Ticket Holds, Pre-Sales & Transparency

Fan Freedom Project president Jon Potter talks with Pollstar about his organization’s efforts to bring transparency to concert ticketing.

Photo: Evan Agostini / Invision / AP
Z100 Jingle Ball, Madison Square Garden Arena, New York City

Do you think you own the concert tickets you’ve purchased?  Various people from within the concert industry might disagree with you, claiming your purchase only gives you a license to attend the event listed on the ticket – a license that does not grant you the right to re-sell or even give the ticket away.

Potter and the Fan Freedom Project think otherwise.  Funded primarily by an online ticketing exchange, the Fan Freedom Project promotes a set of talking points that the organization frames as “Basic rights for fans and ticket owners.”  As stated in the FFP’s press materials, those points are: “Ownership,” “Ticket Transfers,” “Transparency,” “Fair Access” and “Competition.”

While subjects such as “ownership” and “ticket transfers” may seem pretty clear cut, ticketing “transparency” has only recently received coverage by mainstream media outlets via reports about 20,000 seat venues offering less than 5,000 seats to the general public, with pre-sales for fan clubs, credit card holders and other marketing practices resulting in most of the seats being sold before public onsales commence.

It could be argued that the people who join fan clubs or use their credit cards to take advantage of pre-sales are the true fans in any particular market.  After all, they are often the ones that have stuck with the act since the beginning, buying CDs, tickets and merch.  For them, a pre-sale ensuring them decent seats is merely saying, “thank you” for their support.

While talking with Pollstar, Potter described scenarios where 20,000-seat venues are only offering approximately 25 percent or less of their seats for sale to the general public. 

Potter also took issue with ticketing practices meant to thwart scalpers, such as nontransferable policies requiring purchasers to appear at will-call and show their purchasing credit card in order to pick up the tickets, at one point saying that “it’s harder to get into these concerts than it is to get on an airplane.”

While Potter and the Fan Freedom Project represent one side of the issue, it is a side that needs to be explored.  Especially if you buy concert tickets.

Let’s start with the basics.  What is the Fan Freedom Project?

It’s focused on live events, ticketing in particular.  It’s probably one of the industries that an extraordinarily number of people are interested in and engaged with, and they know the least about.

What funds the Fan Freedom Project?

We are substantially funded by StubHub and we have been public about that since day one.  But that’s not the reason 150,000 people support us and agree with us.  I will tell you that there are very, very, very few consumers that disagree with anything we say once they hear us out. 

It typically takes them about 30 seconds to hear us out and say, “Ok, we agree that, if 30-second sell-outs are happening because scalpers are jumping online with bots and grabbing all the tickets, that’s bad and they should be penalized.  And if a 30-second sell-out is happening because Justin Bieber is pre-selling 93 percent of the seats in the house to fan club guys, VIPs and AMEX black card holders, that’s also unfair.”

And so, [with] a little sunshine, a little disclosure, at least people can understand the world that they are unhappy with. And then fans can make smarter choices.

And when consumers find out Justin Bieber is scalping his own tickets, or Katy Perry is scalping her own tickets, through anonymous marketplaces, I think they get a little taste for who they’re going to trust.  And that’s not a bad thing, either.

Our view is, particularly in publicly owned arenas, tell the consumer the truth.  The consumer gets to know the truth when they buy a car.  They get to know the truth when they buy a product on the store shelf.  Just tell them the truth.  If Justin Bieber is only going to sell them 1,000 seats when the house has 14,000 seats and the rest of them are pre-sold, fine.  If you’re going to sell the tickets for $2,000, fine.

Bon Jovi, on their tour, and The Rolling Stones … they see what the secondary market does with their tickets, and they say, “Skip the secondary market.  We’re going to make that money.”  And we have no trouble with that.  Not a problem.  But if you’re going to lie to your consumers, they should know.

When you founded the Fan Freedom Project, did you find any of these practices you just described – pre-selling, putting only 1,000 up for general onsale – to already be illegal anywhere?  In other words, while maybe not popular with the general public, did any of these practices violate any state or local laws?

The only thing we can think of is it’s possible that traditional, literally, cookie-cutter deceptive practice laws arguably could apply.  There are many, many states which have laws which say if you know you’re offering something for sale where demand is going to exceed supply, you need to let people know how many you’re selling.

