By Paul Farhi
Washington Post Staff Writer
Monday, July 5, 2010; A01
Anyone who's ever chased a hot ticket for a concert or sports event knows the agony of the drill. Wait -- online or in line -- until the box office opens and then compete against the masses, including crafty ticket brokers, for the best seats. And for many would-be ticket buyers, the effort is often fruitless.
But the humble ticket -- and the way it's bought and sold -- could be on the verge of momentous change.
In an effort to thwart scalpers and dampen ticket reselling on the so-called secondary market, musicians as diverse as Bruce Springsteen, Miley Cyrus, Metallica and Justin Bieber have adopted "paperless ticketing" for some or all of the seats at their live shows. Sports organizations, such as the NCAA men's Final Four basketball tournament and the Houston Rockets of the NBA, have done so as well.
Ted Leonsis, owner of the Wizards, Capitals and Verizon Center in Washington, says his plans are still in development, but "I think online and paperless is the trend of the future and only will be a positive for consumers and for venues."
As the oxymoronic name suggests, paperless tickets aren't really tickets at all. They're essentially personal seat reservations, secured electronically. Much as they do with airline tickets, fans buy paperless tickets for an event with a credit card. The buyer must then go to the venue with the same credit card and a photo ID to gain admittance. A swipe of the credit card at the gate produces a slip confirming the location of the reserved seat.
Ticket issuers Ticketmaster and Veritix tout paperless tickets as a way to eliminate worries about lost, stolen or counterfeit tickets, and to banish long will-call lines. "It's the ultimate in convenience if you're a consumer," says Jeff Kline, president of Cleveland-based Veritix.
Well, not entirely.
Unlike a conventional ticket, Ticketmaster's paperless tickets can't be transferred from a buyer to a second party (Veritix's technology allows for transfers). The inability to pass along a seat creates what's become known in the industry as the "grandma" problem. Since a paperless ticket buyer has to show up at the door at the same time as the rest of his or her party, it's almost impossible for a grandma living at one end of the country to buy a paperless ticket as gift for a grandchild living at the other end. On its Web site, Ticketmaster tells would-be gift givers to buy paperless tickets "on the credit card of the person attending the event and [then] reimburse them."
Another drawback: Groups hoping to attend an event can be shut out if the person who bought the tickets on the group's behalf fails to show up for some reason.
More controversial is how paperless ticketing could affect the ticket reselling business, a vast, Internet-based marketplace facilitated by behemoths like StubHub.com, Razorgator.com and hundreds of smaller brokers and dealers.
Ticketmaster says its paperless system is designed to undercut scalpers, such as those who scooped up large blocks of tickets to Miley Cyrus's concerts last year and resold them at extraordinary prices. The system ensures that tickets end up in the hands of fans, not speculators, a company spokesperson says, and at the prices established by the performer.
But without the ability to transfer virtual tickets, brokers and dealers fear being run out of business. Consumers would also have a harder time selling unwanted tickets.
"People should be free to give away or sell their tickets to whomever they want, whenever they want," says Gary Adler, a Washington attorney who represents the National Association of Ticket Brokers, a resellers' group that includes StubHub. "An open market is really best for consumers."
Veritix and Ticketmaster say they aren't against reselling, or even reselling at a profit -- they just oppose it being done outside their own electronic walls. Both companies have set up their own reselling sites and require consumers to use them if they want to resell a paperless ticket. The companies then collect a fee, typically about 20 percent of the value of the transaction.
Resellers such as StubHub, which is owned by eBay, oppose this requirement because it cuts them out of the secondary market, which ranges from $2.5 billion to $10 billion annually, according to estimates made in February by the New York secretary of state.
* * *
The debate revives a long-running question about the nature of a ticket: Is it a piece of property that its holder has the right to buy and sell as he sees fit, or is it merely a seat-rental contract subject to restrictions determined by its issuer? State and municipal legislators have wrestled with this question for decades, as they have tried to balance event owners' attempts to control scalping against resellers' desire for an unfettered market.
Team owners and promoters believe they are entitled to participate in the secondary market just like everyone else, especially since it's their tickets that are being resold, says Veritix's Kline. But in hearings last month before the New York and New Jersey state legislatures, which are considering updating anti-scalping laws, Adler and his members advocated that consumers and brokers have the option to resell paperless tickets on any Web site they want.
Without such a legislated option, resellers worry that Ticketmaster could impose its will on the concert industry. Earlier this year, the company completed a merger with Live Nation, the world's biggest concert promoter and a major artist manager, giving the combined company a stake in every step of concert production and management.
With the Live Nation merger, Ticketmaster is "now in a position to control both the primary and the secondary levels of the market," says Marianne Jennings, a business professor at Arizona State University who has studied the ticket market. Innovations like paperless tickets "are often touted as being in the best interest of consumers, but in reality, primary [ticket] sellers have been trying to get rid of brokers and maximize their profits for 30 years."
But Joris Drayer, an assistant professor of sports marketing at the University of Memphis, says the concert and sports businesses are too large and decentralized for one company to dominate. He says paperless tickets may become an option, but conventional tickets aren't about to disappear. Not only do sports fans still like them, but "the sports industry is notoriously slow to adopt to new technology."
* * *
For the moment, local promoters and team owners such as Leonsis are waiting for the debate to play out. Seth Hurwitz, co-owner of Washington's 9:30 Club, says he can see pluses and minuses in a paperless system. "I do like to help protect regular people from having scalpers -- excuse me, 'secondary ticketing' -- get ahold of tickets before they have a chance to," he says. "In that regard, paperless ticketing seems to be a good way to do that."
Hurwitz is nostalgic for the days when he would be so excited about seeing a show that he would try to be first in line for the best seats. "I think that anything we can do to get back to that is good for everyone," he says. "I'm not of a mind to give up on that in the name of 'progress,' and I don't think we have to."
As long as he's being sentimental about it, Hurwitz should consider what paperless tickets could do to nostalgia. Who doesn't have a drawerful of ticket stubs somewhere to remind them of games and shows long past? As tickets go virtual, those keepsakes might become a thing of the past, too.