Ticket scalping takes center stage

NEW YORK -- Kid Rock is a scalper.

The 42-year-old Grammy winner, who is launching a summer tour where most tickets are priced at $20, said he's holding about 1,000 tickets from each show and reselling them on ticketsnow.com -- owned by Ticketmaster -- to make up for the cheaper regular price he's offering.

"I'm in the scalping business, but you know what? We told everyone. A lot of artists have been doing this for years behind fans' backs, taking all these backdoor deals," he said. "We look at StubHub and other places and see what they're selling them for and we just undercut them."

Kid Rock's "$20 Best Night Ever Tour" kicked off Monday in Bristow, Va., and the Detroit native, who released his debut album in 1990, said he likely scalped secretly on past tours. The tour comes to the Verizon Wireless Amphitheatre in St. Louis on Aug. 24.

"I'm sure we have," he said. "I can't say for sure, but I'm not going to say that we haven't. I wouldn't be surprised if we did."

A new direction

Kid Rock's discount ticket pricing is leading a change in the tour industry where scalpers' well-established role as a second source for tickets continues to grow. Along with Kid Rock, key acts like The Rolling Stones, Beyonce, Paul McCartney, Taylor Swift, Justin Timberlake and Jay-Z have tours this summer, and a number of those tickets are being sold for a much higher price on StubHub and other websites. It's legal, but many artists don't much like it.

Justin Timberlake performs on stage during the BRIT Awards 2013 on February 20 at the o2 Arena in London. Timberlake will hit the road with Jay-Z for the “Legends of the Summer Stadium Tour” from July 17 in Toronto to Aug. 16 in Miami. (Associated Press file)

"If I see a scalper, I'll scalp him," the Rolling Stones' Keith Richards said, laughing.

He said he would like to play free shows to balance the high cost for tickets; The Rolling Stones' "50 & Counting Tour" has a range of ticket prices, and Pollstar reported that the average price of a ticket among the tour's seven shows was $355.14.

"I'd do some free shows. I'd work my butt off and I don't care how much. But these are set up above my head, man," Richards said in a recent interview. "You're kind of locked in a thing here whether you like it or not. I wish it was five bucks a ticket."

The Rolling Stones did play a secret show at the Echoplex club in Los Angeles last month, where fans got in by winning a lottery and had to be ID'd and given photo bracelets to eliminate the chance of scalping the tickets, which were just $20.

Mick Jagger said there isn't much the artists can do about scalping and secondary sources for tickets.

"The artist is totally powerless in this. People have made a lot of fuss about it before, but on the other side, some people are like, ‘We might as well participate in it.' And you can't really blame the artist for participating in it because why shouldn't they in a way?" he said. "I know we don't participate in it, but nevertheless, I don't blame people if they wanted to do it.

"You can look at it like, ‘Well, no one's making any money except these secondary ticket selling companies and they're making more money than anyone,"' Jagger continued. "It's completely legal, so until it's illegal, there's nothing much anyone can do about that."

Taking risks

Ticketmaster's North American President Jared Smith said Kid Rock's deal, which he completed with Ticketmaster partner Live Nation, is a first of more to come, though they might not be as risky as Kid Rock's plan, which also includes $4 draft beers and $20 T-shirts.

"I absolutely believe that we're starting to see the real acceleration of some really healthy things in pricing that are going to create new opportunities for fans to come and experience it in a really special way," Smith said.

A small way artists have been able to control scalping is through paperless tickets, which only allow buyers of the tickets to use them at shows and are not allowed to resell them. Smith said paperless tickets, which launched five years ago, accounts for "about 1 percent" of the tickets at Ticketmaster.

"It hasn't grown necessarily as a percentage of the total tickets that we sell, but we certainly see more artists employing it," Smith said. "When it really first started, it was kind of looked at as a tool to use across the entire seats in the arena, but it's really become a tool for the best seats in the house. Increasingly we see artists using it very, very targeted for like the top 500 seats in the house or the top 1,000 seats."

Bruce Springsteen, Keith Urban, New Kids on the Block, Radiohead, Rascal Flatts, Selena Gomez, Muse, Miley Cyrus, Iron Maiden, Atoms for Peace and Eric Church are among the acts using paperless tickets.

On his "Wrecking Ball World Tour" last year, Springsteen used paperless tickets for 20 percent of the seats, and Ticketmaster said its data showed that Springsteen's decision helped reduce scalping by 75 percent. [New York is the only state where Springsteen couldn't offer paperless tickets because the state does not allow nontransferable tickets.]

StubHub, the largest reseller of tickets, said business is booming thanks to the top acts on the road as well as summer festivals. But the company, which has a partnership with AEG, knows the idea of paperless tickets hurts their business.

"That limits a person's right to resell or transfer or to just give away their ticket. We do not support that because we believe in a fan's right to do whatever they want with their tickets," said Alison Salcedo, the head of U.S. Communications for StubHub. Fan Freedom, an organization that supports the rights of ticket holders, echoed StubHub's thoughts on paperless tickets.

"I don't see any reason why nontransferable tickets need to be the solution," said Joe Potter, the CEO of Fan Freedom, which is financially supported by StubHub. "Scalpers get tickets through pre-sale and fan club memberships."

Ticketmaster isn't against the idea of reselling tickets; they just want to be sure fans are receiving proper tickets when buying them from secondary sources.

"More often or not tickets are underpriced, that's why you see so much resell activity," Smith said. "What we try to do is make sure it's done very transparently."

Ticket holders are allowed to sell tickets at any price on sites like StubHub and ticketsnow.com, that's why Kid Rock isn't selling tickets for the first two rows at his shows. He's randomly pulling fans from the nose bleed sections to enjoy his concert from the venue's best view. And the first 20 rows at his shows are seats offered through paperless ticketing.

"We really don't know what we're going to make yet. We were doing estimates on it and they're already going through a lot of these numbers, and it looks like it's going to be a good summer," he said of what his potential tour earnings.

Kid Rock, whose tour openers include ZZ Top, Uncle Kracker and Kool and the Gang, is playing the same venues he's performed at in the past, but he said he's filling up more seats and selling tickets faster. Even scalpers have approached the performer to cut deals.

"I've had people in the scalping business come at me already and try to make side deals like, ‘I can make you thousands of dollars, hundreds of thousands of dollars in cash if you'll just flip a few of these tickets our way for certain shows,"' he recalled.

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