March 3, 2024

Wait, What – NIVA Is In Now Charge Of Telling Senators Klobuchar And Corbyn How To Regulate Tickets?

The National Independent Venue Association (NIVA) is now the lead voice in Congress advocating how to remove rights from consumers and give them to ticketing companies. NIVA is advising as Senators Corbyn and Klobuchar design their bill intended to “promote fairness in the sale of event tickets.” The current draft bill interferes with the free market for tickets by removing transferability from resale and enabling venues to cancel at will tickets already sold. The intention is to limit consumer’s choices by destroying the multi-billion dollar ticket resale marketplace. The ticketing business is complex and competitive. Removing competition is definitionally anti-consumer. NIVA designing a bill to govern the $10 billion plus universe of event ticketing is like Little League Baseball setting the rules for ticketing the Super Bowl. Let’s review how we got here.

NIVA wants powers we grant no one else. Airlines cannot put a floor on prices between New York and Florida in winter. Ford and GM cannot prevent resale of used cars. IBM is not allowed to build a kill code into its computers which is activated if they are sold. NIVA helping Senators Corbyn and Klobuchar write an anti-consumer bill is the tail wagging the dog. For some reason, these Senators have not yet realized when the tail wags the dog, it is the dog who looks foolish.

This whole rush to jam through a ticketing bill seems oddly anti-competitive. Vivid Seats, SeatGeek, StubHub, TickPick and Ticketmaster resale combined sales are approximately $10 billion annually. The proposed Corbyn and Klobuchar bill would effectively legislate away the secondary ticket market, making access to events nearly impossible for people who did not get tickets when they first went on sale. It would be a return to the old ways in which you bought a ticket on the street for cash and hope it worked, with no recourse or customer service when it did not.

Taylor Swift is playing her last show in the United States on August 9th. All of this legislative activity was prompted by how hard it was for her fans to get tickets. It was hard to get tickets because Taylor Swift sold tickets to fifty two shows when there was enough demand for at least one hundred more. Overwhelming demand broke the ticketing platforms. Legislation will not make it better. Approximately 95% of the tickets sold for Taylor Swift went directly to the fans who then attended the shows. The remaining 5% of the went to the secondary market where prices went crazy because demand was many times greater than supply. The lack of supply caused panic, which in turn spiked prices. I’m writing this article today in New York city where the temperature is expected to reach 100 degrees. Con Ed, the power company, is texting that the power grid is overloaded, and warning to prepare for blackouts. When demand exceeds supply in any market the risk is systemic failure.

Currently approximately 40% of the events put on sale can be purchased later at a discount. Ticket prices are always crashing for upcoming shows. A small list of this week’s sales show below face value prices for Ed Sheeran, P!NK, Maggie Rogers, Eric Church, Louis Tomlinson, Regina Spektor, Jessie Murph, Nathaniel Rateliff, 6Lack, The Chicks and most Major League Baseball games. Tickets are readily available on the secondary markets for essentially every event in the country. Somebody paid for those tickets six months ago, or more and held them until today so there would be supply when the shows occurred. Nearly half the time they still lost money on the original purchase. That loss is before accounting for the cost of money tied up to hold those tickets from the day they were sold until the day of the show. This is how it’s possible to go see a show on Broadway, a concert or a game at a stadium without having to commit to those tickets half a year in advance.

The NIVA backed Corbyn and Klobuchar bill is promoted as protecting the rights of artists to control the prices, transferability and resale of tickets to shows. Anyone who has spent even one day in ticketing knows there are only two kinds of artists in live entertainment: the small number of overwhelming powerful acts like Taylor Swift who get whatever they want, and everyone else who gets whatever they’ve been given. The top few artists make almost all the money. The remaining 85% are lucky to come home from a tour with any extra money. This proposed legislation has almost nothing to do with artists. It’s entirely about who controls ticket distribution.

