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Incident Fight Ticketmaster

String Cheese go to war over exorbitant service charges

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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