Suit alleges Ticketmaster broke anti-scalping law

A $500-million class action lawsuit has been launched against Ticketmaster and related groups, claiming the ticket seller conspired to "scalp" its own tickets.

The suit alleges that Ticketmaster has diverted tickets to concerts and other popular events away from its own regular website, Ticketmaster.ca, over to its ticket-brokering website TicketsNow.com. TicketsNow allows people who have tickets to exchange, trade or sell tickets at marked-up prices.

Lawyers from Sutts, Strosberg in Windsor, Ont., and Branch McMaster in Vancouver say they're representing a client who allegedly paid more than $530 for two concert tickets purchased from TicketsNow that would have cost about $130 if they had been available from Ticketmaster.

The client had attempted to buy the tickets through Ticketmaster's regular website and was directed him to the higher-priced tickets on the TicketsNow website.

The firms say other event-goers have been overcharged in the same way when they bought tickets from Ticketmaster.ca or TicketsNow.com since February 2007.

They allege the defendants violated Ontario's "anti-scalping" laws, contending that the practice of selling tickets in the secondary market for amounts that exceed their face price violates the legislation.

The law firms claim Ticketmaster Entertainment, Inc., Ticketmaster Canada Ltd., TNOW Entertainment Group, Inc., and Premium Inventory, INC. owe $500 million in damages to those who were overcharged.

The firms allege that Ticketmaster deliberately limits the number of tickets that are sold at face price and then diverts tickets to TicketsNow, where they can be sold for amounts that exceed their face value.

"Customers have voiced concerns over the fact that tickets for the most popular events can ostensibly sell out in minutes, only to become immediately available in the secondary market at much higher prices," said Luciana Brasil of Branch McMaster, one of the lawyers representing the plaintiff.

"The mere fact that Ticketmaster has a financial interest in both retail and premium ticket sales leads to an obvious question about the process by which those tickets are sold to members of the public and how it works," said Jay Strosberg of Sutts Strosberg LLP, another of the lawyers representing the plaintiff.

Ticketmaster has said in response to prior complaints that the company's ticket-selling system is fair and doesn't violate the law.

The class action aims to represent all persons who bought tickets for an event in Ontario from Ticketmaster or through TicketsNow.com from and after February 9, 2007. More information on the suit can be found at www.ticketmasterclassaction.com.

Earlier this month, Bruce Springsteen expressed anger with Ticketmaster's selling practices.

He said he has heard from fans who wanted to see him play at New Jersey's Meadowlands that they received an error message on their computer screen that shut them out of the main Ticketmaster website.

The potential ticket-buyers then saw an ad for Ticketmaster subsidiary TicketsNow offering tickets for hundreds of dollars more than face value.

Springsteen said on his website that he and the E Street Band are "furious."

"We perceive this as a pure conflict of interest," the band said.

The band said it had received assurances from Ticketmaster that it will stop redirecting Springsteen fans to TicketsNow.

In other related TicketMaster news...

Ticketmaster is seeking to overturn current anti-scalping legislation, lobbying the Ontario and Manitoba governments to review rules banning the resale of tickets.

"There's a real need to update these laws," Ticketmaster vice-president Joe Freeman says.

He said Ticketmaster's resale site, TicketsNow, is just giving the public what it wants: secure access to tickets they don't mind paying more money for.

"You can't regulate away the laws of supply and demand and, unfortunately for a lot of shows, particularly now in the internet era, demand just far, far exceeds supply."

But consumers such as Steve Oetting of Winnipeg, Manitoba said reselling sites such as TicketsNow are illegal and a conflict of interest.

Oetting said he logged on to Ticketmaster's website to look for tickets for an upcoming Elton John concert and found a link to TicketsNow. While tickets weren't yet released on Ticketmaster, TicketsNow was offering 53 tickets at higher prices.

"Reselling tickets above face value, I think, is scalping," he said. "They're promoting it, they are providing the vehicle by which it can transact. I think that's an illegal act according to the government of Manitoba."

Kevin Donnelly, senior vice-president and manager of Winnipeg's MTS Centre, said he asked Ticketmaster to remove the TicketsNow link from the Manitoba site.

"The history is, you hate scalpers, they've been the bane of your existence, and now, there is an industry that is [facilitating it]," he said.

"It sends the wrong message at the very least, that people should be encouraged to go to these secondary sites."

A spokesperson with the Alberta government said a review of the province's anti-scalping legislation, which is rarely enforced, is currently underway.

TicketMaster to get some competition

January 2009 could be the beginning of a new era for concert-ticket buyers who are fed up with high prices, extraneous service charges and a lack of competition in the marketplace.

That's when Live Nation will start taking on Ticketmaster in the United States - with plans to do the same in Canada by 2010 - and there are already promises being made about how the new competition will empower the consumer.

