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Fan Freedom Project Testifies Before New York City Council

10/28/2011

Testimony of Jon Potter, President, Fan Freedom Project, Before the Committee on Consumer Affairs, New York City Council

Chairman Garodnick and Members of the Committee:

Thank you for permitting me to speak today on behalf of the Fan Freedom Project, a consumer advocacy organization promoting the interests of live event fans, with more than 40,000 supporters nationwide and more than 3,000 in New York.

If you visit our website FanFreedom.org, you will see the real stories of scores of consumers who need your help because they are tired of being whipsawed by Ticketmaster and the ticketing industry:

  • The businessman who received four concert tickets as a gift, and learned the day before the concert that he would not get in unless the gift-giver (who did not plan to attend) met him at the event with the purchasing credit card and photo ID. Dozens of irate people on line at the show did not know the proof-of-purchase rules, and after arguing unsuccessfully with the venue staff they eventually gave up. They did not attend the show – and they lost all their money.
  • The man who bought two last-row tickets to a concert, then bought two good seats when they were released for sale later. But he wasn’t allowed to sell his last row seats or give them away, so he lost $150 and two seats at the concert went empty.
  • On the FanFreedom.org website, you will find video shot earlier this month of a woman who gave two tickets to her nephew in New York City, only to learn that she had to drive seven hours from Virginia to show her credit card and ID so he could attend the show. She offered to send her credit card and her ID and even a notarized affidavit authorizing her nephew, but Ticketmaster said that would not be good enough. So she drove seven hours to New York so her nephew could attend the concert with the tickets she bought for him as a gift.

None of these people did anything wrong. They did nothing that justified Ticketmaster or other event producers treating them like criminals. They are fans, they are consumers, and they need your help.

During today’s hearing you will hear about several consumer ticketing issues:

  • Should event producers and ticketing agencies provide basic consumer information to your citizens, just as New York requires of car dealers and other retailers?
  • Don’t consumers who purchase tickets own those tickets, including the right to re-sell or gift those tickets to friends, family or charity if life’s challenges make it impossible to attend an event?
  • Should anti-consumer technology developed by Ticketmaster be allowed to undermine consumers’ rights to own and control the tickets they purchase, by locking tickets to a purchaser’s credit card, and restricting consumers’ ability to share or re-sell the tickets that they purchased unless Ticketmaster or the event producer approves?
  • Can we trust Ticketmaster and others who claim that restrictive ticketing practices that limit all fans’ rights are the best way to “protect fans” from a few bad apples, or is that just a public relations justification for extending Ticketmaster’s already immense control of the ticketing marketplace while ignoring more direct opportunities to promote consumers’ interests and promote fair access to face-value tickets?

At the heart of these questions are New York sports and entertainment fans, whose hard-earned money pays for millions of tickets annually, and whose basic consumer rights and property rights are in your hands.

Many in New York have signed our Fans Bill of Rights, which includes four principles.

Our first “fans’ right” is simple: Fans’ tickets belong to fans. We buy them; we own them. In a recent poll commissioned by the Fan Freedom Project, 90 percent of 1,000 ticket users surveyed across the nation said they should have the right to resell or give away tickets that they purchase to anyone they choose – friends, family or other fans.

Which brings me to our second “fans’ right.” Once we purchase a ticket, we can share it or sell it in any way we choose and at any price we choose. This choice is being threatened by the introduction of so-called “paperless tickets,” which we call “restrictive paperless tickets” because they are a significant inconvenience and an anti-consumer power-play. Left unchecked, restrictive paperless tickets threaten to eliminate consumer choice and undermine the competitive, innovative and consumer-protected ticket resale market that has created so many new opportunities for fans, especially since the dawn of the Internet era.

Ticketmaster’s paperless tickets (and the related scheme of will-call-only events) are tied to the purchaser’s credit card and photo ID, and without the purchasing credit card and ID one cannot enter the event. If you buy your kids concert tickets you must stand on line with them to get into the show – even in January. If you are meeting friends for a game you must all enter together, so if one person is stuck at work or in traffic everyone waits outside – even in January. And if you want to give tickets as a gift, Ticketmaster’s website thoughtfully suggests you ask the “giftee” for his or her credit card number to purchase the tickets. In what other circumstance do you need a gift recipient’s credit card number in order to give a gift?

