Full text of "Pearl Jam's antitrust complaint : questions about concert, sports, and theater ticket handling charges and other practices : hearing before the Information, Justice, Transportation, and Agriculture Subcommittee of the Committee on Government Operations, House of Representatives, One Hundred Third Congress, second session, June 30, 1994"

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PEARL JAM'S ANTITOUST COMPLAINT: QUESTIONS
ABOUT CONCERT, SPORTS, AND THEATER
TICKET HANDUNG CHARGES AND OIHER
PRACTICES

^Y 4. G 74/7: J 24 ^^ ^^^

Pearl Jan's Antitrust Conplaint: Qu...

HEARING

BEFORE THE

INFORMATION, JUSTICE, TRANSPORTATION,
AND AGRICULTURE SUBCOMMITTEE

OF THE

COMMITTEE ON

GOVERNMENT OPERATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS
SECOND SESSION

JUNE 30, 1994

F*rinted for the use of the Committee on CU)vermn6ia0frainBtt^

^^6 8 199b

U.S. GOVERNfMENT PRINfTING OFFICE
85-914 CC WASfflNGTON : 1995

For sale by the U.S. Government Printing Office
Superintendent of Documents, MaU Stop: SSOP, Washington, DC 20402-9328
ISBN 0-16-047228-8

tEARL JAM'S ANTITRUST COMPLAINT: QUESTIONS
ABOUT CONCERT, SPORTS, AND THEATER
TICKET HANDUNG CHARGES AND OTHER
PRACTICES _____^_=

Y 4. 5 74/7: J 24 ~

Pearl Jan's Antitrust Conplaint: Qu.

HEARING

BEFORE THE

INFORMATION, JUSTICE, TRANSPORTATION,
AND AGRICULTURE SUBCOMMITTEE

OF THE

COMMITTEE ON

GOVERNMENT OPERATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS
SECOND SESSION

JUNE 30, 1994

Printed for the use of the Committee on Governme&t««^^/|gfcT^|^

U.S. GOVERNMENT PRINTING OFFICE
g^914 CC WASHINGTON : 1995

For sale by the U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
ISBN 0-16-047228-8

COMMITTEE ON GOVERNMENT OPERATIONS

JOHN CONYERS,
CARDISS COLLINS, Illinois
HENRY A. WAXMAN, California
MIKE SYNAR, Oklahoma
STEPHEN L. NEAL, North Carolina
TOM LANTOS, California
MAJOR R OWENS, New York
EDOLPHUS TOWNS, New York
JOHN M. SPRATT. JR., South Carolina
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
KAREN L. THURMAN, Florida
BOBBY L. RUSH, Illinois
CAROLYN B. MALONEY, New York
THOMAS M. BARRETT, Wisconsin
DONALD M. PAYNE, New Jersey
FLOYD H. FLAKE, New York
JAMES A. HAYES, Louisiana
CRAIG A. WASHINGTON, Texas
BARBARA-ROSE COLLINS, Michigan
CORRINE BROWN, Florida
MARJORIE MARGOLIES-MEZVINSKY,

Pennsylvania
LYNN C. WOOLSEY, California
GENE GREEN, Texas
BART STUPAK, Michigan

Jr., Michigan, Chairman

WILLIAM F. CLINGER, JR., Pennsylvania

AL McCANDLESS, California

J. DENNIS HASTERT, Illinois

JON L. KYL, Arizona

CHRISTOPHER SHAYS, Connecticut

STEVEN SCHIFF, New Mexico

CHRISTOPHER COX, California

CRAIG THOMAS, Wyoming

ILEANA ROS-LEHTINEN, Florida

DICK ZIMMER, New Jersey

WILLIAM H. ZELIFF, Jr., New Hampshire

JOHN M. McHUGH, New York

STEPHEN HORN, California

DEBORAH PRYCE. Ohio

JOHN L. MICA. Florida

ROB PORTMAN, Ohio

FRANK D. LUCAS. Oklahoma

BERNARD SANDERS. Vermont
(Independent)

JUUAN ES'STEIN, Staff Director
Matthew R. Fletcher. Minority Staff Director

Information, Justice, Transpobtation, and Agriculture SuBCOMMirrEE

GARY A. CONDIT, California, Chairman

MAJOR R. OWENS, New York CRAIG THOMAS, Wyoming

KAREN L. THURMAN, Florida ILEANA ROS-LEHTINEN, Florida

LYNN C. WOOLSEY. California STEPHEN HORN. California
BART STUPAK, Michigan

Ex Officio

JOHN CONYERS, Jr., Michigan WILLIAM F. CLINGER, Jr., Pennsylvania

John Edgell, Professional Staff Member

Aurora Ocg, Clerk

Diane M. Major, Minority Professional Staff

(II)

CONTENTS

Page

Hearing held on June 30, 1994 1

Statement of:

Collins, Tim, manager, Aerosmith, Boston, MA 47

Condit, Hon. Gary A., a Representative in Congress from the State of

California, and chairman, Information, Justice, Transportation, and

Agriculture Subcommittee: Opening statement 1

Downs, Bertis, attorney, R.E.M., and adjunct professor. University of

Georgia School of Law, Athens, GA 54

Gossard, Stone, guitarist, Pearl Jam, Seattle, WA, accompanied by Jeff

Ament, bassist; Kelly Curtis, manager; and Mike McGinley, business

manager 6

Marsh, Dave, rock and roll historian, New York, NY 66

Morris, Chuck, manager. Nitty Gritty Dirt Band and others, Denver,

CO 75

Rascoff, Joe, managing director, RZO Inc 73

Rosen, Fred, chief executive ofTicer, Ticketmaster 92

Rothman, Claire L., general manager, Los Angeles Forum, Inglewood,

CA 109

Letters, statements, etc., submitted for the record by:

Collins, Tim, manager, Aerosmith, Boston, MA: Prepared statement 50

Corwers, Hon. John, Jr., a Representative in Congress from the State

01 Michigan, and chairman, Committee on Government Operations:

Prepared statement 4

Downs, Bertis, attorney, R.E.M., and adjunct professor, University of

Georgia School of Law, Athens, GA: Prepared statement 59

Marsh, Dave, rock and roll historian. New York, NY: Prepared statement 69
Owens, Hon. Major R., a Representative in Congress from the State

of New York: Prepared statement 88

Pearl Jam: Prepared statement 10

Rosen, Fred, chief executive officer, Ticketmaster:

Information concerning Ticketmaster Corp. and Subsidiaries 94

Letter from Pam Lewis, Garth Brooks' manager 115

Number of part-time employees employed at Ticketmaster 117

Rothman, Claire L., general manager, Los Angeles Forum, Inglewood,

CA: Prepared statement Ill

(III)

PEARL JAM'S ANTITRUST COMPLAINT:
QUESTIONS ABOUT CONCERT, SPORTS, AND
THEATER TICKET HANDLING CHARGES AND
OTHER PRACTICES

THURSDAY, JUNE 30, 1994

House of Representatives,
Information, Justice, Transportation,

AND Agriculture Subcommittee
OF THE Committee on GtOvernment Operations,

Washington, DC.

The subcommittee met, pursuant to notice, at 9 a.m., in room
2154, Rayburn House Office Building, Hon. Grary A. Condit (chair-
man of the subcommittee) presiding.

Present: Representatives Gary A, Condit, Major R. Owens, Karen
L. Thurman, Lynn C. Woolsey, Bart Stupak, Craig Thomas, and
Stephen Horn.

^so present: Representative Colhn C. Peterson.

Staff present: John Edgell, professional staff member; Aurora
Ogg, clerk; and Diane M. Major, minority professional staff. Com-
mittee on Government Operations.

OPENING STATEMENT OF CHAIRMAN CONDIT

Mr. Condit. The subcommittee will come to order. The House
Government Operations Subcommittee on Information, Justice,
Transportation, and Agriculture has investigative and oversight re-
sponsibilities over certain Federal Grovernment agencies.

Our hearing this morning, Pearl Jam's antitrust complaint, ques-
tions about concert, sports, and theater ticket handling charges and
other practices, falls within our jurisdiction over the Justice De-
partment and oversight of antitrust matters.

A 1991 decision by the Antitrust Division of the Justice Depart-
ment allowed Ticketmaster to acquire its leading competitor,
Ticketron. This calls into question the process for antitrust merg-
ers. We will be asking the Justice Department to explain this proc-
ess at a future date.

We have formally requested documents relating to this merger in
a letter to Attorney Greneral Reno and to the Assistant Attorney
General, Mrs. Bingaman. The subcommittee intends to pursue this
matter.

Most Americans would not be expected to spend a great amount
of time thinking about legal technicalities involving antitrust is-
sues. But they do understand the harmful effects of monopolies in
the marketplace.

(1)

The America free enterprise system thrives on a competitive
marketplace. The consumer suffers when there is no competition.
Monopolies fly in the face of what America is all about. That is the
foundation of*^ effective antitrust policy. And almost every American
consumer has something at stake.

That is what this hearing is all about: Is there a monopoly in the
ticket distribution industry? In short, who is there to protect con-
sumers?

Any consumer who has bought a ticket to a sports event, a con-
cert, or a theater show and has had to pay $5 to $8 per ticket just
for handling charges, I know a little bit about this myself Is the
ticket distribution industry for the consumer's convenience or is it
a cartel? We need to investigate the serious allegations made
against Ticketmaster. And we intend to have a full and fair review
of the charges.

No one will dispute that Ticketmaster is good at what they do.
They are. In fact, it is clear that Ticketmaster has been able to
eliminate its competition because it is very, very good at what it
does. No one disputes the convenience of Ticketmaster's services.
Ticketmaster is a well-run, professional company that provides a
needed service to consumers and performers.

The key question is whether recent contractual agreements be-
tween Ticketmaster and most major stadiums and concert promot-
ers have violated Federal antitrust law. This hearing follows a
legal brief filed by Pearl Jam — a Seattle, WA-based alternative
rock band — with the Justice Department to investigate alleged
antitrust violations of Ticketmaster, a national ticket distribution
company.

The Justice Department has announced a formal investigation of
Ticketmaster and the ticket distribution industry. This subcommit-
tee has a responsibility to pursue an issue that touches the ordi-
nary daily lives of millions of consumers. The subcommittee in-
tends to offer an opportunity for all sides to air their views.

We are honored to have representatives of both Pearl Jam and
Ticketmaster, together with other respected members of the music
industry here with us today.

Since the Justice Department is at an early stage in its inves-
tigation, they will not appear today. The subcommittee expects to
hear from the Justice Department at a later date.

We are honored to have a number of witnesses willing to tell it
like it is from their perspective. Some of them may have put their
careers at some level of risk by testifying today. We are grateful
for their cooperation.

