Technology Gives Buyers Alternatives to Ticket Fee-for-All

By Andy Vuong
Denver Post Staff Writer

Monday, December 5, 2005

Richard Davidson estimates he has paid $400 in fees this year for concert tickets he bought through Ticketmaster. And like many consumers, he's not happy about it.

"They seem to keep adding more and more service fees," said Davidson, a 34-year-old Denver resident. "I feel like there are a lot of other companies that can probably do it for less."

Indeed they can.

Thanks to the Internet boom and software advancements, more sports teams and entertainment venues are turning to alternative distributors or running their own ticketing operations.

For consumers, that translates into more options, greater convenience and, in some cases, lower service charges.

"The end result should be that consumers' ticketing experience (is) made easier," said Denver sports business consultant David Smrek. "Fees should decrease as ticketing infrastructure costs are reduced and even eliminated."

Ticketmaster is still the dominant ticketing company at major venues, selling tickets for about 80 percent of pro teams and events held at their stadiums and arenas, Smrek said.

But over the past five years, the company's share of the U.S. ticket-distribution market - including college and pro sports, and events at major and minor venues - has been cut nearly in half, according to TicketLife, a Minneapolis-based industry research organization. It now handles just 23 percent of all tickets sold.

TicketLife estimates that, on average, consumers already are saving 80 cents a ticket in service fees today because of the increased competition.

All Denver Nuggets tickets purchased on Ticketmaster.com include an $8.55 service fee, for example, so fans who buy a $10 ticket end up paying $18.55.

In comparison, fans of pro basketball's Charlotte Bobcats buy tickets from the team and pay graduated fees. For a $10 ticket purchased online, they pay $2; for an $85 ticket, they pay $8.

Locally, the Colorado Rockies, the University of Colorado at Boulder and the Denver Center for the Performing Arts run their own ticketing systems instead of outsourcing to Ticketmaster.

Their systems use software developed by Paciolan, an Irvine, Calif.-based company that is virtually unknown outside the industry but is considered one of Ticketmaster's two main rivals.

The other is Costa Mesa, Calif.-based Tickets.com, which was acquired by Major League Baseball this year.

Ticketmaster is based in West Hollywood, Calif., and is owned by IAC/InterActiveCorp., a company in which Douglas County's Liberty Media holds a 20 percent stake.

While Ticketmaster is still the Microsoft of the multibillion- dollar ticketing industry - with an abundance of retail outlets and call centers - technological advancements have helped foster competition.

As more consumers purchase tickets online rather than by phone or at retail outlets, Ticketmaster's advantages have been minimized.

"It has made it a lot easier for smaller companies to compete with Ticketmaster," said Jeremy Bayard, general manager of Ticket Life.

An online explosion

In 2000, when the majority of tickets were still sold over the phone or in person, Ticketmaster controlled 45 percent of live- event ticketing in the United States, according to TicketLife. Tickets.com held 9 percent, and Paciolan had 4 percent.

Today, Ticketmaster controls 23 percent, Tickets.com 18 percent, Paciolan 14 percent.

Meanwhile, online ticket sales reached $5.4 billion in 2004, and by 2009 they are expected to hit $9.4 billion, according to market research firm Forrester Research.

Many venues report that 50 percent or more of their tickets are sold online.

"The world of ticketing, as we know it, is in a revolutionary period of change," said Smrek, a principal at the Denver sports- business consulting firm Adrenalin. "Today's ticketing environment is dramatically different than even five years ago, and there's no reason to believe that five years from now it will not see even more change."

Sports franchises and entertainment venues have two primary ticketing options: outsource their operations to companies such as Ticketmaster or Tickets.com, or bring them in-house using software from companies such as Paciolan.

Typically, Ticketmaster pays teams or venues to turn over their ticketing operations. In return, Ticketmaster pockets all or a portion of ticket service fees negotiated with each client.

"We offer our clients the best technology along with an unparalleled marketing and distribution capability that enables us to sell more tickets," said Ticketmaster spokeswoman Bonnie Poindexter.

To be sure, some of Ticketmaster's technological developments have made ticket-buying more convenient. The company's TicketFast system allows consumers to quickly receive their tickets via e-mail, at which point they can print them out. Poindexter said the company also can give clients some in- house ticketing capabilities.

In-house systems let teams and venues control their own ticket distribution and keep the service fees. However, they come with startup costs and operating expenses.

Even so, a growing number of pro sports franchises and arenas have made the switch.

Comcast-Spectacor said last year that it is launching its own ticketing company using Paciolan's software.

Cable giant Comcast Corp. holds a majority stake in Comcast-Spectacor, owners of pro basketball's Philadelphia 76ers and pro hockey's Philadelphia Flyers.

The Charlotte Bobcats, the NBA's newest franchise, also chose to go with Paciolan.

Long focused on college sports, privately held Paciolan has secured deals with about a dozen professional sports teams.

"We are putting considerable energy and resources into going after those markets," said Shaw Taylor, Paciolan's director of marketing.

Breaking ranks

Locally, the Rockies are the only pro team that isn't a Ticketmaster client. It picked Paciolan in 1998, primarily because the team wanted control over its own inventory, said Kevin Fenton, the team's senior director of ticket operations.

The Rockies' previous provider, Destinet, went bankrupt and left the Rockies in the dark for six months.

"It woke us up because we had no access to our data," Fenton said.

Kroenke Sports Enterprises' Pepsi Center, home to the Nuggets and Avs, has a 10-year deal with Ticketmaster.

The company is happy with Ticketmaster but will explore bringing ticketing in-house when the deal expires in 2009, said executive vice president Paul Andrews.

Even Ticketmaster has acknowledged that its business has been threatened by the growth of alternative systems.

In its 2004 annual report, the company wrote, "The increased and continued use of direct systems or new distribution channels by Ticketmaster's clients could have a material adverse effect on Ticketmaster's business, financial condition and results of operations."

Clamoring for choices

Still, Ticketmaster controls the majority of ticketing for major concerts and events.

Both fans and entertainers have long complained about the company's service charges. In 1994, the rock group Pearl Jam filed an antitrust complaint against Ticketmaster over the fees. The Justice Department investigated the company but didn't take any action.

In 2003, local band String Cheese Incident sued Ticketmaster, claiming the ticketing giant had an illegal monopoly. The band said Ticketmaster was preventing it from selling tickets directly to fans.

The case was settled in 2004 after Ticketmaster agreed to give the band a reasonable number of tickets to each of its shows to sell directly to fans.

"Ticketmaster has had a monopolistic position in this market for quite a while," said Albert Foer, president of American Antitrust Institute, a Washington, D.C.-based nonprofit advocacy organization. "The public would be delighted to have more choices available to them."

Staff writer Andy Vuong can be reached at 303-820-1209 or avuong@denverpost.com.