Where you see that is during Black Friday door-buster sales, where Walmart says they have a Blu-ray player for $5.  Then, in the fine print, they say they only have three per store, no rain checks.  The reason they do that is because of deceptive practices laws, bait-and-switch laws.

There’s an argument to be made that if you’re selling 20,000 seats in a 20,000-seat arena, everybody knows there’s a limited supply and fans are going to take their chances and try to get tickets.  But if they’re only selling 1,000 seats or 5,000 seats because you pre-sold 15,000 seats, then that public onsale is sort of a sham.  Arguably, that could be interpreted as standard deceptive practices, deceptive sales laws.  Truth in advertising types of laws.

Photo: Charles Sykes / Invision / AP
Barclays Center, Brooklyn, N.Y.

Do you find instances where primary sellers – venues, ticket services, promoters – try to cover or shield these practices by blaming it on other parties?  Such as in the 1990s when the blame was put on re-sellers supposedly hiring homeless people to stand in line at box offices to buy tickets?

Of course.  That’s the industry’s standard line,  that we want to know how many tickets are actually being put up for sale because it helps the scalpers.  And we challenge them to provide us with the economic rational … for how that works.

For instance, we asked the Target Center in [Minneapolis], which is owned by the public.  In fact, a citizen of Minnesota asked the Target Center, “Tell us how you’re allocating tickets, for instance, for Justin Bieber and Lady Gaga shows.” And the response from the Target Center was “That’s a trade secret.”

Now, a trade secret is usually between one competitor and another.  Like the Coca Cola formula is a trade secret.  There’s no trade secret as to how the publicly owned Target Center distributes tickets.  That’s just silliness.  I suspect they’re going to find themselves in court relatively soon trying to defend their justification of that as a trade secret.

Won’t a lot of issues you’re raising eventually be settled in court?

The good news is there are a whole lot of states with freedom of information act laws.  When we ask them those questions, they don’t try to hide behind trade secrets.  So we have data from a bunch of different arenas showing how they sell to the public only 5, 10, 20, 30 percent of the seats in the house and the rest have gone to VIPs and fan clubs and AMEX black card holders and things like that. And we think in communities that have funded with their taxpayer dollars the construction of those stadiums, that they have a right to know how the tickets are being allocated.  Particularly when it’s done in such a way that it benefits the private, the one percent, not the 99 percent.

The Fan Freedom Project promotes a series of talking points as the  “Basic Rights For Fans,” and the first point is – “When we buy tickets we own them.”  Services such as Ticketmaster as well as venues and promoters have stated in the past that fans don’t necessarily own tickets.  Instead, they claim  tickets are merely licenses for entering venues to experience live events, and that purchasers must abide by the rules stated on the ticket or online during purchasing.  How do you respond to that?

We’ve asked America, we’ve taken a number of consumer surveys.  Consumers believe when they buy a ticket they own it.  Just like when they buy a car they own it.  The ticket is for a specific event, a specific venue, a specific time, but they own it.  Consumers own the right to put one person’s body in one seat at one event.

The fact that it is a license to enter somebody else’s property doesn’t mean … we obviously take issue with the idea that that license or the rights of the licensor is so strong they can limit who we give the ticket away to, or who we resell it to, or how we do any of those things.  I think most legislators would say there may be some technical legal mumbo jumbo going on there about licenses, but when you sell me a ticket and I pay full price, I’ve got the right to that ticket.  That’s mine.  Unless I dump beer on somebody or offend people in ways that deserve me getting thrown out of the arena, that’s my ticket.

And I think there’s a lot of people offended at the idea, that even after you’ve paid full price, the ticket sellers can control how you enjoy that ticket or who enjoys that ticket.

Photo: Eric Reed / Invision / AP
iHeartRadio Music Festival, MGM Grand Garden Arena, Las Vegas, Nev.

Do you think this issue will eventually be settled by legislators or do you think it will be decided in court?

I don’t know.  Probably a little bit of both.

Other Fan Freedom Project talking points – ticket transfers, to be able to give away tickets, transparency, fair access, competition – is there any particular issue you’re making the most progress on?

I think we’re making a lot of progress in a lot of ways.  We have a lot of non-profit groups that are on our side with regards to owning and transferring tickets.  Non-profits get lots and lots of ticket donations that they use to raise money.  In Tennessee we have a major non-profit organization, in Florida the entire association of non-profits, in New Jersey the association of non-profits are very, very supportive of the premise that people who buy tickets own them because they want to receive those donations.  I think those folks are going to start getting more active.

