Assembly Standing Committee on Arts, Entertainment, Sports, and Tourism

Good afternoon. Get this packed house. I'll open by saying that the Taylor Swift fan in my house was very impressed that we held this hearing on the 13th. So I just wanted to point that out. For those that don't know, that is Taylor Swift's lucky number. So good afternoon and welcome to our joint informational hearing hosted by the Committee on Privacy, Consumer Protection and the Committee on Arts, Entertainment, Sports and Tourism.

So I want to thank all of our panelists for being here today and participating in this hearing. Obviously, this issue has been the hot topic for over a year now, and we're really excited today to really get to a great conversation about the root of how we protect consumers in the ticketing industry, which is obviously the focus of this consumer protection Committee.

I want to thank both the staff on our Committee, Privacy and Consumer Protection, and the Arts, Entertainment, Sports and Tourism Committee for organizing this hearing, and the staff from rules, the sergeant's office, and everyone else who helped to support us having this hearing today. So before moving on, I want to make sure that everyone knows that at the conclusion of each panel will be open to discussion to the Members present. So hold your questions for the panelists.

We will definitely set aside time for that and for those that are not on the panels but are here today, we will be setting aside time for public comment at the end of the hearing for those that want to participate. So the purpose of the hearing today is to hear from those working in the entertainment industry to gain a better understanding of how people purchasing tickets for live events and those working in the industry experience the current online ticketing ecosystem.

As I said, much discussion has been had, but today we're going to really hopefully get a better understanding of everybody's experience and how we can make it stronger. So my Committee, as well as some of the Member Gipson's Committee, have wanted to do this for a while and explore how the industry operates and its impacts on consumers. But today we're finally getting to it.

And as you know, last year legislators were asked to weigh in on several bills in this Committee and in the chair's Committee related to event ticketing. Two of the bills approached consumer protection in very different ways, so it made it hard on us to decide what the best way was to protect consumers. The Committee worked diligently to find common ground and compromise. However, we didn't get there, but we will. We are optimistic. This is our year.

So we decided to take a step away from the specific bills and hold this informational hearing to dig more deeply into consumer protection issues. The current ecosystem with the goal of a better understanding of what Californians face. And to be clear, we will not be debating the merits of those bills today. That will be done during the regular hearings on those bills. So we want that to be clear to everyone involved that we would like your testimony on the ticketing ecosystem.

But we do not ask you at this time to weigh in on bills that are before the Legislature, whether it was the bills that were heard last year or we have new bills that have been introduced even this year that will happen before the Committee is at the appropriate time after referral, or when we hold a hearing on the bills already sitting in our Committee. I really do want to thank the panelists for being here today, for giving us your time out of your busy schedules.

One of the industries that weigh in very heavily last year was the sports teams, and they decided not to participate in today's hearing. And I want to thank those that did. Because for those of us sitting on this Committee that heard from so many voices, choosing not to be here to help us get good information, I think speaks volumes to whether folks want us to actually understand their perspective or not. So for those of you that are here, thank you.

So with that, I want to turn it over to my colleague, Assembly Member Gipson, who chairs the arts, entertainment and sports tourism Committee, for opening remarks.

Thank you very much, Madam Chair. Thank you very much for one allowing us to come in this space and work together. As a recent appointed chair of the Arts, Entertainment, Sports and Tourism Committee, I'm excited to be here today. I was not a Member of the Committee, and when the Bill was heard last year on this particular topic, I viewed this as a great learning opportunity to better understand the history of online access to tickets to live entertainment.

This includes concerts and shows as well as tickets to sporting events. California is currently home to about 22 professional men and women major league sports teams, and in the years to come, we will host a number of globally significant events, including the World Cups. We will be hosting the Super bowl as well as the Olympics. I view access to live entertainment as being a major part of California's experience.

People from all walks of life can find joy and inspiration from seeing talent performed and athletes in person. These events can have a big impact on the mental health and wellness, and I view the expanding access as being a very important and vital part of that experience. I look forward to hearing the various perspectives of today's panelists and hearing their views on existing issues with online ticketing.

I also would like to know the steps that are being taken to improve the experience and the access for fans in attendance. Again, I want to thank the chair for one hosting this and jointly with me to both of our teams. Thank you working and our consultants for working diligently to put this together. I believe that there will be more in the coming months to come. So thank you very much and look forward to hearing a very robust conversation throughout this process. Thank you.

Thank you. And I was remiss in, wait, what did I do with it now? I lost your post it. I was going to tell the public how to weigh in. If I find my post it, I will tell the public how to weigh in. zero, I found it. There it is.

Okay, so for those that are not in the room or want to provide written comments, the privacy Committee email to do so is APCPCommittee@Assembly.CA.Gov or on our website, APCP.Assembly.CA.Gov. So we'll be taking public comment here today, but you can also submit it on our website so we can know what you think. And thank you to the chair for his comments.

I know growing up in California, and I won't say what baseball team, because now I live on the other side of the bay, but these sports events, these concerts, we all remember our first concert are integral parts, our families and our communities. And it's a huge driver, as we all know, of our economies, both in Southern California and in Northern California. So this is a really important conversation to make sure those resources are in our communities and being used in an important of.

Do any of the Members want to weigh in at this point? We will have more time. Okay, so we'll go to our first panel, which is overview of the live entertainment ticketing market. And we have Dr. Hemant Bhargava, are you here? Perfect. Join us up here. Distinguished Professor at UC Davis Graduate School of Management, and he is going to give us an overview of the ticketing market when you're ready.

Thank you for inviting me here, and it's an honor to participate and contribute to our method of governance. And thank you, Chairwoman Bauer Kahan and chair Gibson and Julie Sally for asking me to come here. I just want to start with a couple of disclaimers. So, first of all, obviously, I speak for myself, not for the University and not for one of my children who's in musical theater in New York City. And as an academic, this entertainment ticketing is not my number one focus.

It's probably the fifth or 6th thing that would be on my list. But I do a number of things that I study that I think relate to the fundamental economic forces and technological elements that affect how this industry functions. And so I'm going to take some of my time to really link what's happening in the entertainment ticketing industry to these broader aspects of technological change.

I should also mention that I think all of you had access to the excellent background report that Julie prepared and sent to me. And so I will try not to repeat from that, though there are a couple of things that are worth laying out to set the stage. And then, as I mentioned, I will connect with other related industries that I think have similar elements, which you might be familiar with.

That includes airline industry, telecommunications, and in home video entertainment, streaming and other types of entertainment services. And so what I'm going to do for the next 1520 minutes is give you a little bit of overview of the industry, covering both primary and secondary markets and some of the problems that we all know exist. Then I'll take you a little bit through analysis of the primary market to understand how we got here.

And because I think that will be relevant to thinking eventually about how to fix some of the problems that exist. And then I will try to do a similar thing about the secondary market.

So let's begin with that. And I have a few slides which I think I don't want you all to strain your neck turning back, but they are behind you, as far as I can see. So next one, please. So I'll just give you a little bit of an overview of what the different players are. And I think this is something you would all know and from the background reading as well.

But basically, I think the point I want to make, if you look at the players involved, the artists, promoters, venues, ticket sellers, and ultimately fans, is that if you look at especially the first top four parts of this stack, there is codependence among all of these entities, right? They all depend on each other to create value in the industry, and none of them really would be able to do much without the others. So artists don't really have venues. They don't know how to sell tickets.

And so there are all these other details of codependence that are quite relevant. And I'm going to skip the promoter part here because it's really, from my perspective, it's more about risk management in the industry. And really it's the remaining three types of firms or on the supply side that I will focus on. And of course, we're looking at fans or consumers and the impact that all of these things have on consumer welfare and other issues.

It's also important to note that in what these players bring to the market, there are a lot of what we call complementary goods aspects. So when an artist goes and performs at a venue, there is potential to make additional sales or revenue, all the way from parking to concessions to merchandise and a variety of other things besides brand building and so forth. So that one act leads to other interconnected sources of revenue.

So as we go forward in this, I think it's important to keep in mind that there are some economic characteristics that drive what outcomes are found in these markets. The first, at the artist level, is that these are products, or these are things with very high fixed costs. It takes a lot to create a show, right?

And I think what I'm going to say is not true for live sports, but it's true for the other performing arts events, that these are things with high fixed costs and relatively lower variable costs. So there is an intent or a desire to repeat the event, right? Which means you would have to go across multiple venues and perhaps interact with multiple ticket selling systems. And of course, that's not true for live sports, because every sports event is unique.

These are also perishable goods from the perspective of venues and ticket sellers. In particular, once the date of the event occurs or is passed, that remaining seat has zero value at that point. And so that in the industry, and this is true for many other industries, creates a need for what's called dynamic pricing, right?

That prices vary over time, and in particular, that the sellers, or those who determine ticket prices, often change the price of the same product, the same seat, depending on the amount of supply and demand that's still remaining or expected. And, for instance, we see that and seem to have no trouble with seeing that in the airline industry, right, which was one of the earliest practitioners of very intensive dynamic pricing techniques, which are also called revenue management in the industry.

The fact that there is this perishable goods and dynamic pricing also means that there is a need for advanced selling, that tickets are sold well in advance of the event date, and for such products, services, right, entertainment goods.

This creates a lot of uncertainty among those who are buying tickets ahead of time, because for a sports event, I may buy a ticket to a final, thinking it's going to be between teams a and b. But if those teams don't show up in the final, it may change my value drastically and maybe lower it, and yet it may increase value for someone else in the market.

And so this creates a need for a resale market, given that people buy ahead of time and may have other exigencies that cause them not to attend or their value changes over time. There is a need for a very robust resale market, which we cannot avoid. And finally, of course, in most venues with a few thousand seats or 100,000 seats, you're going to have a lot of variation in value among customers.

And so that creates an opportunity for what is often called second degree price discrimination, meaning differential prices are paid by people based on what kind of seat or experience that they get. Now, with all of this, I think we know that there are a number of problems that occur in this industry.

They range all the way from, for instance, this interaction between primary and secondary markets, that there is a lot of scalping or profit taking in the resale market, because one of the, what some might consider irrational elements of these events is that. So I talked to you about dynamic pricing and advanced selling, which means that prices for the same item can vary wildly during the selling period.

But in arts and entertainment, very often, artists do not want to behave like a traditional commercial product, like an airline that may price a ticket for $100.01 day and 1200 at a different time.

And artists tend not to do that. But that given that there is a resale market, it naturally creates an opportunity for extracting those higher prices in the retail market. Other things that you see, of course, there are technological problems, and that's what happened last year with the Taylor Swift sales.

But also, if you look at the very top of the picture tickets, someone might be looking for Ticketmaster to buy tickets, but they mistype the name in the search engine, and they could very well be led to a fake site. It is also the case very often that customers who look for a selling site by beginning their action on a search engine could be led to sites that are deceptive or not, or otherwise sell non real tickets.

So instead of being taken to the correct site, which could be the theater venue, Ticketmaster, they're often led to other sites. And obviously, that's not the fault of probably any of the players in this room, but it's a problem that exists.

So there are a number of known issues that are a problem. There's, of course, tremendous buying by bots and brokers, because another possibly irrational characteristics is that artists love it when a show is sold out on the first day.

And because of that, between the artists and the sellers, there's often you overlook elements that lead to those same day, one day sales. And so if brokers or ticket bots are buying all of the tickets, that's totally fine with some parts of the industry, and those tickets then eventually get sold again in the resale market. All right, so let me take you through a little bit of how we got to this point with all of these problems that exist.

And if you can go on to the next slide, please. So I want you to step back maybe a few decades ago where we lived in a world where we did not have all the digitization Internet devices that we see today, right? And this is a world in which basically, if you think of the national market for entertainment ticketing, it was basically a collection of a number of local markets, right?

So if you look, think about the layers that I depicted to you on the first slide, there are artists, venues, ticket sellers, and then ultimately, fans interactions were generally contained within local geographical regions.

And that's true for fans who couldn't really go 500 miles or discover events that were happening far away. And venues were more independent and owned and operated artists, of course, if you remember what I told you about high fixed costs, Low repetition costs, they always have a desire to perform the same event multiple times.

And this was particularly true for more popular artists, more rich, otherwise, those able to perform an event multiple times, which meant that at the top layer, even though this is a lot of local markets, at the very top layer, there is a desire to go across local regions, right? And if we go back a few decades ago, cross local market, transaction costs were extremely high.

So if you're an artist in the Sacramento region who wants to perform in Los Angeles or Chicago or Philadelphia, you incur substantially high costs every time you want to contract, negotiate, set up the stage, sell tickets, or be discovered.

And so the desire by artists to repeat their shows also creates the desire to see some kind of consolidation in the next layer. And the next layer, because if you only have to transact with one entity for 10 shows, that's a lower transaction cost. And we saw this, of course, if you go back 120 years ago in the era of Wardville, it was pretty common for Wardville performers to look for.

There were so called booking agencies that arranged for their shows to be performed at a number of locations. And of course, we know there were the famed theater chains that existed even back in 120 years ago, around 1900, that consolidated multiple theaters, rather than each theater being independently owned and operated.

So this is where we began this industry. And ticket selling, therefore, was basically a local operation. A lot of venues sold their own tickets, and then over time, it started spreading out to other retail locations where you could buy tickets for a show. So let's go forward now in time. And particularly, as I said, the desire for artists to exhibit across multiple locations meant that there was some consolidation already happening at the venue and ticket selling layers.

And what you saw at the ticket selling layer was emergence of companies like Ticketron and then eventually Ticketmaster. And in the venue layer, we saw emergence of firms that bought multiple venues or arranged to host events at multiple venues, and companies like Live Nation entertainment that came about at that layer. Now, if you look at the time of extreme digitization, where we got personal computers, high speed Internet, and then eventually mobile devices and so forth, that leads to the erosion of those local walls, right?

So those walls that were fairly sharp at the lower layers are now dissipating. And therefore, because artists can now perform at more venues, there's even a greater force to get consolidation in the lower layers.

So now you get companies that were selling tickets covering many more markets, because fans can now discover events at different regions because of the Internet and perhaps because of lower airline prices, they could travel occasionally to events at other locations. So these local markets started gradually breaking away. But I would like to mention here that if you think of the State of the market today, it's not like the local boundaries have gone.

And we should really think of what's happening today in terms of two very different markets. What would be the equivalent of small and medium enterprises? Right. The smaller theaters, smaller artists, they still exist in a local world, and they often have tickets selling through similar methods that they used 3040 years ago. And then for the larger shows, more popular shows, larger venues, we really are looking at a more national, or at least larger regional set of markets.

