Ticketmaster, StubHub and the Battle Over the Future of Ticket Pricing
"StubHub is like Napster," says a Ticketmaster exec of a "Cold War" against resellers even as both rivals push for a law that could curtail mass digital purchases.
During a recent U.S. Senate Subcommittee hearing on the Better Online Ticket Sales Act, bitter industry rivals Ticketmaster and StubHub came together in rare unity to praise the bill. The BOTS Act, expected to pass before Christmas, would make it illegal to use software to buy mass quantities of tickets online. Ticket "bots" are why good seats often are hard to find and why hot acts such as Hamilton and Adele increasingly are trying to pre-empt the secondary market by offering high-priced tickets of their own.
The new bill is the latest salvo in the grinding war over how tickets should be sold (and resold) and, more importantly, who should profit. In an ironic twist for artists and fans who grew to hate Ticketmaster and its high service fees in the 1990s, its owner Live Nation now is siding with artists in creating vehicles such as VIP experiences, fan clubs and credit card presales designed to wrest back control over ticket sales (and profits) from resellers like StubHub. In turn, StubHub also is pushing for the BOTS bill because it wants more inexpensive tickets to change hands on the secondary market, which it controls more than any other company. At stake is the economic ecosystem of live events, where, if a $200 ticket to Beyonce or Drake resells for $1,000 on StubHub, the artists, agents, managers and even the roadies get cut out of the revenue.
"StubHub is like Napster — a business built on other people's investment," says Live Nation COO Joe Berchtold, likening the secondary market to the live-events version of piracy. "The people behind the content own the right to control how to price it."
For various reasons, performers and promoters often sell tickets for less than their market value, which means there's money to be made reselling them. And since StubHub doesn't directly sell anything — like its parent company, eBay, it makes money by taking a fee on transactions — it hasn't run afoul of laws that limit or forbid reselling tickets.
Artists aren't averse to stratospheric prices, of course, but more are seeking to maintain control — especially when they perceive profiteering by resellers. "If Eric Church wanted fans to pay $150 for tickets, he would sell them for $150," says Fielding Logan, who oversees touring for Church and others at Q Prime Artist Management. "But he wants them to pay $79, so he sells them for $79." Ticketmaster and managers such as Irving Azoff criticize StubHub for driving up prices. This summer, Lin-Manuel Miranda lashed out about inflated Hamilton ticket prices that can reach $2,500 on the secondary market, compared with $200 face value. The show has been upping its top prices to combat resellers.
The concert business, worth an estimated $25 billion a year worldwide, is now more important to most top artists than music sales. Against this backdrop, StubHub and Ticketmaster have been at war for more than a decade — first in 2002 about reselling and more recently about paperless ticketing models that require fans to present the credit card they used to buy tickets in an effort to limit reselling. It's probably no coincidence that San Francisco-based StubHub represents the Silicon Valley approach, which can be perceived as less talent-friendly than the West Hollywood-based Ticketmaster.
The rivalry is even more complex because in 2014, Ticketmaster revamped its own secondary sales business as TM+, and StubHub handles some primary ticket sales, such as for the NBA's Philadelphia 76ers. "The platform doesn't distinguish between a primary and a secondary ticket," says StubHub head of partnerships and business development Geoff Lester. That lets the site compete against Ticketmaster as a one-stop shop.
The thriving secondary market has made it more common for buyers to use the bots to skip virtual lines and snap up the best seats. Now the BOTS Act would create penalties for doing so, though it's hard to assess how effective the law would be since some resellers do business outside the U.S. So while the bill is the result of lobbying by rivals to gain an advantage, it's hard to predict how artists will be impacted. Says Dean Budnick, the co-author of Ticket Masters, "I think the Cold War is a fair characterization."
This story first appeared in the Dec. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.