Mytheos Holt

In other contexts, the idea of a market middle man who profits from the resale of goods is not one we find inherently offensive. If we did, retailers wouldn’t exist.

The argument against permitting an open ticket market would be more resonant if there weren’t already major loopholes in the law that benefit powerful. Michigan bars the resale of tickets above face value, unless the reseller receives permission from the original seller. Sites like enter contracts with venues, promoters and sports teams that sanction them to resell tickets. Then there’s Ticketmaster, which already controls roughly 82 percent of the market for major venue ticketing services and is becoming a major player in the secondary market, as well. As Albert Foer, president of the American Antitrust Institute, pointed out in a recent New York Times op ed:

Ticketmaster says its restrictions on the resale and “gifting” of its paperless tickets act as safeguards against various practices: scalping; the bulk purchasing of tickets by automated software bots; and the use of counterfeit, stolen or lost tickets.

But in reality, the restrictions represent an effort to control the secondary-ticketing market and stifle competition from independent resellers and resale marketplaces like StubHub, where tickets are often sold for less than face value. (The American Antitrust Institute, of which I am president, received a modest contribution, in the form of sponsorship of a conference last year, from an advocacy group financed in part by StubHub.) Paperless tickets bought through Ticketmaster may be resold, for example, only through its own resale Web site, which often prohibits sales below face value, sets maximum sale prices and charges a fee for transfers.

Economist Mark Perry has been even more harsh, pointing out that in some cases, Ticketmaster’s fees end up adding as much as 29 percent to the face price of a ticket. This kind of skimming led comedian Louis CK to refuse to do business with the site, claiming its willingness to sell tickets for more than they actually cost hurts his fans, and by extension, him.

And, wouldn’t you know it, Ticketmaster has already come out against similar measures to this one, calling them “attempt[s] by out-of-state ticket scalpers to use legislation to shake the marketplace to protect their profits to the detriment of fans in Michigan.” Which is precisely what Ticketmaster itself, by virtue of selling paperless tickets which make competition harder, is doing. This kind of innovation on their part is not necessarily bad, but it is surely a stretch to ask Michigan to allow only one ticket resaler to operate within their state, while shutting out all the others.

Bottom line: The current law in Michigan is not merely anti-market, but inconsistent. Rep. Kelly's bill is a step in the right correction with respect to both errors.

Mytheos Holt

Mytheos Holt is an Associate Policy Analyst with the R Street Institute