This issue came to life a few weeks ago in New York City, when attendees of the Radiohead shows at Roseland Ballroom were required to present their purchasing credit card and a photo ID in order to gain admission. As I mentioned earlier, one woman featured in a video on our website lives in Virginia, and she bought tickets for her nephew to attend the show in New York. She called Ticketmaster and offered to FedEx to her nephew her driver’s license, her purchasing credit card and a notarized affidavit attesting to their authenticity. But Ticketmaster said that’s not good enough, so she drove seven hours to New York City to escort her nephew into the concert. That’s just ridiculous and unfair, and we hope the Council will take action to protect fans from this happening again.

By design, restrictive paperless tickets are difficult to resell. When Ticketmaster and its partners do allow consumers to resell paperless tickets, we are required to sell only on Ticketmaster-owned affiliates and our pricing choices are restricted. In a stunning exercise of anti-consumer power, it is often the case that consumers are prohibited from offering tickets below face value. We can’t sell tickets at a discounted price? Which consumers does that benefit?

In Cleveland, last year’s Cavaliers season-ticket holders were required to pay for the coming year’s season tickets in order to get playoff tickets – when LeBron James was still on the team and everyone had high hopes he would be back. When LeBron left the Cavaliers the value of those season tickets plummeted. But when trying to sell any of their tickets, the fans who bought the restrictive paperless tickets were only permitted to post sale prices as expensive or more expensive than the inflated-value minimum set by the team. Imagine being told that you must re-sell your car at the original dealer’s lot and that the dealer will set the price – and that price bears no connection to the car’s true market value, especially if the dealer has unsold “new” inventory that has not found a buyer. Imagine that the developer of your home was the only one you could use as your resale agent when you want to move, and that the developer could unilaterally determine the sales price or forbid you from gifting the home to a family member. Would you stand for that?

If adopted by local sports teams and venues, paperless tickets will threaten the healthy and energetic competition between local brokers, StubHub and TicketsNow (the resale market owned by Ticketmaster) that has created new choices and opportunities for fans. When competition is eliminated consumers always lose.

Our third “fans’ right” goes to honesty and integrity in the market: Fans have the right to know how many tickets are actually available to the public, and how many are pre-sold to VIPs, fan clubs and other special customers.

Just as car dealers are required tell consumers how many cars they are actually selling at advertised prices, so should event promoters tell us how many tickets they are actually making available to the public. It has become much too common for concert artists and promoters to pre-sell thousands of tickets to fan clubs and corporate sponsors, so when sellouts happen in five minutes we are all left wondering how so many tickets sold so quickly. Many promoters and artists also withhold tickets from being sold at the box office at face value, and instead secretly sell the best seats on resale markets at a steep markup. This summer, Katy Perry was the subject of media stories when it was learned that her tour contract allows her to sell her own concert tickets on resale markets — scalping as many tickets as she wants, at whatever price she wants, to thousands of her fans.

Our consumer survey found that two-thirds of ticket users said that artists, venues and event promoters should be required to disclose how many event tickets are made available to the general public for purchase. And seventy-two percent of fans disapprove of original ticket sellers secretly selling tickets through resale markets for higher than the face value.

Our fourth fans’ right is a point of public agreement between the Fan Freedom Project and Ticketmaster, and with all sports teams and concert producers: We believe that fans have the right to fair access to tickets, without unfair competition from scalpers using illicit software to jump ahead of the line and purchase all the tickets. Ticket-buying software bots offend all fans, and we encourage the Committee to promote aggressive enforcement of New York’s anti-bot statute.

Additionally, we hope you will also ask Ticketmaster, event producers and sports teams what actions they are actually taking to limit the use of bots. Have Ticketmaster and producers counter-attacked against online thieves as aggressively as New York’s music industry and the motion picture industry did when they were besieged by Internet piracy? Or are scalpers and bots just a convenient excuse for cornering the resale market and restricting fans’ rights?

In closing, I thank the Committee for holding this hearing and for inviting me to appear before you. Your support for consumer ticketing rights will bring joy to parents who can re-sell their tickets when babysitters cancel or the kids get sick, to all New Yorkers whose plans change at the last minute for a thousand different reasons, to season-ticket holders who seek to distribute their tickets as they choose, and to innumerable consumers who get great deals on resale markets because consumer rights, property rights, and competition really can work together to benefit New Yorkers.

Thank you.

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