Bill Summary for Bill Number SB09-071

Date: 01/26/2009

Final
BILL SUMMARY for SB09-071

SENATE COMMITTEE ON BUSINESS, LABOR AND TECHNOLOGY

Votes: View-->	Action Taken:
Moved to postpone Senate Bill 09-071 indefinitely.	PASS

01:50 PM -- Senate Bill 09-071

Senator Hodge presented Senate Bill 09-071. Senate Bill 09-071 prohibits a ticket reseller from charging more than the face value of a ticket plus $5 or 25 percent, whichever is greater. The bill authorizes the Attorney General or a district attorney to bring an action against a reseller who violates the prohibition and to order the reseller to forfeit the tickets or the proceeds of the tickets. Additionally, an event sponsor is prohibited from charging fees greater than 10 percent of the face value of an event ticket. Senator Hodge indicated that Senate Bill 09-071 was suggested to her by a constituent. Senator Hodge requested that the proponents be allowed to testify first.

The following individuals testified:

01:50 PM -- Tori Pater, a musician representing himself, artists, and venues, testified in support of the bill. Mr. Pater discussed the current ticket-selling system. He stated that ticket brokers act as scalpers, and that the money from ticket sales often goes to the ticket broker rather than to the artist or to the venue. Mr. Pater stated that a free market price should be split between the artist and the venue, and argued that the presence of a third party negatively impacted the artists and venues. Mr. Pater read an e-mail from Kris Norris, a mother who was frustrated by the practice of brokers selling tickets for more than face value (Attachment B). Mr. Pater said that the markup the bill would still allow ticket brokers to charge is generous.

01:56 PM -- Terry Walsh, representing himself and other sports fans, testified in support of the bill. Mr. Walsh discussed recent sporting events such as the World Series. He discussed the use of "bots," electronic systems that scalpers use to buy large amounts of tickets in order to resell them for a higher price, and stated that such practices prevent the average fan from being able to afford tickets. Mr. Walsh said that the bill would put the tickets back in the hands of average fans. Responding to a question, Mr. Walsh explained that "bots" allow scalpers to bypass the security features on ticket websites, either through software or through "outsourcing," thereby enabling the scalpers to purchase more tickets than otherwise allowed, or to purchase those tickets before other consumers. Mr. Walsh stated that such techniques are not available to the general public.

02:00 PM -- Lori Goodman, representing Eric Martinez, a musician and business owner, read a statement from Mr. Martinez expressing his support of the bill (Attachment C). In his statement, Mr. Martinez expressed his opposition to the practice of inflating ticket prices without the consent of the artist or venue owner. Mr. Martinez asked the committee to vote yes on the bill, thereby making tickets more accessible for more people.

02:01 PM -- John Tipton, representing artists and consumers, testified in support of the bill. Senator Harvey said that people still go to see athletic and musical events even if the tickets are marked-up, and that the market exists because the consumers are willing to pay the marked-up price. Discussion ensued between Senator Harvey and Mr. Tipton regarding whether the bill would fix the problem of artists losing money to a third party. Senator Harvey said that the current system harms artists, but not fans, who pay the market price. Senator Harvey stated that it was not appropriate for the legislature to attempt to influence the prices set by the free market, and that the bill was not an appropriate way to fix the current problems in the system. Mr. Tipton later provided the members of the committee with a handout titled "Aggressive Ticket Brokering and Colorado: Vote Yes on SB 71" (Attachment D).

02:07 PM -- Bret Berman, representing artists, talent buyers, promoters, and others involved in the ticket-buying system, testified in support of the bill. Mr. Berman described the current ticket-buying system, and stated that agents, promoters, and other entities in the system take on significant amounts of risk in order to put on shows that are not "marquee acts," such as Madonna or a Broncos game. Mr. Berman said that if scalping is allowed to continue, consumers will still pay to see marquee events, but the money paid to scalpers will be diverted from those who took risks in order to present the events. Mr. Berman stated that promoters and agents will then be unable to promote smaller, up-and-coming acts, and that fans who buy scalped marquee event tickets at high prices will be unable to buy tickets to see non-marquee events. Mr. Berman predicted that up-and-coming acts that are not supported now will not exist in the future, when current marquee acts are gone, and that a loss of marquee acts in the future will lead to a loss in possible taxes and revenue. He addressed Senator Harvey's statements about the market and indicated that he agreed that the bill did not put the revenue in the hands of those taking the risk, but argued that the bill would put limits in place to prevent people from abusing the current system.