And so that's one of the forces that leads to consolidation at the horizontal level. So few firms that control venues, few firms that control ticketing. Now, one of the other things that we have seen in this industry in the last 15 years is also vertical integration, that you see combinations of firms that operate at different layers.

So I think that's where the merger between Live nation Entertainment, which operated at the venue level, and Ticketmaster, that was predominantly at ticket selling, brings you an entity that can arrange shows and take you through all of the steps that are needed to put an artist into a venue or in front of fans. All right, so let's go forward. It.

All right, so we do get some efficiencies because of these vertical integrations. And I think this is probably something most of you know, that in the US, for the last 50 years of anticompetitive and antitrust actions, vertical mergers have generally been viewed positively because they do contribute to some reduction in efficiencies, what we often call double or multiple marginalization. Horizontal mergers, on the other hand, are usually viewed as reduction in competition.

But if I go back for a moment to the picture I just showed you, these are markets in which you're both competing horizontally against each other, but you're also competing for the share of the dollar that a customer spends. You're competing vertically for every dollar that a customer spends. How much does an artist get? How much does the venue get? What does the ticket seller take? That depends on the degree of horizontal consolidation at each layer.

So if the ticketing layer is very concentrated, they get more market power. If the artist layer were to be very concentrated, they would get more market power. And I've done a lot of work, for instance, in. In home entertainment, where today when we consume television and movie entertainment, or for the last several decades, right, most content was owned and run by a few content from studios and programming networks. So that's a setting where the artist layer, production layer has strong market power. They are oligopolies.

And in fact, in that industry, we often say content is king, right? But even in a setting where the content layer is strong, we also say distribution is God, right? So the distribution layer is ultimately how the product gets to the customer, and therefore, they always retain some market power. And if the distribution ticketing layer is highly consolidated, then that leads to a natural element of increased bargaining power in the vertical market.

And you might ask why there aren't multiple ticket sellers, or why do one or two firms control a lot of the ticketing market for entertainment? Because, again, if we go back to the airline industry, to, in home video entertainment, few other industries, you notice that there are multiple systems that still operate.

You buy Disney plus, you get Netflix, you get CBS Paramount. So there are a number of firms that are vying for the customer's attention. And in fact, in many of those cases, you see the artists, the production layer, connect directly with the customer. That's what Disney plus, which was made. Content, actually sells content to the customer. Airlines distribute tickets through Expedia and other agencies, but they also sell tickets through their own website.

In this industry, that's a lot harder to accomplish because the artist layer is extremely fragmented I don't think Taylor Swift would love to merge with Beyonce, for instance, and create a big artist company. All right, so this is why you see this kind of structure in the industry. I think it's one of the reasons why you cannot have too many ticketing firms in that lowest layer.

And that leads to some negative consequences I was trying to show in the next slide. And these are the harms, the fault lines that I displayed to you earlier. But you could argue that the lack of competition at the ticketing layer makes the operators less excited about solving the problems.

Less competition generally leads to lower innovation. This is something we saw in yet another time. If you think of Chat GPT that was released by OpenAI for 20 years, Google was a dominant search engine, and to some extent that throttled the amount of innovation that Google did and what it might have done if it were in a highly competitive search industry. Okay, so maybe let me just go on forward.

I'm sorry, need to move to questions in just a couple of minutes.

Absolutely. So I'm just going to end with a little bit of conversation about the secondary market on the next slide, please. Next one, yeah. And so this is again where we know that people have to resell. We would often think of the resale market as a customer to customer selling process, and 50 years ago people would show up in front of a show and then sell their own ticket.

Today you have online marketplaces that enable that, but also you have a lot of middlemen or brokers that play that intermediate role. So it's not necessarily a consumer to consumer setting. And then you have some of the other issues of illegitimate sales. Repeat sales could be duplicated and faked. There are settings where if entities like Ticketmaster also get involved in the resale market, they can control some of that fraud more effectively than if it were other entities doing that. So I'll be happy to take questions here and we can do other things.

Thank you. I can start, unless somebody else wants to start. So let's start with solutions. I'm curious to know what you think we should be thinking about as it relates to you've laid out some of the problems. Obviously we aren't in the antitrust business, so that's not somewhere we can correct necessarily. And I would say both from a government perspective and a tech perspective.

As I was reading the backgrounder about bots, one of the questions that came to mind, and you may have just answered this by talking about the lack of innovation due to consolidation, is why aren't there better tech solutions to stop the bots. Right. The government is doing what it can, but with the brilliant tech minds in this state and elsewhere, it seems like we should be able to do more to stop the bots.

All right, let me see which of those I can answer and I'll try to maintain some sequence. There are a few things I want to say, and maybe if you would indulge me, give you a solution in different industry to motivate the argument that I'm trying to make. And two years ago, I think there was a hearing here on child protection online, and this was also the subject, of course, of Senate hearings a couple of weeks back.

And generally I heard the hearing here and the ideas that were circulated and what's in several of the bills that are in front of the US Senate right now. And generally when the effort, when you look at solving such problems, is to try to tie the arms and feet of the firms that operate. So there were examples such as algorithms that push content to children should be constrained.

Though it would be difficult to know exactly which algorithms and when who exactly is a child, right. There are ways to fake that, or what kind of content may be considered permissible or not permissible. And so there are a number of solutions of that form that have been proposed. Digital curfews banning targeted advertising, all of which try to constrain the hands of the players. And I have just been proposing an alternative solution to that.

So I'm going to share that, because I'm going to argue for a similar thing over here. And the solution is that rather than try to identify who's good, who's bad, and those are judgments that are very difficult to make or to get agreement on, the idea is that all of these social media platforms and a class of other businesses here would all pay an attention tax.

And the motivation is that a lot of the choices they make that lead to the harms occur because they are all chasing user attention, because that's what they monetize, right? So the idea is to impose an attention tax, collect all the attention revenue, and then give it back to platform users to use in order to pay subscription fees to platforms that choose to charge subscription fees.

So this is an economic solution that changes the nature of competition, because if some platforms were to do better things, and in fact, I heard one of the panelists at the hearing say, why can't we have XYZ platform that gives us all the benefits that we want, but doesn't come with all of these harms.

When a firm charges users they're responsive to them. So the idea for voucher is that it would reduce the price you have to pay for a platform that chooses to do good things, and it changes the nature of the market, and it may even cause the firm that was monetizing attention to throttle back its approach.

So I won't go into all of the details of that, but the point is that sometimes you can create solutions that change the way the market behaves, and they incentivize the players in the market to do the right thing, rather than go and try to actually make them do the right thing, which is often very hard to do.

So in this setting, I would propose a couple of things. The first is just like we think of the physical infrastructure. We have the highways, bus services and stops, other transportation, utilities and so forth, as enabling commerce. When you try to bring in a new company into your location, you try to talk to them about infrastructure and other benefits. I think the idea that has been floated here is to build a digital public infrastructure, right?

So the reason firms are unable to compete with entities like Ticketmaster is that the entry barriers are very high. And the idea of digital public infrastructure is to lower entry barriers and therefore encourage new firms to enter and give them more opportunities to compete with established players. And exactly what form that DPI digital public infrastructure would take is not something I've thought of enormously. But it's a very different approach to regulating and solving the problem than some of these other approaches.

On the second element, where there's a lot of fraud in the secondary market, and also this economic problem, that the profits in secondary markets, those gains never go to the artists, right? They are usually captured at other points in the selling system, but they also lead to fraudulent tickets. Here there's, I think, a fairly simple technological idea that the resale market would always connect to the authentic primary ticket source.

And this can be done through technologies, the API calls and other things, so that every time a ticket is sold digitally, it's basically a digital twin is created, which has all the characteristics of the original ticket. And so, for instance, the sale might be done through an app which guarantees that this resold ticket is actually a real one and will be honored, and there cannot be copies of that. So there are ways to solve the problem technologically.

It would require that companies like Ticketmaster do what we expect, for instance, of telecommunications operators that have to provide access to their lines, in this case, at some fair price. And you could imagine that there could be a price for every API call that goes through Ticketmaster. But then that would enable authentic reselling of tickets.

So those are two things that I have in mind for the primary and secondary market, and it would, of course, require a lot more detail. But I thought this was an informational hearing, so that's probably enough detail.

We know where to find that. So thank you for that. Mr. Chair, did you want to hop in with some questions?

I think he answered it. Thank you very much. I think he answered, know, I think that the real issue is bot. Right. And those individuals finding loopholes and going around the system that causes disenfranchisement of those who seek to go out and have an enjoyable experience here in California, whatever the venue may be. And so, as my colleague, the Chairwoman, know that we are a sophisticated society, and it seems that our sophistication is not so sophisticated because of the fact that this exists.

And my thing is making sure that people are not taken advantage of, because it's nothing more horrifying that you buy tickets for your children and you get there and those tickets are fake. Please.

Yeah. So I think you've really pointed out two problems, and they're interconnected problems. The first that there are bots that operate and purchase tickets, and the second that the resold tickets are often fraud. Right. The bot tickets could actually be authentic if they're sold correctly. So these are two different problems. So this is why I went back a few decades ago, 50 years ago, let's say. Right.

Because when the industry, or maybe even longer, when the industry began operating, it made sense to not ask that entertainment tickets be linked to identity. Airline tickets are linked to identity. You have to present an ID to attend, to get on the plane.

And we don't think that was appropriate for entertainment ticketing, because that would create a lot of problems, and then it would really make the reselling of tickets very, very difficult in a world 50 years ago when you had to sell physical tickets to other people.

It is not impossible today to think of linking an entertainment event, especially the high priced ones, to identity and authentication. Because if I go back to the discussion I had earlier about reselling tickets through an electronic system, it would be very straightforward to also get a name change for the new buyer and have it captured into the centralized database that can be looked at at the point of attendance.

So it's an idea that would need a lot more discussion, but I think what we call the overhead costs of reselling today are dramatically lower and close to zero. If you could have an electronic exchange system. Now, the reason bots exist is because there is no identity attached to a ticket.

And I grew up in India, and in the 1970s and 80s, if you wanted to travel on the train system, you could never find tickets to buy, because they were all bought by not bots, but brokers at the time, and then they were resold at crazy prices. And that problem was eventually solved, because traveling on the train in India now requires an identification.

You need to match your name to yourself, and therefore, that cripples the market for agents that might buy hundreds of seats at the same time. So that's one part of the solution. And I don't know if it's time to link identity to a ticket, but it's something that would be worth considering. And I think the problem of fraudulent tickets is something that is actually more easily solved with the electronic arrangements.

Anybody else? Okay, well, thank you so much. That was incredibly helpful to give us a lay of the land. And now we're going to hear from all of the people you've talked about.

Not all of them. And I will point out that I called out the sports teams. The brokers also chose not to show up. So we will now bring up our second panel from the primary and secondary marketplace. Dan Wall, the Executive Vice President of Ticketmaster, Laura Dooley, Head of External Affairs at Stubhub, and Robert Davari, Chief Executive Officer and founder of Tixr. You can correct me if I mispronounced that. Okay. Awesome. Thank you all for being here.

Thank you.

Yeah, you can sit there and we'll just start. Dan, you want to start? And we'll move this way. You can stay right where you are. We'll start with Dan and then move to you.

Terrific. Good afternoon. We have some slides that I think they're going to put up. Sorry that you have to turn around again. Okay. It's all good. So it's a pleasure to be here to address these issues. I do want to say that I want to compliment those who worked on the briefing. It's excellent. If there was a concern that you all don't know what's going on, that it was put to rest by the briefing paper. So it is really very good.

A lot of my remarks here are going to be similar to what Dr. Bhargava just said, but I'm going to then pivot to some of the big policy issues that I think we should be addressing. So if we put up the first slide, this is a different representation of his first slide. And it's just making the point that it's a collaborative endeavor to put on a concert or sporting event. This is really concert oriented, this slide.

It all begins with the artist, it ends with a fan. And it's all about the connection between the artist and the fan. That's what the whole system is about. Live Nation, as a promoter, is working with the artist. The promoters essentially finance and put up the capital for the concert. We also run many of the tour logistics, the touring, making the arrangements that can make particularly the increasing national or even world tour possible. Venues of various kinds are scattered about.

Obviously, you need a venue for the concert. Venues are actually the ones who issue tickets. Tickets, as a legal matter, are licenses to enter the facilities during the time of the show. And so venues are the ones that control the ticket stock. Although it turns out that it's really the artists who price them. And then a primary ticketing platform like Ticketmaster or Axis or SeatGeek is there to both be the transaction engine that distributes the tickets, but also it is essentially the back office program for the venue.

It's the venue management program, and there are a lot of economic interrelations between these players. Moving on to the next slide, in terms of ticket prices, that is very much a function of demand for the artists. I heard Dr. Bhargava's comment about how the artist community is fragmented, and that's true. But there is only one Beyonce, there's only one Taylor Swift, and that's who people want to see.

So this is Bad Bunny, who, if you look at the slide here, you want to see what the source of an artist's pricing power may be. This is someone who has vastly more social media followers and monthly listeners on streaming services than he has tickets to sell. And so the supply demand balance is huge. And unfortunately, that supply demand imbalance tends to be only a large thing for a small number of top acts.

For most acts, it's not, but it's always going to be ultimately the source of the price of the tickets. It's how much do people want to see this show? Those ticket prices will be set by the artist, which does not literally mean Bad Bunny. It means his business manager or, or agent.

And that will be done in consultation with the promoter, because the promoter is making a guarantee that is basically driven in the first instance by an expectation about how many tickets at a certain price point are going to be sold. We are living in a time of unprecedented demand for tickets, especially coming out of COVID when we were all locked up for a couple of years.

But it's also a product of this thing that we've seen called the experience economy that's become increasingly important, and the social media connections that allow for both discovery of new artists and the marketing of shows. Now, on the next slide, there's another factor, which is just that we are now living in a world where concerts are the primary source of an artist's income. It used to be, once upon a time, that concerts were marketing for record sales.

That's what their economic function was, and they were often performed at a loss because the record company knew that it was going to make a lot of extra record sales, and that's what it's about. But now streaming took away the record income, and now it is the primary source of an artist's income, and so it ends up being priced accordingly.

Now, an important thing that I want to cover, because a lot of people say that Ticketmaster or Ticketmaster fees or ticketing fees are responsible for ticket prices. Is that in fact, the primary ticketing, the distribution function adds very little to the ticket price. And that's the next slide, please. This is a depiction- I actually stole this slide from our competitor AG- we just like their slide. It is a slide in which you take a ticket that has $100 face value.

The face value is an artifact of this industry that has to do with a pool of money that is typically split between the artist and the promoter. And then what's put on top of that is the service fee is actually the compensation for the venue and the ticket distribution company, and most of that goes to the venue. The general split of that is about two thirds, one third.

