Online Ticket Resale Market Entangled In Controversy, Looking For Respect

Aug 2, 2011

The online ticket resale market is one of the fastest growing areas in business today.  

Governor Malloy recently announced that Connecticut-based TicketNetwork would be eligible for state incentives if the company adds jobs in the next two years. But the industry has been entangled in controversy and is now on a quest for respect.  

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Buying tickets to a Yankees game just isn’t what it used to be. Back in the day, you’d reserve your seats with the box office, or take a chance with a scalper outside the stadium at the last minute.  Now, you take a chance navigating through a crowd of headlines to link to a website with seats you want at prices you can afford.   

But are you doing business with the primary box office or a secondary broker?  The online marketplace can be confusing. But ultimately, a good thing, says William Rubenstein,  Commissioner of Connecticut’s Department of Consumer Protection.

"...So long as the market is able to operate efficiently.  And  the transaction is fair and transparent and there’s no deception."

Connecticut’s prohibition on ticket scalping was repealed in 2007. Nationwide, the secondary market for sports, concert and theater tickets is now a robust multi-billion dollar industry and growing. 

One of the leading companies, TicketNetwork, is based in South Windsor. Governor Malloy visited the company at the opening of TicketNetwork’s new $15 million facility. There he announced state incentives totaling about $8 million if the company retains nearly 300 jobs and adds another 200 in the next two years.

"There’s a certain value to identifying serial entrepreneurs who in their very fiber, in their very bone marrow, have the ability to come up with great ideas, great concepts, bring them to the marketplace, prove them and grow them."

TicketNetwork’s CEO Don Vaccaro is that serial entrepreneur.

"TicketNetwork is an exchange that trades live entertainment tickets between ticket brokers and other ticket brokers and between ticket brokers and consumers."

And he says some producers and artists sell directly to consumers through TicketNetwork. "Most tickets now are actually sold at or less than face value"

Vaccaro says when attendance is down, brokers buy up seats at reduced prices and pass along the savings to consumers.

The secondary market also gives season ticket holders a way to resell seats to events they can’t attend.

And Andrew Zimbalist, a sports economist at Smith College, says it can help teams figure out how to price their seats.

"For a particular set of seats they’re charging 30 dollars, but on the secondary market those seats are selling for 45 or 55 dollars, then that gives the team information that they can actually raise their prices and still fill the seats."

But there’s another side to the secondary market. Artists like Miley Cyrus and Bon Jovi don't like that secondary brokers often buy up blocks of seats and resell them at outrageous prices. And, presenters such as the Bushnell Center for the Performing Arts, UConn Athletics, and Live Nation Entertainment have been battling secondary resellers over paperless ticketing.

Jesse Lawrence is CEO of TiqIQ, an aggregation website where you can compare listings for all the major ticket resellers, similar to Kayak or Expedia with airline tickets. He says paperless tickets restrict buyers from transferring tickets.

"It’s a way for primary sellers to limit the resale of tickets, so if you purchase a paperless ticket you actually have to use your credit card to get in."

But the secondary market strongly opposes paperless ticketing. Legislation on the issue in Connecticut was pulled last session after TicketNetwork filed a lawsuit against the Bushnell’s CEO over comments he made during a public hearing. 

And there was also a feud between TicketNetwork and the town of Vernon over a proposed amphitheater, and a lawsuit against TicketNetwork by the attorney general of New Jersey over phantom tickets - seats that go on the market before they’re actually available. A judge threw out the case because TicketNetwork successfully argued that it was not selling the tickets, just providing an online marketplace for resellers.

Each year, the Department of Consumer Protection hears from people who say they’re confused by deceptive websites that look nearly identical to a box office websites. For high demand events, consumers may unknowingly pay 3, 4, or even 5 times the actual face value of a seat.   

Again Commissioner Rubenstein:

"Unfortunately, there are many complaints that we receive where consumers feel that they did not understand the transaction, that they were deceived into believing that they were dealing with the box office when they were not; or that the tickets that they thought they were purchasing were not in the hands of the reseller at the time that they purchased."

He admits it’s hard for states to regulate commerce that takes place online.

"There’s really a good reason to have federal intervention.  But that doesn’t mean that states are powerless to protect their citizens from unfair deceptive acts out there in the marketplace."

So Rubenstein says go ahead! Play the field when you search online for Yankees tickets.  But do your homework. Know the face value of the seat, what you’re willing to pay, and who you’re actually doing business with. 

Meanwhile, the Department of Consumer Protection is investigating the online ticket resale market in Connecticut. Findings are to be released next fall.