02:12 PM -- Senator Foster said that she had spoken to promoters who had indicated that they did not support the bill, and had given many of the same reasons that Mr. Berman had given in support. Mr. Berman asked for a clarification of the promoters' arguments in opposition to the bill, and added that because promoters do not make money from service charges or from scalped tickets, he did not understand how a limit in ticket fees would affect the promoters' bottom line. Mr. Berman argued that the bill would actually give promoters more revenue because more fans would be able to see more events, and there would be more acts to fill larger venues in later years. Senator Harvey asked Mr. Berman to clarify who he was and who he represented, and Mr. Berman indicated that he worked for Grooveshark, an internet music service that was supported by advertising, and that he had previously worked for two local booking companies, Partners in Music and Crescendo Artists.

02:16 PM -- Floyd Youngblood, representing Fans 4 Fairness, testified in opposition to the bill. Mr. Youngblood explained that Fans 4 Fairness is a group that was created last year in response to the Denver Broncos' attempts to limit their fans' ability to resell their tickets. Mr. Youngblood discussed legislation passed last year that enabled fans to resell their tickets, and also addressed legislation that prohibits the use of "bots" in ticket purchasing. He stated that an average fan is able to keep buying season tickets if given the opportunity to resell some tickets at a higher price in order to offset the cost of the season tickets. Mr. Youngblood argued that ticket brokers offer a benefit to the average fan, allowing them to sell their tickets early, and that then it is the ticket broker who bears the risk for the sale. He added that the bill puts a cap on potential profit, but does not put a cap on potential losses, and that the free market should be allowed to work.

02:20 PM -- Roger Jones, General Manager and co-owner of Alliance Tickets, spoke on behalf of his company and the Colorado Association of Ticket Brokers. Mr. Jones spoke about the economic impact the bill would have on ticket brokers. Mr. Jones asked the members to consider how a bill that limits a company's ability to generate revenue and grow will affect its abilities to provide for its employees.

02:25 PM -- Mr. Jones responded to a question from Senator Harvey concerning how his business obtained tickets. He indicated that the vast majority of tickets his company sells are from season ticket holders who are reselling or by concert fans wishing to recoup their investments. Responding to a question from Senator Harvey, Mr. Jones stated that his company does not use "bots," and that association members supported last year's legislation that outlawed their use. Senator Heath asked how many of Mr. Jones' company's transactions would exceed the 25 percent mark-up cost stipulated by the bill. Mr. Jones indicated that very few transactions would exceed the 25 percent cap because his company would not be able to acquire tickets at such a high price. Mr. Jones stated that the members of the association would be restricted by the 25 percent cap, whereas individuals would not, and therefore those individuals could make more money selling the tickets on-line. Senator Heath asked for a clarification of the definition of a "reseller." Senator Hodge replied that under the bill, anyone could be a reseller, including individuals such as season ticket holders who resell their tickets; Senator Hodge indicated that such resellers would be subject to the same fee cap as a broker. In response to a question from Senator Heath, Mr. Jones questioned how it would be possible to regulate the individual in the same way that a company would be regulated.

02:30 PM

Senator Harvey asked to clarify if the season ticket holders who were protected by Senator Tochtrop's bill last year would now be prevented from selling. Senator Harvey asked if Senate Bill 09-071 would undermine last year's bill. Senator Hodge replied that Senator Harvey was correct, and that she had drafted an amendment to try to exclude individual ticket holders, but that it would have made the bill too convoluted.

02:32 PM

Senator Foster took a moment to explain her reasons for voting to postpone Senate Bill 09-071 indefinitely.


BILL:	SB09-071
TIME:	02:32:01 PM
MOVED:	Harvey
MOTION:	Moved to postpone Senate Bill 09-071 indefinitely. The motion passed on a 7-0 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Mitchell	Yes
	Scheffel	Yes
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

Final YES: 7 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:35 PM

The committee recessed.