So if you take $100 face value ticket and you add an 18% fee to that venue, it's going to get roughly $12, and the ticketing company is going to get about $6. Ticketing company has costs, it turns out. Primary ticketing company is usually making a profit that is on the order of 2% of the ticket price. It's not the source of why tickets cost so much. They cost what they cost in the first instance because of demand.

But there is another factor in the industry that we cover on the next slide, and that is this world that was created, really, to their credit, by StubHub in 2000 with the online resale marketplaces, which was revolutionary in the same way that streaming was to the music business. It altered the economics substantially from technology. Artists always underprice their tickets. It's been going on.

There's historical records that the tickets to the opening of Dickens the Christmas Carol were underpriced, and therefore, there were touts, as they call them in England, selling there. But the Internet scale of resale changed it all. And we're now living in a world where high volume ticket reselling is creating a constant new price level for tickets that is typically double what the artists set for the show.

The chart here is a number of shows that we at Ticketmaster put out in the late 2022 and then early 2023 to study this. And basically every show, the average resale price is more than twice the artist intended price. And that's the answer to why, Chairman Gibson, you have the bots. It's because there is so much money in doing that. And technologically, we address that with more resources than any company in the world.

And I can tell you that we probably stop 99.9% of the bots, but we give ourselves an F for that. Because if you don't stop them all, that means that tens of thousands or hundred thousands of fans are going to lose out on the opportunity to buy those tickets at the prices that the artists intended. And there is nothing positive from an economic or social standpoint in that at all.

And that happens because the opportunity on the secondary market between the ticket broker and this is overwhelmingly a ticket broker business. 80% of the resale market is ticket brokers. That the economic opportunity there between the ticket broker and the resale platform is actually greater per ticket than what the band can make on the show.

And that's what's depicted on this next slide, where if you look at that $100 ticket, that really was $118 ticket with fees, that's purchased by a broker, it's put on sale at a price which we've assumed here to be twice the face value plus fees. So it comes out to 243. Fees are much higher on the secondary market. The resale platform is going to make about $60 on that. And the reseller, the broker, is going to make about 65.

The band will probably make about 65 or 70 itself per ticket after its costs. So there's so much money in resale that it's distorting everything in the industry. And I'd be happy to answer more questions about that. So, just a quick list of things that we think that need to be done to address some of these issues. The next slide, please. In fact, you can go to the slide after that. The first thing is we are finally on the precipice of having all in pricing.

We're almost there. We have a great Bill in California that was enacted into law, 478, which we think is great. We at Live Nation Ticketmaster are pushing very hard for a federal Bill. We have Live Nation venues now have all-in pricing, but we will just tell you from our experience that there's a great deal of evasion of the existing all-in pricing laws that have been enacted in New York and other states.

I don't think there should be any ambiguity about what SB 478 means, but if we have that problem in California, we have to jump on it, both from the Attorney General's Office and if necessary, through legislation. The second issue is speculative ticketing. Speculative ticketing is this practice of putting up for sale a ticket that you don't actually have. It's done by brokers. That's who does it. It goes on incessantly on SeatGreek, StubHub and Vivid. It's not permitted on Ticketmaster.

I checked yesterday just to get an example. The Dave Matthews band has just gone on sale this morning at 09:00 with a number of new amphitheater shows. Yesterday, there were speculative ticketing listings for that show on StubHub, Vivid, and SeatGeek.

And legislatively, be careful of the Trojan horse, because the resale sites have been saying that they would favor some sort of speculative ticketing legislation, but they wanted to have exceptions, like the idea that if it's a service of procuring a ticket, it doesn't count, which is just gutting it, because if you actually look at the sites, they market the service in the exact same form and manner as a ticket listing.

It looks like a ticket listing, which is grossly misleading because they do not own those tickets and should not be saying that. The deceptive websites, the next slide, should be the easiest thing. I actually found this yesterday by chance, where I typed into my Google search bar, of all things, the word Ticketmaster. And the top listing was some other website, some other company that branded itself as Ticketmaster, even though the URL was different.

So this should not be controversial, that this just has to be unequivocally outlawed. And then the last thing that I'll close on is we do think that these issues surrounding ticket transferability, that public policy needs to come out on the side of the artist and the fan on this one. And it's very simple. The artist wants the ticket to go to its fan, and we can deliver that technologically, but it's not our call as to whether to do that.

Nevertheless, other resale sites and brokers are trying to get legislation passed preventing us from letting the artists manage their resale. You should be very wary of that. It's not in the consumer interests. Thank you very much.

Thank you. Okay, Laura, moving right along to you.

Yes. Thank you, Chairs, Members of the Committee. Hello. My name is Laura Dooley. I am part of Stubhub's external affairs team. Our team focuses on developing relationships with external audiences like potential commercial partners, policymakers, and media. Thank you so much for the opportunity to be here today to discuss the live event industry. I hope to use my time today to really accomplish three things. One, to introduce StubHub and give a little bit of more background about our business model.

Two, to highlight how the lack of competition in our industry really limits consumer choice and is the root cause of a lot of the downstream problems that consumers face. And three, outline how we believe opening the industry to better competition is the critical first step, not the only step, but the first step in addressing a lot of the frustrations you'll hear today. So just jumping right into it, what is StubHub? How did we get here?

Well, StubHub was actually founded right here in California as a Stanford business school project. Our founder was trying to get Lion King tickets on the resale market and thought to himself, there has to be a better way than purchasing a ticket from a street corner or from a classified ad without any guarantees or consumer protections in that transaction.

And as you know, and you've heard, StubHub didn't create the idea of resale that's been in existence for a long time, and it's been regulated for a long time across the United States. But our founders thought that there's a better way to do this. And so they tried to leverage technology to create an online marketplace that could connect buyers and sellers in a transparent and secure way, all backed up with a consumer protection guarantee.

Which is really the differential from how the ticket resale market existed before our customer service. And our fan protect guarantee is really what provides our customers the confidence to buy and sell on our site. So 20 plus years later, we still call California home, with one of our dual headquarters in Southern California with over 90 employees in the state, and growing. Resale has become an important and accepted part of the live events industry.

And regulations have really adapted over time to recognize how consumers participate in this market, both for original ticket sales and for resale. We've got partners across the US, including here in California with the San Francisco Giants and the LA Angels. And over the last 12 months alone, we can say that we've serviced 1.3 million unique California buyers and more than 185,000 unique California sellers. 25% of our sales to California events come from customers from all over the US.

We've sold tickets to California events to buyers in all 50 states, which we think is a great way to provide choice, flexibility, and access to the events that people want to see. So as a marketplace, how does our business work? Our job, again, is to connect buyer and seller and to provide customer support needed to support that transaction and make it successful.

Unlike your original ticket sellers, your artists, your teams, or your other event creators, we don't set the price of the tickets that sell on our site. Those prices are set by the sellers themselves. Our sellers could be a multitude of people. They could be average customers, they could be professional ticket sellers. They could sometimes be partners that decide to list tickets directly on our site. But ultimately, they set the price and our buyers decide if that price and that service that they're offering is attractive.

StubHub charges a fee for the use of our service, and that's the only revenue that we collect from a sale on our site as well. So StubHub does not collect the cost of the ticket or the price of the tickets that listed for sale, but just the fee that's associated with our transaction. And our fees go to operating a global business, to supporting our customer service, and to providing our fan protect guarantee to our customers. Our fees are always clearly disclosed before a transaction is complete.

But that said, we're very encouraged by the movement of states like California to all-in pricing, and we expect many to follow suit, with California being really the first to go to a traditional all-in pricing model starting in July. And while we may have been the first in the resale marketplace at that scale, we're certainly not the last. There are many others that have joined this industry, including SeatGeek, Vivid seats, and in fact, Ticketmaster resale.

We've created competition for consumers in an otherwise highly concentrated or consolidated industry. The competition in ticket resale is in stark contrast to how tickets are sold originally by the original seller. And unfortunately, that competition is under threat in many ways, based in part through the use of restricted technologies that can eliminate or prohibit resale, or often through anti competitive terms and conditions. So I just want to walk quickly through how an original ticket is sold and how that contrasts to the use of our site.

But I encourage you to think about any single event as a monopoly in and of itself. The original ticket seller, whether that be the team, the artist, or again, the event creator, generally sells their ticket exclusively through one ticketing provider. That ticketing provider generally is chosen by the venue, who has that exclusive relationship with the venue itself.

If we were to put that model into another industry, just for point of comparison, imagine if you wanted to buy the latest iPhone, and the only way you could do it was to buy it from one store on one day. You couldn't go to Walmart, you couldn't go to target, you couldn't go to your service provider for your phone.

You have to go to that one Apple store, and on the designated time, which is typically in the middle of the day, in the middle of the week, you have to line up. And that Apple Store does not tell you how many tickets will be available for sale that day, nor do they stop the line from queuing if they know they don't have enough tickets to sell to everybody that's in that line.

I think if people were buying iPhones that way, they'd be highly frustrated, because there's clearly a better way to make high demand products available for sale, yet in the ticketing market, that's how it's worked for a long time. And with respect to tickets today, 8 of 10 times, the retailer you're standing in line with is Ticketmaster.

And Ticketmaster has been able to create such a dominant force in our industry, because not only do they sell tickets, but they also control, downstream, a lot of other aspects of the industry as well, through Live Nation. So when you saw that chart talking about the artist promoter, the venue, the ticket seller, think Live Nation, Live Nation, Ticketmaster.

Because what you have here is a company that manages artists, that is the largest producer of music tours in the world, that owns or operates exclusively ticketing and tickets venues, some which they own, some which they operate, some which they exclusively provide tickets to. And once an event goes to that venue, they're then the retailer of record. And unfortunately, we can't forget that they're also in the resale business as well.

And so they can use terms and conditions and they can use technology to restrict resale altogether. No option. You can't resell. Sorry, non refundable, non transferable, or more frequently, make sure that that resale transaction happens on their platform.

So not only and sometimes are they profiting from the resale from a financial perspective, but they're always profiting from a data perspective, because in order to get that ticket, you have to go and make a transaction and give your data to Ticketmaster in order to receive it and enter the venue. So when we think about that dominant ecosystem, this one that's entirely controlled by one entity, they're controlling who gets to buy the ticket. Are you a verified fan? That's up to them.

Do you have the right credit card to get early access to the ticket? Again, it's up to them. Right? What are the terms and conditions of that sale? Is a ticket resellable? I don't know. Again, it's up to them. Other states have said, yes, those tickets have to be resellable, but that's not a right that exists in California today. Where the tour goes? Up to the promoter, that's them.

When the tickets become available for sale, how that supply is released into the marketplace, can that supply be manipulated to create a sense of false scarcity to increase prices in a dynamically priced system? Yes. Again, all them. So when we're talking about these decisions being made in a vacuum, we're talking about it in the sense that there's no competition to act as a check or a balance.

And most concerning, we also know through reports from the Department of Justice that when people choose not to play along or fall in line, they've been retaliated against as well for not participating in this ecosystem. So we believe that the first step toward reforming our industry needs to start with opening this marketplace to competition. Competition and consumer choice is going to address a lot of the root causes of what we're hearing today.

And it would be remiss if we didn't say that there's downstream problems as well that impact the resale industry and a lot of consumer frustrations that consumers probably have about resale as well. StubHub wants to be a participant in those conversations, and we believe that we can have them in parallel to a conversation, not in leu to a conversation of those root causes about competition.

So if we can solve these problems comprehensively and look at the industry from start to finish, as opposed to just pointing fingers to the resale market, we think it'll be a better overall outcome for consumers in California. So if we can empower those consumers with choice and have them be a part of this transaction, we believe we're going to create a healthier and safer marketplace for people in California.

And we certainly believe the California Legislature is in a position to do that and to innovate on behalf of consumers in our industry. So thank you very much.

Thank you, Laura. Okay, now for the last of the panel, Robert from Tixr. We have your slides here. I don't know if they're also going to be great. Thank you there.

All right. Glad to be here. Thank you for having me. And first and foremost, thank you for doing this, because it's a validation of just how important the live experience is to people. It's innate to the human condition. We all learned that during COVID when we were locked up. Right. And thank you for the great background paper. I agree with my colleague here. It was phenomenal. And we actually made it mandatory reading for our entire company this morning. That's how good I really thought it was.

And look, a little bit about us. We are a group of Californians also. We're founded in California. My business partner and I went to the University of California, Los Angeles. So we are very much rooted in the state. So to be here speaking to you guys is really cool. And the story of Tixr is we are fans, right? We are not the industry. We are fans. And we are fans that also happen to be product engineers.

And the reason we founded this company and why I think it's so important for us to be here and for you guys to hear a completely different perspective on what's been laid out today, which, by the way, a lot of it is, all of it is factual, is as fans and engineers, we face the same problems that I think the founder of StubHub did back in the day, but we approach it a different way. Right. When we looked at, why are there bots? Why are sites crashing?

Why can't we ourselves not get tickets? Why are we paying all these fees on the secondary market? We notice two things that are fundamental, right. And are important, again, to understand. One is the systems that dominate the ticketing industry today are very, very antiquated. Some of these systems have core technology that was built over 40 years ago, and you don't see that in a lot of industries today, because a lot of industries today are best product wins, and it's consumer choice that dictates those.

Because of a variety of factors, which I'll get into, that's been the case. So, first and foremost, we said to ourselves, well, system crashing on sale or bots or all of this pricing inefficiency, the first thing you need to do is build a new system and build a system with new, modern technology that did not exist 40 years ago. And, look, you could renovate things, but building it from the ground up is a completely different ballgame.

The second thing we realized is the market inefficiency problem is just that, and that the secondary market versus the primary, which is really the focus, that's not the only solution. There are things that you can do if you innovate. Right? And you think of the problem in different ways that can create new solutions to these things. And that's what we set out to do. And we bootstrapped the company because, frankly, fundraising was difficult. We will talk about that.

But capital into this industry is very difficult to come by because of the dynamics of the industry. I was lucky to have found another company. I was able to self finance it. We hired a great team of engineers, and we just set out to build something new because we thought it was the right thing to do. Okay. And if you go to the next slide. Next slide.

And we, first off, set out to build a new system, one that, again, is built on great architecture, looks beautiful, looks and feels like the systems of today. Because we believe fans really want two things. First, they want a great experience, and they're used to having great experiences on Uber and Grubhub and these new modern systems that have rolled out over the last 5-10 years, especially mobile experience.

And number two is, and if you go to the next slide, is we set out to innovate. So we've rolled out, and I'll give you guys a couple of examples of this, but tools around behavioral pricing that the Professor mentioned is really important. Dynamic pricing, payment plans which give more accessibility to fans being able to break up payments into installments, and on and on and on.

