— We’ve all bought a ticket to a concert, theater performance or sporting event and then seen our plans change. Rather than get stuck with a worthless ticket, you’d probably give it away or sell it.
Well now there’s a new kind of event ticket that’s more like an airline ticket. It’s called a “restrictive paperless ticket” and it can only be used by the person who bought it. You can’t sell it on your own. You can’t give it away. You can’t even donate it to charity.
To get this ticket, you must go to the venue, show the credit card used to make the purchase and produce a picture ID to confirm your identity.
That means parents who buy their kids a concert ticket must park and wait in line to get them into the show. If you buy tickets for a group of people, you’ll have to wait until everyone arrives before you can go in. How’s that for convenient?
Industry giant Ticketmaster created the paperless ticket. CEO Nathan Hubbard tells me it’s a way to prevent scalpers from buying up all the good seats and then reselling them for five to 10 times face value.
“All we’re trying to do is get a 14-year-old kid into a show, to sit in a great seat at a reasonable price,” he said.
Justin Bieber, Miley Cyrus, Michael Bublé and Bruce Springsteen sometimes use paperless tickets to guarantee their fans can attend their shows. Some sports teams, including the Cleveland Cavaliers, Houston Rockets and Denver Nuggets, also sell them.
Hubbard says paperless ticketing is not for all events or even for all the seats at an event. Right now, it’s an insignificant part of the marketplace. Ticketmaster says less than one-tenth of one percent of the seats it sold last year were paperless. That’s about a half million tickets out of nearly 400 million.
"It’s simply an option for an artist to sell a ticket and to know that the person who bought that ticket is the passionate fan who walks through the door,” he explained.
Hubbard readily admits ticket reselling is “good-old fashioned American capitalism.” But he says scalpers don’t play fair. They use sophisticated computerized shopping bots to snatch the good seats before fans can buy them.
Hubbard says when Ticketmaster surveys customers, 94 percent say they are willing to put up with the inconvenience of paperless tickets in order to have access to good seats at face value.
Attorney Gary Adler is general counsel for the National Association of Ticket Brokers. He calls the use of paperless tickets “distressing” and claims it has nothing to do with scalpers.
“There’s a lot of money to be made in the secondary market,” he said. “Everyone is looking for the mousetrap that will capture that market and I think this is a result of that.”
Adler says consumers benefit from an open market. He points out that about 40 percent of the tickets handled by ticket brokers are sold below face value.
“That will not happen if Ticketmaster and Live Nation and the other original ticket sellers can control the resale and put restrictions on what you can and cannot do,” he warned.
Consumer groups oppose paperless
John Potter hates paperless tickets. About three months ago he launched the website Fan Freedom Project to educate people about the risk they take when they buy these tickets. He says 28,000 people have already joined the project.
“Our mantra is ‘I bought it, I own it,’ ” he said. “You got paid full price, so what are you still doing with your hand in my pocket?”
Potter believes restrictive paperless tickets will grow rapidly in the years ahead.
“This is a way for sports teams and concert producers to essentially create a monopoly in the secondary ticketing market. And for fans, the loss of competition is not a good thing.”
Two national consumer groups, the National Consumers League and Consumer Action support the Fan Freedom project.
“Ticketmaster says that it’s trying to stop scalpers, but what it’s really doing is hurting consumers,” said Linda Sherry with Consumer Action. “If you only can use the ticket yourself, that really cuts out a lot of the value of the ticket if you want to sell it or give it away later.”
At the National Consumers League, John Breyault calls paperless tickets “anti-consumer and anti-competitive.” He believes ticket buyers have the right to sell their tickets on the open market. With paperless tickets they can only resell them through an exchange run by the ticket seller with fees set by the ticket seller.
“It takes away a consumer’s access to the secondary market that is competitive,” Breyault noted. “And we think people deserve better than that and they should benefit from competition.”
Ticketmaster’s Hubbard insists he is not trying to shut out ticket resellers. He calls them “a legitimate distribution channel” that meets a real need of fans. But he says fans need to be able to buy tickets without going through a broker.
“All we are trying to do is get those fans access to tickets,” Hubbard said.
Consumer groups support laws that prohibit the sale of restrictive paper tickets. New York now has a law that gives consumers the right to choose what kind of ticket they want. The Minnesota legislature is considering a bill to ban restrictive paperless tickets.
Don Salyards, an economics professor at Winona State University, testified in favor of the bill last week.
“Most of the time regulations make markets less free,” he said. “This bill would basically say to sports teams and concert promoters that you can sell that ticket to the first customer, but once that customer has the ticket, he has the freedom to sell it anyway he wants.”
Brad O’Keefe, a Minnesota banker and big sports fan, also testified in favor of banning restrictive paperless tickets. He buys season tickets to the Vikings and Twins, knowing that if he can’t use some, he can sell them or give them away.
O’Keefe agrees that there is a problem with scalpers grabbing all the good seats for an event. He just doesn’t think restrictive ticketing is the right solution.
“They need to find a better way to combat it than this. The consumer should not suffer because they can’t find a way to stop these bot programs,” he said.
Ticketmaster says it spends millions of dollars every year trying to foil scalpers. CEO Hubbard tells me they’re looking at other, more effective options to beat the bots, such as validating your identity through a social network site.
My two cents
I know the frustration of not being able to attend a concert I want to see. I hate scalpers who use bots to game the system. Clearly, paperless tickets are good for the fan who wants to see a show without paying a steep premium. But there’s just got to be a better way.
I spent a half hour on the phone with Ticketmaster’s Hubbard the other day. He seems to genuinely care about the connection between performers and their fans. So I’ll take him at his word when he says he only wants to give fans a better experience. Then find a way to beat the bots and get rid of these annoying paperless tickets. Do that, and you’ll make everyone happy.