Having said all this, we will get to those witnesses as quick as
we can, but I must first allow the subcommittee members to make
any opening statements that they may want to make. We are hon-
ored today to have the distinguished chairman of the full commit-
tee here with us today, Mr. John Conyers.

Mr. Chairman, do you have any statement you would like to
make for the record?

Mr. Conyers. Thank you very much. Chairman Condit. I wish
to congratulate you and these artists who have dared to come for-
ward. As a strong advocate of performing arts and with many close
friends in the industry, this is an issue of extreme importance to

me, and we can see from the enthusiastic response to this hearing
that this is an issue that is of great interest to the American people
as well.

Question: Why is it when you personally go to the box office to
buy sports or performing arts tickets, when you are right at the
stadium or a concert hall, you have to pay a service charge to
Ticketmaster for the honor of purchasing from them? What service
do they provide that they can rationalize charging so much money
for so little effort? My staff contacted the management of the
Chene Park Amphitheater in Detroit, and they said that they rou-
tinely receive calls complaining about high handling charges and
lack of other ways to buy tickets in most cases, and so I am de-
lighted to join vou here today.

Let me just leave with you this observation. When art is success-
ful, it unavoidably becomes a business. The question, then, is
whether artists have an inherent right to control the limits of their
business and how it relates to the growth of their art. The answer,
I am convinced, is that artists do have a right to that control.
Thank you very much. Chairman Condit.

[The prepared statement of Mr. Conyers follows:!

STATEMENT OF JOHN CQMYEKS, JK., CHAIRMAN OF THE CCMMZTTEE ON

GOVERNMENT OPERATIONS

BEFORE TEE

INFORMATION, JTTSTICE, TRANSPORTATION AND AGRICOLTURE

SUBCOMMITTEE, COMMITTEE ON GOVERNMENT OPERATIONS

HEARING ON PRACTICES WITHIN TEE TICKET DISTRIBUTION INDUSTRY

JUNE 30, 1994

As a strong advocate of the performing arts, and with many
close friends in the music industry, this issue is of extreme
iiq>ortance to me. And we can see from the enthusiastic response
to this hearing that this is an issue that is of great interest
to the American people. It is important to the minority
communities as well, including African Americans, who have
produced some of the world' s best artists like Thelonious Monk,
Aretha Franklin, Miles Davis, Janet Jackson and Wynton Marsalis.
Yet many members of the minority community are excluded from the
possibility of seeing high-quality artists because of outrageous
ticket prices. It is important for young people also, most of
whom are hot rich, because they want to have access to these
artists. A monopoly by middlemen must not stop the availability
of culture to anyone outside the wealthiest in our society.

Why is it that even when you personally go out to the box
office to buy sports or performing arts tickets, when you're
right at a stadium or concert hall, you have to pay a service
charge to Ticketmaster for the honor of purchasing from them?
What service do they provide that they can rationalize charging
so much money for so little effort?

My staff contacted the management at the Chene Park
Aiq>hitheater in Detroit, in my congressional district, and the
Assistant General Manager said that he routinely handles ten
calls a day complaining about high handling charges and the lack
of other ways to buy tickets in most cases.

The American people see what is happening and they don' t
like itt Ticketmaster appears to be exploiting its exclusive
contracts with major entertainment outlets, and the average
consumer is being gouged with outrageous service fees. Consumers
are demanding that we investigate these practices, and I'm glad
the Justice Department is doing so. I look forward to hearing
Pearl Jam and others as we get to the heart of this issue today.

Congratulations and thanks to Congressman Condlt for
organizing today's important hearing.

Mr. CONDIT. Thank you, Mr. Chairman, We have the ranking
member on the Republican side, Mr. Thomas. Mr. Thomas, do you
have a statement that you would like to make?

Mr. Thomas. Yes, thank you, Mr. Chairman. I will be brief so we
can get on with it. Before we begin today's hearing, let me just
state at the outset that I believe as a general proposition that the
market is an effective regulator from determining prices to selling
one's product efficiently.

Clearly, there are instances, however, where a minimal competi-
tion exists and we should take a closer look at how to foster it, not
just in the music industry but in other areas as well. Certainly,
this is a more well-attended hearing than we usually have on this
matter, so I am delighted for that. Unfortunately, the Clinton ad-
ministration's Justice Department has chosen not to participate,
and without the presence of the Justice Department it will be dif-
ficult to accomplish this task.

The subcommittee has oversight responsibility of the Depart-
ment. We should evaluate the Antitrust Division and the guidelines
the Division has used to review competitive effects of mergers and
acquisitions.

As you are aware, two of the witnesses are presently involved in
legal disputes. This matter should be left to the review of the Jus-
tice Department where it has been appropriately filed. Today's tes-
timony and questions should instead focus on how the Department
interprets current antitrust laws and applies them. This is where
the subcommittee's iurisdiction falls. This is the area that we
should evaluate, and if we need to make improvements, so Mr,
Chairman, thank you. I look forward to the testimony.

Mr. CONDIT. Thank you, Mr. Thomas. I will turn to my left to
the subcommittee's musician, Mr. Peterson,

Mr, Peterson. Thank you, Mr. Chairman. I have to admit that
I, after some requests, tried to learn some Pearl Jam songs, but I
think it is a little beyond me. They have great music, but I iust
couldn't work it into my repertoire. But I do appreciate your calling
the hearing and allowing me to be with you today, and I commend
these young folks for coming forward.

I am probably the only card-carrying member of the Federation
of Musicians up at the table here today. I have never had the kind
of problem they had. There weren't that many people clamoring to
get in to see my performances, but anyway, I also found out that
Mr. Ament's father is from Blufflon, just south of Blufiflon in mv
district, about 30 miles from where I live, so it is a small world.
Welcome to the committee. We appreciate your coming forward.
Thank you, Mr, Chairman.

Mr. UONDIT. Thank you, Mr. Peterson.

Mrs. Thurman.

Mrs. Thurman, I just wanted to welcome you all and look for-
ward to your testimony and let you know that you have really put
quite a stir on Capitol Hill today.

Mr. CONDIT. Mr. Stupak.

Mr. Stupak. No statement.

Mr. CoNDiT. Thank you very much. We have a practice of swear-
ing all witnesses in. Would you gentlemen rise and raise your right
hand.

[Witnesses sworn.]

Mr. CoNDiT. OK, we got off to a great start, they said I do. Be-
fore we start, no bottles, no cans, no frisbees or beach balls are al-
lowed at this hearing. Lighters are OK though. We are delighted
to have both of you here. You have been very courageous in bring-
ing your complaints forward and dealing with an issue that is im-
portant to the American people. I don't know the full extent you
may have put your own careers at risk, and I think that is a very
courageous thing for you to do. Hopefully, this will help consumers
across this country.

We have Mr. Stone Grossard, are you the drummer?

Mr. GossARD. I play guitar.

Mr. CONDIT. Jeff.

Mr. GossARD. Plays bass.

Mr. CoNDlT. OK We appreciate you being here. Who would like
to go first? Stone.

STATEMENT OF STONE GOSSARD, GUITARIST, PEARL JAM, SE-
ATTLE, WA, ACCOMPANIED BY JEFF AMENT, BASSIST; KELLY
CURTIS, MANAGER; AND MIKE McGINLEY, BUSINESS MAN-
ACER

Mr. GossARD. Yes, I would like to go first. I am not used to doing
this sort of thing, so bear with me if it is a little rough.

Mr. Chairman and members of the subcommittee, my name is
Stone Gossard. With me is JefF Ament. I play guitar and Jeff plays
bass, as you know. I would first like to thank you, Chairman
Condit, for holding this hearing today. We, and I am sure many
other Americans, feel very strongly about the subject of this hear-
ing, and we appreciate your efforts to shed light on this matter.

All the members of rearl Jam remember what it was like to be
young and not to have a lot of money. Many Pearl Jam fans are
teenagers who do not have the money to pay $30 or more that is
often charged for tickets today. Although given our popularity, we
could undoubtedly continue to sell out our concerts with ticket
prices at a premium level, we have made a conscious decision that
we do not want to put the price of our concerts out of the reach
of our fans.

For these reasons we have attempted to keep the ticket price to
our concerts to a maximum of $18. In addition, we have also tried
to limit any service charges that may be imposed on the sale of
those tickets to a reasonable percentage of the actual ticket price.
We have also tried to ensure that any service charge will be sepa-
rately identified from the price of the ticket itself so that fans know
how much is being charged for the ticket and how much is being
added on by the companv selling the ticket.

Our efforts to try to keep our ticket prices at this level and to
limit excessive service charges have put us at odds with
Ticketmaster. Ticketmaster is a nationwide computerized ticket
distribution service that has a virtual monopoly on the distribution
of tickets to concerts in this country. It is today almost impossible
for a band to do a tour of large arenas in major cities and not deal
with Ticketmaster.

The reason that bands like Pearl Jam have to deal with
Ticketmaster is because Ticketmaster has exclusive contracts with

most major venues, and almost all significant concert promoters in
the United States. In essence, if you play at any of these venues
or if you deal with any of these promoters, Ticketmaster will claim
that its contracts give it the exclusive right to distribute tickets for
your concert.

Ticketmaster's exclusive agreements with most of the suitable
venues and promoters has left most bands without any meaningful
alternative for distributing tickets. This absence of any alternative,
in turn, gives Ticketmaster the power to exercise excessive control.
The result for our fans has been higher service charges, meaning
effectively that they pay higher prices for their tickets.

To imderstand how Ticketmaster found itself in this position of
power requires a brief description of the structure of our business.
When Pearl Jam makes arrangements to go on tour, we act
through an agent. Our agent will then enter into an agreement
with a promoter for a particular show or shows. The promoter in
turn will enter into an agreement with a venue. Typically, the
venue, the promoter or both will have exclusive agreements with
Ticketmaster.

It is well known in our industry that some portion of the service
charges Ticketmaster collects on its sale of tickets is distributed
back to the promoters and the venues. It is this incestuous rela-
tionship>— and the lack of any national competition for
Ticketmaster — that has created the situation we are dealing with
today. The service fee, which in concept should be nothing more
than a handling charge for purchasing tickets, has thus become a
source of additional revenue, not only for Ticketmaster, but for the
promoters and the venues.

In at least one instance, Ticketmaster's service fee has reportedly
gone as high as $15 a ticket. Bands like Pearl Jam by contrast re-
ceive no part of the service charges collected by Ticketmaster, and
let me make it quite clear that Pearl Jam seeks no portion of those
service charges.

As a result, our band, which is concerned about keeping the price
of its tickets low, will almost always be in conflict with
Ticketmaster which has every incentive to try to find ways to in-
crease the price of the ticket itself.