But over the course of the 10 years we've been in business, which we are the babies in the industry, we are constantly rolling out new innovations at an incredibly rapid pace. And not only have we caught up with the legacy in terms of a lot of the core requirements to handle a festival or an arena, and we could actually do it globally, but we're now bringing things to market that have never existed before, that changed the dynamics of the business.

I'm going to give you guys a couple more things. Next slide. And the other piece is we are a pure play technology company. We are not a promoter. And as a matter of fact, it's part of our ethos, and we have turned down offers for being acquired.

We've turned down offers to invest in promotion companies because we believe that as long as we are here as a technology company, we're here to solve problems, and we should not have any bias towards one side or another. We purely just want to solve. And we're also data neutral, right?

The data that an artist gets or a promoter gets that works on our system is not shared, it's not resold, and it's just part of our core ethos to be a pure play technology company, which I think is very, very important to understand. Next slide. And I want to give you guys an example of how all this manifests. So, Pretty Lights.

An artist that was in hibernation for a while, phenomenal electronic music artist, and he happened on his, I think it was a 15 or 20 city tour to route through two of our venues. And there's a great opportunity for us to contrast our technology with what legacy systems that were the other stops the tour went. And what we did was a little bit different. First of all, we gated and made sure only specific fans come in and that they're like fan club members.

But then, because our system is able to scale and we don't have those queues where people have to wait in line and see your number, 100 out of 500, we built the system to handle a tremendous amount of volume simultaneously. So from a fan experience, if you go on the site, you're not waiting. You could just transact. And these tickets sold out incredibly fast, which on most systems you would show sold out.

People would jump onto a secondary to try to get tickets because they can't get them. But we've built this unique technology, which is one of the few innovations we've rolled out, called Waitlist. And how that works is when an event sells out in real time, we can start pre authorizing people's credit cards so they have a chance to get a ticket. And because you do that, you do a couple of things.

First of all, scalpers, they don't have as much of an opportunity to get on our site because we're very good at fighting that. But once you have the waitlist, what we did in this particular case is once the event sold out and we had people, again, with their credit cards on file, the promoter was totally okay with us going in and scraping everybody that had bought, and we removed anybody that looked even remotely suspicious. And the net result was virtually no scalping, no secondary market.

And true fans got tickets. There's actually a Reddit thread with Pretty Lights fans where they're, like, blowing up and excited that, oh my God, I actually got tickets on Tixr. And this happened because our ability is there, and this is a very important point. We have new technology, and we're very flexible to make changes and adjustments to market conditions in real time. And the motivation is that we genuinely want to solve the fans' issues. All the issues that have plagued us today.

Thank you to Taylor Swift for bringing us here again. Same issues as when I founded the company 10 years ago. So nothing has changed materially. So the question is, well, what can legislature do to help this? There are a lot of different approaches, but I think, first of all, you genuinely need to side on the side of innovation. We can solve these problems. There are a lot of bright minds in California and in the rest of the world.

This is something people are passionate about. They don't approach this because capital is hard to come by. It's a daunting build. It's taken us a decade to get to this point. Not everybody's got that kind of insane stamina. And the dynamics in this industry generally do need to change in order for innovation to break out. So exclusivity, for example, at the venue level is an interesting topic.

If more venues were accessible, more independent promoters and artists would be able to pick their own ticketing system, which opens up more primary ticketing opportunities. Also, this combination of the promoters, which take up a lot of the inventory pick in their ticketing system, that also makes it very challenging. And we've learned this firsthand as promoters, and it's not just the biggest, but it happens across the wider market.

As they buy more and more market share, they naturally put people on their own ticketing systems that oftentimes are legacy, and it causes a lot of these macro issues.

I'll close off saying thank you for having me. I'm here to answer questions and appreciate the conversation.

Thank you so much, Assembly Member Wicks, and then Assembly Member Irwin, after.

Thank you, Madam Chair. I was supposed to be at an event about 10 minutes ago, but I was so captivated by the conversation. So, Mr. Davari, basically, if I understand what you're telling us, is that you all have the technology to solve the bot problem.

And you feel like that's a doable thing.

Yes.

Yeah, I mean, look, it's a cat and mouse game, right? But we believe that because we're able to move faster than others, and we're built on newer, modern technology.

We have a better chance of beating them. We've historically been able to do that. And, look, all of these things are solvable with product. Legislation should simply allow the products to thrive. And hopefully, there will be more Tixrs out there, because we want to solve problems. That's why we're here.

I assume also when there's exclusivity on the venue, that makes it difficult for you guys to participate. That's another issue.

Yeah, I mean, look, we have our own venue exclusivity, and we have venue clients that are phenomenal. But it is true that if an artist or even an independent promoter wants to go into, say, Chase Center here in San Francisco, they cannot do that. Right. And because there are certain companies that control so many of the venues, it creates a very low ceiling and barrier to being able to actually get into those venues.

Thank you. So, if the technology exists to fundamentally address the bot issue, which I think is an important one, then, Mr. Wall, how come Ticketmaster doesn't deploy that?

We deploy the most sophisticated antibot technology on the planet. We spend more on antibot technology than the rest of the world combined. It is the cat and mouse game that he mentioned. It's an arms race. When we deploy something that works, the resale world immediately starts working on an alternative to it. We have come up with verified fan is a wonderful product. What's happening in the advent of verified fan, you see ticket brokers crowdsourcing people to create fake verified fan accounts.

It is the world we live in, and it's the world that all of us are going to live in as long as we turn a blind eye to this runaway resale market that we have.

And do you all think that it's a priority for you all to stop the bots and that's a company top down priority?

That I can assure you that not only is it a top priority, but all you have to do is get the wrath of the Swifties and it will be a top priority forever and ever.

I know Ticketmaster requires exclusivity with regard to ticket sales.

Require it. That's the common way that ticketing contracts have been sold for 40 or 50 years.

But you do require it or you don't require it.

It's venue driven. It's not driven by us. Venues prefer to sell their ticketing rights to auction them off to ticketing companies under a winner take all auction, which puts the maximum competitive pressure on the ticketing companies. The opposition to the bills that would restrict exclusivity, it's not going to come from us or from any other primary ticketing company. It's going to come almost unanimously from the venue community.

I just was referencing a Wall Street Journal article which I guess said that you all were requiring that, but maybe that isn't correct.

We have non exclusive arrangements. We are very rarely asked to bid on a non exclusive basis. It almost never happens.

Got it. Okay, so you guys are open to eliminating that exclusivity?

We defend exclusivity because our clients want us to defend it. The venues, it's their issue. It's not our issue. It's the venue's issue.

Got it. So you wouldn't be open to getting rid of it?

If you can convince the venue community to get rid of it, we will thrive in a world without exclusivity. It's not a problem.

Okay, so you would support it?

We're not going to undermine our venues. We're not going to do that.

Okay, so you wouldn't. Okay, thank you, Madam Chair.

And we are going to hear from the venues in the next panel. Yeah, Ms. Irwin. And then we'll go to...

Thank you. I appreciate that you said you support all-in pricing and that it was even on your slide, but you still don't have all-in pricing. So are you looking for the

June deadline. When can we expect Ticketmaster to have all in pricing?

So Ticketmaster, where Live Nation, is able to control the pricing and the way that the pricing is presented, which is on our owned and operated venues, it's already in effect. It's already been done. We did that pursuant to a commitment that we made to President Biden last year. But the ticketing company doesn't get to decide this for the artists and the teams. We need to get the sports teams.

If the sports teams, if a league came to us and said, we want you to do all in pricing, we would do it tomorrow. This is one of the reasons Stubhub knows all about this. StubHub went out, to its credit, tried to change the model and go to all in pricing, and it was hammered competitively when it did it. We need legislation that makes everybody do it so that everybody does it, and there's no competitive benefit from being a bad.

In. So you said the deadline for that is June.

That's when the California deadline is under the recent legislation.

Absolutely under the Dodd Bill. Okay. And then if we're looking at dynamic pricing, and maybe it's for both of you, how do we know that prices aren't being artificially inflated by keeping tickets back?

Well, first of all, in terms of dynamic pricing, one thing that I do want to make clear, we don't do the computer driven dynamic pricing like airlines do, that it's automatically updated four times a day according to demand. What Ticketmaster offers its clients is an ability to make manual adjustments to the manifest, up or down in some other ways like that. The overwhelming incentive of everybody in the creative ecosystem that puts on a live entertainment event is to make sure the show sells out.

That's how everybody makes money, is you get the show to sell out, and the promoter first and foremost, because the promoter is not going to make any money unless the show is close to a sellout. Nobody holds back inventory. That's a myth that has been going around. We don't hold back inventory now.

Inventory is now fragmented into various kinds of pre sales and things like that because the event organizers have decided to sell some of the inventory to visa and some of it to American Express and things like that. But inventory is not held back.

So if it's being sold to mean, is there any transparency on how many tickets might not be sold yet?

No, and we oppose that mandatory transparency because the only parties in the ecosystem for which that has any value are ticket brokers. For everybody else, their decision on whether they want to go see Beyonce has nothing to do with what the supply of available tickets is.

Okay. And then with your technology, are there tickets held back?

First of all, we do have automated dynamic pricing, which is one of the major innovations we brought on. It's controlled by our clients, but it is automated, right. So that if there's a surge, for example, the price can go up. And the whole goal of that is to put more money in the pockets of the people that own and control the ticket so it doesn't go on the secondary market. Right. With respect to holds, I mean, holds are common in the industry.

There are holds on the back end. It's true. It's dictated by the venue or by the artist. We don't, as a ticketing company, dictate it. If we had to remove that, I guess we could. But I will tell you that it's not common for a lot of the tickets to be held. They are kind of like here and there.

And the concept that he was mentioning about the presales and all that kind of stuff are common and generally advantageous, because what they're usually trying to do is expand distribution, like an AMX presale. Or we do a lot of artist direct stuff where we'll do festivals with artists and they'll do fan club presales to keep the tickets in the hand of the fans. So it's not necessarily a bad thing.

I think what's more important is creating dynamics where you're able to get them in the hands of fans through market optimization and yield management.

Madam Chair, may I make a statement to this effect?

Sure, go ahead.

I would just add that I think when we talk about holdbacks, we should think about it in different ways. Just because the ticket doesn't go on sale immediately doesn't mean it's not being held back for the benefit of dynamic pricing.

So if you can dictate when that supply is released, even if the ultimate goal is to release it all by holding back some of those initial tickets at that immediate moment of sale to create a sense of false scarcity, you can then release tickets two or three weeks later, and those prices may go up to meet demand.

We've seen this happen quite a bit with the secondary market often kind of being like the market clearing price determiner and those tickets now being rereleased later, seeing those prices go up. I would say we don't object to the practice by any means, that tickets are distributed at the discretion of the artists. In that sense, I think our point of view is, if you're transparent about it and you're a consumer on day one who thinks something is sold out.

If they were to know in that moment that actually no 1000 more tickets are going to become available in three or four weeks, you may not pay that higher price in that moment. You may just wait and see what happens three or four weeks from now when that next allocation of tickets comes out. That is very common, but I think it's fair to say they're not held back exclusively or entirely from the public. They're just held back in real time, only to be released or dripped into the marketplace over time.

Okay, so you are advocating for transparency, not a false scarcity. Okay, I was going to move to my next question, but please.

Yeah, I just wanted one follow up to that before she moves on to the next topic, but we'll come back to you. So I think that as I've seen the dynamic pricing, and I know the teams chose not to be here, but the teams were actually pretty transparent that they do this. Look, I mean, the teams are bringing incredible economic benefit to our community and so the ability for them to make more money or fill their stadiums is a positive thing.

So I don't know that I agree with you. I don't think that holdbacks are always a problem, but I do think where I've seen the problem, and this is why I wanted to come back to you with what you said, is if I tried to buy those bad bunny tickets on day one to spread the love between the artists here, and they appear to have sold out, but my kid was heart set on it.

And then I go to the secondary market and now it's five x and I don't know, more is coming, right? I'm going to maybe pay that five x when I wouldn't otherwise. So I saw the benefit as it actually related to depressing the secondary market. So this is interesting to me that you're saying the brokers are the primary beneficiaries. So I just wanted to come back to that comment you made, Dan.

So it's extremely rare for tickets to be held back for that kind of purpose. Tickets in the natural cycle of a show will sometimes become available later on because they decide to change the way the stage is built and there's 1000 more tickets available or something like that. But the key moment of demand for tickets is at the on sale. That's the peak of demand. That's when you want to have everything out there available for sale.

It's a myth that there is a strategy out there that says we're banking on those tickets, that the primary tickets are going to go even higher later on, and so we will hold them back. That's not rational behavior by a promoter. A ticketing company has nothing to do with it. But that's not rational behavior by a promoter or an artist. If the artist has decided that they can get $450 for that seat, their best chance of getting it is in the buzz of the on sale.

Right, but you said the brokers would be the primary beneficiary of the disclosures. I didn't understand that.

Yeah, because the brokers, as she just said, actually determine the true market clearing price, which is a function of what? Supply and demand. So what you want to know is supply. You want half the equation. Transparency gives you supply, and that allows you to make a judgment about how much to offer those tickets for on the secondary market. And this is being done by very sophisticated people. We're not in the days of Bob the broker anymore, where you have a couple of guys are really unsophisticated doing this.

These are computer science driven brokers who are figuring this stuff out and looking for the information to figure out how high they can press these prices.

Okay, did you want to follow up on this point about drip?

Okay, back to you.

Hopefully, this one is a quick question. So if I buy a ticket, I pay Ticketmaster a fee, and then if I can't go and I have to sell it back, I pay Ticketmaster a fee. And then if it's resold, then Ticketmaster gets a fee also. Is that accurate?

If you would sell it on us, but sure, there's a completed transaction in the primary market. In my example of $100 ticket, you paid 118. If you go to sell that, whether you sell it on us or whether you sell it on stubborn or anything else, what will happen is you'll be subjected to a new fee structure.

If you're a broker, you won't pay a seller fee on a resale site, but if you're a consumer, you'll pay a seller fee, and then buyer will pay a buyer fee.

Okay. And then with the new technology, how do you handle somebody having to.

So this is a really important thing to understand and some that we kind of have figured out over time, because, again, we're relatively new to the market. As you go upscale into the big arenas and the big shows and sports teams and stuff like that, the way the deal dynamics work to win these big accounts has swayed heavily towards the secondary market.

