When the New York Yankees recently confirmed that they were revisiting whether to permit their tickets to be sold on StubHub below face value, it focused attention on the manner in which teams, entertainers, venues, and ticket sellers in general try to control what you can do with a ticket to a sports event or a concert that you bought with your own money.
Season ticket holders in particular often plan to sell those tickets that they do not want to use in order to afford the ever-rising cost of attending games. Logic, and the law, should support ticket buyers' beliefs that they should be able to do whatever they want with tickets that they bought with their own money -- including being able to sell, or give away, the ticket to others.
But when it comes to the secondary market in tickets to sports and entertainment events, logic is not the driving force.
Tickets today come in three basic versions: the traditional paper ticket, the e-ticket where the buyer prints out a receipt with a bar code that is scanned upon entry, and the newest and most problematic version, the paperless ticket.
With restrictive paperless tickets, the purchaser has to show up at the event with the credit card used to purchase them. That means that you would not be able to resell that ticket or give it away unless you also handed over the credit card, or that your entire party would have to show up at the same time in order to gain entry.
Ticketmaster and others paperless ticket promoters claim that the change is designed as a consumer protection against fraud or scalping, but critics -- including the American Antitrust Institute, according to a report issued earlier this year -- are not necessarily buying that argument. That report argues that "transferability restrictions unjustifiably limit consumer choice and depart from bedrock competitive market principles."
There are other gimmicks that have been presented as pro-consumer that appear more designed to limit transferability, such as will-call-only tickets, used recently for a Radiohead concert and some tickets for a Bruce Springsteen show, that require bringing the credit card used to purchase tickets in order to pick them up.
The government should not be impeding technological advances in the private market, but must be vigilant when those advances are a fig leaf that is designed to mask the monopolistic effect of limiting competition in the open market.
The current New York State law, which was just renewed and signed by Governor Cuomo, essentially allows venues or their ticketing agents to sell-non-transferable paperless tickets only if buyers have the option of a transferable alternative. That is a sensible status quo, provided that "transferable option" is not limited to, say in the case of Ticketmaster, their own TicketsNow resale site that they set up to claim that they are trying to accommodate the general public.
The bottom line should be that if you buy the ticket, you should own it, and be able to do with it as you wish -- use it, resell it, or give it away. That is where a secondary market comes in.
For decades, the secondary market was dominated by "scalpers," who buy tickets from box offices or online, or from a first-instance ticket buyers, and then resell those tickets, often shortly before the event occurs and outside the venue. But the last decade has seen the development of a more regularized secondary market online, through CraigsList-style classified ads, eBay-style auction sites, or ticket brokers or exchanges such as StubHub or TicketsNow.
These developments give flexibility to a first-instance ticket buyer, whether because the buyer cannot attend an event because of changed plans, or because the buyer wants to sell some of a multi-event series of tickets such as a season ticket. They also benefit the late-instance buyer whose plans change so that attending the event is now a possibility.
A smoothly working secondary market also can benefit the entertainer and the venue, since attendees purchase food or souvenirs that would go unsold if the seat remained empty.
Contrary to one image of the secondary market, with scalpers ripping off hapless fans, a substantial percentage of ticket resales, especially at sports events, are sold below face value, and that is what the Yankees and other sports teams appear to want to control through paperless ticketing.
The paperless ticket is also promoted as a way for performers and venues to reward loyal fans with tickets at favorable, below-market prices. The concern is that scalpers will use electronic bots and other devices to crowd out the loyal fans, grab the tickets at those favorable prices, and then resell at a profit.
However, there are alternatives to restrictive paperless tickets that protect against scalpers and still protect ticket buyers' ability to resell or give away the tickets. These alternatives include technologically inhibiting the scalpers' bots and working with enforcement authorities to track bot users, as well as limiting the numbers of tickets that any buyer or group of buyers can purchase.
That is why I applaud the New York State Legislature for renewing the section of the state's Arts and Cultural Affairs Law that allows venues to sell non-transferable paperless tickets only if buyers have the option of a transferable alternative, including the right to resell their ticket above or below face value as they see fit, or give it away.
Sports and entertainment are not only fun, they are big business as well. Lawmakers, as well as state attorneys-general and consumer groups, should take a closer look at the entire entertainment industry to protect against anti-competitive practices in a sports and entertainment industry that is so central to New York's -- and the nation's -- culture and economy.
Lawrence J. White is a professor of economics at the NYU Stern School of Business.
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