The written statement we have submitted to you today contains
many examples of how Ticketmaster has used its power to interfere
with or to stop our efforts to keep the price of our tickets low. I
refer you to that statement for details.

Since we brought Ticketmaster's conduct to the attention of the
Justice Department almost 2 months ago, public support for us and
more generally for our efforts to reduce ticket prices has been over-
whelming. Although our success as a band gives us a degree of
power to stand up to Ticketmaster, we are not simply crusading for
some abstract cause at the spur of the moment. This is business
as usual for this band.

For over 10 years Jeff and I always made it a point to try to en-
sure low prices for our tickets, the T-shirts and everything else as-
sociated with the various bands we played in. We, in fact, recently
did a show in Atlanta that any radio station who wanted to could
broadcast for free. Jeff, in particular, has always been an advocate

of keeping things affordable and making sure our audience has ac-
cess to our music.

Jeff grew up in Big Sandy, MT, and survived on a very hmited
music budget. We have had many conversations regarding the im-
portance of music to his spiritual development and survival. There
is too much great music out there to be limited to just a few be-
cause of a ridiculously high ticket price. Anyone who has worked
with us knows that this has always been an important concern of
ours.

Our interest is really quite narrow. We simply have a different
philosophy than Ticketmaster about how and at what prices tickets
to our concerts should be sold. We can't insist that Ticketmaster do
business on our terms, but we do believe we should have the free-
dom to go elsewhere if Ticketmaster is not prepared to negotiate
terms that are acceptable to us.

As we learned in attempting to go on tour this summer, because
of Ticketmaster's dominance of the industry, our only other option
was to play nontraditional venues and use nonestablished promot-
ers or promote our own shows. Using nontraditional venues and
promoters would create a tremendous security risk for our fans if
we are forced outside the network of established venues and pro-
moters currently working major cities. We would have to seriously
question whether we could consistently provide safe and secure
concerts for our fans.

Ticketmaster's monopoly ensures that our only alternatives are
unsafe, risky, and financially more complex, Mr. Chairman, this is
really about choices. Fans can go from one music store to another
to find the best deal on a CD, but they can't go anywhere but
Ticketmaster for concert tickets. We are able to choose marketing
strategies and how we work with Sony, our record label, as well as
others in the business, but when it comes to tickets, we feel we
have no fair choices.

The lack of competition is not conducive to free enterprise. Where
is the incentive to give the consumer a quality product for a rea-
sonable cost when you don't have to? Why does Ticketmaster
charge a high service fee? Because they can. Something is vastly
wrong with a system under which a ticket distribution company
can dictate the markup on a price of a concert ticket, can prevent
a band from using another less expensive approach to distributing
tickets, and even effectively preclude a band from performing at a
particular arena if it does not want to use Ticketmaster. This is
also about knowing what you are paying for.

Service charges range from $1 to $15. That is not based on the
value of the service the company performs, it is based on how much
money they can get. None of the other companies once accused of
being monopolies — phone companies, buses, whatever — are able to
charge the public such ridiculous and random amounts.

In bringing Ticketmaster's conduct to the attention of the De-
partment of Justice, Pearl Jam hoped that the government would
agree with our view that Ticketmaster's anticompetitive business
practices are illegal and would take steps to stop those practices
from continuing. We believe that the Department of Justice is par-
ticularly well suited to deal with this matter because the problem

is national in scope and has broader ramifications than simply the
price of tickets to a Pearl Jam concert.

We are encouraged by the Antitrust Division's investigation into
those practices and we look forward to the outcome of that inves-
tigation and any enforcement action that may result. Congressional
attention and support for this matter will, we hope, reinforce the
Antitrust Division's efforts.

We feel Ticketmaster has in essence dug its own grave on this
issue. It is unwilling to be in step with the times and to cooperate
with a band whose business ideals are commendable, given the
state of the world today. Just look at the tours planned for this
summer. There are plenty of bands charging a lot for their tickets
who seem to have no conflict with Ticketmaster's practices. In the
scheme of things, Pearl Jam is a minute percentage of the overall
concert revenues.

In closing, I would like to thank you for requesting that we bring
these matters to the attention of the subcommittee. Jeff and I
would now be pleased to respond to any questions you have. We
would also like to thank all of our friends and fans and R.E.M.,
Aerosmith, and the Grateful Dead for showing support for us also.

[The prepared statement of Pearl Jam follows:]

STATEMENT OF PEARL JAM

TO THE INFORMATION, JUSTICE,

TRANSPORTATION AND AGRICULTURE SUBCOMMITTEE

OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS

Pearl Jam submits this statement In connection
with the oral testimony before the sub-committee of Stone
Gossard and Jeff Ament, two members of the band, on June 30,
1994.

As most or all of you are aware, in early May of
this year, our attorneys at Sullivan & Cromwell filed a
memorandum with the Antitrust Division of the Department of
Justice in which we brought to the Government's attention
certain conduct by Tlcketmaster that we believe is
unlawfully interfering with our freedom to detennine the
price and other terms on which tickets to our concerts will
be sold. The high price of concert tickets — especially
the imposition of excessive service charges — is a
significant issue to us and we believe to the public
generally. In this statement we will discuss the reasons
why Pearl Jam is especially sensitive to the price of
tickets to our concerts; describe some of the incidents that
led us to bring Tlcketmaster 's conduct to the attention of
the Justice Department; address the reasons why we believe
Tlcketmaster 's business practices violate the antitrust laws
and the consequences those business practices have on us, on
our fans, and on others who purchase tickets to concerts;
and finally, discuss the- type of change we hope will occur

in this industry and how Government action might help bring
that about.

Many of Pearl Jam's most loyal fans are teenagers
who do not have the money to pay the $50 or more that is
often charged today for tickets to a popular concert.
Although, given our popularity, we could undoubtedly
continue to sell-out our concerts with ticket prices at that
premium level, we have made a conscious decision that we do
not want to put the price of our concerts out of the reach
of many of our fans. Moreover, we do not want to be
responsible for teenagers, who may be influenced by peer
pressure to feel that they must see Pearl Jam perform,
spending more money for that concert ticket than they can
really afford. All of the members of Pearl Jam remember
what it is like to not to have alot of money, and we
recognize that a teenager's perceived need to see his or her
favorite band in concert can often be overwhelming.

For these reasons, we have attempted to keep the
ticket prices to our concerts to a maximum of $18. We have
also tried to limit any service charges that may be imposed
on the sale of those tickets to 10 percent of the ticket
price, and to ensure that any service charge will be
separately identified from the price of the ticket itself so
that fans know how much is being charged for the ticket and
how much is being added on by the company selling the
ticket. As a result, even where a service charge is

-2-

imposed, our goal is to make it so that no one will pay more
than $20 to see a Pearl Jeun concert.

Our efforts to try to try to keep prices for
tickets to our concerts to this low level and to limit the
possibility of excessive service charge mark-ups have put us
at odds with Ticketmaster. Ticketmaster is a nationwide
computerized ticket distribution service that has a virtual
monopoly on the distribution of tickets to concerts in this
country. It has been no secret that since Ticketmaster
acquired Ticketron, the only other nationwide computer
ticket service, service charges have been on the rise. It
is today virtually impossible for a band to do a tour of
large arenas or other significant venues in major cities and
not deal with Ticketmaster.

The reason that a band like Pearl Jam has been
required to deal with Ticketmaster is because Ticketmaster
has exclusive contracts with most major venues for concerts
and with almost all significant promoters of concerts in the
United States. In essence, if you play any of these venues
or if you deal with these promoters, Ticketmaster will claim
that its contracts give it the exclusive right to distribute
tickets for your concert. This affords Ticketmaster
tremendous power in this business.

By locking up all of the suitable venues and
promoters with arrangements of this type, Ticketmaster has
effectively thwarted competition and left most bands without

-3-

any meaningful alternative for distributing tickets. This
absence of any alternative, in turn, gives Ticketmaster the
power to exercise virtual control — to the exclusion of the
views of the band — over the level of service charge
imposed on tickets for that band's concert that are sold
anywhere but at the box office. The result, for our fans,
has been higher service charges, meaning effectively that
they pay higher prices for their tickets. Often those
service charges are buried in the overall price charged by
Ticketmaster, so that the fan may not even know that a
substantial portion of what he or she is paying is a
Ticketmaster- imposed surcharge.

Now, some of you might wonder how Ticketmaster,
seemingly a service organization performing the routine
function of distributing tickets, managed to put itself in a
position where it can exercise such a high degree of control
over the pricing and distribution of concert tickets. To
understand this requires a brief description of the
structure of our business.

When Pearl Jam makes arrangements to go on tour,
we act through an agent. Our agent will then enter into an
agreement with a promoter for a particular show or shows.
The promoter, in turn, will enter into an agreement with the
venue. And as indicated above, typically the venue, the
promoter or both will have exclusive contracts with

-4-

Ticketmaster for the distribution of tickets for events in
which they are involved.

It is well known in our industry that some portion
of the service charges Ticketmaster collects on its sale of
tickets is kicked back to the promoters and the venues.
Thus, Ticketmaster 's service charges are a source of
additional revenue for venues and promoters. It is in their
interest, as well as in Ticketmaster 's interest, to impose
high service fees. The "service fee" — which in concept
should be nothing more than a handling charge for the
convenience and cost associated with purchasing a ticket
over the phone or at a remote location — has thus become a
source of additional revenue not only for Ticketmaster but
for the promoters and venues.

As anyone who has read the papers this summer is
undoubtedly aware, the Ticketmaster service charge has in at
least one case been reported to have gone as high as $15 per
ticket. An informal survey of the service charges being
imposed by Ticketmaster on the events currently being
advertised in the Los Angeles area shows that they range
from a low of $3.50 for a ticket to an ice skating show at
the Forum to $6.25 for a ticket to see either ZZ Top or Phil
Collins at the Forum or Janet Jackson at Irvine Meadows, to
a high of $7.25 for a ticket to see the Eagles at the Rose
Bowl. On top of that, Ticketmaster imposes an additional
charge of $2.00 or more per order if the tickets are ordered

-5-

by phone.* By contrast, the service charge imposed on a
ticket to the musical Sunset Boulevard purchased over the
phone — from a non-Ticketmaster service — is only $3.00,
less than the lowest charge being imposed by Ticketmaster
and less than half of the surcharge Ticketmaster imposes for
a ticket to a ZZ Top, Janet Jackson or Phil Collins concert.
There can be little question that if competition existed,
service fees would be lower.**

Bands like Pearl Jam receive no part of the
service charges collected by Ticketmaster. And let us make
it quite clear that Pearl Jam seeks no portion of those
service charges. As a result, a band like Pearl Jam, which
is concerned about keeping the price of its tickets low,
almost by necessity finds itself on the opposite side of
Ticketmaster, which has every economic incentive to raise
the price of the tickets it sells.

