Service Fees got you down?

June 17, 2007

BY JIM DeROGATIS POP MUSIC CRITIC

The biggest extra charge is the "convenience fee" added by Ticketmaster: The cost averages $10 per ticket, but can climb much higher. (See sidebar on the numbers.)

"The ticket prices are not the problem; it is the additional fees that are a problem," local music fan Brian Hoekstra wrote in an e-mail to the Sun-Times typical of many complaints from concertgoers. He and his son went to see Ted Nugent at the Star Plaza Theatre in Merrillville, Ind. The price was $27 per ticket, but they wound up paying $40.50 each. "Sometimes the fees add up to half of the original ticket price!"

For years, consumers have complained about the big jump in the cost of tickets purchased from Ticketmaster during a two-minute transaction online or by phone. But given the lock the ticketing giant has on many venues in the Chicago area, concertgoers had no choice: They had to buy from Ticketmaster or not at all, since many venues didn't have box offices where tickets could be purchased in person without fees.

But two weeks ago, the Chicago office of national concert promoters Live Nation (formerly Clear Channel) announced it is now selling tickets for all of its big summer shows -- at the First Midwest Bank Amphitheatre in Tinley Park, the Alpine Valley Music Theatre in East Troy, Wis., and the Charter One Pavilion on Northerly Island -- at the House of Blues box office, 329 N. Dearborn, with no service charges added, from 10 a.m. to 10 p.m. seven days a week. (Live Nation bought HOB last year, and it owns or controls the other venues.)

"This is really a local customer service effort," said Live Nation spokesman John Vlautin. "The benefit customers get by coming to the HOB box office to buy these tickets is that they don't have to pay a service or handling fee and they can conveniently pick up the tickets if they work or live downtown."

Live Nation's major rival, Jam Productions, does not have a central location where fans can buy tickets to all of its shows, but it maintains box offices at two of the venues it owns, the Vic Theatre on the North Side and the Park West in Lincoln Park, and concertgoers can purchase tickets for shows at those venues without service fees. The company also notes that many of the other venues where it promotes concerts -- including the Allstate Arena, the United Center, the Metro, the Aragon Ballroom and the Chicago, Auditorium, Riviera and Rosemont theaters -- have box offices where concertgoers can purchase seats without Ticketmaster fees. (Hours vary at each, and some are only open on the day tickets go on sale and/or the day of the show, so always call ahead.)

"We fight for the fans to pay less for service charges -- we're on their side," Jam co-founder Jerry Mickelson said. He added that a portion of the Ticketmaster convenience fee for venues Live Nation owns, including the FMBA, reverts to Live Nation.

"A percentage of service charges is often kicked back by Ticketmaster to promoters and venues, giving them a vested interest in keeping service charges high," alternative rockers Pearl Jam charged in a memo to the Justice Department written in 1994, during the height of their battle with Ticketmaster (see sidebar). In 2003, Rolling Stone reported that the convenience fee is divided with 30 to 40 percent for the venue, 25 percent for the ticket outlets and the rest after expenses as profit for Ticketmaster.

"All I can tell you about how the Ticketmaster fees are set is that they're scaled to the size of the show and the venue," Live Nation's Vlautin said. He added that only Ticketmaster can comment about how its fees are set and how that money is divided.

Ed Stewart, Ticketmaster's Los Angeles-based vice-president of corporate communications, declined to comment or answer numerous questions posed to the company for this story.

If Live Nation cuts Ticketmaster out of the transaction and sells tickets direct to concertgoers, industry experts say that it will be able to keep more of the ticketing revenue for itself -- and hopefully reduce service fees for concertgoers.

"We're in the midst of talking through next steps with Ticketmaster," Vlautin said, "so it wouldn't be appropriate for me to comment on that."

Chicago and Ticketmaster: The History

Ticketmaster first became a center of controversy in the music world 13 years ago, when alternative rockers Pearl Jam declared war on what they called an unjust monopoly -- and it all started in Chicago.

Though Ticketmaster was founded in 1978, its rise to prominence in the concert world really began in 1982, when it was purchased for $4 million by Chicago investor Jay Pritzker, head of the billionaire family that owns the Hyatt hotel chain. From that point on, its headquarters were based in Los Angeles, and it quickly became the dominant force in ticket sales nationwide.

Seattle's alternative rockers stumbled into the role of Ticketmaster's most famous critics: In March 1994, they were touring in support of their second album, "Vs.," and trying to keep ticket prices under $20 when they performed at the Chicago Stadium and the South Side's Regal Theatre. The musicians were outraged when they learned that Ticketmaster had raised their $18 ticket price to $21.50 per show (though the $3.50 convenience fee the company added to each ticket seems reasonable when fees now top $10).

At the time, the federal government was already investigating Ticketmaster's dominance of the concert field, and the Justice Department asked Pearl Jam to file a memorandum about its experiences in Chicago. It did, and Stone Gossard and Jeff Ament soon found themselves testifying before an investigative subcommittee on Capitol Hill.

It's important to remember that the government went to Pearl Jam, not the other way around, but the press covered the story as a personal crusade by singer and Evanston native Eddie Vedder, especially after the Justice Department dropped its investigation without taking action. The government said Ticketmaster was not a monopoly; Pearl Jam eventually returned to performing at Ticketmaster-controlled venues, and a class-action lawsuit filed against the company by Chicago concertgoers went nowhere.