The secondary market has become so dominant and the fees are so much higher that even the primary systems that are controlling the venues have become far more incentive to make money on the secondary than on the original transaction. Right. So in that way, we're very contrarian in our thought process to the existing market dynamics because we're all about efficiency. So we're in the primary. Right. So for example, with the waitlist product, right.

When you waitlist somebody, they just charge a normal transaction fee and the first ticket goes away. They get a refund, the next person gets a ticket. Right. There isn't any incremental margin fee that's 25-30% or anything like that. Right. Whereas sometimes a primary system will take a dollar, a very little amount of ticket, but then they'll make 20205% on the secondary.

That's a really key point and why you're seeing more inventory and more of the capital shifting to the secondary market, because frankly, the margins are much higher there.

Okay. And then just last question, and Ms. Dooley might want to, I don't know if you have response to what the gentleman said, but can you tell me about the rights that consumers currently have when they purchase a ticket?

Yeah, it depends on where you live. And unfortunately, in California, the answer is not many in a state like New York or Illinois, Colorado, the Legislature has opined upon the fact that consumers should have some rights when they're purchasing tickets, particularly around how they use that ticket after purchase.

So if they elect to give it away, if they elect to resell it, if they elect to do something else, they're able to do so without restriction from the original ticket seller who sets the terms and conditions of that original sale. So there's six states that have that opportunity today for consumers.

Okay, so you're saying that California is in the lower end of consumer protection?

Yeah, unfortunately, I think this is one example where California has not led, but I think there's an opportunity before us to really innovate together and kind of figure out a better way to have this system operate.

Okay.

That was a lot of questions. I appreciate your patience, Mr. Chair.

Thank you.

Sure. To the previous speaker, what states are leading in this space?

Yeah, we would point to New York, Illinois and Colorado. Utah, Virginia, and Connecticut are the other three that have these things. But I think Illinois, Colorado, and New York not only talk about the right to transfer, but they talk about a whole host of other issues as well, many of which are already in statute in California. That would be one aspect that we would say California does not have to match those other states right now. The right to transfer.

Thank you for that. I've certainly thoroughly enjoyed this robust conversation. A question for the panel. Do small, independent venues feel pressure to work with specific sellers in order to get access to talent?

Well, I would say that, no, the smaller venues, that's the most competitive part of this industry in all respects. And throughout the whole product stack, there's more ticketing solutions. There's thousands of venues. For our position, we probably have 200 out of over 2000 venues in the United States, and there's many, many more concert promoters working at that level of the. So while I hear that, I don't understand logically why that would be true.

Thank you.

So not as much in the smaller venue market, right? There are a lot of more independents, some of the promoters, the large scale ones, that own ticketing companies, they also own venues, and they're constantly buying up new venues. So the ability to ticket those or give them freedom to do so is becoming more and more limited every single day that goes by. What I would focus on are the large venues. The large venues are mortified about losing concerts.

It's just a fact, whether it's explicit or implicit. And it's at the large venue level where most of the revenue rises, most of the economic value also rises, too.

Got it. With your technology, since you own this company, have other ticket brokers or ticket venues not been receptive to your new technology? And if so, why?

That's a really good question. I mean, there's always fear, right? Fear about something new, obviously, and new technology. That's kind of a common thing. There's inertia in this industry. There are very long term exclusive contracts, like we mentioned. So sometimes a venue or a festival or whatever it is, might want to move over, but it's going to take years for them to be able to actually do that, because the nature of the contracts.

And then there are, I mean, we're only recently getting to the scale where we're competing on the large scale venues and stuff like that. And there is a fear about losing shows. It's just a fact. Right. And wanting to disrupt the larger kind of dynamics of the industry. So we're starting to definitely see that.

Got it. Thank you.

We don't permit it.

It's not allowed on Ticketmaster.

Okay.

But I do think it's a problem now. I did stand in line in college for basketball tickets for other people. So this is an age-old tradition, right, of people spending their time to buy tickets. So I think I get the benefit, right, of someone who can't in the middle of the day, log on to Ticketmaster and try to get these tickets.

But I also do think that when you search for it the day before, and it's not clear you're not buying a real ticket, that that's not transparency and consumer protection. So I just wanted you to touch on that.

Yeah, I'm happy to. I think I would wager to say that one thing that I'd like us all to think about is, what is the definition of a speculative ticket? I think in many ways it's been discussed as not having that ticket in your possession. And in many ways, that cannot be the definition of a speculative ticket because of how original tickets are sold. You could pay for a ticket months in advance before it's delivered to you, right, because of delivery delays that happen.

And so it's important when we think about spec, it's about a ticket that you either don't possess or you haven't purchased. You don't have a right to that ticket because you could very well have purchased it and resell it before it's delivered to you. So putting that aside, we would agree. I think the regulation of speculative tickets is incredibly important. California has had that in statute for quite a while.

I think it's fair to say that one of the difficulties of regulating speculative ticket sales is identifying what is a spec ticket and what is not. And so what we've seen is kind of a movement to rethink the way that those regulations work. I would point to a bill that passed through the United States House Energy and Commerce Committee unanimously that basically prohibits the resale of a speculative ticket. Full stop. And I think that's a step in the right direction.

But then what it does is it couples it with the enablement of some sort of procurement service like you just described, but with very detailed explanations on how that service is merchandised. So it cannot be in line with another ticket sale. It has to be very distinct from what a ticket listing actually looks like.

And from our perspective, we think that's a great regulatory path forward because it allows for innovation and it allows for better ways to do things, all while protecting the consumer from buying something that doesn't exist. So we think it's a really positive middle ground.

And as the product guy in the room, I'd be curious, your intake, your input on it's really hard to identify the speculative tickets. In some cases, very easy. If they aren't on sale yet, you should know they're speculative. But other than that.

We're pure play primary.

No, I know you're primary, but I just didn't know if you had thoughts on the speculative market.

I haven't seen it as, honestly, like, I don't know how big of a problem it is.

Okay.

I think it's kind of ridiculous. It's kind of like the edge ridiculousness of so much secondary activity happening where people are now buying, like, short positions almost on secondary.

That's exactly what it is.

I'm more focused on trying to keep as much revenue in the hands of fans and the promoters.

If I could just make just a quick comment on that. So I don't think this is nuanced. I don't think it has to be involved with any complex distinction between tickets and services. If--I agree that if you either have the ticket in hand or you have the contractual right to the ticket, then that takes it out of the realm of speculative. But that's not what we're dealing with here. We're dealing with, for example, the Dave Matthews tickets that are on StubHub yesterday.

The show isn't on sale. It's impossible for that not to be speculative. It's impossible. And yet you can see this amphitheater, this section, this row, and you have to read fine print to figure out that you're buying the service of somebody procuring. There's no social value in that kind of hair-splitting. It's trying to make hair-splitting on different kinds of fraud. Fraud is fraud. It should just be--it should be a blanket prohibition on speculative ticketing, and the world will get along just fine under those conditions.

Just need to go back to the days where the poor college student can just wait in line. Then I had a question about--so the analysis notes the point about controlling the prices. And I think we've talked about--Laura has done a good job of talking about the limits on the resale, right? If there's a contractual limit to how you can resell that ticket.

But the analysis also noted that secondary sellers--and it didn't refer to them, so this may not be StubHub, but I just wanted you to comment on it--may restrict the sale of tickets at face value and only allow for the higher price tickets to get those higher fees that we saw. That seemed problematic, too, and we haven't talked about that. So I just wanted to touch on that.

StubHub doesn't restrict prices up or down.

Okay.

So it's not a service that we offer today in the U.S. I'm not sure if we do it--I mean, there might be places where there's a legal obligation to do that somewhere else, but we don't do it in the U.S. I think what's interesting about face value exchanges, I think it's a great option for consumers, right? And they should always have the option to participate in that face value exchange.

But one of the things that concerns me from a consumer perspective is whether or not that face value allows for those prices to fluctuate down. And in many instances they don't because I think one of the things we haven't really discussed is how resale restrictions can be used to control the market going down as well, right?

If an event can't hold the market, if it can't hold the price of the ticket initially sold, a price floor or a face value-only exchange prohibits those prices from dropping, whereas on a StubHub or another website that doesn't have those controls, prices can go very low. I'll give you an example of Bruce Springsteen, a hot ticket on the East Coast. Those tickets didn't maintain that price point in the middle of the country. We had tickets selling on StubHub for six to 30 dollars for an event.

The same tickets being resold on Ticketmaster resale were not listed below 60 dollars. So clearly there was some sort of mechanism to prevent that price from going down, and I think when we think about a free market, we need to think about it both ways.

Because restrictions can be used to cap prices going up, certainly, but they can also be used in the other direction, and it would be a real disadvantage, we think, to consumers, to prevent those loan prices from happening because in a lot of ways, in a very corporatized industry, tickets aren't cheap. We all know that. And having the ability to go to an event below face value is important.

Yeah, it's important to note. I mean, dynamic pricing can lead to very high prices, but as the A's well know, it can also lead to very low prices. Happy to throw them under the bus as they leave the stage. Well, I want to thank you all for your being here.

I know this was a hard dialogue to have, but I really actually appreciate it because I do think the innovation we're seeing in California and the ability to have these hard conversations to get to the bottom of it will hopefully lead to legislation that will protect consumers and allow fans to not have to start companies to get tickets. You know we appreciate that you did.

Thank you. So the last panel we have is: Working with the Ticketing Ecosystem. We have consumer expert Justin Brookman, the Director of Technology Policy at Consumer Reports. We have a venue operator, as I mentioned, Joe Rinaldi, the Managing Partner at the Music Box in San Diego. We lost--I think our San Diego member left. And we have the Artist Representative Dave Shapiro, partner at the Sound Talent Group, to speak from the artist perspective. And we will start with Mr. Brookman.

Thank you very much.

Hey, good afternoon. Thank you very much for having me here, Members of the Committee and Chair Bauer-Kahan. I got to testify with you last year on AB 254, which I was very privileged to get the chance to do. I'm glad that's law now. My name is Justin Brookman. I am Director of Technology Policy at Consumer Reports. We are an independent, nonprofit membership organization working for a fairer, safer, and healthier world. So we do this in a bunch of different ways.

We test and rate products like cars and refrigerators. We do in-depth journalism, exposés in the companies. We create products to help people manage their online lives. We conduct nationally representative surveys to find out how people feel about these sort of issues. And then my group, we advocate for stronger laws around the country to protect consumers. One issue we've worked on for a while is the issue of the online ticketing marketplace. I think it's clear a lot of consumers are frustrated with how it goes.

A few years ago, the Federal Trade Commission had a workshop on this issue. We reached out to our members and said, 'hey, tell us your stories about how it's working for you.' We had about 6,600 people write back to us and the Federal Trade Commission complaining about hidden fees. They really weren't sure who they bought from, bait and switch tactics, frustration about dark patterns. In general, the opacity of the marketplace they found to be really frustrating.

One person wrote to us, she said, 'I actually buy tickets to events, plays, and shows quite often. I search for the best night, best seats, best prices. After all that searching and comparing, I proceed to actually placing the order, and that's when the added fees show up. After all the effort over the time limit to complete the order before the seats are lost, I just go ahead and pay what I have to. I feel this is unfair.'

'I don't find out the true cost until this clock is ticking.' Other people have said they really weren't sure who they bought from. One woman wrote in. She said she spent three times of her face value for a local production of the Nutcracker she bought from secureboxoffice.com, which she thought sounded really official. I thought it was the box office. And then she bought them. They didn't even have the tickets. They just said, 'we are committing to procure these tickets for you now.'

And then she found out they're actually available on the venue site for list price, and she found that to be frustrating, confusing. These findings, I think, largely reflect again a broader report that the GAO did that was referenced again in the very excellent briefing memo done by the Committee staff showing the marketplaces are dominated by resellers, hidden fees, and shady white label resale sites. And since that time, I think things have not gotten better.

A couple of weeks ago, I was on Reddit, and on the front page there was a story of 'What Has Become So Expensive It's Not Worth Buying Anymore?' The number one thing was fast food. That people were very frustrated about burger prices. But the number three answer was over 13,000 upvotes with concert tickets. And the threads contained a lot of unsurprising amount of invective directed at Ticketmaster, Live Nation, resellers, junk fees. The Federal Trade Commission got a lot of grief for why is this allowed.

And in some cases, the artists themselves. The number 12 upvoted thing was also concert fees, by the way. So a lot of anger about this. I will say my own experiences have reflected that. I took my son to a Capitals game a couple of months ago, checked out, and then suddenly upon checking out, the price was 40 percent higher from the fees, applicable service delivery and transactional fees. I took my daughter and one of her friends to a Melanie Martinez concert.

They sold out within seconds, and so we had to pay it on the secondary market. We showed up. Me and my daughter got in. Her friend showed up, and it was a fraudulent ticket. So the example that Chair Gipson talks about, she couldn't get in. We had to go. I gave her my credit card, and eventually she got in after half an hour, but it was still not a great first concert going experience for her.

And then last week, I was actually trying to buy tickets for myself. It was an artist who was trying to create all these hoops to jump through so only the real fans could get it. And I authenticated myself. I went to the fans-only site and then I got online and then they thought I was a bot. Not sure why, but I was not able to buy a ticket. So I think there is agreement. There's need for some sort of policy intervention here.

I do think the lowest-hanging fruit is all-in pricing received a ton of attention. The Federal Trade Commission is doing a rulemaking around it. It seems like a no brainer that should have been addressed years ago. We supported SB 478, which I think will help rein in fees. I think it's a great and fantastic bill. I do want to echo something that Mr. Wall said, that we have seen other efforts to do this have not been as effective.

New York has all-in pricing. Again, the briefing memo, I think, cites a rolling stone story that showed that they went to all these sites, and in fact, there's really not all-in pricing for a lot of places. You need to click like ten times. You need to log in first and then at the end right before, not at the last step, the second to last step, they'll tell you at the right prices. And I think some companies are doing it right.

They do show all-in pricing right away, but they suffer from it because if someone looks and say, 'well, shoot, this site is charging me more,' so it really is a collective action problem that there needs to be clear rules for. Again, 478 is great, but I think implementation is going to be really important, so it's going to need to be enforced. I think additional price transparency could be useful.

We've seen other legislations mandate, tell people the original list price of the ticket so they can say, 'is this a 15 dollar ticket or a 40 dollar ticket?' So some indication of value, breaking out all the fees, again, just so people can know what's going on in addition to the all-in price. Whether the seller is the original seller or a reseller, I think this degree of transparency can inject some more information into the marketplace. We've heard some stuff around speculative ticketing.

