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Internet ticket sales loop around legal issues
Friday, December 16, 2005

Shannon Peacock felt excited about using the Internet to land tickets to the touring Broadway show "Wicked," spending $170 each for three. When she learned the face value of each ticket was only $65, she felt embarrassed.

 
 
 

Box offices and ticket distributors

To pay face value and guarantee the validity of your event tickets, you can buy direct from the box office or at the following distributors:

Ticketmaster: 412-323-1919, www.ticketmaster.com.
ProArts Tickets: 412-394-3353, www.proartstickets.org.
Pittsburgh Cultural Trust: 412-456-6666, www.pgharts.org.
Pittsburgh Steelers: 412-323-1200, http://media3.steelers.com.
Pittsburgh Pirates: 1-800-BUY-BUCS, http://pittsburgh.pirates.mlb.com.
Pittsburgh Penguins: 1-800-642-PENS, www.pittsburghpenguins.com.

 
 
 

Whether she had a right to feel victimized is another question. In the strange world of Internet ticket resale, laws are less than absolute, and tickets to almost any event -- even those that are sold out -- are available for prices that can exceed three or four times the face value.

"I'm so embarrassed," said Mrs. Peacock of Trafford. "I'm not stupid, I have a business degree, and know a little about computers. But I'd never bought theater tickets before and didn't know how much they cost. I thought they'd add $20 or $30 maybe. But when I realized I'd paid almost three times the listed price, I felt taken advantage of."

Ticket resale is nothing new. For decades, scalpers have lingered outside of entertainment and sporting events, offering to buy low and resell high. But the Internet has changed the dynamics of the ticket resale business. Direct covert contact with a dealer has been replaced with easily accessible, professional-looking Web sites that can be Googled with the click of a button.

The Web site that sold Mrs. Peacock her tickets and the industry that supports it exist in a loosely regulated legal gray area. Each state is charged with regulating the scalping of event tickets within its borders. At least 16 states prohibit most ticket resale. Pennsylvania is one of seven that attempts to turn scalpers into legitimate "ticket brokers" by licensing them and putting a cap on resale profits.

On the surface, Pennsylvania law seems clear: Licensed brokers are permitted to add a service charge of 25 percent of the face value or $5, whichever is greater. Reselling tickets at higher prices is punishable by a fine of up to $300 or 30 days in jail. With subsequent offenses, the fine can soar to $5,000 or two years in jail.

In Pittsburgh, a reputable ticket resale broker pays $258 to the Bureau of Building Inspection for a vending permit, which carries the vendor's name, picture and permit number.

The light-speed spread of the Internet, however, has outpaced applicable laws.

"There's a caveat," said Barbara Petito, a spokeswoman for the state attorney general's office. "In some cases, interstate Internet sales may not be covered by the Pennsylvania Resale Ticket Act.

"I can't comment on this particular case, but in general a reseller's license is needed, and the 25 percent or $5 rule applies depending on the level of interaction between the consumer and the business. The more interaction [on Internet sales], the more jurisdiction we would have. If you just buy [the ticket] and get off [the Web site], the act may not apply."

Ticket resale is a growth industry. It's unclear how big the business has become, but many brokers join a nationwide industry association that publishes guidelines and lobbies state lawmakers.

TickCo Premium Seating, the Internet resale site where Mrs. Peacock found her tickets, has been in business for 15 years, has about 60 employees, and boasts of its membership in the Better Business Bureau and Phoenix Chamber of Commerce. Every page of its Web site reminds customers that it's a resale site.

Before vending Benedum Center tickets, a disclaimer reads: "TickCo Premium Seating buys and resells 'Wicked' tickets on the secondary market at above face value. We are the not the official Benedum Center box office. Our prices can be substantially higher than the original ticket price, as they reflect the cost of obtaining premium seating."

"Some people say we're the same as a scalper," said Kris Farmer, director of e-commerce at TickCo. "I don't think so. This isn't a fly-by-night operation. From what I know, we've never been sued by the attorney general of any state. What we do is advertise tickets that are put on sale by a lot of people. We don't necessarily own the tickets, but we usually know the legal brokers who sell tickets on our site."