Generally overlooked in the media coverage was the fact that Ticketmaster negotiates exclusivity agreements with major venues in most cities. In the Chicago area, it controls the right to sell tickets at every major concert venue except for the Sears Centre in Hoffman Estates, which sells its tickets direct. Artists performing at the First Midwest Bank Amphitheatre, Charter One Pavilion, Allstate Arena, United Center, U.I.C. Pavilion, Aragon Ballroom, and the Chicago, Auditorium, Riviera and Rosemont theaters must sell tickets through Ticketmaster -- and allow the company to charge whatever convenience fees it wants -- or they cannot perform on those stages.

Inside the Numbers: Breaking down the cost of your concert ticket

The price of concert tickets is steep enough, many consumers say, but the service fees incurred by ordering from Ticketmaster drive the cost even higher. The Sun-Times took a look at the breakdown of fees when purchasing tickets online for a sample of shows from this summer's busy concert season.

Some notes on these numbers: While the House of Blues box office does not charge service fees when selling tickets for shows at the First Midwest Bank Amphitheatre, the Charter One Pavilion or the Alpine Valley Music Theatre, it does charge a $2 box office fee and a $2 facility fee for tickets to shows at the House of Blues. And customers must still pay for parking -- a cost labeled as a "facility fee" and which averages $4 to $6 per ticket -- for the Live Nation amphitheater shows. (Don't be deceived when you arrive at FMBA and see traffic attendants collecting $20 for "premier parking": You've already paid to park in a dirt lot that is only slightly farther from the venue than the "premier" dirt parking lot.)

Another additional cost online is Ticketmaster's delivery fee: There is no charge if you choose to have the tickets sent to you by standard mail, but Ticketmaster does charge extra for UPS delivery, and it also charges $2.50 for "Ticket Fast" -- which is simply you printing the ticket out with your own home computer and printer.

Ticketmaster convenience fee: $12 (an additional 22 percent)

Parking fee: $4.50

Total price from Ticketmaster: $72

Total if purchased at the House of Blues box office: $60

Ticketmaster convenience fee: $11 (a 9 percent increase)

Facility fee (for theater restoration): $2

Total from Ticketmaster: $136

Total at the box office: $125

Convenience fee: $10.50 (an 18 percent increase)

Order charge: $4

Total price from www.searscentre.com: $74

This new venue is the only major local arena that does its own ticketing. Owners promised reduced service fees, but the fees have been comparable to Ticketmaster's.

Ticketmaster convenience fee: $14.25 (a 24 percent increase)

Parking fee: $6

Total from Ticketmaster: $105.25

Total at the HOB box office: $91

Ticketmaster convenience fee: $7.25 (a 29 percent increase)

Parking fee: $6.25

Total from Ticketmaster: $38.50

Total at the HOB box office: $31.25

Ticketmaster convenience fee: $10.40 (a 13 percent increase)

Total from Ticketmaster: $89.90

Total at the box office: $79.50

The Texas-based promoters no longer charge a convenience fee for ordering through www.lollapalooza.com, but they raised ticket prices $30 from last year, when a $16 convenience fee was added to online orders.

Scalpers leave fans in the dust

After exorbitant service fees, the single biggest complaint from many concertgoers concerns "scalpers," as music fans call them, or "secondhand ticket brokers," as they prefer to be known.

Every fan has had the experience of getting up early to pick up the phone, log on or stand in line to buy concert tickets only to find that the show instantly sold out, or that the only available seat was in the last row of the top balcony. Yet scalpers always seem to have great seats -- for people willing to pay their astronomical prices.

"I feel something is very wrong and it needs to be checked now, before it gets worse," local concertgoer David Pearlman wrote in a recent e-mail to the Sun-Times. "When a show sells out in 1.5 minutes, and 2 minutes after that you can buy eight tickets for $160 each instead of $29 each, something is very wrong. I dare say it should be illegal."

In the most striking example this summer, the reunited Police quickly sold out two shows at Wrigley Field on July 5 and 6. The top ticket price was $275 -- Tickets.com, an independent rival to Ticketmaster, added a $21 service charge to the face price of $254 -- but ticket brokers are now selling those seats through Web sites such as StubHub.com and eBay.com for as much as $3,000.

How do the scalpers get their tickets? They refuse to say, but frustrated promoters and artists claim brokers use a number of ploys ranging from hiring homeless people to stand in line at the box office to employing small armies of temporary workers to man the phones and computers when tickets first go on sale.

Many states have anti-scalping laws prohibiting brokers from reselling tickets above a set price over their face value, though some of these have been overturned because of developments on the Internet. Illinois has never had such a law, but Jam co-founder Jerry Mickelson has been urging state legislators to pass one for years.

"Ticket scalpers are scum to me," Mickelson said. "They're just ripping off the real fans and regular people who stand in line to get tickets."

But the technology exists to assure that only the person who buys the tickets can use them, thereby making them impossible to resell. Concertgoers could pick up tickets at the venue by checking in with their credit card, the way travelers do for airline tickets sold online, Mickelson said. "I think that technology will be in place by the end of the year for concerts, and that to me is the ultimate way to stop scalping."

The Jam executive said Ticketmaster supports this initiative, though the ticketing giant declined to comment.

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