By Richard Harrington
Washington Post Staff Writer
Friday, June 2, 2006

Once upon a time, concertgoers enjoyed first-come, first-served access to tickets, initially by waiting in line at ticket outlets, later by telephone and in recent years via the Internet. The best seats for the most popular acts always cost the most, and to get them you had to camp out or dial and type quickly. For the most part, everyone had a fair shot at tickets with fixed prices set by promoters and venue operators based on what they thought people would pay. Those prices were printed on the ticket stub -- the so-called face value.

Then came the scalpers -- people who resell in-demand tickets for greater than face value -- and later, ticket brokers, who institutionalized the practice. Together they created an unauthorized secondary market for tickets to concerts, sports, theater and other live events that's estimated to have annual sales of $10 billion. The Internet has pretty much legitimized scalping, making it easier for speculators -- amateur and professional -- to snap up tickets when they go on sale and resell them at online sites such as eBay, Craigslist, StubHub, RazorGator and TicketNetwork at huge markups.

Not surprisingly, top artists and their agents, as well as promoters such as Live Nation, the country's biggest concert producer, and Ticketmaster, the world's largest ticket agency, have long been unhappy as ticket scalpers and brokers raked in huge profits for prime seats, diverting dollars they consider rightfully theirs.

Now, through Ticketmaster Auctions, the traditional players are looking to regain control in what may well be the future of ticketing. It's a showdown between face value and true market value.

Here's the basic principle: The most desirable seats for popular shows are offered in timed auctions to the highest online bidders, with no limit on how high prices can go. Ticketmaster introduced what it calls "dynamic pricing" three years ago for tickets to a boxing match in Los Angeles, and there have long been isolated auctions for front row seats benefiting charities. But the practice started to catch on more widely only last year when Ticketmaster clients began putting more tickets for more shows up for auction.

Right now, auctions in most cases are affecting only 3 percent to 5 percent of the premium seats, up to as much as 10 percent. And they tend to involve the most popular acts, particularly veteran acts with longtime, hardcore fans willing to shell out the big dollars. Auctions are unlikely to work with new or developing acts and are problematic even for middle-range acts.

What is thought to be the first "all auction" concert will take place June 14 at the 650-seat Lobero Theatre in Santa Barbara, Calif., with all tickets for an INXS/Scott Stapp show sold in an open auction opening at $1. Results from the first week of sales (which were staggered) ranged from VIP Meet and Greet tickets (auctioned only in pairs) selling on average for $349 per ticket to a handful of tickets sold for under $20. According to StubHub spokesman Sean Pate, non-auction tickets for 2006 INXS events on StubHub have been selling for about $148 apiece.

According to Ticketmaster spokeswoman Bonnie Poindexter, as much as half the house may be offered at auction for certain shows in the near future. Exact numbers of tickets are not being divulged, but Ticketmaster is auctioning the best seats to many of this summer's top tours, including Madonna, Tim McGraw and Faith Hill, Shakira, Kelly Clarkson, Red Hot Chili Peppers and Roger Waters. A dozen or so upcoming major shows at Verizon Center and Nissan Pavilion feature ticket auctions.

"Auctions are a solution and option in the market," says Ticketmaster President Sean Moriarty, rejecting a suggestion that a Pandora's box has now been opened. "It was opened several years ago in the form of brokers and scalpers moving online. We're creating an opportunity whereby fans have the ability to get tickets to the shows they want at prices they're willing to pay in a safe, open and transparent environment. And the industry -- the artists and producers and promoters who have worked so hard to bring their offering to market -- have the opportunity to truly capture the value of the experience they're offering. That's a much better option, a much more fair one, for the parties involved."

Moriarty points to "the huge amount of money that flows outside of the industry [via secondary marketing] and can't be reinvested in venues, tours, increasing the quality or quantity of live entertainment options available to the public."

Ticketmaster Auctions are being sold with the pitch that auctions let customers set their own prices, even if the bidding process results in prices that rival even the greediest secondary sellers. Some competitors say the practice basically allows Ticketmaster to scalp its own tickets. In many states, the resale of concert tickets is subject to strict rules meant to protect consumers and give average fans a chance to buy tickets for their favorite event. Ticketmaster Auctions involves the first-time sale of tickets and don't appear to be subject to anti-scalper rules.

Of course, it's a thin line between what people are willing to pay and what they feel they have to pay to get premium seats, and critics worry that auctions will skew away from ordinary fans and toward wealthy ones, and that younger fans in particular will be left out in the cold. Or the parking lot.

This is not the Golden Circle system of recent years, which involved selling the best seats in the first few rows at inflated, but fixed, prices: Last year's Rolling Stones "A Bigger Bang" tour set a benchmark of $450 per ticket, helping it become the highest-grossing North American tour of all time at $162 million for just 42 shows. According to Pollstar, the concert industry journal, the average ticket price for the Stones was $133.98, third behind Celine Dion's $136.04 and Paul McCartney's $135.46. U2 was sixth at $96.92 per ticket, but the band earned $138.9 million for 78 shows, the second-highest grossing tour of all time.

Peanuts, as it turns out. The best seats for Madonna's current Confessions on a Dance Floor world tour have a face value of $380 (including Ticketmaster fees), but minimum Ticketmaster Auctions bids for them range up to $800 a ticket, while some on eBay are going for $3,000 and StubHub has a few listed at $4,000.

In New York, where on April 10, 40,000 tickets for two Madonna shows at Madison Square Garden sold out in 10 minutes; two more shows were immediately announced and sold just as fast. A fifth and sixth went on sale a week later and promptly sold out as well. Billboard magazine has forecast Madonna ticket sales in the $200 million range. Madonna is playing only about 60 shows and yet she'll surpass Cher's record of $192.5 million from 273 shows on a "farewell" world tour that lasted almost three years.

When Barbra Streisand tours this fall, it's been rumored that top tickets are going to be priced at $1,500.

And that's before any auctions.

Richard Harrington is Weekend's music writer.