I think a lot of existing speculative ticketing practices are probably illegal already. But because of under-enforcement, these practices remain relevant. Unfortunately, going through Google Search, you're not always going to find the right answer. Dr. Bhargava talked about how Google Search has gotten worse in a lot of ways. I think a lot of us feel the same way. You don't know who you're going with. Search engine optimization has gotten better, so people often end up at the wrong site.

I think legislation clarifying that you can't market tickets you don't have is probably a good idea. I do understand there is some gray area around these concierge services. You hire someone to go wait in line for you, for example. I'm not sure these are really pro-consumer services. They do inject middlemen into the process. It does jack up prices because people who are willing to pay for the labor of finding tickets; at the very least, I do think these need to be more clearly disclosed.

I also want to bring up the issue of regulator resources. A lot of this stuff we're talking about is probably already illegal under California's very strong consumer protection laws, and that was a common theme, the things we heard. Like, how is this not illegal? Sometimes it is, like deceptive pricing, obscuring sellers' identity, selling tickets you don't have. I think it's probably already prohibited, but without robust enforcement, without regulators who are really dedicated to it.

Again, we've seen lots of efforts around the country to address this, but a lot of times they've fallen by the wayside. So I think as you're thinking about regulatory interventions that make sense, making sure regulators are enforced to do that. There is a private right of action under SB 478, which I think will help, and we're very supportive of that element.

One area we've heard very different opinions on today is the issue of policy interventions around restrictions on resale, putting limitations on transferability or the ability to charge higher prices in resale. Some states just strictly prohibit it. The reseller can do whatever they want. There's a hearing tomorrow in Maryland. They're hearing a law to say that you can only resell at face value. You can't resell anything more than that. I think in some limited cases, resale restrictions can hurt legitimate consumers if you can't attend an event for a reason.

Dr. Bhargava testified about this. If you buy season tickets, you can't make it every single game. Reselling it can be very helpful, but I think it's important to keep in mind the vast majority of the people who are reselling are brokers who are trying to take advantage of the lower than the market value prices and then jacking them up.

If there were more restrictions on resale, I think there would be a strong deterrent against scalpers, and I think some of the lower prices might actually seep down to consumers at the end of the day. So I think it's a good idea to encourage artists to experiment with these sort of restrictions. And so for that reason, I think I would disagree with Ms. Dooley, who is saying that those six states that have those blanket prohibitions, like resellers, can do whatever they want.

I think that's not actually good at the end of the day for consumers because, again, it does incentivize resellers and the prices getting jacked up in the first place. I would agree probably with Ms. Dooley that resale restrictions imposed by the primary seller, those might be bad by the ticketmasters just to prohibit resale through partners. Dr. Bhargava again talked about the benefits of interoperability, which might help provide some more clarity and liquidity to the marketplace.

And so I think in those cases, the Ticketmaster-imposed restrictions would not necessarily be a good idea. But, yeah, I'm happy to talk about these or answer more questions as the day goes on.

Thank you so much. My regulatory lawyer heart is full here. You all talk about enforcement, and I took away we need to have a hearing on where the dollar menu went to McDonald's. Next, we will go to Mr. Rinaldi to talk about what it means to be a venue operator.

Thank you, Chairs and Members for having me, and today. My name is Joe Rinaldi. I'm the Managing Partner of Music Box in San Diego. It's a 705 capacity venue in the heart of Little Italy. Very new, nice venue. We sell about 84,000 tickets a year. We are an independent venue. We're a member of NIVA, the National Independent Venue Association, but I'm here today to speak on behalf of my club.

We have taken the first nine years of our existence and tried to build a reputation that we're a place that a person can come and have a good time and see an artist they've always wanted to see and have that timeless experience of a concert. What I do at night is I tend to have to deal with about four to six customers a night that are the result of all of the different deceptive practices you've heard about today.

I'm very happy that my colleague from Consumer Reports took a second to look at it from a consumerist position because that is what my focus is on as well. I feel like on a nightly basis, I am letting down about four to six pairs of customers. It's normally on date night. They've normally traveled a great distance to be at our venue. We normally are not sold out. We spent so much time today talking about sold out shows and the mechanics of the resale market.

I sell about five shows of my 25 shows out a month. The rest of them I had tickets available at face price, as my colleague had mentioned. That means that there's a cottage industry, a cottage industry that is diverting my business, my likeness, the license, and likeness of that artist, and they are taking it and ascribing to it their business plan.

And their business plan is to take my 25 to 40 dollar ticket and convince you, through search engine optimization or any other nefarious trick, and that they have a ticket for you at my venue that cost about 350 dollars although my show is not sold out. They will also adorn that ticket with things that don't exist in my venue. They will tell you that you're sitting in the front row. I am a standing venue.

They will tell you you have a meet and greet where there's no meet and greet with that artist offered. If you've bought those tickets and you're on date night, and you're 700 to 800 dollars in on my less than 100 dollar ticketed show, and you are--as we've all seen the research on--participating in the economic activity of attending a concert, which we all know the science behind this, that every dollar spent with me generates 12 dollars in the economy, you are losing faith and confidence in this industry.

Again, to my colleague's point, we are desperate for enforcement of existing laws, but also clear understanding, a referee, if you will, that when you buy a ticket to our venue, it is something that we are a primary seller of. This is not about the secondary market. These are simply people diverting. The secondary market is for Taylor Swift. Taylor Swift has never played Music Box San Diego.

Well, we did have Billie Eilish. We have those equations here and there. They're troublesome too. This is an 80/20 situation. 20%, we spent almost all of these 3 hours talking about. 80%, that's my daily existence. We need to figure out how these people got here. I don't necessarily think those people are StubHub. It's not that hard for you to reprint a barcode and get a barcode on a piece of paper to a customer if you have no other overhead.

You did not contribute to the talent box office security rental production of that show. You only had to take one barcode and put it from one spot to another for the high premium of whatever goodwill you got in that transaction. So if you change the price to some other secondary price, your only expense was the effective photoshopping.

And so when that doesn't happen and they come up to my window, to my rope line, and I am the General Manager of that venue, and I have to greet them and they show me a piece of paper that has nothing to do with me, and you know they spent that money. What do you tell them right then? Now they're going to go on my feedback. They're basically going to attribute their experience to me.

They're going to leave that secondary seller or that other fraudster is what we're talking about here. That person. They're going to leave all of those people out of the story because those people don't actually have a place for you to leave feedback. They're going to put all of that and they're going to heap it on my venue. Nine years of investment. It's a small business. I have 60 employees.

None of this, none of the situation that we're talking about today has anything to do with those 60 employees except for negative fallout. It's imperative that we try to take a look at this in a way and see where we can actually enforce laws and make changes, I think of other industries. We did a pretty fine job of getting Amazon to pay California sales tax. There was a dollar motivation in it, I get it. But this is a very similar thing.

Interstate commerce is going to affect even the smallest of consumers. If those consumers, not me, but the consumer, that's who the constituent is today, that consumer is buying a ticket from the State of Oregon or the State of New Jersey to my venue. We are both, the customer and myself are both in San Diego County.

If that customer is leaving state lines to procure a transaction and then coming back in state lines, we should take whatever enforcement mechanism, got sales tax done, and apply it right there because we need to oversee that transaction because it's absolutely murdering us, and unnecessarily so on a non-sold-out show. The other part of this, too, is my kingdom for signage. My kingdom for the same signage that has helped us to interrupt the flow of cigarettes in convenience stores.

It says right there, cigarettes will kill you. It would be very, very amazing to my industry, independent venues, 650 of them in the State of California, to my venue, my employees if when you got to a secondary site or a site that was claiming to be me. I loved the website that was referenced, musicbox.notreallyme.com. If you got to that website and it said in big, bold letters, I'm not the primary seller, face-value tickets might be available. Simple solutions. They're out there.

And I don't know how to administrate these kinds of problems. I trust that we all care. I trust that we all know that we're creating hardship. I also trust that we understand. I took the time to phone treasurers in California. I phoned the General Manager of the Troubadour. I spoke with the person who runs the Fox Theater in Bakersfield. I spoke with Casey Lawdermilk from the Bellwether, who's here with us today. I checked my story. Hey, are you guys seeing any of this?

There's 10 of us here today. Every one of them could tell this exact story. We just did it last night. We compared notes, we made sure. This is affecting all of us. Every fact in this. 80/20, 80% of those shows aren't sold out. The prices are 10 to 40x for no reason. And that they are all doing whatever they can for tragedies at our rope line. I don't have a slideshow.

I just want to be sure we walk away from this, from all of the information here, and we get to work for consumers, get to work for those people, and it will inevitably save my business because we had an economist on this panel today. In my rudimentary understanding of economy, confidence is everything. And I just can't imagine what this particular set of distortions within this marketplace is going to do if given too much time in our marketplace.

These venues that I associate with, they're economic drivers. We go into distressed neighborhoods, we go into places, we fight blight. Our businesses will come into tough neighborhoods. And next thing you know, five years down the road, you'll see 5, 8 new restaurants. They'll center around us. Take a look at those 84,000 people who bought those tickets, and sell them other services, and become ancillary business. Our community is a big part of that ancillary business.

All of those people, they are all participating in this ticket economy. And this ticket economy is in a crisis of confidence, and I would love to see what solutions could be proposed. There's a great set of solutions proposed in the national legislation. I know the organization I'm with endorses that national legislation. I don't always have the greatest confidence that national legislation is going to get invoked.

Nor do we.

But I would tell you that it's the 6th largest economy in the State of California. We should be very proud of it. And if they can't get it done, we should go top-down on what's hurting our customers and make single-focus laws that attack these situations and these distortions. I appreciate your time.

Thank you so much. I really appreciate you being here and centering the communities that matter the most to all of us, I know, which is the people we represent and the economies that support them. Somebody asked me where I was in this discussion, and I said, "I'm with the consumers, the venues, and the artists," and however, best we protect the ecosystem there, because that's what matters to California. So thank you. And now, moving to the artists' perspective, I will turn it over to you.

Yeah, thank you. Yeah ,one of the disadvantages of going last is a lot has already been said, but I'll try to add some new information here, at least give a different perspective from the artists. My name is Dave Shapiro. I live in San Diego. I own a company called Sound Talent Group. We're a booking agency. We rep over 300 artists. We book them globally, all over the world, right here in San Diego and everywhere else. We have offices in San Diego, Nashville, and New York.

And we also have people in L.A. and a number of other places. Most of us came from the big corporate agencies. So we have a lot of experience, a lot of years under our belt. I've been doing this about 20 years now representing artists. So I think something that's been made clear is reform is needed on certain things. Everyone's been talking about, all-in ticketing. Seems everyone here supports that. We certainly do. The artists certainly do.

I think there's a distinction, though, with the artists, which is that what we would like to propose is itemized, all-in ticketing. For the artists, it's very important that at checkout, you see the actual price when you first see it, and you know exactly what it's going to be. But we'd like at checkout for that to be broken down still, because right now, everyone knows ticket fees are a large percent and there's all these other fees.

But 5, 10 years from now, when all-in ticketing becomes the norm, and that's no longer a thing of recent history, people will think that this is the price that the artists want to charge, and artists want to make it very clear what they're charging versus what the additional fees are. So from the artists' perspective, it's very important that we make that slight twist and add the word "itemized" to all in ticketing. I think that's very important.

To that point, something that's come up today is a lot of this exists because artists underprice their shows, and I think that's an important thing to address.

Artists want their fans to pay the price that we choose collectively as their agent and artists, when we talk about it, because artists don't get into this when they're in their bedrooms learning how to play, having a dream of getting out there on stage and making a living playing music, they're not sitting there thinking, we need to charge every single dollar we can and get every dime out of everyone's pockets. They want to make a good living.

And I think to Joe's point, we give a lot of the Taylor Swift examples and things like that, but the other 80% are the working class artists, the artists that sell out 1-2,000 seaters nationwide, globally. And they're not rich. They're getting by, though, but they don't want to gouge their fans, right? They want shows to be priced fairly. Ultimately, when shows end up on the secondary marketplace, they end up going for much higher, and the artist doesn't get cut in on that.

So ultimately, these tickets go for these prices anyway. And the artists don't receive any benefit. To Ticketmaster's credit, I think they've actually done a lot to try to combat some of these things. They do something called Platinum, which essentially is dynamic pricing, but it puts that money into the artist's pocket. What they also do is they allow us, as the agents and the artists, to dictate some of the rules of the dynamic pricing.

We have shows and certain artists where they don't want to do it at all. Ticketmaster says that's fine. So we don't do any dynamic pricing. No platinum tickets. We have other artists that they're like, look, we want to make as best a living as possible. Go nuts. And they work with us on that. They also work with us on limiting the price.

So maybe we say, okay, we want dynamic pricing, but we don't want it to get too crazy, so it won't go above $200 or $300 or whatever the price is. So Ticketmaster has been really great to help us with all this. As far as bots go, because I think that's been a big topic today, but it hasn't really been addressed from the artists' perspective. And this is really crucial.

This has a huge effect on the artists, the decisions that are made for the artists and their overall business and budgets on the road. The reason for that, I'll give you an example. One of our artists is currently about to embark on a farewell tour. They're called Sum 41. They just played Joe's venue as an underplay show, so we just put their tour on sale. We planned to do two nights in New York and obviously it's not California, but this could happen anywhere. Yep, exactly.

They are playing here, too. So we put the first night on sale. It sold out immediately. We put the second night on sale. Well, come to find out, there were over 800 bots on a 2500-capacity venue.

So what ended up happening was we had to return those tickets and now we have a show on the second night that's half sold, and now we have a show on the first night that's three quarters sold or two thirds sold, where we were sold out when we made that decision.

But one of the biggest problems, and this is something that, I don't know how it hasn't been solved yet, but bot reports typically take a week to come in, so we have to make decisions a lot of times in the moment before we have the actual information. And the fact that it takes a week still is a problem that really needs to be solved. Furthermore, the accuracy of these bot reports isn't always perfect. Another example is another artist we have called.

Can I just stop you right there because I was confused by something you said. So--and this may be particular to New York--but because it was a bot, you had to return the tickets?

Okay, so the way that this works. Yeah. Again, because this hasn't come up from the artists' perspective, but what happens is when we get bot reports, the promoters will come to us and say, "do you want to cancel these tickets and put them back on the primary ticketing site?" Most artists will say, yes.

Got it. Okay.

So not all the time, but most of the time they will. Because again, their intention was to sell tickets for the face value. So that's what they want their fans to get. Now, this creates a huge problem because what happens is fans go and buy those tickets on the secondary market, and then those tickets get canceled. So now they've tried to buy tickets the first time, now they try to buy it the second time, they got canceled. Now they go back to the primary site when they get back live on Ticketmaster, AXS, or whoever. And sometimes that cycle happens four or five times for one show because bots will buy the returned bot tickets. So this is a cycle that goes over and over. So the larger the show, the more times that cycle happens, because the higher capacity, the more tickets are bought through bots.

