and years of league expansion have led generally to an over-supply of tickets. Season ticket holders, passionate superfans though they may be, can’t reasonably be expected to attend 81 home games per year. Many sell their extras, often well below face value, to help offset their expensive season ticket package. The sellers are happy to recoup any part of their investment, and the buyers are thrilled to get good seats at bargain prices. Numerous online ticket exchanges compete vigorously to host these transactions based on price, selection, and customer service. More bodies in seats mean more concession and parking sales for the teams. Everybody wins.

But with restrictive ticketing, these transactions either become impossible or can only be processed through the same monopoly that sold the ticket the first time. Ticketmaster, the dominant primary ticket-seller, is owned by Live Nation, the world’s largest concert promoter and manager of the world’s most popular music stars. And through Live Nation, it owns or has exclusive booking rights in more than 120 major venues across the nation. Ticketmaster also owns TicketsNow, the second largest ticket resale marketplace, and operates its TicketExchange service for many sports teams and leagues, including the entire NFL. As you might predict, Ticketmaster’s restrictive tickets can often only be resold on Ticketmaster-owned resale services like TicketsNow. And as you would expect, this closed-loop monopoly leads to higher fees and poor customer service, and even allows the ticketers to set arbitrary minimum and maximum sale prices. It’s like purchasing a new car and years later finding out that you can only resell it to the original dealer and that the dealer gets to unilaterally dictate both the sale price and his cut of the transaction.

This strange attempt to thwart free market principles has already engendered legislative fights in a number of state capitols, with unusual coalitions of free market advocates and consumer rights crusaders banding together to oppose restrictive ticketing. Their message is simple: let the free market run its course, and let sports and music fans do what they wish with the tickets they buy.

Suhail A. Khan chairs the Conservative Inclusion Coalition and serves on the Board of Directors of the American Conservative Union.