Statement for the Record of the Owners’ Rights Initiative

Examining the Better Online Ticket Sales Act of 2016

US Senate Committee on Commerce, Science and Transportation

Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security

September 13, 2016

The Owners’ Rights Initiative (ORI) submits the following statement for the record.

ORI was founded in 2012 by over 20 companies and trade associations in the run-up to the Supreme Court’s hearing of Wiley v. Kirstaeng (Kirtsaeng).  Kirtsaeng was a foreign national studying in the United States.  He began to import and resell legitimate graduate level textbooks to his peers.  The First Sale Doctrine is an exception to the Copyright Act that allows the free alienability of goods that, as the title indicates, have gone through a legitimate first sale.  It’s what allows Goodwill to take donations and sell them in their stores.  It enables the local library to lend books.  It ensures that anyone can use an e-commerce platform to engage in the robust global free markets.

Wiley sued Kirtsaeng arguing that the First Sale exception to the Copyright Act did not apply extraterritorially and that such goods should be subject to downstream control by the original rights holder, in this case the book’s publisher.  The Court held that such a rule would create a perverse incentive to produce even more goods overseas as these goods, and not US made goods, would be exempted from the First Sale Doctrine.

ORI supports the legislation before the Committee because it will enable more consumers to access tickets which are becoming more expensive and more difficult to obtain.  The use of Bots to purchase tickets has reduced the market of available tickets to sporting events, concerts, and the theater for consumers across the board.  Tickets to in-demand events are largely consumed and controlled by the venue, a promoter, the sports league or record label, or those who hold a credit card that provides advance purchase opportunities.  For the average person with a few dollars to spare, who wants to take his or her family to an arena event, obtaining tickets is increasingly difficult.  Bots make it that much harder.

To be very clear the BOTS Act addresses a very small portion of the ticket ecosystem.  It does not address the underlying issue of who owns the ticket and the right to resell it, give it to charity or simply pass it along to a friend.   While many of these issues arguably reside in the jurisdiction of other committees, we believe that limiting access to e-commerce platforms alone is enough to bring it within your purview.  We encourage the Committee to investigate this and other issues outlined below.

ORI believes that a ticket should be treated like any other good under the First Sale Doctrine.  However, ticket sellers insist that the consumer does not have ownership rights, but merely a license to a seat at the event.  We find this to be abusive of the licensing exception to the First Sale Doctrine.  The exception was designed to protect software where an unauthorized copy could easily be made to look authorized.   The secondary buyer might have no knowledge that the software was an unauthorized copy.   Tickets do not have that problem because only one person can occupy the seat connected to the ticket at a given event.

There is no legitimate reason for a team, venue or promoter to limit the resale of a ticket.  We’ve heard the argument that piratical tickets are a reason to limit the secondary markets because the purchaser of that ticket is defrauded.  But piracy exists across the spectrum of goods and shutting down all secondary markets, libraries and charities would harm tens of millions of Americans who rely on channels that can result in lowers costs.  Indeed, the secondary market for tickets can, in fact, result in lower costs.  Anecdotally there are countless situations where a ticket holder is unable to attend an event at the last minute and may have to sell the ticket below the list price.  Some venues actually have a prohibition on those types of sales.   In our opinion there is no logic to support this policy.  The team was paid precisely the price it demanded and the ticketholder may be unable to sell that ticket at the market price.  How does the team benefit by having one less person in the stands, one fewer hot dog purchased, a t-shirt that didn’t get sold, parking that wasn’t paid for and all of the other purchases a fan makes to support the team and its vast network of employees.  We’re confident that the hot dog vendor, who walks the aisles carrying a hot, heavy case, relies on full seats to maximize his selling opportunities.

ORI is also concerned that there is limited access to resale platforms for consumers.  When reselling tickets to some events there is a requirement that a single platform, such as Ticketmaster, must be used by the seller in order to affect a legitimate transfer.  Because we believe that a ticket is “owned” and not “licensed” you should be able to resell that ticket on a platform of your choosing.  As long as the ticket is real, it should make no difference what platform the seller uses.  The only reason these companies will seek to limit resale to their platform is to capture even more fees from the seller.

The trend towards electronic tickets (e-tickets) also lends itself towards making ticket holders captive of these entities.  E-tickets can create convenience for event-goers.  No more searching your pockets for a paper ticket.  No more worries you left it at home.  However, e-tickets whose resale is limited to the platform chosen by the promoter destroys this convenience for the consumer.  Imagine a perfect storm where you’ve purchased expensive concert electronic tickets.  Suddenly a child is sick and the babysitter has cancelled just hours before the start of the show.  You’re limited to resale on the platform where you made the original purchase but there’s a glut of tickets waiting to be bought.  You can’t sell them at a loss and recoup some of your purchase price, nor can you look for another e-commerce platform.  In short, because of the simple fact that a ticket is a license and not a good, you cannot avail yourself of the great American free market.

ORI unequivocally supports the BOTS Act.  We also believe that the Committee has an obligation to investigate the anti-competitive practices instituted by the various entities that promote events and sell tickets.  The practices abuse the statutory term “license” to limit consumer choice and move ticketing completely outside the free market.  We appreciate the opportunity to submit our statement for the record.

 






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