During its brief existence. Pearl Jam has had
several confrontational encounters with Ticketmaster. The
first occurred in 1992, in connection with the "Drop in the
Park Show", a free concert Pearl Jam arranged in Seattle.
Pearl Jam paid for the costs of staging the free concert —

* Attachment A summarizes the fees currently being
charged by Ticketmaster for various events in the Los
Angeles area.

** As another example. Smith Tix, in the State of Utah,
where there is no other competing ticket service, imposes
services charges ranging from $1 to a maximum of $2.65.

-6-

an amount in excess of $125,000 — but was required for
security reasons to limit attendance to 30,000 fans and as a
result had to distribute tickets. Ticketmaster refused to
distribute tickets for this free concert for less than a
$1.50 per ticket service charge (a total of $45,000),
requiring us to make other arrangements with the City of
Seattle to distribute tickets.

A series of run-ins with Ticketmaster during our
last tour illustrates quite clearly the power that
Ticketmaster wields and the risk that any band undertakes in
attempting to utilize an alternative to Ticketmaster 's
distribution system. Last December, we had made
arrangements with a local promoter in Seattle to perform at
the Seattle Center Arena. A portion of the proceeds from
this concert were to go to charity. We originally had an
agreement with Ticketmaster under which they would
distribute tickets for the concert and impose a service
charge of $3.25, of which $1 would be donated by them to the
charity, plus they would make an additional contribution
from their revenues so that their total contribution would
be $20,000 if the concert sold out. Pearl Jam also agreed
to contribute $20,000 to the charity. At the last minute,
just as tickets were about to go on sale, Ticketmaster
reneged, and threatened not to sell tickets if it could not
raise the service charge by $1 per ticket to cover the
amount of their contribution. After a tense impasse,

-7-

Ticketmaster finally relented and agreed to charge only
$3.25, but it limited its contribution to the $1 per ticket
portion of its undertaking and did not make the full
contribution it had originally agreed to make.

After this, our run-ins with Ticketmaster became
increasingly threatening. In Chicago last March,
Ticketmaster insisted on imposing a $3.75 service charge on
top of the $18 price of a ticket to our concerts. We
negotiated with Ticketmaster 's general manager in Chicago
and obtained an agreement to identify that service charge
separately from the actual price of the ticket. Then, just
as tickets were to go on sale, Ticketmaster again reneged.
It was necessary for us to threaten to perform at another
venue before Ticketmaster backed down and agreed to sell
tickets that separately disclosed its service charge. Even
then, Ticketmaster told us that its concession only extended
to our Chicago shows and we should not expect them to be
willing to do it elsewhere.

Chicago was followed soon after by Detroit. In
Detroit, we decided to try to bypass Ticketmaster by
distributing tickets through our fan club and by a lottery
system. We were informed that Ticketmaster threatened the
promoter of this concert with a lawsuit for violating its
exclusive Ticketmaster agreement by allowing this method of
distribution to occur, and also temporarily disenabled the

-8-

promotor's ticket machine so that it could not print tickets
for the concert for that time.

In New York, where we played a show at the
Paramount Theatre in April of this year, we tried to
distribute some tickets over the radio. Using a city-wide
promotion, tickets were sold through the Paramount Box
office. Here again, we were informed that Ticketmaster
threatened the Paramount 's management with legal action for
supposedly allowing us to evade Ticketmaster 's exclusive
rights.

While we were experimenting with these alternative
distribution arrangements, Ticketmaster attempted to
threaten and intimidate us. For example, at one point the
person in charge of handling concert arrangements for us was
told by Ticketmaster in essence that he had better watch
himself and that if we didn't back off he would be run out
of the business.

After the conclusion of our winter tour, we began
to plan for a tour this summer. In attempting to arrange
that tour, we made it clear that we would only perform if
the service charge imposed on our tickets was limited to 10
percent and was separately disclosed. Ticketmaster
responded by spreading the word to promoters that it viewed
our efforts as a threat to its business and urged promoters
to refuse to deal with Pearl Jam. For example, as we
disclosed to the Justice Department, in March of this year,

-9-

Ben Liss of the North American Concert Promoters Association

— a group of all major promoters In North America — sent a
memorandum to the Association's members in which he referred
to them as "brother racoons" and warned that:

"Ticketmaster has indicated to me that they will
aggressively enforce their contracts with promoters and
facilities. Ticketmaster 's stance is that they have
been loyal to their partners in this business and they
hope & expect their partners will reciprocate."
A day later Mr. Liss sent the Association's
members an "update" on the matter, in which he conveyed that
"Fred" — referring to Fred Rosen, the CEO of Ticketmaster -

- "intends to take a very strong stand on the issue" and
that Ticketmaster "will use all available remedies" to
protect itself. He added that "[Ticketmaster] views the
Pearl Jam issue as an all or nothing proposition, meaning
that they will not agree to handle half of the available
inventory on a show in any situation where a contract
exists."*

Now what is wrong with Ticketmaster 's business
practices? On a purely practical level, its practices are a
problem because they preclude bands like Pearl Jam from
having access to any alternative method of distributing
tickets with the consequence that our fans are forced to pay

* Copies of the memos are annexed as Exhibits B and C to
this statement.

-10-

higher ticket prices. In our memorandum to the Justice
Department, Sullivan & Cromwell explained why those
practices should also be considered to be illegal.

As our memorandum to the Justice Department
explains, Ticketmaster's exclusive arrangements with
promoters and venues are unreasonable restraints of trade,
and its use of those arrangements to prevent promoters and
venues from dealing with Pearl Jam amounts to a group
boycott, in violation of Section 1 of the Sherman Act.
Ticketmaster is also a monopolist, having acquired and
perpetuated that position through its acquisition of
Ticketron and various other regional ticket services and the
use of long term exclusive contracts. In acting to preclude
Pearl Jam and other bands from distributing tickets to their
own concerts other than through Ticketmaster, Ticketmaster
is unlawfully exercising that monopoly power in violation of
Section 2 of the Sherman Act.

Since we brought Ticketmaster's conduct to the
attention of the Department of Justice almost two months
ago, public support for us and more generally for efforts to
reduce ticket prices has been overwhelming. Although our
success as a band gives us a degree of power to try to stand
up to Ticketmaster that newer and less established bands do
not have, we do not consider ourselves to be crusaders. And
while we recognize that the issues we have raised have
implications that go beyond Pearl Jam, our interest is

-11-

really quite narrow. We simply have a different philosophy
than Ticketmaster does about how and at what price tickets
to our concerts should be sold. We do not want to force
Ticketmaster to do business on our terms, but we believe we
should have the freedom to go elsewhere if Ticketmaster is
not prepared to negotiate terms that are acceptable to us.
That is the essence of competition. As we learned in
attempting to arrange a tour this summer, given the current
state of Ticketmaster' s dominance of the industry, that may
well mean that we must play non-traditional venues and use
non-established promoters or promote our own shows.

The level of the service charge is not the only
problem that Pearl Jam faces in connection with the sale of
tickets to its concerts. Beyond the excessive service
charges there are the problems of ticket scalping,
counterfeiting, and commercial advertising on tickets. For
example, at some of our recent concerts, an informal poll of
fans in the audience revealed that more than 40 percent of
them bought their tickets from ticket brokers. At many of
our concerts, we are experiencing a counterfeit ticket rate
of about 2-1/2 - 3%. And at one recent concert in Boston,
we learned that some of these counterfeit tickets had been
sold to fans for $250.

The problems of ticket scalping and counterfeiting
are not new or unique to Pearl Jam concerts. There are,
however, steps that can be taken to address those problems.

-12-

These include specific monitoring to ensure that when
tickets to a concert go on sale to the public, none are held
back for the benefit of ticket brokers. With respect to
counterfeiting, it is possible to use ticket stock that is
more difficult to copy. Ticketmaster, unfortunately, has
been unwilling to address these concerns.

Pearl Jam believes that if Ticketmaster is unable
or unwilling to provide the level of service that Pearl Jam
believes is appropriate for the distribution of tickets to
Pearl Jam concerts, then we should have the option to make
arrangements to distribute tickets to our concerts through
other means. That freedom of choice — a basic principle of
competition in this country — does not effectively exist in
the music industry today. Something is vastly wrong with a
structure under which a ticket distribution service can
dictate the mark-up on the price of a concert ticket, can
prevent a band from using other, less expensive, methods of
tickets, and can effectively preclude a band from performing
at a particular arena if it does not accede to using
Ticketmaster. The effect of this situation on ticket prices
has not been subtle: prices paid by consumers — the
ordinary concert fans — for tickets to see Pearl Jam or any
other band in concert are higher than they would otherwise
be if competition existed.

In bringing Ticketmaster 's conduct to the
attention to the Department of Justice, Pearl Jam hoped that

-13-

the Government would agree with our view that Ticketmaster's
anticompetitive business practices are illegal and would
take steps to stop those practices from continuing. We
believe that the Department of Justice is particularly well
suited to deal with this matter because the problem is
national in scope and has broader ramifications than simply
the price of tickets to a Pearl Jam concert. He are
encouraged by the Antitrust Division's public confirmation
that it is conducting an investigation into those practices
and we look forward to the outcome of that investigation and
hopefully to enforcement action that will serve to prevent
these practices from continuing. Congressional attention
and support for this matter will, we hope, reinforce the
Antitrust Division's activities.

-14-

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EXHIBIT B

NpR^lJ^KEJy£^iLCO^LClRT PROJ^IOTERS JS^

March 14. 199*

TO /U I WArPA MEMBERS

Dear (■'nends:

ObviiHuly. spring traininfi has te£un and h's ^uu'S to be a long teason.

I.alertMl you last week about tbc concenw of your hmiher raocuuu> oo Mcailoafs national
ad campaign. This wcvk'i topic k PEARJ ■ JAM.

PEARL JAM K putdns oin reclen oooc aiain (o require pnnnnters to bypaw TickciMasier
on their dates later iliis sumincr- TM htw iadicaied tn me tDey will aggreuivcty enforce
Itifffr cODtnM.is with promoten and facilities TtcketMaswr's suntx u that they have been
luyal to their partnen in this business and ilicy hope & expect their pannen: will
reciprocate. I do not nAcd to remiDd yuu tliat loyalty in oor induniy is a valuable auet auJ
that long-rerm relailopships depend upon it

f b»w you are very bu«y and i nnceiely hope you are making great deals thai will see you
through your mo«t stirceuAil season ever.