We’re seeing a lot of support from property rights groups and from free market focused organizations.  And we continue to get more and more support from consumer groups. 

I think that if you start with the premise that this is an OK industry … which charges premium prices and is not in the habit of doing anything that’s fan-friendly – [charging].  $2.50 to print your ticket at home after they’ve charged you $11 in fees for what was only a $40 ticket to start –  these are not folks who have earned the trust and goodwill of consumers. 

It’s not a challenge to convince people that there’s a problem here. I think it’s a question of how much lobbying money we’re going up against and how many lawyers they’re going to throw at this to keep the business the way it is, which favors the incumbents and is not so good for consumers.

In talking to lawmakers, are you finding any particular political party to be more receptive to what you’re saying, or does this cross political lines?

We have the American Conservative Union supporting our position and the National Consumers League.

What about Congress?

I’ve never talked to a member of Congress.  There has been a bill in the past couple of Congresses, but … to my knowledge, there was never a hearing, nobody ever vigorously tried to promote support for it … and we didn’t.

You said you’re primarily supported by StubHub.  How do you convince people that you’re not trying to protect those who buy tickets only to turn around and sell them for way above box office prices?

You know who the second largest ticket-reseller is?  StubHub is first, Ticketmaster is second.  The difference is Ticketmaster pretends their PR department talks about scalpers then they quietly talk about legitimate re-sale versus illegitimate re-sale. And everybody that does legitimate re-sale does it on their platform, everybody that does illegitimate re-sale does it on everybody else’s [platform].

Our point is, the 150,000 people that have signed up with us all around the country are not there because we’re supporting brokers and scalpers or whatever. … We’ve hired the best polling firm in the country to do consumer surveys nationwide as well as in some states and people really believe they own the tickets they buy.  And people believe that when they buy those tickets they can sell them to whomever they want or give them away to whomever they want for free or to donate them to charity or to sell them for above or below face value.

We also, by the way, get to watch things like the New York Yankees. The Yankees have been quite public about their desire to end the re-sale of tickets below face value, or well below face value.  It offends them that on a Tuesday night in May I can get a $200 list price ticket for $20.  And they want to stop that. But you know what?  That’s pretty good for fans. We’re fighting with The Yankees.

And StubHub is the official re-seller for Major League Baseball.

In fact, [the contract] was just renewed but there’s an opt-out for that and The Yankees and the Los Angeles Angels opted out.  The Yankees are doing their own separate official re-seller with Ticketmaster and it’s going to have price floors.  I don’t know if it will have a price ceiling but it will have a price floor.

If you go to the New York Jets during the NFL season, if you go to the NFL ticket exchanges, they have price floors.  So you could go to the NFL ticket exchange, like the New York Jets ticket exchange, and every ticket in the lower bowl is $125.  But if you went to StubHub or Ticket Network you’d find them for $40, $50, $60.  And that’s not disclosed.  It’s not like you go to the website and they say, “By the way, you can get better prices on seating somewhere else.”  They don’t disclose they’re putting a secret price floor on it.

You’ve already mentioned a couple of artists – Justin Bieber and Katy Perry.  What’s up with the Fan Freedom Project taking on Kid Rock and how ticket sales to the fan club are nontransferable?

Two things.  No. 1 – if artists are going to treat everybody like scalpers just to stop the handful of scalpers that are out there, then we’re going to let fans know.  Also, if you’re going to sell tickets that are nontransferable, then consumers should know that before they buy the ticket.

As you know, so often a consumer will go to a ticket site, it’s the public onsale at 10 a.m. on a Friday, and they’re in a frenzy clicking five computers at a time trying to get on to that site. They’re not reading the fine print.  And that’s where you’ll find it, in the fine print that says, “This is a nontransferable paperless ticket, you’re never going to see this thing, you’ll have to show up at the door yourself, you’ll have to bring your purchasing credit card.”  We think consumers should be aware of that before they pay $60, $80, $125 per ticket.

Photo: AP Photo / IPL / SPORTZPICS
IPL opening ceremony, Chidambaram Stadium, Chennai, India

Speaking of having to bring the purchasing credit card – that pretty much requires a fan to have a credit card if they want to go to concerts, as opposed to using cash.

It does do that. And there’s an extraordinarily percentage of Americans that do not own credit cards, particularly after the mortgage debacle.

Or people under 18.

