Incident Fight Ticketmaster

String Cheese go to war over exorbitant service charges

August 28, 2003 12:00 AM ET

Almost a decade after Pearl Jam stood before Congress and called for an investigation of Ticketmaster, a new band has taken up the cause. Jam band String Cheese Incident have sued the concert-ticketing giant for alleged antitrust violations, hoping to succeed where Pearl Jam failed in scaling back hefty service charges.

At issue is whether the Boulder, Colorado, group can sell tickets directly to its fans or whether it must go through Ticketmaster, which has exclusive contracts with most major U.S. venues. Ticketmaster service charges are high -- $10.10 for $32.50 tickets to the band's upcoming Red Rocks shows. String Cheese want to be able to sell tickets directly and to set more affordable prices. (Through the band's SCI Ticketing, service charges are $4 for the $32.50 ticket.)

"There was a massive disconnect from when we would set a ticket price and what people would see on their tickets," says Mike Luba, a partner in SCI Ticketing and co-founder of Madison House Inc., String Cheese's management company. "People are fucking sick of it. We got sick of it, and that's why we did this."

Since early 2002, the band claims, Ticketmaster cut direct artist-to-fan ticket sales to eight percent, and in some cases to zero. "SCI Ticketing has been providing a better service at a cheaper cost to the fans for some time," bassist Keith Moseley says. "We've come to a point where Ticketmaster is not allowing us to get tickets available to our shows. Our supply of tickets has essentially dried up to the point where we can barely stay in business."

Ticketmaster, a Los Angeles company that sold 95 million tickets for entertainment events last year, announced plans to countersue. In a statement, the company dubs the lawsuit "frivolous" and accuses SCI Ticketing of "trying to step in for a 'free ride' on the many benefits and services Ticketmaster provides."

In an interview with Rolling Stone, Ticketmaster chairman Terry Barnes elaborates. "SCI Ticketing puts the venues in a tough position: 'Break your contract with Ticketmaster or the band is not going to do the show,'" he says. "If this is all about doing it for the good of the fans, why would you put a building in that position? This really is about the money."

Antitrust expert John Solow, a University of Iowa economics professor, calls SCI Ticketing's suit "more than a plausible claim" and adds, "This is not something that should be laughed at." But Barnes cites the U.S. Justice Department's 1995 decision not to proceed with a Pearl Jam-prompted investigation. Today, the band regularly plays Ticketmaster venues.

"We have nothing but massive respect for Pearl Jam," Luba says. "It's better to try to do the right thing and fail rather than just go along and accept what's going on."

For years, according to the lawsuit, String Cheese Incident negotiated with concert promoters to receive a fifty percent allotment of face-value tickets before every show. The band created SCI Ticketing to sell them to fans -- as the Grateful Dead, Dave Matthews Band and Phish have done for years. Matthews' manager, Coran Capshaw, has parlayed the ten percent ticket allotments many bands receive from Ticketmaster into the band's ticketing service, MusicToday. "We're supporters of artist-to-fan ticketing," he says.

In the early Eighties, the Grateful Dead pioneered this practice by negotiating with Ticketmaster to sell a portion of the tickets directly to fans, says former publicist Dennis McNally. "The band's objection has always been a discomfort with the corporate nature of it all and that there tends to be real heavy-handedness with an unwillingness to negotiate," says McNally, who continues to represent Grateful Dead Records. "In terms of rights, who's got a better right to sell String Cheese's tickets than String Cheese?"

For years, Ticketmaster has defended itself from accusations of inflated service-charge fees by claiming they are the cost of doing business. But what is that business? The company prints up and distributes tickets exclusively for eighty-nine percent of the top fifty U.S. arenas, eighty-eight percent of the top amphitheaters and seventy percent of the top theaters, according to SCI Ticketing's lawsuit. It also maintains equipment and staff for phone lines, as well as ticketmaster.com.

The company has yet to reveal figures for how the fees are divided. But a music-industry source breaks down the numbers this way: thirty to forty percent to the show's promoter, twenty-five percent to the ticket outlets and the rest becoming Ticketmaster's primary gross income.

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