He«t regaitlS'

-^"^y^

PS: Nick Gokl (212/840-7800) is waiting to bear from you. Maiec your NasbvOle Hotel
reservarimw ASAP.

1622 NarA41jt Strut MeUtti. Vs-flaM 23iO/4M7 T€l:l70J)3U-4«44 FaL:(703}S3*^a7

EXHIBIT C

INUKid AMlLKlLAiN tUi^itiLKi rRUiviuicno noouv.i/\i luii

March 25. 1994

PEARL JAM TICKETING

This U an update on the Pearl Jam/Tickeimasier controversy.

Fred has indicated that he intendi; tn talce a Tcry strong stand on this issue to protect
Tickeunascer's existing contracts with promoters and facilities and. further, TM will use all
available remedies to protect itself from outside third panics that ancmpt to interfere with
those existing contracts. TM views the Pearl iam issue as an all or nothing proposition,
meaning they will not agree to handle half of the available inventory on a show in any
situation where a contract txisK.

If asked, you may wish to consider and cite this fact: you and/or your venue have an
existing contract with TM which precludes you from contracting with others to distribute
tickets. 1 urge you to be very careful about entcrine into a conflicting agreemeo: which
could expose you to a law.<:ui(.

I know all of you hope this maner is resolved amicably to everyone's satisfaction. In the
interim, you may want tn review your situation in preparation for an important decision that
you may be asked to make next week.

tx^-y V....L ^ f .. Ca..... i#*r •*. r/.*...-.;* ^^lAr ai^T ^*i, nnv* t7j *ojji c*«. 'init c».« 4^-11

Mr. CONDIT. Thank you, Mr. Gossard. Mr. Ament, do you have
any comment you would Hke to make?

Mr. Ament. No, I will just answer questions.

Mr. CONDIT. You will just answer questions, OK We have heard,
and this is for both of you if you want to respond, we have heard
that Ticketmaster considers itself the victim in this matter. What
do you think about that?

Mr, Gossard. Say that again, I am sorry.

Mr. CoNDiT. Ticketmaster, we have heard, feels they are the vic-
tim in this matter. Do you have any response to that?

Mr. Ament. Well, I think, I mean the victim from where we are
coming from, is being a fan and being a person that doesn't have
a lot of money to spend on tickets, and I think that is where the
victim lies. I don't think we consider ourselves necessarily being a
victim, either. I definitely don't think Ticketmaster is a victim.

Mr. CoNDiT. I read in the L.A. Times last night that in an effort
to keep the ticket prices down that the band forfeited $2 million
in fees. Is this true?

Mr. Ament. I am not really sure how much money we forfeited.
In a lot of cases the money at this point really isn't that important
to us. We are trying to do things in a new and different way and
a new approach to things. Just from a different perspective because
that has never been our major goal. Our major goal has been to
make great music together and a lot of levels we have come to that
point.

Mr. Gossard. If the question is could we make more money
going on tour, yes, we could. We could make a lot more money than
we are making right now by going on tour.

Mr, CONDIT. I am not real familiar with the music industry. Our
industry up here, we chat with each other from time to time and
share horror stories. Have you heard from other performers on this
issue? Are there other bands who are concerned about this? If so,
are they individual performers? Could you share that with us?

Mr. Ament. I think mainly Kelly Curtis, our manager, has been
talking to a lot of different people. I know we have gotten a lot of
support from Aerosmith, Grateful Dead, Garth Brooks, R.E.M., and
Neil Young. It seems like when it actually became a public issue,
it seemed like everybody came forward and actually supported us,
and even more so than the artists, I think the public support has
been intense. People that really don't have verv much knowledge
about our band or the kind of music that we play have been very
supportive about it whether they are concert goers or they go to
plays or opera or whatever, but it is actually really nice, you know.

Mr. CoNDiT. Do you have contracts with your record company
manager and agent and are those contracts exclusive?

Mr. Ament. I think the only person that we have an actual con-
tract with is our record company. Our agent and our manager and
our soon-to-be with our merchandiser, too, we have just a hand-
shake, it is people that we trust, and we talk and communicate on
a daily basis and we kind of feel in a lot of ways that is the only
contract that needs to exist.

Mr. CONDIT. Can you tell us how the ticket prices are set. Who
sets the ticket price?

Mr. Ament. The band does. We have meetings. We haven't had
one in a while because we have all been kind of doing our own
thing, but whether we are touring and when we are recording, we
get together and talk about those things and actually before we
went on tour last fall we sat around and decided that we never
wanted the price of a ticket over the course of the next year or two
to ever be over $20, and that is how we came up with anywhere
between $16 and $18 so when the service charge was tacked on
that it would never be over $20.

Mr. CONDIT. Do you adjust your fee to accommodate it not being
over $20?

Mr. Ament. Actually, I think in order for us to break even or
make money on the last couple of tours we had to set it at $18,
and so I think there were cases when the tickets were $21 or what-
ever, but this summer we just decided that we didn't want the tick-
et prices to be over $20.

Mr. CONDIT. To achieve that you work with the concert halls or
stadiums or whatever. They receive a fee. You obviously have
Ticketmaster, who gets their cut. Do you readjust your fee to get
to that $20 or is your expectation for the stadium and Ticketmaster
to readjust their profit margin to get to that $20 total?

Mr. Ament. Well, I think we were willing to talk about that. Es-
sentially what we did, how we came up with it, with the $18 was
that we figured out what our expenses were. In the previous 3
years touring, we actually lost a lot of money, and we decided that
going into this we didn't want to get into a situation where we
were losing money touring, and we have put on free shows. We did
a huge show in Seattle where we actually put about $125,000 or
more into that show, and so in order to do those sorts of things you
have to make a little bit of money to balance it out.

Mr. CONDIT. Why was your summer tour canceled?

Mr. Ament. I don't laiow when the exact date was. Probably
about 2V2 months ago.

Mr. GOSSARD. Did you say why?

Mr. Condit. Yes, why.

Mr. GossARD. We dian't feel like we could coordinate — because of
our dispute with Ticketmaster and feeling really the only way we
could tour was to sort of go outside and try to do it on our own,
given the amount of time we had and our feelings about security
and whether we could actually put on a safe show consistently in
these sort of — we would be in outdoor venues probably in fields and
stuff, we just felt that it wasn't appropriate and we should deal
with this issue first and focus on recording music.

Mr. Condit. So your dispute with Ticketmaster is the reason you
canceled your tour?

Mr. GossARD. Yes.

Mr. Condit. I have two real quick questions because other Mem-
bers want to ask questions and I don't want to take all the ques-
tion time. Have you ever done a performance and did not use
Ticketmaster?

Mr. Ament. Yes, on this last spring tour there were actually two
shows. There was a show in New York and a show in Detroit where
we came up with two alternative ways. We actually distributed the
particular seats in New York — actually, they were both through the

box offices, but we distributed through radio stations in New York
and in Detroit we did it through a lottery system, and it was an
incredible amount of work.

Mr. CONDIT. What was the price of the ticket?

Mr. Ament. The prices were — I think they were $18 in both
cases.

Mr. CoNDiT. Did you think it was a success or

Mr. Ament. I think it was a success, but like I said, it was a lot
of work, and looking at those two situations we knew that doing
something along those lines this summer would have been an in-
tense amount of work.

Mr. CoNDiT. Do you think Ticketmaster is entitled to a profit?

Mr. GossARD. I don't think that question matters, you know. I
think that our main concern is are we entitled to use a different
company other than Ticketmaster and right now so far we haven't
been able to find an alternative that is viable that we feel is fair.
If Ticketmaster runs a good business and they make good deci-
sions, then they should make a profit, but, you know, just like any
good business they have got to be smart about it, too.

Mr. CONDIT. OK I appreciate your responding to my questions.
You have been very candid, and I appreciate that. I am going to
turn to the chairman of the full committee and ask if he has any
questions at this time.

Mr. CoNYERS. Thank you, Chairman Condit. I have one question
about Detroit. When you were there you tried a lottery system.
Could you just tell us how that worked out and whether there were
any repercussions as a result of that, Jeff.

Mr. Ament. Essentially, we set up an address where people could
mail in requests to go to a concert. I think we got — it was over
600,000 letters for a show that I think the Masonic Temple held
like 4,000 people or something like that, and we have pictures. It
is prettv intense and actually Mike McGinley, he had the task of
going through those 600,000 letters and actually picking them,
and

Mr. CoNYERS. Sounds like a pretty good job and lots of work.

Mr. Ament. It failed in a lot of ways just because it was putting
a ridiculous amount of mail through the mail system.

Mr. CONYERS. Did Ticketmaster threaten the promoter of the
concert as a result of your lottery effort, if you recall?

Mr. Ament. I remember hearing something to that effect. I don't
know if there is something in the submission or not, but — I am not
really entirely clear on that, and if you wanted to talk to either one
of these guys, they could probably let you in on that.

Mr. Conyers. We will. Thank you very much. Thank you, Mr.
Chairman.

Mr. Condit. Thank you, Mr. Chairman. Mr. Thomas.

Mr. Thomas. Thank you, sir. Thank you for being here. I am in-
terested in how you do this. For instance, if you were to play some-
where like Casper, WY, which is unlikely, I suppose.

Mr. GossARD. Not that imlikely.

Mr. Ament. That was actually on our wish list.

Mr. Thomas. Was it really? You need to get out there. Who do
you contract with? Do you contract with the event center there?

How do you do that? Who do you contract wdth for this concert to
make the arrangements?

Mr. Ament. Well, essentially we will send our agent an angle on
how we want to tour and a lot of my angle, and this hasn't always
necessarily been like the whole group's angle has been to play
smaller places, and so we will send that list to our agent, and our
agent will contact

Mr. Thomas. But you don't contract with Ticketmaster, do you?
The arrangement for selling the tickets is between the facility,
what do you call it, a venue?

Mr. Ament. Yes.

Mr. Thomas. And Ticketmaster?

Mr. Ament. Exactly.

Mr. GrOSSARD. And our agent deals with a local promoter there
or whoever, deals with a promoter and the promoter in turn deals
with the venue itself, so it is sort of a chain of command sort of
thing.

Mr. Ament. Lots of middle people.

Mr. Thomas. You could get lost in it, I suppose. There is a func-
tion to distribute and sell tickets which somebody has to pay for
and do, isn't that true?

Who does it if Ticketmaster doesn't do it?

Mr. Ament. Hopefully, somebody comes up with a different angle
on it. I think if there is more than just one person providing that
service, I think it is going to make all the services better. I think
it is going to make Ticketmaster better, too, because I think it is
going to snow them a different angle, you know.

Mr. Thomas. In one concert, let's say you are in Los Angeles for
this concert, should more than one person be able to distribute
those tickets for the same concert? Is tnat your point?

