The Springsteen Refunds

Here’s the news: The FTC has told Ticketmaster to refund those consumers who bought tickets to 14 Bruce Springsteen concerts last year.  What happened was that since Ticketmaster had acquired secondary market seller, Ticketsnow, the company was passing ticket buyers over to Ticketsnow when its full price tickets had been sold.  The result is that some customers felt they’d been deceived into thinking they were buying regular box office tickets, but instead were buying in the secondary market.  Presumably, TM will be required to refund the difference between the price paid and the face value of the tickets.  Also, some of the sellers on Ticketsnow did not actually have Springsteen tickets, but were selling ‘on spec.’  In the end, some buyers didn’t actual get tickets they “bought” and presumably, they got a 100% refund a long time ago.  If not, that’s a separate issue of fraud on the part of the individual brokers who sold the phantom tickets through Ticketsnow.

Here’s my view of this.   There’s nothing inherently wrong with the secondary market.  Secondary markets are an indication of healthy demand for a product.  But I don’t like the blurring of the line between primary and secondary markets for two reasons: it tends to create bad customer experiences and it’s bad business.  It’s much better for them to stay clearly separate.

For example, there are times when a good broker is a life saver, getting you tickets you really need to get at the last minute or finding you that special, exact seat you want for a show that sold out.  There’s a value added there, and that’s good.  There are also times when brokers try to make their money by creating clouds of obscurity about the availability and price of tickets in the regular market.  The fact is that most consumers don’t fully understand what ticket inventory is available and where to buy it, and some of them naively buy from the first broker site or broker ad they see, thinking that’s the one and only place to buy tickets.

Should they be more circumspect before buying?  Of course, but the fact that some brokers work hard to create that confusion means it’s a business that still, for many, has an ethical asterisk next to it.

For TM, I think we’re going to see them divest this business for these reasons and others, but who knows?  I believe strongly that while a robust ticket buyer and seller marketplace (a la Stubhub) is incredibly valuable, there’s considerably less value in a site primarily made up of broker ticket listings, and I would add to that that we had a secondary market bubble a couple years back.  It has most definitively popped.

For the record, I don’t believe that TM deliberately steered people to its Ticketsnow site in order to deceive them.  The upside for them in doing that is so small that it beggars belief, and their reasons for acquiring Ticketsnow had nothing to do with selling secondary market tickets instead of primary market tickets.  It was to add revenue, not replace one kind of revenue for another.  Now, that may or may not have worked out, but it seems obvious to me that this isn’t in line with any kind of corporate strategy that would be worth TM’s time, considering the scale of its business concerns.  It’s just small potatoes and fraught with trouble, as evidenced by what happened.

Still, I question the emphasis on the secondary market in TM’s corporate strategy.  I think it’s misplaced, based more on competitive matching with eBay, and basically puts them in business with a lot of people (brokers) they can’t control, which means they can’t control the customer experience.

And that’s something you always want to be able to guarantee.