The market for tickets to concerts and sporting events has been explained by insiders as being rigged. From the very start, when a seat map appears on screen it is anyone’s guess whether every seat in a venue is on sale or if only half are being made available. That’s because of so-called holdbacks, one of the most shameful, hidden secrets in the ticketing system.
Meanwhile, because ticket-issuing companies and venues have fought against any attempt at passing laws to require transparency, fans around the country have little assurance things will change. Software bots and ticket brokers are usually blamed when tickets are difficult to purchase, and because they are popular villains, the blame tends to stick.
In New Jersey, for nearly 20 years, a consumer-protection law states that holdbacks be limited to no more than 5 percent of a venue’s capacity. It is a good law. But veiled within new legislation — that never received public notice or comment and was hurried through the Legislature in less than a week — this important law is at risk of getting repealed. Gov. Phil Murphy must stand up for his millions of voters who enjoy live events, and against the political forces that drove this flawed, anti-consumer legislation through the Assembly and Senate when no one was watching.
Assembly bill A-4259 purports to improve ticket sales in New Jersey but in practice it will do the opposite. That is why it was hidden from the public and maneuvered such that it did not require the normal committee review and debate process. It is not how good public policy should be created.
Controlling ticket supply to raise prices
Ticket holdbacks serve one purpose: to control the supply of tickets in order to raise prices. The New York State Office of Attorney General investigated this practice and found that in other states often nearly half of a venue’s tickets are never offered when tickets go on sale. From the very start of the release of tickets, this report found, consumers are misled when an arbitrarily small supply is put on sale to meet a large demand. And, as supply-and-demand economics work, the primary issuer of tickets, by creating the illusion of scarcity, can distort the market and charge fans more than necessary. Many of these companies either sell their held-back tickets on secondary market resale platforms that they own (or partner with for a piece of the transaction fees), or they trickle these tickets on to the market slowly in such a way as to keep consumer demand high enough to support arbitrarily high prices. This is nothing short of deceit.
A-4259 is driven by a small group of primary-market companies (the primary market being where tickets are initially sourced) who want lawmakers to believe New Jersey is struggling to attract shows. In truth, the bill will only vest more monopolistic powers into the hands of already powerful companies that have no trouble in attracting shows to venues in the state. Indeed, the very law that this bill repeals has been in place for 17 years, during which time venues have thrived when talent tours through the state. The market for live events is strong in New Jersey; it has always been and remains today a premier market to book during a tour.
Total lack of transparency
Had normal order been applied to this secretive legislation, these and other issues would have been discussed. But because the committee review process was intentionally circumvented, public notice and comment never happened. This total lack of transparency around A-4259 speaks volumes.
If the Legislature desires to genuinely work on ticket sales reform, there are provisions worth considering.
First, as other state laws require, when tickets go on sale consumers should always be offered a transferable, unrestricted ticket option. Second, transparency should be another central part of any ticket sales reform; primary issuers should be required by law to disclose and confirm that indeed no more than the permitted 5 percent of tickets is held back. Such transparency would go a long way toward protecting consumers and the broader consumer market for tickets. And finally, as other states have enacted, nondiscrimination should be part of any ticket sales reform, prohibiting a venue from turning away a ticket-holding fan just because he or she may have purchased their ticket from a source other than the box office. Resale websites and apps provide a convenient and valued alternative for ticketholders to sell their purchased tickets if they cannot use them, and for fans to use as another option while shopping around to buy tickets.
These are all pro-consumer provisions that should be included in any meaningful proposed law.