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From...
Industry Standard

On the Net, everyone can be a scalper


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April 27, 1999
Web posted at: 11:33 a.m. EDT (1533 GMT)

(IDG) -- Prompted by the rise of ticket scalping on online-auction sites, recording artists and their promoters are moving closer to auctioning concert tickets on the Web.

At the moment, eBay customers can go online and auction off tickets at any price the market will bear. Although the legality of some auctions is questionable some states have strict rules governing the resale of tickets bidders nonetheless can buy anything from orchestra seats at Broadway shows to box seats at Yankees games.

The problem for artists and venues is that scalping takes money out of their pockets. This has always been the case with offline scalpers, but Web auctions offer a chance to level the playing field. The popularity of online scalping is forcing the industry to concede that there's a viable secondary market online.
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"We've talked with several artists who want to do this sometime soon," says Jim Caccavo, president of Internet operations for Tickets.com, a Newport Beach, Calif., ticket broker. "The more that consumer-to-consumer ticket auctions take off, the more venues and artists want to get in the game."

Some ticket brokers say privately that they expect artists to begin auctioning tickets online this summer. The first performers to auction tickets might start by giving to charity the premium that's above a ticket's face value. In fact, last summer Best Buy Online auctioned 50 premium seats for the Jimmy Page and Robert Plant tour on Bestbuy.com and gave the proceeds to charity.

Sources at Ticketmaster and other ticket companies say that what's holding back direct ticket auctioning is that no artist seems willing to blaze a trail. And there are questions about how much control and cash major vendors like Ticketmaster will give up. Stepping around the brokers to auction tickets could increase the artists' take at the brokers' expense.

"It's mandatory that artists are involved in this process," says Marc Geiger, cofounder of Artistdirect, an Encino, Calif.-based music site.

"We think that the artists' sites could be virtual ticket outlets."

Geiger says that Artistdirect has proposed the "virtual outlet" idea to Ticketmaster, which declined to comment on its plans but has apparently been wrestling with plans to get into the secondary market. Historically, Ticketmaster has fought secondary markets, since it forges agreements to try to sell every seat, not just the good ones that scalpers covet.

Geiger says direct online ticket auctions will both allow artists to make more money and reduce scalping.

Meanwhile, if Ticketmaster and other outlets get into auctioning tickets online, they will face hurdles unique to the Internet. The biggest problem: local antiscalping laws. New York state law, for instance, limits the resale price of tickets to $5 over the purchase price, or 10 percent, whichever is greater. Nonetheless, last week on eBay you could find someone seeking $505 for three tickets to The Lion King on Broadway. Total face value: $225.

Clearly, ticket brokers, promoters and artists all realize the need to get in on the action. With each passing day, they're effectively handing over to scalpers cash that could be theirs.

"EBay has allowed everyone to become a scalper," claims Geiger. "Any eBay customer can go out and buy four tickets and auction off two. You'd be a schmuck not to do it."


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Best Buy Co., Inc.
Ticketmaster Group, Inc.

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