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New York State Senators hear pros and cons of paperless tickets

By Alfred Branch Jr.

The two sides debating the issue of whether to legislate paperless event tickets in New York testified before a State Senate committee in Albany today, June 2, and while no final decisions were reached over the matter, virtually all of the speakers agreed on one thing: that the technology behind paperless ticketing should continue to move forward.

Where there was sharp division, however, was over the issue of "independence" in how paperless tickets may – or may not – be transferred following the initial sale.

Representatives from the New York Yankees, Live Nation Entertainment, digital ticketing company Veritix, the Broadway League and Madison Square Garden (MSG) all told the State Senate Standing Committee on Investigations and Government Operations that while they support transparent transferability of tickets, they don't want to see the legislature place any restrictions on paperless tickets. The legislature is considering a new law that would require ticket companies, venues, promoters or others to provide traditional hard tickets or paperless tickets if the paperless tickets cannot be exchanged on through an "independent" channel.

"This debate about how to handle paperless tickets threatens to compromise our ability to present diverse entertainment," said Joe Lhota, senior vice president of Government Affairs for MSG. "We do not dictate how [artists and promoters] price or choose to distribute their tickets." He added that the proposed legislation would make New York less competitive in attracting acts because those artists would gravitate to states and venues that do not have such restrictions.

Only a handful of shows at MSG have utilized paperless tickets, and none of sports teams that play there have used them, Lhota said.

"We believe that ticket innovation should be encouraged, not discouraged," said Robert Wankel, president and CEO of the Shubert Organization and top executive with the Broadway League. "Broadway doesn't use paperless tickets yet, but we shouldn't be precluded from doing so, which is what this legislation does."

Specifically what Wankel, Lhota and the others object to is a passage under the "Operator prohibitions" section of the proposed new law (the capitalization was done by the State Senate):

A ticket is a license, issued by the operator of a place of entertainment, for admission to the place of entertainment at the date and time specified on the ticket, subject to the terms and conditions as specified by the operator. Notwithstanding any other provision of law to the contrary, it shall be prohibited for any operator of a place of entertainment, [who offers for sale subscription or season ticket packages] OR OPERATOR'S AGENT, to: (A) restrict by any means the resale of any tickets included in [the] A subscription or season ticket package as a condition of purchase, as a condition to retain such tickets for the duration of the subscription or season ticket package agreement, or as a condition to retain any contractually agreed upon rights to purchase future subscription or season ticket packages that are otherwise conferred in the subscription or season ticket agreement[. Furthermore, it shall be prohibited for any operator of a place of entertainment to]; (B) deny access to a ticket holder who possesses a resold subscription or season ticket to a performance based solely on the grounds that such ticket has been resold[.]; OR (C) EMPLOY A FORM OF PAPERLESS TICKETING THAT IS NOT READILY TRANSFER ABLE TO ANOTHER CUSTOMER THROUGH A TRANSACTION THAT IS INDEPENDENT OF THE OPERATOR OR OPERATOR'S AGENT, UNLESS A PURCHASER IS GIVEN THE OPTION AT THE TIME OF FIRST PUBLIC SALE TO PURCHASE THE SAME TICKETS AT THE SAME ESTABLISHED PRICE IN SOME OTHER FORM, INCLUDING, BUT NOT LIMITED TO, PAPER TICKETS, THAT IS READILY TRANSFERABLE THROUGH A TRANSACTION THAT IS INDEPENDENT OF THE OPERATOR OR OPERATOR'S AGENT, PROVIDED HOWEV ER, THAT NOTHING IN THIS PARAGRAPH SHALL PROHIBIT THE OPERATOR OR OPERA TOR'S AGENT FROM IMPOSING A NOMINAL SURCHARGE ON PAPERLESS TICKETS.

In addition, Live Nation and the others want to ensure that artists can decide whether tickets can be resold at all, which paperless allows them to control. In instances where those artists allow resale, it's controlled through Live Nation's Ticketmaster division and its proprietary TicketExchange, which charges for ticket transfer. Veritix allows for a more open paperless resale model, which is free, but all transactions are also through its system.

Representatives from the National Association of Ticket Brokers (NATB), AllShows.com, AdmitOne, StubHub and TicketNetwork all spoke in favor of the proposed law, stressing that it will allow consumer protections.

"I don't have an issue with the technology of paperless tickets, just the choice," said Leor Zahavi, founder and owner of AdmitOne, who added that the government should not allow artists, venues or promoters to solely have pricing power when it comes to ticket sale and/or resale.

No time frame was given as to when a decision might be reached in the legislature, but the current government session is scheduled to end June 21, and officials hope to have the matter resolved by then.

"What this legislation says is, 'You're the consumer, it's your money and you have the choice of what to do with that ticket,'" said Dan Pullium of TicketNetwork. "We're not asking for a ban on paperless tickets, we simply want consumers to have a choice."

State Senators Liz Krueger and Jose Peralta tried to pin down the group that does not want to see the paperless restrictions enacted on whether they could offer a choice to consumers of traditional and paperless tickets, and Wankel essentially said yes.

"Broadway probably wouldn't want a 100 percent paperless event, but curbing paperless is not in the best interest of consumers," Wankel said.

Lance Lanciault, legal director for StubHub, said the proposed legislation does not curb paperless tickets, but instead opens up more opportunities for them.

"Ninety-five percent of consumers we surveyed believe that they own the ticket, and that they should be able to do whatever they want with it," Lanciault said, adding that StubHub already shares ticket data with Tickets.com, Ticketmaster and other primary ticket sellers, so he would not anticipate a problem if those companies made paperless tickets transferable across multiple platforms.

TicketNetwork is the parent company of TicketNews.

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