Mr. GossARD. That is the gist of the whole thing. We feel like
there should be somebody else that could potentially distribute
tickets and right now we don't feel that when our agent goes and
sets up the shows with the different promoters and the different
venues, you know, 90 percent, 95 percent of the time Ticketmaster
has exclusive contracts with those venues and those promoters al-
ready, so already you have to sort of deal with Ticketmaster be-
cause of their contracts with the local

Mr. Thomas. So there is two things, as I understand. One is the
exclusiveness of Ticketmaster for this concert. They are the only
one that can do it, and you object to that. The other is, you said
95

Mr. GossARD. I don't know if that number is correct, I am sorry.

Mr. Thomas. It doesn't need to be exactly, but if you go to 100
places in the country, how many of them will have Ticketmaster
as their exclusive agent roughly, 10 percent, 20 percent?

Mr. Ament. You are playing major markets, I would say it is a
really high percentage. If you are plajdng Spokane, WA, or Mis-
soula, MT, or someplace like that you won't be dealing with
Ticketmaster, but 80 percent of the bands don't play those places,
so that is where you run into problems.

Mr. Thomas. OK, So what, and this is general, you may not feel
comfortable with it, what is it you would like to accomplish — what
do you think the Government ought to do?

Mr. Ament. To have an option. As a consumer going out to see
a concert to actually go out and have a choice, you know, like a
consumer has a choice to buy gasoline or a CD or whatever, people
have different reasons. Some people go to the major chains because
the CDs are cheaper, other people have, you know, a different
agenda on where they buy their music, and they will support a
local small one stop.

It would be great to have locally owned ticket agencies or an-
other— and also another national ticket agency just to provide some
different choices.

Mr. Thomas. So Pearl Jam tickets in Spokane ought to be avail-
able through several outlets, that is your point?

Mr. Ament. Yeah, that would be great.

Mr. Thomas. Have you filed a lawsuit?

Mr. GossARD. No, I don't think we have.

Mr. Thomas. The answer is no?

Mr. GossARD. No, we have not.

Mr. Thomas. Thank you very much, I have enjoyed having you
here.

Mr. CONDIT. Thank you, Mr. Thomas.

Mr, Peterson.

Mr. Peterson. Thank you, Mr. Chairman. I know a little bit
about the country side of the business, but I don't know much
about the rock side. Apparently, what has happened is
Ticketmaster has gone out and signed up all these bigger venues,
and is that — are they requiring that there be an exclusive relation-
ship, is that what is happening, that in order for Ticketmaster, for
example, to deal with the bigger venues where you have 30, 40,
50,000 folks, that there is an exclusive relationship with
Ticketmaster to handle those tickets; is that what the situation is?

Mr. GosSARD. That is what we think the situation is. It is hard
to sort of determine exactly what the situation is. We can't prove
that they have exclusive agreements with a lot of these places, but
that has been — in trying to find other alternatives, we have always
been forced with, well, you can use Ticketmaster or you can basi-
cally try to do it someplace else. That has been our perception, that
they have an exclusive agreement with

Mr. Peterson. So your agent is finding that this hall or say the
Metro Dome in Minneapolis or whatever, that you can't play that
unless you use Ticketmaster, that is basically what is happening?

Mr. GosSARD. Exactly.

Mr. Peterson. I am trying to figure out if there is some way
around this. I ran into this problem when I was in the State Sen-
ate in Minnesota. The State Fair had a rule that you couldn't plav
within 200 miles of the State Fair in that year if you booked with
them. We have this "We Fest" in Detroit Lakes, which I have been
involved with and played at. Anyway, we couldn't get Willie Nelson
and some other people to play because they had this rule, so I put
a rider on the tax bill and changed it.

I got an editorial from the Minneapolis Tribune about my Willie
Nelson amendment, so maybe we could do something like that
here, Mr. Chairman. We could put some kind of rider on the budget
bill. It is just curious to me why there wouldn't be some venues out
there that would spring up that would sell their own tickets. For

example, of the "We Fest," we have 120,000 people who come to
that event. We think they use Ticketmaster. Maybe that is just the
country side of the business.

Do you know, is there a difference to the country side of the busi-
ness and the rock side?

Mr. Ament. I don't think so. I think maybe the difference is that
that is in Detroit Lakes and maybe it is just a smaller community
and probably it doesn't make as much business sense. I have no
idea if Ticketmaster deals with that area or not, but — and I think
we could actually go out and probably find our own venues and find
our own places to play shows, but that would probably take us a
year to set that up.

Mr. Peterson. It is just too much work to set up for each com-
munity?

Mr. Ament. Yes.

Mr. GrOSSARD. You, basically, have to build the venue from the
ground up. You have to put in the bathrooms, you have to hire the
security, you have to do all these things and when you are not
dealing with anyone that is normally sort of in the network of peo-
ple that are established promoters and stuff like that, that is where
you run into risk. Your local crew in any given show could be, you
know, inept. You just don't know, and you are dealing with maybe
20, 30,000 people or whatever, and that is a big risk for us.

Mr. Peterson. You should go play wedding dances every Satur-
day night. You never know what you are going to run into.

Just one other thing I was curious about. I had read in the paper
before I listened to your songs and was trying to learn "Black and
Alive" and a couple of the other songs — I am still working on
them — that you were trying to only play in halls that were no big-
ger than 8,000 people or something. How does that relate to this
particular circumstance — does Ticketmaster have those places tied
up as well?

Mr. GossARD. That is a different issue. That is more of the
band's personal feelings about, you know, what kind of clubs we
want to play, and we have played bigger shows than 8,000 people,
and I am sure we will in the future, but during a tour we definitely
like to mix it up as far as — ^we definitely like more intimate shows
and maybe we will come to a place and we will play three or four
theater shows and whatever, and then we will maybe do one sort
of bigger event, maybe in an outlying area or whatever. That is to
keep us happy and the fans happy at the same time. We are usu-
ally happier in sort of more intimate environments, but we are also
into playing big shows. It is just a matter of being able to choose
and mix it up.

Mr. Peterson. One more point. So you are not on tour now until
this gets resolved, is that where you are at?

Mr. Ament. Exactly.

Mr. Peterson. OK. So now what happens if the Justice Depart-
ment looks at this and decides that there is nothing wrong? You
will decide that when the time happens?

Mr. Gossard. We will figure something out. We are not going to
stop touring.

Mr. Peterson. That is good to hear. I will have to come and hear
one of your concerts when you get back on the road again. Thank
you for being here.

Mr. CoNDiT. Thank you, Mr. Peterson. Mr. Horn.

Mr. Horn. Thank you very much, Mr. Chairman. I have a num-
ber of questions that don't require lengthy Einswers, just yes or no.
Do you believe contracts should be honored?

Mr. GossARD. Sure.

Mr. Horn. I take the answer is, yes, sure.

You mentioned in your answer to a previous question that you
do have a contract with your record company and that it is exclu-
sive; is that correct?

Mr. Ament. It is, but then at the same time if we went to the
record company and said — if I went to the record company and said
I have my own project and I want to go somewhere else with it,
I think if we sat down and talked to them about that, they would
let us do that.

Mr. Horn. But right now it is an exclusive contract.

Mr. Ament. With our band it is.

Mr. Horn. And it is their decision whether they will let you
break that contract in essence, not your decision, unless you want
to

Mr. Ament. It is our decision.

Mr. GossARD. We have never been in a contract dispute with
Sony. They have worked with us on every level. We have a contract
that we have to go through the process of making because that is
what business is all about, but we have never gone to court or had
any sort of disagreement that we couldn't resolve as people just
working together, and but we do have an exclusive contract with
Sony, a signed contract.

Mr. Horn. Of course, you mentioned your contract with your
manager and your agent is a handshake.

Mr. GossARD. Yes.

Mr. Horn. That is a contract, you would agree?

Mr. Gossard. It is a contract in our minds. That is as good as
we feel we need.

Mr. Horn. It would be a contract in the court's mind also, de-
pending on who testified which way.

Mr. Gossard. OK.

Mr. Horn. That is an exclusive contract with your manager and
your agent?

Mr. Gossard. No. A handshake can't be — I mean, I can't imagine
that you could get from that that it would be an exclusive contract.
It is a contract.

Mr. Horn. Well, what is the length and the duration of the con-
tract?

Mr. Gossard. There isn't one, it is a handshake. It is however
long we feel like working together.

Mr. Horn. In other words, tomorrow you could get rid of them?

Mr. Gossard. Absolutely.

Mr. Horn. You would claim your promoter and manager have no
contract.

Mr. Gossard. Exactly.

Mr. Horn. Well, that must come as news to them because they
probably think they do. Did you receive any advance against future
sales from your record company?

Mr. GosSARD. We have in the past. We didn't on this record.

Mr. Horn. OK, but you have in the past. Is that regarded as a
kickback in the industry or what?

Mr. Ament. I would say it is a loan.

Mr. GosSARD. If anything, it is a loan. If they advance you
money for a record, the way it is set up is that they advance you
money and you make your record and, you know, then when the
record sells you have to pay that back, so it is basically a loan.

Mr. Horn. Have you ever spoken directly to anyone from
Ticketmaster?

Mr. GrOSSARD. An employee of Ticketmaster?

Mr. Horn. Well, anyone in relation to this case from
Ticketmaster.

Mr. GossARD. No.

Mr. Horn. I assume their employees, president, treasurer, who-
ever.

Mr. GossARD. No.

Mr. Horn. So you have had no discussions with them on this?

Mr. GosSARD. I personally have not had any discussions with
them.

Mr. Horn. Well, has any of your staff that is employed by hand-
shake or contract?

Mr. GossARD. I don't know, I would have to ask them. Have we
had any discussions? Yes, our manager has.

Mr. Horn. Could we identify the gentleman?

Mr. GossARD. Kelly Curtis.

Mr. Horn. That is your manager, and he has had discussions,
even though you personally haven't had, but it is on your behalf?

Mr. GossARD. Sure.

Mr. Horn. Who, if anyone — is he your only person that speaks
on your behalf or do you nave a legal counsel and others

Mr. Ament. He is the main person that speaks in our behalf,
and — ^yes.

Mr. Horn. Well, do you have any contracts with Ticketmaster
that are outstanding anywhere?

Mr. GosSARD. I wouldn't be able to answer that question.

Mr. Horn. Can your manager answer it?

Mr. Curtis. No.

Mr. GossARD. No, we don't.

Mr. Horn. Has Ticketmaster ever refused to sell tickets to your
concerts?