"We still believe the venue, the artist and the fan would love an alternative ticketing company," said Live Nation chief executive Michael Rapino during a recent conference call. "I think it's probably the only industry in the world ... that doesn't have a good No. 2 or No. 3 (competitor)."

"We believe that competition will drive a better price for the fan."

In the other corner, Ticketmaster recently announced that it is "experimenting" with selling tickets with no extra fees attached, as long as the customer prints out their tickets at home.

Even though ticket buyers have long vilified Ticketmaster for introducing those fees in the first place, company president Sean Moriarty insists he's been advocating for "the fan-friendly move to no-fee or all-in pricing."

"The initial reaction from fans has been overwhelmingly positive," he said during a conference call.

"We look to lead the way with this dramatic new approach and fundamentally change the way tickets are sold."

But some industry watchers predict concertgoers won't be won over by Ticketmaster's new strategy, and that Live Nation will eventually be held in the same esteem as their much-maligned rival.

"Competition is good, it keeps everyone on their toes," said Tim Baker, the head buyer for Sunrise Records, which handles the lion's share of Ticketmaster's retail sales in southern Ontario.

"But I don't know if it's going to mean one bit of difference for the general public or not, to be perfectly honest."

Terry McBride, founder and president of Vancouver-based Nettwerk Music Group, said there are major changes coming in the ticketing business but he predicted most will improve the companies' bottom lines, while doing little to reduce prices.

"Ticketmaster just moved the fees within the ticket price," McBride said of the company's plan to do away with separate service charges.

"All they really said was rather than stand outside, the fees are now going to stand inside the ticket price."

Ticketmaster has told investors that is true but, said Moriarty, the company believes consumers won't complain about paying the extra fees as long as they're invisibly bundled into the price.

While both Ticketmaster and Live Nation say they expect that competition and recessionary pressures will drive prices down somewhat, they also don't believe today's highest-priced tickets are too expensive.

When Madonna played a few Canadian dates on her world tour this year the most expensive ticket went for $350, and Rapino doesn't think fans will balk at that price point for music's biggest acts.

"That's their one or two chances a year where they have to go out and have that Kodak moment - we think the fan still wants to do that," Rapino said.

"We think those consumers actually can still afford and will go to one or two shows next year, and we haven't seen anything in history that says they don't go when economic times are bad."

Moriarty said the whole range of ticket prices will probably decrease a little as fans question the true worth of a concert experience, although he believes promoters won't be forced to drastically slash prices.

"(Recessionary worries are) something almost everyone is feeling," he said.

"There's no question I think you're going to see some adjustment in price, but I still think fans are going to be committed to experiencing live entertainment."

And yet even as the companies predict ticket prices will have to come down, they're still experimenting with how much they can charge.

For Nickelback's upcoming tour the band is selling "rockstar packages" for $495 per person - plus additional service charges and taxes, of course - which come with a top ticket, a T-shirt, poster, VIP pass and guitar picks.

A Britney Spears "Toxic VIP Experience" ticket goes for $549.50 and includes an invitation to a preshow party, a ticket to the show, a backstage tour, a "tour gift item," laminate tour pass and free parking, among other add-ons.

Offering all those extras to die hard fans is part of Live Nation's strategy to commoditify (is that a word? not sure) every aspect of the concert experience - from selling a line bypass on the way into the show, to the advertisements that fans see throughout the venue, what they eat and drink on site, and even reselling the concert itself.

"We still are working on a much bigger project (about) how can we institutionalize the sale of the live show online and through mobile (phones), and we believe that the future of that will come together soon," Rapino said.

Live Nation's foray into the concert market will be limited at first, and fans won't have the choice of selecting which company to buy tickets from.

Live Nation will sell tickets for venues it owns or operates, and has the rights to some limited sales for the all-star artists it works with, including the likes of U2, Madonna, AC/DC, Jay-Z, Nickelback, Coldplay, and the Jonas Brothers.

The company's reach is further limited in Canada currently, since it only controls two venues, Toronto's Molson Amphitheatre and Vancouver's Commodore Ballroom.

But the company is already promoting more and more shows in Canada - with sales going through Ticketmaster - and it was Live Nation that put on this summer's inaugural Pemberton Festival in British Columbia.

It's unclear whether the three-day festival that included performances by Coldplay, Jay-Z, Nine Inch Nails and the Tragically Hip will return next year.

Baker of Sunrise Records said he just hopes the new ticketing business doesn't scrap all the old traditions of concert going for the sake of profit.

Both Ticketmaster and Live Nation are moving toward more and more e-ticketing, which will allow fans to flash their cellphone to get into a venue with no paper ticket required.

"That's fine if we can reduce waste and stuff like that, but it's not the same as a ticket," Baker said.

"I still have a Jimi Hendrix at Maple Leaf Gardens ticket from the late '60s. People have their bright, colourful tickets from the Montreal Canadiens. I don't want to see the demise of the actual real ticket."