Pay attention: Taylor Swift is guarding her revenue numbers so she can announce at the end of her worldwide tour that her tickets and merchandise revenue will exceed $2 billion and that she earned $1 billion for herself. That will be the new all-time record. Beyonce is on pace to gross $750 million from her worldwide tour. Meanwhile, Clyde Lawrence, of his eponymously named band Lawrence who testified to Congress about Ticketmaster will still be worried about the prices of towels charged against his fee when he finishes opening for the Jonas Brothers.

Resale of tickets for NIVA venues is relatively insignificant. Their rooms are smaller, and the acts they draw typically bring in relatively small crowds. The only reason anyone is paying attention to NIVA is they are the stalking horse lobbying to end the free market for tickets. NIVA’s agenda is to use legislation to gain excessive power for venues and ticketing companies they cannot win in the free market.

First, some basic uncontroversial facts: tickets go on sale every day in the United States to more than 1,000 shows. Most of these shows will never sell out. Those shows which do sell out are rarely in NIVA venues. The few shows for which there is demand far in excess of the number of seats available are already playing in large theaters, arenas or stadiums. These are acts like Taylor Swift, Beyonce, Bruce Springsteen and BTS. Those shows are ticketed almost exclusively by Live Nation/Ticketmaster, AEG/AXS and SeatGeek. Taylor Swift is the outlier. She’s selling everything in sight this year, and it will likely be years before anyone else has this much market power. However, her US tour ends in two weeks, so nothing which happens will bring any relief to fans who missed out on this tour. Springsteen and Beyonce have both left tickets unsold at recent concerts, or had their tickets resell on secondary markets for far less than face value.

MORE FROM FORBESBruce Springsteen Tickets For Houston Now Cost The Same As Two Gallons Of Gasoline

Professional sports such as the NFL, MLB, NBA, MLS and NHL all have control over how their tickets are sold and distributed. They sell them in seasons, removing much of the inventory from sale by offering priority access to playoff tickets as the lure to purchase seasons. Nobody has time to go to 82 baseball games each year. The unused tickets find their way onto the resale market platforms. Even then, there are typically tens of thousands of empty seats. These vacant stadiums photos are easily found on Twitter (“X”) by searching @EmptySeatsPics.

The lagging interest in ordinary games during the season is why baseball tickets can be bought for as little as $6, then run up into the thousands of dollars during the World Series. Football tickets are more expensive because there are fewer games, and the Super Bowl is marketing perfected. People happily spend upwards of $10,000 per Super Bowl seat, plus outrageous hotel and party entrance fees all because if weren’t there, you weren’t there.

So, why is NIVA leading Congress to impose restrictions which are terrible for consumers? And what are they trying to get written into law?

NIVA wrapped in the shiny imprimatur of “protecting artists” wants venues to have absolute control over tickets. They want new powers enshrined in their ticket terms and conditions that allow the venue to cancel your tickets for any reason, prevent you from transferring tickets to someone else, require that you and everyone you’ve invited has to enter the room at the same time, and prohibit the resale of tickets after they were sold.

So far, based upon the current draft bill, Senators Corbyn and Klobuchar seem to be going along with NIVA’s power grab. The stated reason is to make the process of buying ticket more fair for consumers. The truthful reason is to kill the burgeoning secondary market which has taken a lot of market share away from the old school players. StubHub, Vivid Seats, SeatGeek, TickPick and their peers built consumer friendly technology and provide easier access to tickets. The resale markets spent the time and money to understand what consumers want. Listening to your consumer is a better strategy than dictating terms to them.

Consumers want to see the available tickets on a clear seating map, to be able to select their tickets and to complete the transaction quickly. The primary market has clunky processes in which they employ code lotteries, multiple gated presales, undisclosed inventory holdbacks, waiting rooms and dynamically priced tickets . The secondary market has done a better job making ticket buying fast and easy while standing behind their tickets with guarantees and accessible customer service teams to resolve any problems. In a digital economy delay is fatal to consumer relationships. People do not have patience for waiting rooms, or being number 2,000 in a queue to purchase tickets which has to entered just before 10 a.m. local time while the secondary market is open and functioning twenty four hours a day.