Mr. GossARD. I think this line of questioning is very strange be-
cause it seems like what does that really have to do with anything
with the issue at hand here which is whether Ticketmaster is a
monopoly. It doesn't have anything to do with our business or what
our relationship is with our manager or our record company. It
seems it is about whether Ticketmaster has a monopoly. I find your
line of questioning strange in that sense.

Mr. Horn. Well, have they ever refused to sell tickets to your
concerts?

Mr. GossARD. I don't know whether they have or not.

Mr. Horn. Can your staff answer it? You know, a monopoly is
something

Mr. GossARD. My staff has said they don't think so.

Mr. CONDIT. You are probably aware that we do have
Ticketmaster coming up.

Mr. Horn. No, but I would like to know from their side, we have
got this case in quotes "before us," which properly is probably be-
fore the Department of Justice. We are into antitrust. The question
is what is a monopoly, how does a monopoly function?

You are claiming to be the victims of the monopoly. I am trying
to get a feel for what activities alleged to have been done by the
monopoly make you feel you are a victim.

Now, one would sure make me feel I am a victim if I wanted to
sell tickets and they refused to sell tickets to my concert, and I
take it the answer is they have never refused; is that correct?

Mr. Ament. No, you are right.

Mr. Horn. You are right? They have never refused to sell tickets
to your concert?

Mr. Ament. If there is any information where there might have
been some weird innocence that — ^it is in the submission that you
have.

Mr. GossARD. You can read that.

Mr. Horn. OK When you perform, who does the deal on behalf
of the band? Is it your manager, and I assume the manager would
be the equivalent of the promoter? Is that combined or is there a
separate promoter?

Mr. Ament. Well, if we are doing our own shows, like we did in
Seattle in December, Kelly would have been the promoter, but nor-
mally we go through our agent, and our agent goes through a local
promoter or a regional promoter.

Mr. GossARD. If you have any more business questions we can
put some of our business people up here and you can ask them spe-
cifically.

Mr. Horn. Well, that is your discretion. You are the witness,
they work for you, so you use your judgment when you would like
them to reply. That is fine.

Mr. GosSARD. I am using that judgment right now. If you have
any more business questions, you can ask them.

Mr. Horn. Please have them sit with you. No use us turning
around craning our necks. Let's just get it on the record. Now, I
gather

Mr. CoNDlT. Mr. Horn, do you want these guys to play Long
Beach or not?

Mr. Horn. What I want is a record here, and would the gen-
tleman identify himself please that just joined you.

Mr. McGinley. I am Mike McGinley. I am the band's business
manager.

Mr. Horn. The band's business manager, OK I don't understand
how this works.

Mr. CONDIT. Excuse me, Mr. Horn, I apologize for interrupting
you. We are going to have to swear this witness in if he begins to
answer questions. I apologize to you.

Would you raise your right hand, please?

[Witness sworn.]

Mr. CoNDiT. The record would indicate he answered in the af-
firmative. Would you please introduce yourself for the record.

Mr. McGiNLEY. I am Mike McGinley. I am the band's business
manager.

Mr. Horn. Spell the last name.

Mr. McGinley. M-C-G-^I-N-L-E-Y.

Mr. CoNDiT. Now, that is clear. Mr. Horn, you may proceed.

Mr. Horn. As I understand it, the Ticketmaster operates on be-
half of a particular arena, building, whatever they call it, and they
have a contract with them, and I guess my query to you in terms
of your interaction, does that contract, in your judgment, prevent
any securing of the band or anything or is that your exclusive deci-
sion as an artist?

I am just trying to get how this system works.

Mr. McGinley. I don't understand your question.

Mr. Horn. Well, as I understand it, Ticketmaster has a

Mr. McGinley. I am sorry.

Mr. Horn. Let's take the Long Beach arena, it has been men-
tioned or let's say arena X in some city. We have a contract with
Ticketmaster to sell the tickets that relate to events in that arena.

Mr. McGinley. That is correct.

Mr. Horn. All right. As you look at it from your standpoint, is
that simply to sell tickets or do they in any way relate to other as-
pects of your performance, such as securing the band or whatever?

Mr. McGinley. Whether we go play a venue, Ticketmaster pro-
vides the service just to sell the tickets.

Mr. Horn. OK, nothing else, simply the tickets?

Mr. McGinley. Simply the tickets.

Mr. Horn. Now, what type of arrangement do you basically have,
then, with the arena besides Ticketmaster on the tickets or a mer-
chandiser or £inything else? Are those exclusives when you go to a
city? Is there only one person you really can deal with or one en-
tity?

Mr. McGinley. There are a lot of different choices when a band
goes on tour. They have to make certain decisions on what they
want to do in given areas, and when they make certain decisions
in many cities like, for example, if you want to play Manhattan,
you have to play Madison Square Garden. If you want to play that
level of venue, yes, there is no other place in Manhattan to play
other than Madison Square Garden.

Mr. Horn. OK. Now, I understand from listening to the testi-
mony it is the band leadership itself, the group's leadership that
sets the ticket prices.

Mr. McGinley. In the case of this band, the band sets the ticket
prices.

Mr. Horn. Now, is there any service charge ever added when you
do these outside of a Ticketmaster venue? I mean, do you have an
additional service charge or is it just a flat fee they decide on and
that covers all your expenses, whatever they are?

Mr. McGinley. There is a cost of selling tickets, and no matter
whoever sells the tickets, yes, there is a fee to sell tickets no mat-
ter how you do it. Someboay has got to pay to sell the tickets.

Mr. Horn. As I understand it, then, the basis of your dispute
seems to be down to about 50 cents between what you want

Ticketmaster to charge versus what they claim their basic service
charge is. Are we talking about a 50-cent difference here?

Mr. McGlNLEY, I don't know how you arrived at that figure.

Mr. Horn. Well, let's say an $18 ticket and the band said that
is what they would like to perform at and they seem to feel
Ticketmaster is keeping them from that because they have a serv-
ice charge that would ticket over $20, and let's say an $18 ticket
has a $3.50 service charge-

Mr. McGlNLEY. That is $21.50, by

Mr. Horn. That would ticket over.

Mr. McGlNLEY. By $1.50.

Mr. GrOSSARD. Our concern is whether Ticketmaster has a mo-
nopoly and whether we have viable choices to go out and sell tick-
ets for a national tour in major cities by any other means, and
right now we don't, so that seems to be the real issue here, not
about what the final discrepancies in our particular arguments
with Ticketmaster are about, our affairs with them or whatever. It
is all about being able in the future for any band and anyone to
be able to go and sell a ticket through a company that is going to
treat them fair, and it seems strange that we are focusing on our
business activities, our specific business activities rather than the
bigger picture, which seems to be the important overriding issue.

Mr. McGlNLEY. If you go to the State of Utah there is an exclu-
sive or just one ticket company in the State of Utah, and their serv-
ice charges range from $1 to $2.65 maximum, which would be sig-
nificantly less than Ticketmaster is charging.

Mr. Horn. Well, we will pursue it on the next round. We have
other members of the committee who want to ask questions.

Mr. CONDIT. I would like to yield to Mrs. Thurman from Florida.

Mrs. Thurman. Do you also get involved with the concessionaires
as far as the selling oi T-shirts, hats, posters, and booklets?

Mr. McGlNLEY. As with tickets, the band made a conscious deci-
sion to only charge $18 for their T-shirts, and because of the fees
that venues charge, if we couldn't lower that percentage, it would
have been unprofitable to sell tickets, so we negotiated fees with
most of the venues on the last tour where at least we could charge
the $18 for the T-shirts.

Mrs. Thurman. Is there a monopoly in that?

Mr. McGlNLEY. The building has the right to set T-shirts. They
can charge — ^you have to negotiate a fee with them.

Mrs. Thurman. What do you think is a reasonable charge for a
ticket sale?

Mr. McGlNLEY. To sell tickets?

Mrs. Thurman. Yes.

Mr. McGlNLEY. Competition should determine that.

Mrs. Thurman. So if there was competition and it actually could
raise prices in some cases, what do we do?

Mr. GossARD. Then we are all screwed.

Mr. McGlNLEY. I think there is plenty of examples in the briefs
that you have that show that there is a lot of ticket companies op-
erating around the country that aren't charging $3 and $4, so

Mrs. Thurman. I just wonder what percentage people think that
the parties involved ought to have. I live in a very rural part of
Florida; very, very, rural part of Florida, and, my option of being

able to purchase a ticket might be through somebody Hke that
since I can't get to one of the larger cities here there may or may
not be two or three ticket services.

I don't Hve in Miami. I don't Hve in Tampa. I don't Hve in Jack-
sonville, and so for some of us where an organization has taken the
time to set up the service it really provides a valuable service to
us.

Mr. GossARD. We have never argued whether Ticketmaster can
provide a good service or not. They can get tickets anywhere in the
United States efficiently on some level.

Mrs. Thurman. So in some cases they actually help some of your
fans?

Mr. GosSARD. I wouldn't — That has never been part of our— defi-
nitely.

Mrs. Thurman. So your only issue is the contractual part of it
between

Mr. GossARD. Whether or not Ticketmaster is an illegal monop-
oly or not, that is what our main concern, because we feel that they
are.

Mrs. Thurman. Are there a lot of other ticket sellers out there?
Is there a reason why they have got a monopoly or has this just
evolved?

Mr. GossARD. I wouldn't be able to answer that question.

Mr. McGlNLEY. There is a whole — without getting into too much
detail, I think pretty much what Ticketmaster has done is they
have gone around the country and they have bought up all the
local competition in all the major cities. I mean, you could

Mrs. Thurman. I am not sure how to respond to that, to be hon-
est. They have just done exclusives within these places and not al-
lowed other people in. Are there other people tnat have actually
been in on these? Do you know?

Mr. McGlNLEY. I am sorry.

Mrs. Thurman. Are there other people that have actually tried
to get contracts in these buildings? Do we know?

Mr. GossARD. Has anyone ever tried to go up against
Ticketmaster?

Mr. McGlNLEY. Not in the last 4 or 5 years, I don't think.

Mrs. Thurman. OK, Good luck.

Mr. Condit. Mr. Stupak from Michigan.

Mr. Stupak. Thank you, £md welcome to the committee. Go back
to 1991, Justice Department says it was OK for Ticketmaster to
buy out Ticketron and in a way Ticketmaster sort of became the
exclusive person or individual or entity to handle tickets. Did any
of the groups back in 1991, any of the artists or musicians support
Ticketmaster's application with the Justice Department to allow
them to purchase? Do you know?

Mr. GossARD. What were we doing in 1991?

Mr. Ament. I am not sure if there were bands who supported it.
From my just general knowledge of a lot of bands, it is a bottom
dollar thing. It is like however much money they can make regard-
less of what the service charge is, that is what they are interested
in, and we have a different agenda when we tour.