So it can create a real problem, because now, an artist like that, we created a budget based on doing two shows that we thought would sell out, and now we're behind the eight ball, and it's going to affect the merch numbers that night. The whole budget trickles down. Right? So the other point I was about to make was that another artist that we work with, a band called I Prevail, they just finished a headline tour last fall. They played Chicago.

Chicago, we got a bot report that was pretty heavy, so we decided to cancel them, return them, put them back in the primary site. What ended up happening was the accuracy of that bot report was not great. And we ended up having fans, we had fans come to us upset, saying, "we bought legitimate tickets. Why were they canceled?" And then the show sold out.

And those people that had legitimate tickets no longer had tickets to the show, and now they're paying double, triple, quadruple the price on the secondary market. So from the artists' perspective, a lot of them don't even understand all this. Right? We do this every day, and it's hard to keep up with all the technology and different things happening. So I think the biggest need there is some sort of better technology and further regulation of bots.

And I know that bots are already not legal, but clearly that doesn't matter. And there is something that needs to happen there. But especially the technology has got to get better. It's got to be more accurate, and it's got to take less than a week for them to generate these reports. And yeah, Joe made mention of this. But on the secondary market, another problem we run into is a lot of times people will buy tickets for more because they think it's a better ticket. Right?

People think, oh, it costs more money, it must be a better ticket. It's some sort of premium ticket. Again, Ticketmaster has actually done a good job with this because their resale platform is TM Plus, which integrates with their actual platform. And it says right under the real ticket, "verified resale ticket," and they do verify. So, again, they've done a pretty good job at addressing these issues with the artists and with us. But you go to other platforms that are not Ticketmaster, and there's no transparency.

No one knows what they're buying. Speculative ticketing, I mean, it's in the name. It's speculative. You don't have an actual ticket. So that just should be flat-out killed. There's no reason any form of speculative ticketing should happen. No artist wants people buying tickets to their shows that don't exist yet. There's a reason that we coordinate our on sales for our shows and have them announced and go on sale at certain times.

A lot of times, those have to do with coordinating with a new song release or an album release. There's a much bigger picture for the artist globally. So when you have all these speculative ticketing, all these things happening, it just takes all that away, and it can really hurt the artist. I think ultimately, everyone here seems to actually be on the same side on most of these issues, and I think we're just looking for any help we can get.

But we appreciate you guys listening, and I think that the artists, it's important to them that this stuff gets addressed.

Thank you. I know that a lot has made it hard for artists in the last couple of decades, so we don't want this to be one more thing. Mr. Chair, question?

Thank you very much. Again, just want to reiterate that this has been an eye-opening experience. All that I heard thus far. And like my colleague, the Chairwoman, we want to protect the consumer and the artists, right? Because those have a lot to lose. And I know there was made a statement regarding existing laws just being enforced. Right. One, if anyone have any knowledge, have anyone been caught or any named organization or company are, in fact, behind bots that you can share with us?

And if so, I see the Professor shaking his head yes. Because one of the things I want to explore is the penalties. I would absolutely love to explore penalties as well as prosecution, because until that happens, we'll continue to have these bad actors. Even when it comes down to, in my world, with illegal cannabis growers, we shut them down, and then they materialize. It's almost like you kill Chucky. He just appears in your closet. When you open it up, Chucky comes back out again.

Exactly. And so I guess my question is, again, have anyone that you are aware of have ever been caught and named? And if so, if you have any knowledge of what actually happened to that individuals or companies?

Not to my knowledge. You guys?

I'm going to get this wrong and maybe feel bad that much to the Professor seems to know the answer. The Bots Act was passed in 2016. I believe there's been a handful of enforcement actions. The Federal Trade Commission, I want to say, went after three of them a couple of years ago for violating the Bots Act. And again, I think there were considerable penalties, but this is like three companies. And you said for your one show, your one show, like 800 bots for 500 person venue.

I think the thought is, "okay, if I get caught, that's terrible, but there's like a one in 1000 chance I'll get caught." The Federal Trade Commission, famously historically underfunded. They have 500 people in all of consumer protection working on all the issues. They have, like maybe one person, not even that. I think the right of private enforcement could help with that. But also the California AG's office is probably even more. I used to work for the New York Attorney General's Office. I was in Internet Bureau.

We had like four people for the Internet. So the regulators just don't have the capacity to keep up with it.

Right. I can appreciate you sharing that with us, and again, the examples and also your own lived life experience with respect to going to the website and seeing and it's a fraudulent website and people are being taken in. It just seemed like trying to figure out, you know some of those website has a blue check that legitimize that actual website. I mean, I've done hotels, airlines, the whole nine yards, come to find out it's not Southwest, it's not the Hilton, it's a third person, and then there's all these charges that goes along with it. And it's something to see and figure out what authority do we have in that jurisdiction to try to go after them and level penalties and not limiting to prosecution. Because people, as you have indicated, we have a potential business--hope it doesn't happen--we can have businesses go out of business and then your name is smeared and your reputation is tarnished.

Right? And again, people walk away with a bad experience and they blame you for that experience, and that's grossly unfair. So again, I appreciate the dialogue and the conversation, and you've given us a lot of fruit for thought to think about what we need to create around positive legislation and legislation with teeth. Thank you.

It's funny that everything in this Committee always comes back to Section 230 Reform. But some of the search engine optimization is because the search engines are not on the hook for these fraudulent websites that they profit off of putting at the top of the search bar. So I'll just add Section 230 Reform to the list of things we need to do. So, I have a question for you. So you mentioned that whole bot scenario.

Now, we just heard from two different primary ticket sellers, one of whom seems to have figured out a technological solution to address what you're talking about. Right? They pre-authorize the charges for the additional folks. The artist can then be guaranteed that if they pull back the bots, that they're paid. But I get the sense that you primarily sell on Ticketmaster. Is that correct? And if so, why aren't you using these competitive technologies that might solve your problem?

So it's not up to us who we sell through. So when we book shows or tours, each venue has a contract with a ticketing platform. So when we book shows, we're beholden to whoever that platform is.

So if we're booking a show at an AEG venue, it's AXS. If it's a Live Nation venue, it's Ticketmaster. If it's an indie, it could be anyone. And those exclusive contracts are important. That came up a little bit earlier. I think they are important for the promoters to survive, because we've said this before, but we all need each other to survive. And usually they get advances and things like that in their contracts, and that's how a lot of these venues stay afloat. So it is important.

But, yeah, Ticketmaster obviously has the largest share of the market, so it's just an easy example. And as I mentioned, I do think they've done a lot to address a lot of these problems more than others have. But these issues exist everywhere, no matter what. I mean, the bots, no matter what you do, they get through, and it's a problem.

Yeah, well, maybe more competition in the ticketing marketing place would help get that technology across platforms which would benefit, it seems, the artists. Okay, and I wanted to touch, Mr. Brookman, you mentioned a lot of what was said here today and your perspective on it to protect consumers. I don't know that I heard you mention the question about drip sales and holdbacks, so was curious to get your input on that.

Yeah, I don't have a strong instinct on that. I was very interested in the conversation. I can see the arguments from both sides. I will say I have heard some artists complain that if you tell people--I think this is the argument that Ticketmaster made--that if you tell how many tickets are available up front, then that can give signal to the secondary marketplace to jack up the prices. I don't know, maybe there's some legitimacy to that.

I think Pearl Jam has made that argument, for example. Yeah. I just don't have enough insight into the actual techniques of how it works to know how much of a problem it is.

No worries. I just wanted to give you the opportunity in case you did. No, we were talking about this yesterday with some members of the Legislature, and one of them had bought tickets to a concert in Southern California. She then couldn't go to the concert, went to resell it, and the artist had, I guess, set a deal, I think, with Ticketmaster that it could only be resold at face value, which she felt was fair.

She could resell the ticket, she could recoup because she couldn't make it, but wasn't driving the price up. So she found that interesting. Again, it's not mandated, but it was a choice that I think the artist had made.

Yeah. And obviously, the artist can only control it at the primary level, so she could have gone and sold that ticket for whatever she wanted on StubHub or wherever.

Interesting. But if she resold it on Ticketmaster, was it possible to make that original deal with Ticketmaster, or no?

Sorry, repeat the question.

So Ticketmaster has a resale? No. Okay. We're getting a no from Ticketmaster. Interesting. I wonder where she experienced that. She told me this whole story. Now I have to go back and revisit it.

And also to address the question you just asked, as agents dealing with the artists, we will never allow tickets to be held back to be sold. Our goal is to put as many people in the building as possible. So if we find out that's happening, we're going to force all those tickets be opened up. But that really doesn't happen often.

Okay. And it may be that it's not in the artist context. Right. We're talking about ticketing across.

Sure.

Like I said, I think I heard from the sports team, so that's something that may happen in their context, which is different. Again, and you have teams like the A's that have trouble selling tickets so that they have a different situation. So thank you, guys. I really appreciate this perspective, and we intentionally wanted to close by centering the consumers. So I really appreciate all of you helping us do that, because what we want here is to make sure Californians win in this conversation.

So thank you and thank you to everyone who's been here. We are going to open it up for public comment. I know some folks were here. They did not have the opportunity to weigh in. So this will be your opportunity. Trying to get a sense for how much time. I think we're going to try for, okay, we'll try for two minutes each. So come on up. Go ahead. Make sure. Name and organization and comment.

Sure. Chair and Members, Alex Torres with Brownstein Hyatt, on behalf of the National Independent Venue Association of California. I've had the opportunity to work with this group for the last four years, and I think to piggyback on some of Mr. Rinaldi's points, the Legislature saved these venues 150,000,000 in the budget for the California Venues Grant Program.

And now we're dealing with a real challenge, a real crisis of confidence, as Mr. Rinaldi put it, in the industry, and the ability of venues to have, to put on shows, and consumers are really affixing that blame to the venues. And so as independent venues, the margins, and you'll hear it from these folks that are behind me. The margin is very difficult. 75%, tickets will get you about 75% to profitability. The rest is people actually showing up at your shows.

And with a venue, if you're looking at it on paper and your show is sold out, you're going to bring in an extra bartender, you're going to bring in an extra door guy, another security staffer, only to have a show be 65% full, 70% full.

And again, I think I would emphasize the role of independent venues, the operators here as first responders in every aspect that you heard today, whether it's booking the show, working with the agents and the nido folks, making sure the logistics are good, manning that rope line, they are truly the first responders. They have folks staffing box offices so you can come up and physically buy a ticket if you buy a ticket that way. But they're really integral to every part of this.

And again, I think it was great to have a venue representative at the dais here today, and thank you for this hearing. Thank you for including us. But going forward, it's got to be more than just the platforms. The venues are really critical in this. So thank you again for your time. And I have some folks from throughout the state here that will tell a little bit about their experiences. Thank you.

Hi. Good afternoon, Madam Chair and Mr. Chair. Robert Herrell. I'm the Executive Director of the Consumer Federation of California. We're a nonprofit advocacy regularly before this Committee in various and sundry issues. I have a number of points. I will endeavor to make them in under two minutes. Number one, great background paper, always the case. A high standard of quality of consultant work at this Committee. Two, let's not pretend. We're largely here because this is an industry where there is a monopoly.

I know people don't like to say the M word, but it's one of the main reasons why we're standing here and sitting here today. You're right, Madam Chair. The feds do have primary jurisdiction on antitrust. There are active investigations by the Federal Department of Justice by a number of AGs, including the California AG, into anti-competitive practices in this very industry. So let's not hide from that.

There are some steps, which I won't go into right now, that the state could take to try to enhance competition, to try to get at that without directly dealing with the antitrust challenge at the federal level. Number 3: 18% percent. I go to a decent number of shows. I also have a 13 year old daughter who's a big K-pop fan, so I'm on those queues incessantly looking for tickets. I can't remember the last time I bought a ticket where I paid 18% above that in fees.

So let's use that as the starting point for a cap on fees above face value. That's the number that the Ticketmaster representative said himself in his own slides. Let's use that to start. Number 4: All-in pricing. I think there's pretty much universal agreement, but let's be careful about how that gets parsed out.

The example of the monopoly, after being with the President of the United States and saying, "we're going to do all-in pricing, at the end of the summer concert season, so we can rake all that in." Then when it actually was supposed to happen, they said, "oh, we thought we were very clear. We met only for the venues that we own, not for all the other venues."

I'm going to have to ask you to wrap up.

That's a challenge. The national conversation is more advanced than the state conversation, which is troubling and rare. We support that house Bill that got out 45-nothing as well. There are some good steps in that. Hopefully something will happen, but I'm not holding my breath. Terms and conditions are a big challenge. And the teams. It's amazing, Madam Chair, that the teams aren't here, because they were here at every single Bill hearing throughout the past two years on every Bill, and usually they were coordinating their testimony with a monopoly. There are some areas of agreement. We look forward to working with you and all the interested parties on this matter. Thank you.

Appreciate it.

Madam Chair, Mr. Chair and Members. Courtney Jensen, on behalf of SeatGeek and TickPick. SeatGeek evolved from being a leading resale marketplace to entering the primary ticketing market in 2016, when it realized that the primary ticketer, in most cases Ticketmaster, controls so much of what happens in the entire ticketing ecosystem. Through its evolution, SeatGeek has sought to maintain focus on the consumer.

We allow consumers to see the all-in price of a ticket, as well as a breakdown of fees early in the purchase process. TickPick is a secondary ticket marketplace connecting buyers and sellers of tickets for events held in the US. They differentiate themselves by showing all-in pricing for all events in every state. The first price their consumer sees is the price they pay for their tickets. For far too long, fans have lacked important consumer protections that other industries take for granted.

You've heard a lot about SB 478 today. We agree it is a great step in the right direction on all-in pricing. However, we remain concerned that because last year's legislation was not ticketing specific, it may not be implemented consistently throughout the industry, and look forward to continuing to discuss that. Californians are best served when the tickets they buy are fully transferable and they have ability to choose which marketplace they transact on.

So we believe that they need to continue to be allowed to sell and transfer their tickets in the place that they choose. SeatGeek has had modest success since entering the primary ticket market nearly eight years ago. As of a few weeks ago, they proudly count the Sacramento Republic Football Club as a ticketing client, and they are also the primary ticketing provider for a small handful of other teams outside of California.