Tickets to some hot events can sell out moments after they go on sale. Ticketing giant Ticketmaster, which doesn't handle most Cultural District events, maintains 70 local vendor outlets and can sell 500 to 700 tickets in the first 10 seconds that they're available for sale. Savvy ticket brokers know how to work the system. But as much as average ticket buyers want to believe there's something shady going on, it's far less nefarious and far more complicated than they realize.

Ticket "presale," the routine vending of event tickets before the official on-sale date, accounts for many of those that end up briefly in the hands of brokers. Tickets are presold, usually at standard rates but sometimes at bargains, to season ticket holders, through artist fan clubs and through the venues' Web sites. Some are released early through promotional give-aways. The percentage that are presold is event driven.

"I can't think of any show that's presold less than 5 percent, and I've never seen more than 30 percent," said Pat Lucas, general manager of Ticketmaster Pittsburgh.

Mr. Lucas said the city's biggest concert event of the year -- July's Kenny Chesney concert at Heinz Field -- "had the biggest presale [30 percent] I've ever seen. The artist really pushed this."

Presale began two weeks before the on-sale date through six radio stations; Steelers, Penguins and University of Pittsburgh season ticket holders; and the fan clubs of all five artists on the bill. The show sold about 53,000 tickets; 17,000 of them were presold.

Brokers often hire "diggers," people who stand in lines at box offices and purchase the standard eight-ticket limit. And some get them the old-fashioned way, hiring as many people as they can to call at the moment the sale begins and buy the maximum number allowed. The legally sold tickets are posted at several times face value at registration-only Internet ticket databases such as EventInventory.com, TicketNetworkDirect.com and TicketTrader.com.

Resale sites, including TickCo.com and StubHub.com, buy from the databases and resell them again to any consumer with a computer who's willing to pay the price.

Marc Fleming, vice president of marketing and communication at the Pittsburgh Cultural Trust, said that of the 45,000 total ticket inventory for "Wicked" -- 16 performances in the 2,800-seat Benedum -- many were distributed long before the published sales date.

He declined to reveal the percentage that were presold but said presale privileges were extended to subscribers to the PNC Broadway Series; group sales, which bypass the eight-seat ticket limit imposed on individual sales; radio give-aways or other promotions; and anyone who signed up on a presale e-mail list, accessible for free on the Trust's Web site.

"It's standard operating procedure," said Mr. Fleming.

The Trust is aware, he said, that tickets to Benedum Center, Heinz Hall and other Cultural District events are being resold online at inflated prices. But Mr. Fleming was unaware of one brazen Web site operator who vends high-priced tickets to Benedum shows at benedum.com. The site is not affiliated with the Benedum Center or the Cultural Trust.

Ticket resale profits don't go back to the entertainment or sports industries -- they line the pockets of the resale brokers. It's become so prevalent and profitable that major ticket vendors, including Ticketmaster, are taking steps to get in on the market, setting up legal means for the secondary resale of their own tickets.

"The unauthorized ticket industry is wrought with fraud," said Bonnie Poindexter, a publicist from Ticketmaster's home office. "When you buy from one of these secondary ticket resell sites, there's no way of knowing if it's a valid ticket or a forgery.

"They say they can verify [the authenticity], but they can't because they don't actually hold the hard ticket. We do. That's why Ticketmaster is involved in an effort to legitimize ticket resale and offer consumers a valid, safe and secure site to buy [resold] tickets."

Ticketmaster is slowly rolling out a program called TicketExchange, which enables sports and entertainment season ticket holders to resell their seats on sites approved by the venues. Negotiations are under way in Pittsburgh to secure the cooperation of local venues. Ticketmaster hopes to unveil TicketExchange here next year.

The Cultural Trust, too, is taking steps to ensure the validity of tickets, including those that have been resold. A ticketing software called Tessitura enables season tickets to be scanned at the gate. Mr. Fleming says the Trust hopes to extend the program to individual tickets.

Mrs. Peacock, however, will have to wait until March to see if her high-priced tickets will get her through the door to see "Wicked."

"How would you feel?" she asked. "I was just trying to enjoy the culture in this city, and this is what happens."

First published on December 16, 2005 at 12:00 am
John Hayes can be reached at jhayes@post-gazette.com or 412-263-1991.
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