There was a time when the U.S. airline industry was regulated by the Civil Aeronautics Board, dictating to airlines where they could fly, and what the ticket prices would be. When those restrictions were lifted, the old school airlines melted away or merged leaving only the strong and efficient carriers. The C.A.B. was abolished in 1985. Prices today, nearly forty years later are still lower than the prices which were charged then. Just this week Southwest Airlines offered to sell flights within California for $29 commencing August 15th. The simple reason: competition.

So, how is it that the Corbyn/Klobuchar bill is being written in extensive consultation with NIVA, and why are the requests from NIVA so tilted away from consumer rights and in favor of ticketing companies and tour promoters? “Scalper and Bots,” the twin bogeymen of ticketing has been repeated with enough regularity that now almost nothing else enters the conversation.

BOTS are computer software programs which can get tickets into a buying cart faster than a human. They are also illegal in the United States. The easiest way to solve the BOTS problem is to enforce the law. There has been no significant action taken by the Federal Trade Commission to enforce the BOTS act since it was signed into law by President Obama. Passing new laws won’t change anything if the laws are not enforced. There’s a reason the IRS brings cases against people who break tax rules – why would anyone would pay taxes if there was never a consequence to just keeping the money.

“Scalpers” is a more complicated issue. It used to be that it meant people who bought tickets and resold them, usually at the venue on the day of the event. This likely started when Romans fed Christians to lions at the Coliseum in Rome and demand was high to attend. Now, with both money and tickets moving seamlessly across the internet, scalper is an archaic term.

If the definition of Scalping is to sell the tickets a higher price than they were originally sold, then any artist who uses dynamic pricing tools to move up prices when their tickets are sold is a scalper. The artist would also be a scalper if they held back tickets to sell later at a higher price. Billy Joel tickets for his February 9, 2024 show went on sale this week. Tickets being sold directly to the consumer at his direction more than tripled in price over the past three days when bought from Madison Square Garden or Ticketmaster. Identical tickets are cheaper on the resale markets such as Vivid Seats or SeatGeek. So, who is the scalper? Is it Billy Joel who is now trying to get more than $1,000 each for tickets in the lower bowl area which were approximately $350 earlier this week, or the ticket reseller who is asking $508 for the same today on TickPick?

There’s another dynamic at play. Ticket sellers sell approximately 40% of their tickets at a loss. This irritates theaters and sports teams who can’t sell out their venue, and now have to compete for the consumer with ticket resellers who are trying to get rid of their tickets at a loss. But, it saves the consumers tens of millions of dollars. If it wasn’t for the resellers, the venues and teams would hold the prices at face value. That’s the end of $6 baseball tickets and $25 Bruce Springsteen tickets.

Speculative ticketing is also being bandied about as a demon in need of exorcising. NIVA is reportedly telling Corbyn and Klobuchar that speculative tickets are “fake.” In a digital world, “fake” tickets don’t exist. In fact, speculative ticketing is nothing more than a contract that tickets will be delivered at a promised price prior to the event. Given the complexities of ticketing these days, delegating the purchase of tickets to professionals is often the difference between getting tickets and staying home when the show comes to town. It is easy to purchase low demand tickets. Getting tickets to a high demand event is like entering battle. There are more than 300 million people in the United States, most of whom have internet access in their pockets at all times. Taylor Swift fans were extremely organized, computer savvy and diligent. They still failed in trying to get tickets. Demand wiped out supply. The only solution is more supply. Taylors fan’s kept their tickets even when they could have sold them for enough to buy a good used car. This tour all by itself demonstrates why the problem is not one of changing the ticketing ecosystem. The problem is one of entitlement. When something is in limited supply, but high demand, not everyone can get it. That’s equally true for tickets, Porsches, Rolex watches, and reservations at the most popular restaurants. People want things which are scarce. There is no urgency to buy anything which is plentiful, which is why bananas sell for 19 cents apiece every day at Trader Joes.

