NY Law Puts Restrictions on Paperless

18 Jul

The state of New York has adopted the first law attempting to regulate the growing paperless ticket market. On July 2, New York Governor David Patterson signed the bill, limiting the ability of ticketing companies and producers to force consumers to use paperless tickets.

The law requires artists, promoters, sports teams and venues to purchase traditional paper tickets if the seller does “not allow consumers to transfer their tickets independent of the operator.”

The law essentially blocks a growing practice by Live Nation and its ticketing system Ticketmaster of blocking fans from reselling and even transferring tickets to high demand events. Under Ticketmaster’s present paperless system, only the original buyer of the ticket can redeem the ticket at the door using the credit card used in the purchase.

The law also provided an extension to New York’s ticket resale law, which had expired in June and had temporarily made ticket resale illegal. It also banned the use of computerized bots to purchase tickets.

The law is a win for ticket brokers and resale platforms like StubHub, which had lobbied hard to fight paperless technology as anti competitive and anti-consumer.

“The new law passing in New York is a great win for consumers, as it allows for a truly open marketplace,” said StubHub spokesperson Joellen Ferrer.

During a June 2 hearing on the bill, a number of sports executives testified about the impact of paperless tickets and several state senators indicated they were considering an outright ban on paperless tickets.

“We believe in and we support transferability,” testified Randy Levine, president of the New York Yankees. He argued that the technology is too new and that the state legislature shouldn’t yet put restrictions on paperless tickets until it was better understood.

“If an artist for a show wants to provide ticketing directly to their fan club, or decides to utilize paperless ticketing, it is the artist’s prerogative to do that,” said Joe Lhota, executive VP of Government Affairs for Madison Square Garden in New York. He said a number of artists have “initiated efforts to thwart the brokers and scalpers and to drive as many first-sale, face-value tickets into the hands of their true fans.”

Lhota said banning paperless ticketing will weaken the ability of artists to sell directly to fans and push concerts into other states.

“Paperless ticketing technology is evolving, and rather than ban or limit its growth in New York,” legislators should “pass legislation that will be flexible enough to create a transferable paperless option,” Lhota said.

The losers in the deal are ticketing companies like Ticketmaster, which had sought to corral the high prices associated with ticket resale, as well as artists and agents who wanted to limit the number of tickets that end up in the hands of scalpers.

Live Nation’s Investor Relations Spokesperson Linda Bandov said the company would not comment on the resale law.

Veritix also maintains a paperless ticketing system, although its system likely will comply with the law because under most circumstances, the platform allows for both paperless and traditional fulfillment of tickets (there are some events, like student ticketing for the Final Four, where only electronic tickets are issued).

“We believe wholeheartedly that there should be a free market opportunity to buy and sell tickets digitally,” said Jeff Kline, president, Veritix. “We’ve always believed that the content owner should choose how they distribute their tickets.”

Kline also said that paperless tickets are often misunderstood by lawmakers.

“There are people out there who think it’s restrictive, and actually it’s just the opposite,” he said. “Paperless ticketing provides the ultimate flexibility.” — Dave Brooks

Interviewed for this article: Joellen Ferrer, (415) 308-8209; Randy Levine, (718) 293-4300; Joe Lhota, (212) 465-6000; Jeff Kline, (216) 466-8055

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One Response to “NY Law Puts Restrictions on Paperless”

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  1. Restrictions of Paperless Tickets Policed « FULL HOUSES: Turning Data into Audiences - July 19, 2010

    […] READ FULL ARTICLE ONLINE NY Law Puts Restrictions on Paperless […]

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