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SeatGeek

President Joe Biden announced a major accomplishment in his battle against ticketing junk fees Thursday (June 15), but the impact is likely to be minimal.

After meeting with executives at Ticketmaster, SeatGeek and Dice, among others, those companies agreed to adopt all-in ticket pricing for their sales. For Ticketmaster, that will specifically impact shows at the more than 250 venues owned by parent company Live Nation in the United States — not all its ticketing clients.

The companies’ commitments to all-in pricing are part of a larger effort under the Biden administration and the Federal Trade Commission to reign in billions of dollars in junk fees charged to consumers by banks, hotel companies and entertainment groups. And while the buy-in from some of the world’s largest ticketing companies is an important milestone, the voluntary change will likely only impact a small percentage of tickets and give ticket sellers who conceal add-on fees to consumers until the end of the checkout process a competitive advantage over firms who display the full price at checkout.

The limited impact of Thursday’s announcement underscores the challenges lawmakers face as they attempt to come up with legislative fixes for the ticketing industry in the wake of disruptions to Taylor Swift’s high profile Eras tour. While politicians like Senator Amy Klobuchar (D-Minn.) have pointed the finger at Ticketmaster’s dominant market share, a growing coalition of music industry insiders under the #FixTheTix banner have blamed scalpers for the disruptions to the Taylor Swift sale and continued bot attacks on the ticketing industry.

While much of the battle between Ticketmaster and secondary sites like Stubhub and SeatGeek comes down to fundamental disagreements over artists’ rights to control their tickets and consumers’ rights to buy and sell tickets at whatever price the market will bear, the elimination of last minute fees added to tickets at checkout — sometimes as high as 25% to 35% of the face value of the ticket — had support from both primary and secondary ticket sellers.

In order for the all-in pricing to work, however, most experts agree that it must be mandated by law. Otherwise, many ticketing companies, sports teams and venues are unlikely to voluntarily change their pricing policy out of concern it could be a competitive disadvantage for their facility.

Even Thursday’s commitment from Ticketmaster has no impact on the hundreds of sports venues that sell millions of tickets to games and concerts each year. That’s because Ticketmaster cannot force teams within National Hockey League, National Basketball Association and National Football League to adopt all-in pricing at their stadiums and arenas, despite holding the exclusive ticketing rights to approximately 80% of the teams within those three leagues.

The same goes for the hundreds of independently owned venues for which Ticketmaster provides ticketing services.

Looking at the top 40 venues on Billboard‘s midyear Boxscore charts, while most are ticketed by Ticketmaster, none are owned by parent company Live Nation and none of the facilities will initially offer all-in pricing on their websites or ticket sales pages under the new commitment. The same goes for the hundreds of tours Live Nation promotes as well. That’s because standard ticketing contracts allow venues — and not Ticketmaster or other ticketing companies — to decide how tickets are sold, how much money in fees is added to a ticket, and how and when the breakdown between face value and add-ons like facility fees are displayed to consumers.

Studies show that ticketing companies that don’t use all in pricing have a competitive advantage over companies that show the full price of a ticket upfront. A consumer study by Stubhub in the 2010s shown that fans were more likely to purchase a ticket, even if it had a higher checkout price, if the initial price they were shown was lower than comparable tickets on other websites prices

“Live Nation’s promise today to give Americans price transparency at their venues is encouraging, but we need all-in pricing at all venues, for all live events, and on all ticket selling services now,” Rep. Bill Pascrell (D-N.J.) wrote in an email to Billboard, noting his bill, the BOSS and SWIFT ACT legislation would “mandate in law all-in pricing for true transparency.”

“Not until every seller offers all-in pricing can consumers get the comparison shopping experience for tickets that they deserve,” he wrote.

Critics of the BOSS and SWIFT ACT argue that while the legislation does improve transparency, it includes protections for ticket scalpers that would make it impossible for artists to protect their concert tickets from price gauging.

“Live Nation is proud to provide fans with a better ticketing buying experience,” said Tom See, president of Live Nation’s Venue Nation, in a statement. “We have thousands of crew working behind the scenes every day to help artists share their music live with fans, and we’ll continue advocating for innovations and reforms that protect that amazing connection.”

Stephen Parker, executive director of the National Independent Venue Association, told Billboard in an email, “Up-front pricing should be the start of comprehensive ticketing reform that protects consumers from price gouging and deceptive practices by predatory resellers.”

“We applaud the President for today’s meeting and look forward to working with his Administration and Congress to make comprehensive, bipartisan ticketing reform a reality,” Parker continued.