All business is built on a promise to deliver something. Speculative tickets are sold in advance of the initial sale, with the seller taking a chance they will be able to deliver the promised ticket and make a profit. The tickets are nearly always delivered, no matter what they ultimately cost to acquire, because the secondary ticketing market has an enforcement mechanism. If you sell a ticket you can’t deliver, the selling marketplace will go out and buy a replacement. The seller will pay the greater of a 200% penalty for the blown sale, or whatever it cost to acquire the replacement ticket. During the 2015 Super Bowl in Arizona, the NFL changed the way it distributed tickets. This created a shortage of tickets to deliver to buyers. Seller’s losses of $10,000 per ticket were commonplace. Fans still got their tickets. The free market works in both directions of profit and loss.

NIVA claims that speculative tickets are “fake.” In a world of digital tickets, there is no such thing as a “fake” ticket. The technology is too good. The only fakes are those which are tickets printed on paper and sold to rubes who simply don’t know that tickets are digital, or those last remaining few instances when the theater hasn’t moved yet to digital. It’s certainly not meaningful in a world where most big events are ticketed by Live Nation/Ticketmaster, AEG/AXS or SeatGeek all of whom have digital tools to issue, spot and remedy ticketing problems.

The argument against speculative ticketing is silly. The incidence rate of failure is low. There are at the edges some people who do not deliver what they promised. The markets deal with them, and cut them off. Airlines crash the occasional plane. The entire electrical grid for Texas failed last year. Drug stores are out of Adderall. No process is perfect. But, speculative ticketing is 99%+ delivered timely, and the incidental problems get resolved. The exception appears to be Taylor Swift in which there were simply no tickets in the market because everyone who got a ticket wants to go. But, even then, considering the fifty two U.S. stadium shows Swift sold out, there have been very few failures to deliver.

The secondary ticket marketplace has professionalized resale of tickets. There are virtually no issues with tickets bought through StubHub, Vivid Seats, SeatGeek, TicketNetwork, TickPick or Ticketmaster’s resale platform. Delivery completion nears 100%. Legislating away the ability of these companies to function in the ecosystem will drive ticket resale back to Craig’slist and eBay where inexperience people with limited experience selling tickets will create havoc in place of an industry which sells millions of tickets with a success rate which exceeds the frequency in which airlines get their passengers home on time.

A free market is one in which value is the result of a push and pull between competing suppliers and willing buyers. So, again, why is NIVA the advocate in front of Congress. That’s an easy answer. They are not Live Nation, and for the moment Live Nation having already been demonized by Congressional hearings early this year cannot advocate publicly.

During the Covid-19 pandemic, venues across the country were shuttered. NIVA advocated on behalf of its venue operators before the Congress, and more than $2.2 billion dollars was allocated to qualifying venues as part of a $16.25 billion dollar Shuttered Venues Operators Grant (also known as Save Our Stages) relief bill. This money did not come from teams, ticketing companies or artists. It came from the taxpayers. Because venues are essential to the culture of our country, public money went to save performance spaces in ways other industries could never imagine. The public whose money saved these venues should benefit. Instead, Senators Corbyn and Klobuchar who authored the 2020 bill granting this pandemic relief are now reteaming to bring a bill granting near unlimited power to venues and ticketing companies without consideration of the harm it will cause consumers or the ways in which the secondary ticketing markets will be impacted.

