Internet-driven ticket reselling a hot issue this Legislative Session

Editor’s Note: As the 2015 Legislative Session approaches, FloridaPolitics.com is reporting on several “legislative food fights” likely to break out during the annual lawmaking period. These food fights don’t always make the front page of the Tampa Bay Times, but they are the kind of industry vs. industry or intra-industry turfbattles that drive Tallahassee — and expand the economics for state lobbyists. The first profile focused on an expected scrum between Big Tobacco and trial lawyers, a second story focused on the tax exemption on jet fuel purchases. Today’s installment.

After the collapse of the record industry from a witches’ brew of online music sales, internet streaming and piracy, live music has arisen as the next great revenue source for the music industry.

With it, came the evolution of a secondary ticket market – “scalping” as some say.

The logistics of putting on a concert, from the artists, promoters and venue operators to ticket sellers, causes billions of dollars in lost revenue to this “secondary market.”

Internet-driven ticket reselling, where both ticket brokers and scalpers see profits while those taking artistic and financial risks, see little or no returns.

Live music event behemoth Ticketmaster, with its parent company, Live Nation, the world’s largest concert promoter, are now entering the fray by moving into the reselling market.

“There’s a lot of bad options in resale — counterfeit, speculating,” Ticketmaster’s North American president Jared Smith told Rolling Stone magazine in 2013. “This was our opportunity to do it in a way that’s completely safe and secure.”

In true corporate fashion, Ticketmaster is working legislatively in Florida to gain an advantage in this lucrative resale market.

Several years ago, the Legislature allowed for ticket scalping by amending a law passed in the 1940s which originally prohibited tickets from being resold by more than one dollar over face value.  The law was amended to create more competition in the secondary market and allow consumers to decide what to do with their own tickets after original purchase.

Although resellers such as StubHub and eBay strongly support the current law, Ticketmaster (TM), concert venues, and professional sports teams oppose it with equal fervor.

As the original ticket seller, Ticketmaster managed to amend the original statute to be exempt from resale laws, giving them a substantial competitive market advantage.

Since then, Ticketmaster, venues and sports teams have each entered the multibillion-dollar secondary ticket market, setting up a massive legislative showdown with resellers like StubHub, now owned by eBay.

After creating its own secondary market website – called Tickets Now – Ticketmaster is now looking to close other sellers out of the market. The pair of bills, currently making way through the Legislature, is an attempt for Ticketmaster/Live Nation to boost its competitive advantage.

HB 463/SB 742 are new attempts to rewrite the law in 2015. If passed, it would revamp Florida law, defining a ticket as a license, revocable for any reason:

“’Ticket’ … a printed, electronic, or other type of evidence of the right, option, or opportunity to occupy space at or to enter or attend an entertainment event even if not evidenced by any physical manifestation of such right.

“A ticket is a revocable license, held by the person in possession of the ticket, to use a seat or standing area in a specific place of entertainment for a limited time. The license represented by the ticket may be revoked at any time, with or without cause, by the ticket issuer.”

What makes this significant is that for an individual to transfer a ticket – for sale or free – they would need permission of the original ticket issuer. In many cases, that’s Ticketmaster.

Consumers have only one option: to resell or transfer the “license” through Ticketmaster or its reselling website, presumably for a fee.

The problem with that is this: imagine being unable to attend a concert at the last minute. The law would technically prohibit you from merely selling the ticket/license, or even giving it to a friend. You would have get permission through Ticketmaster first.

This is the way TM will prevent reselling tickets by anyone except them.

Limiting competition in this manner will have one intended consequence: driving up secondary market ticket prices, with TM reaping additional billions in revenue.

The bill also enhances criminal penalties for ticket brokers who sell tickets under certain circumstances and requires dealers to register with the Florida Department of Agriculture and Consumer Services.

Of course, TM would be exempt from registering its reselling site.

In addition, the bill defines a ticket broker as anyone who sells more than 60 tickets per year or more than a third of season tickets to a sports team.  It has the primary purpose of getting professional brokers to register, allowing TM to go after those who register, which again limits competition.

Average consumers will also need to register with DACS, opponents say.

As an example, they cite, consider 162 baseball games in a season, half of them played at home. A season ticket holder selling more than 27 of their tickets would need to register as a broker.

Here’s the wording of SB 742, filed by Sen. Wilton Simpson:

“’Ticket broker’” means a person, or persons acting in concert, involved in the business of reselling tickets of admission to places of entertainment. The term does not include: A person who does not regularly engage in the business of reselling tickets, who resells less than 60 tickets or one-third of all tickets purchased from a professional sports entity during any 1-year period, and who obtained the tickets for the person’s own use or the use of the person’s family, friends, or acquaintances.”

Ticketmaster is working hard to compete with StubHub and others. The key difference is that TM is the original seller, giving them access to the original tickets.

Critics say they often hold back a block of tickets to sell them on their own reselling website — at a premium — without making the tickets available for the initial sale. This, many artists and consumers point out, is deceptive and creates an artificial market.

Concert promotion was always a risky business; promoters always run the risk of a show not selling out. Ticketmaster, as an exclusive ticket seller for any given Live Nation event, controls inventory to offer consumers the best available seating, no matter where purchased.

Unfortunately, that business model has also raised the ire of artists, resellers and other who bristle at anything that hints at “monopoly.”

The major players in this issue have already retained a stable of lobbyists.

The Florida Association of Ticket Brokers has hired Nick Iarossi, Jennifer Gaviria, and Chris Schoonover of Capital City Consulting. Likewise, TicketNetwork has retained Matt Bryan, David Daniel, Jeff Hartley, Jim Naff, and Andrea Reilly of Smith Bryan & Myers.

Ebay, which owns StubHub, is represented by Metz Husband & Daughton‘s Greg Black, Jim Daughton, Patricia Greene, Warren Husband, Aimee Lyon, Stephen Metz, and Andy Palmer.

Ticket Hungry has Fausto Gomez and Manny Reyes working on their behalf, while Ticketmaster is repped by Corcoran & Johnston‘s Mike Corcoran, Jeff Johnston, Matthew Blair, Michael Cantens, and Amanda Stewart.