The National Independent Talent Organization, a group representing independent talent booking agents, applauded the voluntary change at Ticketmaster, but noted the change was “an important first step.”

“Until Congress acts to eliminate excessive fees and secondary ticketing is carefully regulated,” the organization said in a statement, “millions of consumers will still be the victim of predatory ticketing practices.”

SeatGeek executives were scrambling to recover from an unforced error earlier this month when two discount codes leaked on social media granting users $500 discounts on the secondary ticketing marketplace. After about a half-hour of frenzied buying, the ticket resale site was forced to cancel thousands of sales and cover costs incurred by untold numbers of brokers.

The source of those troublesome codes? SeatGeek created the codes for a business conference for Major League Baseball box office managers and ticketing staff, sources tell Billboard — three months after SeatGeek signed a reported $100 million, five-year deal to take over from rival StubHub as the league’s official ticket reseller.

The $500 discount codes — “MLB1” and “MLB2” — were originally given out as prizes for a team building exercise during the event on May 3 at Globe Life Stadium in Arlington, Texas, home to the Texas Rangers. Known to most in the sports ticketing industry as the Baseball Ticketing and Marketing Meetings, the summit is a typically low key affair where baseball ticketing staff come together to network, share ideas and meet with league vendors. SeatGeek representatives were present at the meeting to discuss their new agreement with the league, according to multiple sources. The two discount codes did not include any expiration date or limit on how many times they could be used.

Nine days after the summit, the codes leaked onto the internet and quickly spread across social media. The first instance of the code sharing on Twitter on May 12 at 11:29 p.m. EST appears to have come from an account linked to a sports gambler named Drew Morgan, writing, “I just got 2 tickets to 2 different Steelers games 100% free on SeatGeek. Sounds too good to be true but there was zero catch at all.”

Holy shit I just got 2 tickets to 2 different Steelers games 100% free on Seat Geek. Sounds too good to be true but there was zero catch at all 🤯Use codes MLB1 or MLB2 for a $500 discount on the tickets. I have no incentive at all to promote this. My friend told me about… pic.twitter.com/8G6ELGHPkn— Drew Morgan (@DMProps) May 13, 2023

Three minutes later, an account calling itself “Lord Restock” with 168,000 followers posted the codes, kicking off a frenzy of fans using the codes to buy tickets to sporting events, SZA concerts and more.

Around midnight, SeatGeek staff noticed the frenzied use of the $500 discount code and took the SeatGeek site offline to investigate what was happening. The site remained offline for several hours before the issue with the codes was identified and the codes were deactivated.

A SeatGeek spokesperson declined to comment on specifics about the code leaks, but told Billboard in a statement, “Last week, some fans made purchases on our site using an ineligible promo code that was wrongfully distributed without authorization. Tickets acquired via these purchases are not valid and we are working to resolve each situation accordingly.”

Officials with Major League Baseball did not respond to Billboard’s inquiries about the SeatGeek ticket codes and how they leaked online.

In the days following, SeatGeek staff began contacting ticket sellers on the site, laying out plans to cancel any transactions that used the leaked discount codes, refund any money that was spent in transactions using the codes and claw back any tickets possible before they reached fans.

“At this stage, we have been able to contain the impact to SeatGeek, but that came at the cost of an operational burden that you have all helped us to shoulder,” company co-founder Russ D’Souza wrote in an email to ticket broker Randall Smith, CEO of America’s Top Tix, and obtained by Billboard.

SeatGeek operates as both a primary ticketing site for a number of sports teams, as well as a massive secondary ticketing site where tens of thousands of brokers list tickets for resale for concerts, sporting events and festivals. The company implemented a triage system to respond to the code leak, where sales made for teams that use the SeatGeek ticketing system could easily be canceled and reversed. Sales for tickets that haven’t been delivered yet will also be canceled.

Tickets originally issued by rival companies like Ticketmaster, however, were more difficult to claw back. While Ticketmaster technology does allow resellers to digitally transfer tickets from seller to buyer – a process SeatGeek can automate to occur immediately after a sale on its site is made – it can’t transfer the ticket back to the seller if an error is discovered. Because of this, SeatGeek is now covering any losses incurred by brokers who now must reselling tickets issued by Ticketmaster and other services.

As a result, dozens and maybe hundreds of fans who received Ticketmaster-issued tickets using the SeatGeek discount code are now in possession of tickets that can’t be canceled. Since the code was discovered and taken down, many of these fans have taken to Twitter asking other fans if they think the tickets are still valid.

Brokers on the site are also angry, saying SeatGeek took too long to respond to the crisis and should have to pay the same 100% fine it charges its own sellers when customer service mistakes are made.