We must stress that any discussion of the challenges plaguing live events entertainment must be centered on the well-documented, anti-competitive behavior of Live Nation Ticketmaster. Larger venues hosting concerts in California and beyond do not choose from competing ticketing platforms based on their technological capabilities or fan friendliness. The competition that should exist in an open and fair market where companies can compete fairly for ticketing businesses on the merit simply do not exist. California consumers suffer as a result. We welcome and appreciate all efforts in this space and look forward to working with you all this year. Thank you.

That was an impressive exactly two minutes.

I will not be taking two minutes, but Tish Rylander, on behalf of Vivid Seats, want to thank you very much for the conversation today. At Vivid Seats, the fan is the priority. And one thing that was made clear today, and other spaces as well, is that when there is a competitive marketplace, the fans and consumers come out on top.

They are empowered and it drives innovation. So we look forward to continuing the conversation and happy to meet with you all to discuss our perspective on some of the issues raised today. But thank you very much.

Thank you so much.

Chairs, Members, thank you for taking the time today. My name is Casey Lowdermilk. I'm the General Manager of the Bellwether, an independent concert venue just west of downtown Los Angeles. I'm here today to echo and support the perspective of Joe Rinaldi and the National Independent Venue Association. The most significant challenges as a venue operator are the secondary market and deceptive websites.

Just last week, I answered a call to our venue from a gentleman who was looking to buy a ticket to an upcoming show for his son. He wanted to confirm that the $500 ticket price he saw listed was accurate. In reality, the face value for that show was only $32.50, and we still had plenty of tickets for sale.

Now, this consumer was savvy enough to call us to verify, but every show we see patrons who unknowingly purchase tickets on a secondary platform that won't scan at our doors. We help them as best as we can, but customer service for StubHub, Vivid Seats, and other secondary resellers is minimal to nonexistent during our event hours. The secondary market hurts our reputation in the community, impacts our margins due to lower attendance rates, and kills consumer confidence in our industry. Thank you,

Thank you.

Chairs and Members of the Committee. Julie Baker, CEO of California Arts Advocates, a (c)(4) organization advancing policies and resources to support the arts, culture, and creative industries, with an emphasis today to speak about the nonprofit performing arts, which in California alone represents over 4000 organizations, employing close to 40,000 people, earning more than $2 billion in revenue each year. While I appreciated the excellent report prepared by staff--Julie, great job--and the hearing today, unfortunately, nonprofits were left out of the conversation.

The artists, venues, and audiences in the nonprofit performing arts sector are also threatened by predatory practices and secondary ticket sales. Relief from predatory activity on the secondary market is urgently needed. It is important to note nonprofits do not have the same resources, human, financial or otherwise, as some for profits. Therefore, implementation may impose a greater burden on nonprofits and take more time. Future legislative efforts on these topics need to center nonprofit arts presenters from the beginning of drafting.

They have specific expertise, specific concerns, and unique, mission-driven impacts. But their ticketing practices are necessarily diverse and complicated in ways that may not be immediately visible, with complexities arising from educational discounts, memberships, flexible subscriptions. That flexibility and diversity of practice is necessary to best serve different audiences and art forms and is necessary for arts nonprofits to survive.

Our organization would welcome the opportunity to work with the committees to address the specific needs and concerns of a nonprofit performing arts and urge the Legislature to include nonprofit performing arts in any future ticketing legislation, planning, and design. Thank you.

Thank you. The Bankhead in Livermore changed that downtown, and they are a nonprofit venue.

Thank you so much for having us today. My name is Jon Gunton. I am the General Manager of a 500-cap room in San Francisco called the Independent and also going to be the General Manager of a 2300-cap room that we're building here in Sacramento, near Midtown. I'm here to echo what Joe Rinaldi said so perfectly. I wish Joe would represent me in all things in life, I can't emphasize enough. I've been at the venue I'm at for almost 20 years.

We're celebrating our 20th anniversary this next week, and we are economic and cultural drivers of these neighborhoods. As an independent venue, we are at the ground level directly interfacing with consumers in a way that I don't think anybody else in this room can say. I know the people that come in our venue. I know their faces. I know their names. I actually do care about them. I swear. And it is hurtful, as Joe said, to see this crisis of confidence.

I can't emphasize how much he's correct that we have to deal with this on a nightly basis. From an operational standpoint, it's a headache. Imagine loading an airplane and there's a bunch of fake tickets from, as Alex mentioned, when we have a no show rate, we lose money. And lastly, as a brand, it all falls on us. When people are upset, they're upset with us, and we get the blame for it. And we have the smallest margins of anybody here.

So it really affects us when that confidence comes down on us. So thank you for hearing us and we appreciate it.

Thank you.

Madam Chair, Mr. Chairman. James Jack here for the Coalition for Ticket Fairness. And the Taylor Swift saga, which has really created, I think, a cry for reform in this industry, that is a wonderful outcome. But what often gets overlooked, really, until, Madam Chair, you definitely brought it up at the end of the second panel, is that there are very few Taylor Swifts. As Mr. Rinaldi said, for each show he sells out, there are four that he doesn't.

And one of the things that the secondary market brings is a very profound, pro-consumer outcome as well, and that is the ability to attend events and pay less than face value for those tickets. Our coalition commissioned a study last year to try and quantify this and found that the secondary market was responsible for 7 million tickets sold nationwide at below face value. And so that really is very profoundly pro-consumer and the single largest state to enjoy that benefit was California.

Just under a million of those tickets were for sporting events and concerts and theater events here. So thank you for this hearing today and for also paying close attention to that other important side of the equation. Thank you.

Thank you. He didn't say how many of those raised tickets.

Madam Chair and Members, my name is Jim Cornett. I am the owner and operator of Harlow's, the Starlet Room and Cafe Colonial here in Sacramento. I've been operating live entertainment venues for over 32 years and been responsible for over 10,000 shows. And I have not seen any of these types of ticketing issues in the past until the last few years. Joe and Ali cover the crux of our problems that we're having at our front door, dealing with our patrons.

This is that the practice hurts our brand, takes money out of our pocket, our patrons entertainment budget that can be spent on attending other shows, and it's just outright frustrating to deal with on a face-to-face basis. When you deal with customers that come up, that have expectations that you can't meet and you have to turn them away and it's very disheartening and it affects our brand. And thank you for your time.

Thank you.

Hi, Josh Lieberman. I'm the General Manager at August Hall, which is an 850-cap room in downtown San Francisco. I think Joe said it pretty well, but one thing I would like to add is that I don't think there should be a literacy requirement for being able to purchase a ticket. And unfortunately, that is the environment that we find ourselves in where anyone who is not savvy enough to cut through the noise is just finding themselves being taken advantage of.

We had an international artist a few weeks ago. I spent 40 minutes learning how to use Google Translate to find out that she had bought $150 ticket for a $20 ticket that we were selling and was able to essentially comp her tickets if she could attend, but she had to fight it with her credit card and we have no recourse that our customer is going to be able to get their money back. Just from doing some basic Google searching the other day, there are 27 results that come up before my venue for fraudulent websites or fraudulent tickets that are three to four times above what our base level is sold at, that offer seating that we don't have, that offer vip packages, meet and greets that are not there. And I think there are a lot of eloquent points made by everyone. The fact that Ticketmaster is also encountering these issues kind of speaks to the breadth of this problem. But for folks that don't have those same kind of resources.

We are all finding ourselves on the ropes trying to figure out how to operate in an environment like this, and I haven't been able to think of an analogous reference. We haven't been able to really find one for trying to buy groceries at Safeway and ending up on a fraudulent website. But to use the iPhone one from earlier, it would be like purchasing an iPhone and then showing up and getting a Sidekick, which I don't think anyone would be very excited about.

But thank you for your time and attention in this and we appreciate it.

Thank you.

Good afternoon, everyone. I'm Daniel Romandia. I am the Marketing Director and a Talent Buyer with Harlow's in the Starlet room here in Sacramento along.

Being a co owner with Jim of Cafe Colonial, also here. And I came here with a prepared story that I was going to tell you until last night, because last night we had a sold out show at Harlow's and we were expecting a full house. We were expecting a very busy bar. We were expecting be all hands on deck. Nearly 100 people did not show up.

And then along with that, I get to the venue maybe half hour after doors open and my box office attendant is dealing with someone who does not have tickets that are able to be scanned because they bought them from vivid seats and only received one of the four they purchased. So I took them outside, I talked to them.

I explained everything that's going on with just all sorts of resale tickets, all sorts of fraudulent sites, all sorts of sites that are essentially pretending to be us because the average ticket buyer does not know to go to Harlow's, they don't know to go to our ticketing provider, Etix. They know to go to Google and look up the show they want to see and Harlow's and they click those first links.

We were lucky that we were able to find tickets that people weren't using that night and we got them into the show, but our inventory did not have it initially. We had to find it. And so it ended up being a good story in the end. But it's something that we encounter every single day and it just hurts our business and it brings us headaches that we don't need on top of already having a sold out show. So that's part of the problem here. Thank you for your time.

Thank you so much.

Chairs Members, thank you for having us today. My name is Gabriel Docto. I'm also at August Hall in San Francisco, as well as a Member of Neva and San Francisco venue coalition. I came here today to thank you for having this hearing. I think as someone who's personally written some of the opposition towards some of the legislation that's come out, the thoughtfulness behind conducting this hearing is appreciated. There's a lot of nuance, as you guys have heard over the last couple of hours.

And in addition to advocating for some of this legislation on the rental side, I would also encourage a lot of this discovery to keep on happening as more legislation gets written. We would love to continue to have these conversations, either in hearings or meeting rooms in order to make sure that this legislation is thoughtfully drawn out to help prevent everything that you've heard today, as well as navigate a lot of the nuances that exist, some of which weren't voiced but many of them that were. So thank you very much and we look forward to continuing this work.

Thank you.

Good afternoon, chair and Member. I'm Rebecca Marcus and I can only dream to be as cool to own my own music venue. So instead, I'm an advocate representing Cal-PIRG, which is a statewide consumer watchdog and advocacy group working to protect Californians to ensure a fair marketplace. We are also the sponsors of co sponsors of Ms. Friedman's AB 8. We want to thank the Committee for investigating problems with the ticketing industry and considering all reforms to make the marketplace more fair to consumers.

For a marketplace to work effectively, we need transparency and control. We need to know. Consumers need to know what they're paying for and how much upfront in order to make informed purchases. Yet ticket sellers have gotten away with, including hidden fees, unclear seat location information and murky refund policies. We agree with Miss Dooley. Consumers should know how many tickets are actually available for purchase and when they will be sold.

As was discussed, ticket sellers have been known to hold back these tickets, which can artificially inflate the prices. In addition to proper transparency, consumers also deserve control over their ticket after they purchase it. They should be able to decide how to use it, sell or give away their tickets if they wish. Unfortunately, many ticket sellers currently can prevent ticket owners from reselling these tickets through any website that they choose. Once they buy a ticket, it should be yours to do with as you please. We look forward to continue working with the Committee. Thank you.

Thank you.

Last but not least, hi, my name is Jessica Herbauds and I'm a Latino promoter. I do concerts all over the United States. I'm based in California. I moved here when I was 23 years ago, when I was 14, and I've been in California ever since in LA. And I'm the secretary for Niva for the National Independent Venues and Promoters Association. And one of the main things that I've seen with the ticketing right now that it's affecting a lot the Hispanic community as well. The Latino community.

The Latino community in the United States is the five largest economy, so they move a lot of the economy throughout the world. And one of the main things is the language barrier. Sometimes on the website is not specific to them and of what they are buying or where they are buying. The other day I was driving and I heard on the radio, 0714 tickets on a very well known Latino radio station, 7114 tickets has your tickets for any event, sports and concerts, anything.

So that means that people that are listening to the radio instead of on the Internet. And people that some of those people, they didn't finish their education, they go, zero, I listen on the radio, so it must be real. So they go and buy tickets that they don't even have. When I close the tours with the artists, and we never know how many people are going to show up because a lot of the people are not certain that they're buying the right tickets.

So sometimes you have 300 tickets presale, and then you have 900 people show up. So you are never ready to what you are going to expect the night off. And then also, this brings a lot of problems with the artists, because on my experience, it's not true that the artists put the price for the ticket price. You buy the show, and then according to your expenses, you do a scaling of how much you shall charge for the ticket.

So I have many calls from artists that I bought the whole tour, and they go, hey, Jessica, why are you selling the ticket for 500 when our topest price was $75? So those are different experiences that we've been having on the Latino side. There's about 80% of the shows in the United States that are from the Latino community. And also a personal experience. It was my mom last week, she wanted to go to a Flamingo show. She's been here for 23 years.

She doesn't speak English that well. She's a us citizen, but still, she doesn't speak English that well. So she wanted to go to a Flamingo show, and she called me because she knows that all these ticket things are going on, and she goes, hey, can you help me buy the tickets? Because I don't know if I'm going to be like, if they are real tickets, or should I just go to the door and make sure that they are real tickets? So I know this is a thing that is affecting everybody. Thank you.

Thank you so much. I really want to thank all the Members of the public that took your time to be with us today. This was such an important conversation, and every perspective we heard was critical. And I want to reiterate the gratitude to the staff and specifically to Julie, who has spent more hours on this than you can even imagine. But it definitely showed through her analysis.

So I know we have a lot of work ahead of us, both me and Mr. Chair, and we look forward to our continuing to work with all of you to find the right solution for California consumers. Any closing words?

Thank you very much, Madam Chair. I just wanted to thank all those who were on the panel, as well as those who gave your personal testimonies through your personal journey and lens. As I said before, it has given us a lot of fruitful thought. I appreciate the very robust conversation. And certainly I look forward as the chair of the arts, entertainment, sports and Tourism Committee, to work with the chair of privacy to try to find real solutions.

And I would just simply underscore this as I conclude my thoughts. If you have those suggestions in writing, I would invite you to please submit those suggestions to our office so that we can look at those suggestions and try to figure out what we can do in this legislative session now. Because I think it's very important that we have a balanced approach to solving this major issue.

I just want to put people in, well, let me not say that I want to address the issue of trying to put that industry that has taken advantage of people and address that particular issue.

Because, again, listening to the stories and people work hard and save money to go to these shows, to support these artists, and then to no fall their own, going to a website that they believe they can trust and then losing those resources in which they've saved, or the owner of that venue, maybe an independent venue, and you sell out, then you find out you really didn't sell out, and you've staffed based on what you believe is projecting for that particular night.

And then having to send people home or to lay people off to make a bottom line to keep the lights on, that's disheartening to me. And we want to try to find real solutions to these particular problems and situations. So I invite you to please help us in this process by submitting this information to both of our offices so we can look and figure out what's there and what we can do in this legislative session. So I thank you all for coming.

And with that, we'll be adjourned. Thank you. Excellent.