Durden Center For The Advancement of Liberty

Tes⁠t⁠⁠i⁠mony ⁠t⁠o ⁠t⁠he U.S. House Comm⁠i⁠⁠t⁠⁠t⁠ee on Energy and Commerce

By: Sal Nuzzo / 2023

Sal Nuzzo

SENIOR VICE PRESIDENT

Durden Center For The Advancement of Liberty

2023

Sal Nuzzo
Senior Vice President
The James Madison Institute
100 North Duval Street, Tallahassee, FL 32301

House Committee on Energy and Commerce
September 27, 2023

Chair McMorris, Ranking Member Pallone, and members of the committee,

My name is Sal Nuzzo, and I am the Senior Vice President of the James Madison Institute, whose mission is to tether Florida to the wisdom of free-market capitalism, limited government, the rule of law, economic liberty, and the principles that have made our nation great. I have spent 25 years in the policy arena, and was appointed by Governor Ron DeSantis to serve on Florida’s Government Efficiency Task Force, by Agency for Health Care Administration Secretary Simone Marstiller to the State Health Care Policy Advisory Council, and by the American Legislative Exchange Council to serve as Chair of the Communications and Technology Task Force.

H.R. 3660, The BOSS and SWIFT Act, and H.R. 3950, the Ticket Act, represent two enormous chances for the live events ecosystem to finally enact some impactful change. Unfortunately, some dominant players in the live events ecosystem want to oppose any legislation that would negatively impact their monopolistic behaviors. Large, entrenched companies are vying to be the only game in town, fighting to control the ability to sell and resell tickets. I want to express my perspective about key principles necessary to ensure whatever reform is considered that it be centered around the ticketholder – the consumer who spends his or her hard-earned money on what are increasingly more expensive tickets to live sports, theater, and music.

Right now, one Ticketmaster controls more than 80% of the primary ticketing market. This allows for a plethora of consumer harms, from controlling the supply of tickets, to service fees, to exclusivity requirements with venues that desire touring bands promoted by its parent company, Live Nation. And those extra costs are always passed onto the consumer. Ticketmaster claims that the restrictions it puts on tickets helps to nullify illegal ticket buying bots, but in reality, it is just to exert further control over competitors and fans. The company has attempted to ban ticket transfer in the past and engages in deceptive ticket holdbacks, an industry scheme that creates fake scarcity, as was documented by The Wall Street Journal. The well documented issue of holdbacks has been investigated by the US GAO, New York Attorney General, and the City and County of Honolulu.

Legislation to fix ticketing should be comprehensive in reforming both the primary and secondary market ticket sellers (primary being where tickets are originally sold – the box office or its contracted agent, Ticketmaster, for example) while exacting a higher standard of transparency and fairness across the industry. Representatives Bill Pascrell (D-NJ) and Frank Pallone (D-NJ) introduced the updated BOSS and SWIFT Act to do just that. The legislation will ensure transparency on the total number of tickets that will be offered to the public, will require upfront and all-in pricing of tickets, require refund protections, ensure fans cannot be denied entry by a venue on the basis that they purchased their ticket from a resale marketplace, and will protect ticketholders’ right to freely transfer their purchased tickets if they choose –  so consumers are not restricted from selling tickets that they have already paid for. Fans should be able to do what they want with the tickets that they have purchased, with no caveats. Recent reports from Sports Fan Coalition and Protect Ticket Rights show the many millions that can be saved on sports and concert tickets thanks to the secondary market.

As an example, I purchased a Volvo from a private seller in 2015, using a website that connected me with sellers from across the country. Volvo didn’t place restrictions on the vehicle when it was first purchased, and if I decide to sell it, Volvo will likely have no role in the transaction. The secondary ticketing market works in the same way, where buyers across the country have a plethora of companies and options to choose from when trying to find tickets to their favorite artist or team. Buyers and sellers make informed decisions and work towards their individual goals of finding or selling a ticket – and this is a perfect display of free market capitalism. An artist cannot dictate how and for what price a fan resells their vinyl record after they purchase it. Artists can however charge what they want for the initial sale, but that is where their control and influence should end. It is inappropriate and intrusive beyond the initial sale.

At a fundamental level, purchasing a commodity on the market should guarantee a consumer’s right to do what he or she pleases with that property. Restricting transferability undermines that basic component of our economic system and harms consumers in the process. Ticketmaster and others have attempted to complicate this issue to obscure the fact that transferability is about property rights.

The central question here is what happens when a ticket is purchased. Some including Ticketmaster would argue that the buyer is simply leasing or renting a space in a venue, and that would make the ticket subject to terms and conditions. That logic would rest on the misguided assumption that the commodity in this situation is the venue. The stadium may have a lifespan of 50 years, but an individual purchases a commodity with a very limited lifespan – a couple of hours. This distinction is key to understanding the issues that plague the event ticketing market. Live Nation/Ticketmaster uses its vertically integrated monopoly to control different aspects of the live events ecosystem (ticketing, artist management, venues management and ownership, tour promotion), driving up prices and drowning out the competition. Ticketmaster is not just the largest primary ticket seller, but also the largest ticket reseller (reporting $4.5 Billion in ticket resale last year).

H.R. 3950, The TICKET Act, introduced by Representatives Jan Schakowsky (D-IL) and Gus Bilirakis (R-FL),  is a more pointed bill that will tackle transparency in the ticketing industry. Sellers would be required to disclose any fees upfront, so consumers know exactly how much they are paying before they make up their mind. The TICKET Act would also protect consumers by mandating that speculative tickets, or tickets where sellers are not in possession of the tickets but promises to fill the order, are disclosed so consumers can stay in the know. While not as comprehensive as the BOSS and SWIFT Act, the TICKET Act will still benefit consumers greatly. To be sure, it is our view at the James Madison Institute that rights holders can set their initial price however they wish – be it $50 or $500 – but price transparency is important so that consumers aren’t lured into a shopping cart only to encounter unexpected high fees. Meanwhile, it is not the business of this rights holder after they are paid their asking price whatever the price the ticketholder might seek if they can no longer attend the event – whether that resale price is lower or higher than the initial price.

Although I am generally opposed to additional government regulation, there is very little to promote competition in the ticketing industry aside from a patchwork of laws in a handful of states. The BOSS SWIFT Act and TICKET Act are needed to increase transparency, protect transferability, and promote competition in the ticketing industry.

Sincerely,

Sal Nuzzo
Senior Vice President
The James Madison Institute
September 27, 2023