“If a broker makes an error and cancels an order, they are penalized. If the exchange that dings you makes an error, they unilaterally effectuate a mutual cancelation without consent of the broker,” one reseller wrote on a forum for brokers. “It is a totally one-sided relationship, and I really hope customers, brokers, or both bring a well-deserved class action against SG.”

SeatGeek is the second largest ticket resale site in the United States and last year raised $238 million in Series E funding. A recently abandoned effort to take the company public valued it at $1.35 billion.

In December, Barclays Center and BSE Global chief executive Sam Zussman arranged a meeting with officials at SeatGeek and offered the ticketing company an ultimatum: Either terminate the seven-year contract they signed with his predecessor, John Abbamondi, the year before, or else Zussman would publicize SeatGeek’s tech failures as they happened, multiple sources tell Billboard.

SeatGeek quietly complied and the ticketing company’s third NBA contract would come to an end, losing one of New York’s most popular venues. Starting this month, all new concerts at the arena are now ticketed by the team’s previous ticketing provider, Live Nation’s Ticketmaster — the world’s biggest ticketing service — under a deal term that runs for three to five years, according to sources familiar with the situation.

“The Barclays Center team met with our execs to figure out a way to amend the contract which would offer us the ability to continue ticketing the teams, but not third party events,” a SeatGeek spokesperson told Billboard in a statement. “Several months later we offered Barclays the opportunity to simply end the agreement, in consultation with our other clients, on good terms.”

A separate statement from Barclays Center confirmed that BSE Global and SeatGeek’s partnership would “wind down” beginning with the New York Liberty’s 2023 season in May. “SeatGeek provided our fans with a first-class gameday ticketing experience,” the statement reads, “and we’re appreciative of the time and energy they put into our work together.”

“They Just Aren’t Designed for High-Demand Ticket Sales”

A Barclays Center representative would not comment on the reason behind the arena’s dramatic turn face, or why Zussman had been frustrated with SeatGeek’s fulfillment of its contract — most ticketing agreements have clearly defined “service level agreements” governing response expediency and site uptime — but an incident from October 2021 provides insight into the issues SeatGeek may have been struggling to rectify.

Booking agents Jared Arfa and Marsha Vlasic at Artist Group International whose agency represents New York indie rock icons The Strokes, claim SeatGeek mishandled an October 2021 presale that cost the group several hundred thousand dollars. That concert, originally scheduled for Dec. 31, 2021, was postponed to April 2022 due to concerns over the omicron COVID-19 variant and ended up selling 13,548 tickets and grossing $1.57 million. That total was 2,000 tickets and $400,000 less than the band’s 2019 New Year’s Eve show at Barclays Center, which Arfa and Vlasic blame on SeatGeek’s user interface— not The Strokes’ popularity.

“They just aren’t designed for high-demand ticket sales, like concerts,” says Arfa, who describes SeatGeek as “a secondary ticketing company that dabbles in primary ticket sales” and struggled during large sales. “There’s things that we have become accustomed to in the music business that SeatGeek can’t do that as well.”

By contrast, says one prominent Brooklyn concert promoter familiar with both ticketing systems, “Ticketmaster has a ton of marketing power and reach in New York” through its huge email lists, search engine optimization and decades of work in the city. “For better or worse,” the booker adds, “Ticketmaster sells the most tickets in New York hands down.”

This wasn’t a one-time instance, either. Sources tell Billboard that concert promoters S2BN booked and then cancelled a Genesis 2022 tour date for Barclays Center due to issues with SeatGeek. The show, which was to be a surprise fourth New York date of the band’s Last Domino run (Genesis played two nights at Madison Square Garden and one at UBS Arena in Belmont), suffered from technical issues after going on sale and never came close to hitting the promoter’s sales goals.

The SeatGeek Deal Points

SeatGeek officials dispute the claims about problems with their system, telling Billboard in a lengthy statement, “Being the fastest growing tech company and a newer entrant to the primary ticketing space, SeatGeek is unencumbered by legacy technology, historical relationships, and outdated biases, allowing us to invest where the most impact can be felt.”

“In the last twelve months,” SeatGeek’s statement continues, “we’ve bolstered our entertainment team with key hires and have completely revamped our entertainment product offering, including making a number of fan-friendly strides in how we handle onsales, from utilizing state-of-the-art 3D view-from-seat imagery to providing ‘similar seat’ recommendations when multiple customers are vying for the same inventory.” The changes have resulted in “resounding appreciation from both AEG and Live Nation’s teams.”

