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Ticketmaster Looks to D.C. To Restrict Rival’s Resales

When StubHub started up in San Francisco a decade ago, it posed a challenge to L.A.-based Ticketmaster’s domination of the sports and concert ticket market. The challenge then turned into a brawl, and the brawl has turned into a high-profile war of words – and politics.

Live Nation Entertainment Inc., the Beverly Hills company that bought Ticketmaster last year, gave money to launch a Washington, D.C., interest group with the goal of preserving the right to limit resales of its “paperless” tickets. The launch of the group came in response to StubHub’s lobbying group, which is trying to convince state and federal legislators to outlaw Ticketmaster’s restrictions.

Earlier this year, the StubHub-funded group, Fan Freedom Project, lobbied four state legislatures to ban the resale restriction. StubHub makes money from fees it collects on tickets that people sell in its virtual marketplace.

Ticketmaster convinced legislators to block the StubHub proposals in all four states. It formed the Fans First Coalition last week to combat future Fan Freedom initiatives.

“Some in the industry have used legislation as a weapon,” said Jacqueline Peterson, a spokeswoman for Ticketmaster. “If there’s an education process that needs to happen, we’re willing to be a resource.”

Paperless tickets are only a small segment of the market; Ticketmaster has used the process for high-demand concert acts, such as Miley Cyrus and Justin Bieber. Concertgoers enter the stadium without tickets, showing only their credit cards and IDs. Buyers can only exchange paperless tickets through Ticketmaster’s proprietary service, TicketExchange. StubHub claims that Ticketmaster’s goal is to eliminate competition.

“Paperless ticketing was created to destroy the secondary market,” said StubHub spokesman Glen Lehrman.

Lehrman said StubHub doesn’t oppose the idea of paperless tickets, but wants them to be transferable.

StubHub, which charges commissions on resales, said people bought and sold $1 billion worth of tickets last year at its site.

The company, owned by San Jose-based eBay, has also had lobbying success. Last year, New York passed a StubHub-supported law preventing ticket companies from going exclusively paperless. There is also a federal law pending a vote in Congress, called the Ticket Act, that would ban resale restrictions on tickets.

Ticketmaster is testing a new sales model this summer, called dynamic pricing, that lowers prices when sales slow and raises them for popular events. At least one analyst said it’s likely an attempt to cut in to StubHub’s business.

“A major aspect of their efficient pricing is to negate the impact of the secondary market,” said Douglas Arthur, an analyst at Evercore Partners in New York. “If they were smarter about how they priced each seat, there’d be less need for the secondary market.”

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