Imagine this in any other industry: you buy a Tesla, but Elon Musk has the ability to change the software anytime so that no one other than you can drive that car. And, forget selling it once you’ve bought it. It’s for you and you only. What if Apple could lock out your iPhone if you handed it to your significant other to check email while you’re driving? Or, more on point, what if Robinhood could cancel your purchase of Carvana stock if it went up after you bought it, keeping the profit for themselves? Remember in 2021 how much attention there was when GameStop stock was moving up and down 100% a day, and Robinhood suddenly restricted how many shares anyone could buy? People stuck in that window lost fortunes. It was not well received.

This country’s economy is based on capitalism. We don’t set prices, we don’t control markets. Instead, we encourage people to make money whether by selling their talent or by trading their goods. The idea is to make a profit, and within that idea sometimes the path to a profit includes taking some risks and losses. This idea, commonly known as The American Dream is the fundamental tenant of our country. Earn your own money. Pay your own bills. The goal since Ronald Reagan was president has been to get government out of the way. What we do not do is stack the deck so that a subset of the players are in control of everyone else’s opportunities. Tickets, like baseball cards, bonds, automobiles, Funko toys, vintage jewelry and art are bought, sold and traded.

What do you think the NIVA membership will say if there was a push in Congress to put a price ceiling on drinks? It’s not uncommon to see beers in small venues sell for between $8 and $12. That’s a massive profit margin. It is easy to spend more inside a small venue on drinks than it cost for the ticket to enter. Everybody has an angle. The NIVA venues sell tickets at little profit so that they can fill their rooms and sell high margin drinks and snacks. Would they allow the performer to set the drink prices, or which brands of beer are banned that evening based upon their politics?

Artists get paid to play. That’s the deal. Book into a venue, collect the ticket money, play your show and leave. The venues don’t designate the set lists, the fans don’t prescribe which brand of instruments you play. You play, fans listen, the venue provides security, restrooms and a safe stage.

Garth Brooks advocated for making “scalping” illegal this year at the Pollstar conference in Los Angeles. But, he’s already solved that problem for himself. When Garth enters a market he puts the first show on sale, as it edges toward sold out, he adds another. And, like DJ Khalid, Garth continues with “and another one” until demand is exhausted. There is no real secondary market for Garth Brooks tickets. The market is flooded. Tickets resell below face value. You solve demand with supply. Everything else is a smokescreen.

Taylor Swift is a unicorn. She has created a tsunami of demand which is insatiable around the globe. Tickets in the United States were very hard to purchase, but nearly 95% of those tickets went directly to her fans. The secondary ticket markets got very few tickets. As a result, the resale ticket prices were astronomical, although not as high as Super Bowl ticket prices. It is preposterous to change the laws surrounding ticketing because of this tour. The proposed changes would not have made any difference to the way in which ticketing systems melted under the demand, or the fact that for everyone who got a ticket there are another ten who could not.

Mick Jagger turned 80 years old this year. The Rolling Stones have long dealt with high demand for their tickets. They’ve done what normal people do. They raised their prices to where the supply was just a little lower than the demand. Higher prices reduced the number of people trying to buy their tickets. This is a perfect response to what would otherwise have been “you can’t always get what you want.” It is in fact “if you try some time, you just might find you get what you need.”

But, maybe it’s Tom Petty who had it perfectly when he sang in Breakdown “it’s alright if you love me, it’s alright if you don’t.” Truth is what it is. Venues are largely built with taxpayer money whether in upfront cash toward construction, discounted use of public land, tax abatements, special bond issues or billions of dollars from the SBA as it was with the Save Our Stages initiative. We already let privately owned sports teams to use these facilities at a below market price. There are no limits on what prices the teams or event organizers can charge. There is one thin line working in favor of those taxpayers whose money made construction of the venues possible – that tickets once sold belong to the buyer. That is how selling works. You get money in return for giving up something else. The only functional market is one in which power is distributed widely. That’s where checks and balances lie. Free markets resolve themselves. Trust them. Prices and supply work in counter balance like the mechanism of a fine watch as the markets keep ticking.

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