Brokering the biggest deal of them all


September 14, 2003


Of the many frustrations and indignities suffered by music consumers of late--from overpriced concert tickets and CDs to the recording industry's campaign to criminalize Internet file sharing--the most troubling remains the lack of choices in the business of selling concert tickets.

The giant firm Ticketmaster has long dominated the sale of concert tickets in the United States by signing exclusivity agreements with most major venues. In a market like Chicago, artists either agree to use Ticketmaster--burdening fans with "convenience fees" ranging from $5 to more than $30 per ticket--or they are effectively barred from playing the United Center, the Allstate Arena, the Tweeter Center and dozens of other venues large and small.

Now Ticketmaster is adding insult to injury for consumers with a new plan that essentially finds it morphing into a legalized scalping agency.

The company, which sold 95 million tickets last year, recently announced that with particular artists' approval, it will begin holding some premium concert seats in reserve to auction them off online to the highest bidders.

This means that you could be the first in line with a fistful of cash the minute a show goes on sale, and you still might be shut out of getting the best seats--unless you're willing to pay a lot more.

The plan was seemingly inspired by similar auctions that are already being held by scalpers on existing online auction sites. Chicago's alternative-country heroes Wilco take elaborate measures to thwart scalp-ers, but they aren't always successful: Some prime tickets for the group's two sold-out shows Friday and Saturday at the Auditorium recently sold on eBay for $300 a pair. The face value was $32 apiece.

Ticketmaster says that it is merely bending to the will of the marketplace--because some people are willing to pay more for good seats--and that it is trying to usurp the role of the scalpers and ticket brokers. But the company is really just angling to be the biggest and baddest scalper of them all.

The trial program is set to start some time this fall. Ticketmaster hasn't said exactly which cities will be affected, but company president John Pleasants tipped his hand when he recently told the Sun-Times, "Chicago would be a good market for this."

Illinois is notorious within the concert industry for being one of the largest and most lucrative live-music markets to allow legal ticket scalping (in the guise of ticket brokers). Other states, such as New York and New Jersey, have outlawed the practice, but scalpers here have a powerful and well-funded lobbying group in Springfield, and state legislators have for years sided with them in keeping scalping legal.

Local promoters Jam Productions have crusaded against ticket scalpers for more than 20 years. Co-owner Jerry Mickelson supports the Ticketmaster plan as a way to short-circuit the scalpers, but only because the state has failed to act.

"Ticketmaster is proposing a way to capture revenues that are going to a third party that has nothing to do with the transaction or the event," Mickelson said. "I can rationalize it all day long because the Illinois legislators haven't supported outlawing ticket scalpers. Don't get me wrong: I'm all for the consumer getting the ticket at the price that's printed on the ticket. But it hasn't been happening, and the consumers have done virtually nothing to stand up and say, 'Hey this is wrong.'"

The last time anyone did rise up in protest against Ticketmaster came when Pearl Jam took the company on in 1995. Although the Seattle rockers were one of the biggest bands in the world at the time, they failed miserably, in large part because their fans and musical peers didn't support them.

Pearl Jam fell into the role of crusaders by accident. On tour to promote its second album, "Vs.," the group was seeking to keep ticket prices under $20 when it performed at the Chicago Stadium on March 10, 1994, and at the South Side's Regal Theatre in a surprise show for its fan club the next night.

The musicians were outraged when they discovered that Ticketmaster had tacked a service fee of $3.50 onto the $18 tickets for each show. It so happened that the federal government was investigating Ticketmaster's dominance of the concert industry at the time, and the Justice Department asked the group to file a memorandum about its experiences with the company. It did, and band members Stone Gossard and Jeff Ament soon found themselves testifying before an investigative subcommittee on Capitol Hill.

It's important to remember that the government came to Pearl Jam, not the other way around. But the press covered the story as if the crusade was a personal vendetta by singer Eddie Vedder, especially after the Justice Department dropped its investigation three years later without taking any legal action. Ticketmaster is not a monopoly, it ruled.

This decision still baffles many industry observers, who point to Ticketmaster's exclusivity agreements. The government contended that alternative ticketing agencies are free to do business in competition with Ticketmaster. But how can they do that when Ticketmaster has a lock on nearly every major venue in the United States?

Pearl Jam's plight during the years 1995 to 1998 illustrates the difficulties of trying to tour without using Ticketmaster. The group was able to play only a handful of shows during that time because of the scarcity of venues that were not controlled by the company. (Among the concerts that it did perform was a galvanizing show at Soldier Field on July 11, 1995. At the time, Soldier Field did not have an exclusivity agreement with Ticketmaster, but it signed one a short time later.)

Though other groups, including Aerosmith and R.E.M., sent representatives to testify against Ticketmaster on Capitol Hill, no other band joined Pearl Jam on the barricades in refusing to tour with the company. The Seattle rockers paid a steep price for their principled stand: After the group stopped touring, album sales declined to a fifth of what they had been before. And instead of thanking them, some fans actually disparaged the musicians for withdrawing from the concert scene.

It's worth pausing for a moment to consider exactly what consumers get when they use Ticketmaster. With a transaction that may take less than a minute online, over the phone or at a Ticketmaster outlet, you can purchase tickets to just about any event. The "convenience fee" is the company's reward for this service.

According to a report in Rolling Stone magazine, that fee is divided with 30 percent to 40 percent going to the show's promoter, 25 percent going to the ticket outlets and the rest going to Ticketmaster as its gross profit.

Suppose you don't mind standing in line and you want to avoid paying the service fee? Too bad: Many Chicago venues no longer have on-site box offices. You either buy your tickets through Ticketmaster, or you don't buy them at all.

What if you have a customer service problem? Good luck trying to get a human being on the phone to help. Ticketmaster is almost entirely automated these days, and it doesn't even have a complaint line or a Chicago office listed in the phone book.

Say you're buying four tickets at once; you only pay one convenience fee, right? Wrong. The fee is charged per ticket. It is four times more expensive to buy four tickets than it is to buy one, even though both transactions take exactly the same amount of time and cost Ticketmaster the same amount of money.

The steep convenience fees and the lack of customer service are two factors that recently prompted the Colorado-based jam band the String Cheese Incident to become the first band since Pearl Jam to attempt to battle the ticketing giant.

Three weeks ago, String Cheese filed suit against Ticketmaster, claiming that the company has effectively prohibited it from selling tickets directly to its fans sans extra charges. It also protested convenience fees of as much as $32.50 per ticket that the company added to performances by the band at the Red Rocks Amphitheatre.

"There was a massive disconnect from when we would set a ticket price and what people would see on their tickets," one of the band's managers, Mike Luba, told Rolling Stone. "People are f---ing sick of it. We got sick of it, and that's why we did this."

The String Cheese Incident isn't nearly as popular as Pearl Jam was when it took on Ticketmaster, and it is likely to suffer even more if it is shut out of the touring market because of its lawsuit. And it is even less likely that other bands will join it in its fight against the company.

The bottom line, then as now, is that unless the government acts to limit Ticketmaster's domination of the market and policies such as its online auctions--or until consumers voice their disapproval by withholding their concert dollars--Ticketmaster will continue to act as it always has, charging whatever it sees fit for its services.