Bill introduced to address ticket-resale issues

TRENTON – The issue of who profits from ticket resales is heating up again.

A bill that aims to restructure the way tickets are sold and resold in the state – including lifting limits on resale prices – was introduced this week.

S2901, sponsored by Sens. Ray Lesniak, (D-20), Union, and Robert Singer, (R-30), Jackson, states it is designed to protect consumers by bringing more transparency to the process.

Current law limits the price at which certain tickets can be resold. The bill would remove price limits on the resale of all tickets.

Other provisions of the bill include:

* Requiring ticket issuers to provide advance public notice of their ticket policies, including the total number of tickets to be issued; the number of tickets to be offered to the general public and the number of holdback tickets.

* The bill prohibits owners or operators of a place of entertainment or of an entertainment event, or their agents, from making initial ticket sales to themselves or their affiliates.

* Under the bill, ticket brokers would no longer have special privileges or be separately regulated. They would no longer have to register with the Division of Consumer Affairs and sections of law concerning registration of ticket brokers would be repealed by the bill.

* Operators of places of entertainment would be required by the bill to code tickets, so that they can be traced back to the original sale, and to keep records of ticket sales for five years.

* This bill also addresses a newer aspect of the business, so-called paperless tickets. The bill would prohibit ticket issuers from issuing “paperless tickets” in an electronic form that is not readily transferable to a subsequent purchaser or that conditions entry into an event on the presenting of documentation, such as the original purchaser’s credit card, that cannot be readily transferred to a subsequent purchaser.

Paperless tickets is one way for a ticket issuer to control the secondary market and prevent a resale by the purchaser.

Lesniak said that right now ticket sales are essentially a monopoly of Ticketmaster and its parent, LiveNation. “This would give the consumer the right to do with a ticket what they want,’’ he said.

A ticket purchaser who changes their mind about attending an event, for whatever reason, should have the right to resell a ticket for whatever they can get for it, he said.

In addition, he said if a performer strikes a deal to hold back a percentage of tickets for their own event that they can sell, or ‘scalp,’ at a higher value, the public has a right to know about it.

“I’m advocating this just from a free-market, empowering-the-consumer perspective,” Lesniak said.

The whole issue of ticket resales resonates in New Jersey where two years ago the Attorney General’s office sued three ticket resellers for allegedly selling tickets that either did not exist or they did not possess for Bruce Springsteen shows at the Meadowlands.

The AG’s office eventually reached settlements with the companies, and then-Attorney General Anne Milgram testified before an Assembly committee looking into the problem of resales.

“We’ve taken all of the rules away and opened the flood gates for the brokers,” she said at the time.

The National Consumers League is on board with some aspects of the Lesniak/Singer legislation.

John Breyault, the league’s vice president for public policy, said that although he is not familiar with the specifics of this bill, the league in general opposes paperless ticketing.

“Our position is that paperless ticketing is anti-competitive and anti-consumer,’’ said Breyault, who added the league opposed the merger of Ticketmaster and LiveNation precisely because they feared fallout such as this.

He said that there was legislation introduced in New York the league supported designed to give consumers the option of a paperless ticket if they want it.

The league also backs efforts at increasing transparency on ticket holdbacks.

“What we oppose is when they hold back tickets and don’t tell consumers,” Breyault said. “They (consumers) believe falsely there is a diminished supply of tickets.”

One expert on the issue said it all comes down to who controls the resale of a ticket.

Stephen Happel, an economics professor at Arizona State University who has testified, studied, and written about ticket sales and the secondary ticket market, cheered aspects of the Lesniak/Singer proposal.

“That sounds like a step forward,’’ he said. “I’m a free-market economist. I adamantly oppose price controls any place in the economy.”

He said that Ticketmaster has in the past argued to different states that it should be the sole reseller of tickets. Happel said he supports a secondary market that is not controlled by the primary ticket agencies.

Paperless tickets under complete control of the primary seller? “We have a name for that,’’ said Happel. “It’s called a vertical monopoly. We don’t like vertical monopolies.”

However, Ticketmaster argues that it is protecting fans from scalpers and from unscrupulous brokers.

After reviewing the proposed bill, it issued a statement:

“We support legislation that puts fans ahead of scalpers. While there are elements in this bill that we support, we oppose the other provisions that will harm fans.

Ticketing methods such as paperless ticketing and will-call only are designed to get tickets into the hands of fans. Limiting the ability of artists, sports teams and venues to choose these or other forms of ticketing is tantamount to helping scalpers.”

But Happel believes the anti-scalper argument no longer holds water. “In the 1980s I thought you needed to regulate scalpers,  and I now believe the best way to protect the public is a free market,” he said.

“Ultimately free markets will protect consumers, with proper regulatory constraints,” he said.

The bill has been referred to the Senate Commerce Committee. Bill introduced to address ticket-resale issues