Abbamondi signed the SeatGeek deal in 2021 with a $10 million signing package, sources say, that included cash, savings on the fees SeatGeek charged and a lucrative sponsorship agreement. The contract was seen as a means of helping reduce owner and Alibaba co-founder Joe Tsai’s $50 million to $100 million annual losses operating the team and arena since he bought out majority owner Mikhail Prokhorov in 2019. Just seven months later, however, Tsai agreed to accept Abbamondi’s resignation, despite the executive signing a record number of sponsorship agreements for the Nets that brought in an additional $30 million in annual revenue.

For SeatGeek, one of the largest ticket resale services in North America, the Barclays Center deal marked a major win in the company’s move from secondary ticketing into the primary, direct-to-consumer ticket business. Partnering with venues for primary ticketing services also drives significant traffic to SeatGeek’s secondary marketplace. That’s because ticket buyers don’t generally know if they are buying tickets from the team or from a reseller, since all primary and secondary tickets are listed together without any differentiation. The company’s other clients include the NBA’s New Orleans Pelicans and Cleveland Cavaliers, the NFL’s Dallas Cowboys and Arizona Cardinals, most of Major League Soccer and a growing number of Broadway theaters due to an alliance with Shubert Tickets.

Ticketmaster Regains Control

Ticketmaster has been under scrutiny this week, following a high-profile hearing before the U.S. Senate Judiciary Committee on Tuesday, examining competition in the ticketing industry and the company’s disastrous Nov. 15 ticket sale for Taylor Swift’s record-breaking The Eras tour. SeatGeek chief executive Jack Groetzinger testified during the hearing that Live Nation and Ticketmaster’s 2010 merger should be unwound due to a monopolistic behavior, saying it “it stifles competition completely.” (He was not, however, asked about his company’s own outages selling tickets to five of the concert dates for which the company has exclusive deals — including one reported instance where it charged a woman’s credit 14 times for $9,000 in total.) With Barclays Center’s move back to Ticketmaster, and the opening of the UBS Arena in late 2021, Ticketmaster now tickets all four of New York’s major arenas.

Barclays Center’s switch is likely to be examined by the Department of Justice, which monitors Ticketmaster as part of a 13-year-old consent decree dating back to Live Nation’s 2010 merger with Ticketmaster. One area of inquiry will likely be the drop in the number of concerts brought to Barclays Center in 2022, compared to 2019, the last full year of concerts prior to the COVID-19 pandemic.

Six months after signing with SeatGeek, Barclays Center saw the number of especial events and concerts at the building drop 13% from 2019 to 2022. The number of Live Nation concerts at the building fell 23% compared while the revenue generated from those Live Nation 2022 shows — $14.6 million — was less than half of the $31 million Live Nation concerts generated at Barclays Center in 2019.

The precipitous drop in Live Nation content, if done to retaliate against the venue for signing with Ticketmaster, could be a serious violation of the consent decree and could be grounds for challenging the merger in court.

Billboard found that other major buildings experienced similar fluctuations, though, including Madison Square Garden, which saw its total show count from 2019 to 2022 drop 11%. Revenue from Live Nation touring shows dropped 20% during that same period, while the number of touring shows brought to the arena was only down 2%. The 02 Arena in London, Scotiabank Arena in Toronto and FTX Arena in Miami each also experienced double-digit event night declines at their venues in 2022 compared to 2019.

The arena shows that Live Nation did bring to Barclays Center were some of the company’s most popular tours, according to Boxscore data, including Kendrick Lamar ($3.7 million gross), My Chemical Romance ($4.4 million gross) and Arcade Fire ($1.3 million gross). Barclays Center was also likely impacted by the opening of the OVG-managed UBS Arena, which booked $50 million in shows in 2022. Often the opening of a new venue can temporarily affect older venues as touring shows line up to be among the first to play the new facility. Barclays Center was able to make up for much of the loss caused by the decrease in Live Nation shows with higher grossing events from other promoters. By doing so, executives were able to minimize the venue’s drop in revenue from 2022 to 2019 to a difference of only $2 million, according to Boxscore data. Among those were Elton John’s March 1-2 concerts that generated $4.9 million in sales and Tame Impala’s March 14-15 shows that generated $1.9 million in sales, both promoted by AEG Presents. As well, Bad Bunny’s March 19-20 dates from Latin promoter Henry Cardenas generated more than $7.9 million in sales.

Looking ahead to 2023, Barclays Center already has three of the year’s biggest shows on the books – Madonna, as well as Blink-182 and Bruce Springsteen. Blink and Springsteen are both Live Nation tours booked at the venue prior to the switch back to Ticketmaster.