That’s true, too.  So you buy your kid concert tickets, you have to go to the gate and stand in line so they can swipe your credit card or [you’ve] got to give your kid your credit card and your photo ID because they have to match.

Do you know it’s harder to get into these concerts than it is to get on an airplane?  Think about that. An airline doesn’t make you show your credit card. … You can always buy an airline ticket for somebody else. I can buy an airline ticket for you on my credit card that’s in your name that you can pick up at the airport.

It was also interesting that this week, the Green Day shows at the Barclays Center [in Brooklyn] and in Rochester, our understanding is that the band didn’t even know the tickets were being will-called only for all the floor seats at the Barclays Center. And, when the reporters called, the band said, “We don’t know what you’re talking about.” Then, all of a sudden [one] day later they they reversed that. They’re still not emailing them to you, you have to go to the window to get them [but you can pick up the tickets in advance].

I gotta tell you, I’d rather have those tickets in hand so I can hand them out to one of my buddies in case one of them is late for the show and I don’t have to wait for them at the gate.  The beauty of the digital ticket is when you can hand them to your friends, email them to your friends.  But, before they were totally nontransferable and you had to pick them up on the night of the event at will call. Now you can pick them up in advance at will call.  At least it’s an improvement for consumer convenience. What’s interesting is that the band denied knowledge of the fact that the tickets were being made will-call only and not transferable.

We’ve been talking about issues such re-selling and transferring tickets. Are you addressing other issues, such as service?

No.  The service charge business, if you will, the model is silly.  For instance, we’re not complaining about prices.  We’re not the group that’s interested in cheap beer and free parking. That’s too easy. We’re not asking anybody to lower their prices.  I think that if companies were smart, they would not break out their service charges.  They would just put them in the ticket price.  Consumers get more offended by service charges than they do … if it’s an $80 ticket, they pay $80.  When it’s $60 plus $20 in service charges, it makes them angry.

Do you think the concert industry as well as primary ticket sellers have only recently become aware that consumers may not be all that pleased with the way ticket sales are handled?

I don’t know. If you’re an artist or a band manager, touring is the last, best place to make money.  You’re not selling a lot of albums these days. It used to be you would tour to promote your album. Now you sell albums to promote your tour.  The business has changed … dramatically and I think everybody is trying to figure it out.  There certainly was an impression until probably three years ago that the concert business, that the demand was inelastic, that you could raise prices, raise prices, raise prices and still sell out.  I think that started to change about three years ago and now folks are trying to adjust prices and things like that.

When it comes to things like the ticket being property, nobody tried to stop you from re-selling tickets until Ticketmaster decided it would be a great idea.  Now that tickets are digital, we have the ability, the technology to stop you from transferring that ticket.

Ticketmaster is going to bands saying, “We can help you make more money.”  I think that’s part of it. The business people, the folks whose business is profits … not folks whose business is consumer welfare or consumer interest. Ticketmaster’s clients are venues, Ticketmaster’s clients are bands.  Their clients are not consumers. I think that’s demonstrated because they’re pushing the envelope. I don’t blame them for pushing the envelope but then consumers have to push back.

Some people say scalpers are bad or re-selling tickets is bad because the artist doesn’t make any money from it. My view is the artist got their money.  They got paid full price. If they want to raise their ticket prices, raise the price.  Once you’ve set your ticket price at $80 or $100 and I pay you the $80 or $100, what’s the problem? You’ve been paid.

Photo: Eric Reed / Invision / AP
iHeartRadio Music Festival, MGM Grand Garden Arena in, Las Vegas, Nev.

Where do you see the Fan Freedom Project a year from now?  What battles are on the horizon?

I think this battle is just getting started.  The more consumers know about the concert industry and the ticketing industry, the more they want to know and the more they want to reform it.  When we surveyed consumers and said to them, “Do you know tickets are held back in concert venues?”  They said they weren’t surprised by that. And we said, “What do you think is the percentage that’s held back?” They answer, “10 percent, 15 percent,” some went as high as 25 percent.  When we told them it was 40, 50, 80 percent, they went from, “Gee, that’s not very good” to, “Gee, that should be illegal.”

I think it’s because they feel duped because they’re being encouraged to get crazy and frantic, to go online and open up four computers to try to buy concert tickets.  And then they’re being re-directed to TicketsNow.com and finding out it’s the artist scalping the tickets to them. And they feel duped.  They feel as if they’ve been played and it doesn’t feel good.

(For more information about the Fan Freedom Project, click here for the organization’s website)