Mr. GosSARD. We have had that tour agenda for years and years
and years, and I think the record shows tnat we have always been

concerned with keeping ticket prices low and doing things sort of
at a grassroots level.

Mr. Stupak. You know, I appreciate what you are trying to do,
trying to keep the flow and again I come from a very rural, small
district, large district geographically, but very rural. When you
start getting into tickets $30, $40, $50, $60, basically you price out
a lot of people, so I appreciate what you are trying to do.

I guess the point I am trying to make is what happened between
1991 when Justice Department — and I have to correct the gen-
tleman from Wyoming where he said the Clinton administration.
That was back in the Bush administration where they allowed this
monopoly to develop, if you will. What happened between 1991 and
1994?

Have the prices, the service fees gone sky high? Have they
stayed the same, have they stayed flat, do you know?

Mr. Ament. It seems like particularly this summer if you look at
the ticket prices, and it has been big news, the Eagles and Barbra
Streisand and all those people, I think with the ticket prices going
up I think the service charges have gone up, too.

Mr. McGlNLEY. Service charges have increased significantly
since 1991.

Mr. Stupak. In 1991 was there a percentage, be it 5 percent, 3
percent that a service charge was and has that service charge
stayed the same or has the service charge, proportion of the service
charge increased since 1991?

Mr. Gk)SSARD. There is no proportion. That is one of the problems
we have. There is no designated proportion of the ticket price that
Ticketmaster charges. I mean, it is a random or seemingly random
amount for every ticket, having more to do with the marketplace.
That is what it seems like at least.

Mr. Stupak. So conceivably you are a hot band right now, so
they can sell your tickets, so they could put out a higher service
charge than tney would for someone else who might be on the
downside?

Mr. GosSARD. That is why it is such a weird incident because we
are a big selling band, but yet we are trying to do a lower ticket
price than a lot of other bands so there is a very good opportunity
for Ticketmaster to want to tack on as much money as they can,
knowing that our tickets will sell for, you know, as much as $50,
$100, you know, scalpers can get.

Mr. McGlNLEY. It is hard in a 10-minute discussion here to go
into the whole history and research behind ticket pricing, et cetera.
I mean, I could certainly make myself available and we certainly
made all our staff available to the Justice Department to help you
people research this, but in this 10-minute timeframe you really
can't do it justice to explain to people and have people knowledge-
able of what is really going on, so I guess that is kind of some of
the, you know, reservedness in our questions — in our answers.

Mr. CONDIT. Mr. Stupak, may I interrupt vou for a minute?
There are some other questions other Members have. We are going
to let them ask their questions, but with your comment would you
agree if some Members wanted to submit written questions to you,
you could respond to them in a little more detail?

Mr. McGlNLEY. Absolutely.

Mr. CONDIT. Mr. Stupak.

Mr. Stupak. One more question, if I may. What if a show cancels
or if for some reason it doesn't come on, the refund, hopefully,
there is a refund to the consumers. Is there a service fee then? Is
that service fee kept then by Ticketmaster or is the whole price re-
funded, if you know?

Mr. McGlNLEY. I believe recently Ticketmaster has refunded the
service charge. Up to a point in time, I believe about 2 years ago
they kept the service charge, and there was a court case, I believe,
in Oregon or Seattle or somewhere when Michael Jackson canceled
a show where Ticketmaster did not want to refund the service
charge, but in the last several years they are definitely refunding
service charges on canceled shows.

Mr. Stupak. You testified earlier that you wanted or I read in
your testimony you wanted the service charge to be printed on the
ticket so people would know.

Mr. Ament. Yes.

Mr. Stupak. Is that one of the reasons whv?

Mr. Ament. That is part of our whole philosophy to educate peo-
ple on what is going on, not just to

Mr. McGiNLEY. People should know what they are paying for. I
mean, we have product labeling, people should know what they are
paying for.

Mr. GOSSARD. If there was natural competition, that is exactly
the kind of thing that would keep prices down, if someone could see
that every time they bought a Ticketmaster ticket they were add-
ing $4 on their ticket and somebody else was only adding $2 on,
that is what is going to create the kind of situation we are looking
forward to in the future.

Mr. Stupak. To your business manager, then, do any States right
now require you to do that? I am from Michigan. I don't think we
do. I don't think we put down every charge that is on that ticket,
and I know Ticketmaster is there in there. Do you notice of any
States

Mr. McGlNLEY. I don't know the answer to that, but I know that
in California because Ticketmaster was not printing or advertising
ticket prices in most ads, especially in Los Angeles anymore be-
cause there was no place you could really go to buy a ticket for that
price because they were not putting the service charge in the ads,
and so they don't put ticket prices in ads anymore.

Mr. Stupak. What about on the ticket stub, if I purchased a tick-
et for $20, is it $15, $5 for handling or

Mr. GosSARD. It doesn't split it up.

Mr. McGiNLEY. That was one of the problems we had with
Ticketmaster for a show in Chicago. They were insisting on an all-
in price on the ticket and we want it broken out so the fans could
really see what they were paying for the service charge.

Mr. Stupak. Thank you. And thank you, Mr. Chairman.

Mr. CONDIT. If I might, since you have been on the service
charge, I would just like to ask quickly, should handling charges
be per order or based instead on per ticket.

Mr. McGiNLEY. If you are doing a mailing, there certainly is a
charge to mail things. OK, on a per order basis so anybody that is

mailing an order can recover the cost of what it costs to mail tick-
ets or whatever. I don't think that is unfair.

Mr. CONDIT. A family goes in and buys six, seven tickets, should
they be charged per ticket for handling or should they be charged
a unit price?

Mr. GossARD. The market, hopefully, should be able to figure
that out, too. If there is natural competition, all those things will
be sorted out.

Mr. CoNDiT. Ms. Woolsey.

Ms. Woolsey. Thank you, Mr. Chairman. I have to tell you, I am
sorry I wasn't here for my opening statement, so I want to say a
little bit of my thoughts on this. First of all, I want you to know
I think you are just darling guys. This has been great.

When my staff told me we were going to have this hearing, I
have to tell you, I knew nothing about grunge. But I know a lot
about the importance of fairness and equity, and I think you have
raised some very important questions. This is just not an issue for
your band, we are talking about sporting events, rock and roll fans
all over the country, and theater fans. I think you have opened a
lot of good questions for us to be talking about now. We have to
determine carefully what we need to be doing about this and re-
spond appropriately.

One thing for sure is that the most sought after ticket here is
the ticket to consumer fairness. Because we all know that the
music won't rock if the consumers get rolled. So what I want to ask
you is something that kept confusing me as you were talking. Are
you looking at being able to have the choice as a group of your tick-
et distributor or are you looking at the consumer having a choice?

The reason I ask is it worries me that if more than one distribu-
tor in an area is working with you, how do you protect from over-
selling? I am concerned about that.

Mr. GosSARD, I am not sure I know exactly what you are asking.
We would love choices for both the fans ana ourselves. Ideally, we
would like to have our choice as far as finding a ticket distribution
company that we feel we can work with and, of course, we want
the fans to enjoy a natural marketplace to determine how much a
fan pays for their tickets so the checks and balances are sort of in
place.

Ms. Woolsey. I understand that in the big picture, but when you
get right down to the number of tickets and the number of people
that can come in, how do you protect from dual ticketing and over-
selling?

Mr. Ament, They used to have a system that was called commu-
nicating.

Mr. McGlNLEY. In 1994, with the sophistication of computers, it
seems pretty easy to figure out how we can sell tickets at a venue.
It is not that difficult, but once again, I don't know, the half-hour
discussion that it would take to snow you how to do it, that this
is the appropriate place to do that.

Ms. Woolsey. I think I will do that, I will ask that question be-
cause I think it needs to — ^you don't want to put yourself in a place
where consumers are getting ripped off from another direction. I
would like to know why you were the first group to bring this to
national attention.

Why do you think that you did that?

Mr. Ament. I think that is the way we have always done things.
I think in a lot of other levels, whether it be with our record com-
pany or the merchandising industry or whatever, I think the way
that we have done things has changed the way people perceive
doing things, and it just doesn't seem fair to us the way a lot of
things are done in the music industry right now, and having been
a fan and having been a consumer for many, many years, I don't
want to become something that I despised as a kid, or something
that I got upset over as a kid and a music fan, and so we are just
trying to carry through with just our gut feelings on a lot of that
stuff.

Mr. GosSARD. I think we have been in other bands, too, and not
so successful bands and plajnng music for a long time, and you cer-
tainly learn a lot. We have put out our own records, you know, on
independent labels. Jeff has always done the art work. We have al-
ways been very hands on in that regard, so in doing that you start
to really learn what the business sort of is about and I think that
maybe we have just had our hands involved in it a little bit more
than a lot of people so we have become aware of a lot of issues that
other people do not have in their frame of reference.

Ms. WooLSEY. I have to ask another question that has nothing
to do with monopolies. What does Pearl Jam mean or does it have
a meaning?

Mr. GosSARD. I am not going to answer that question.

Mr. CoNDiT. You guys can go silent if you would like. If you want
to answer the question, it is fine as well.

Ms. WooLSEY. OK, thank you very much.

Mr. CONDIT. We have done a round of questioning here and you
guys have been really kind with your time, and we appreciate it
very much. I do have to let Mr. Horn have another round of ques-
tioning. If you noticed, this thing appears a little lopsided. This
side has got a few more people, so we want to give Mr. Horn a little
more time, so indulge us for a few moments and he is aware that
he can submit some questions in writing and you may want to say
that if you don't want to respond to questions.

Mr. Horn.

Mr. Horn. Mr. McGinley, you are probably the proper one to an-
swer some of these. They get a little technical, and I will be asking
similar questions of all witnesses.

On a typical date for this group or any group with which you
have been familiar in your own past, how many tickets really go
on sale to the public versus the promoter holds, the band holds and
so forth? What are we talking about 80 percent go on sale, 90 per-
cent?

Mr. McGinley. It is really hard to be specific because every situ-
ation is different, OK? Specifically, with Pearl Jam we hold a very
limited number of seats, so most of the seats can go on sale to the
general public. There are certain seats that need to be held to take
care of certain needs that they have, but for the most part a great
majority of the seats go on sale to the general public.

Mr. Horn. Pick a figure. What generally are we talking about?

Mr. McGiNLEY. It is tough because it depends on the size of the
venue, but I would say 300 or 400 tickets would be held and every-
thing else would go on sale to the general public.

Mr. Horn. A typical venue you would have how many seats?

Mr. McGlNLEY. 3,000 to 10,000.

Mr. Horn. Grenerally, you hold out about the same number.

Mr. McGlNLEY. Yes.

Mr. Horn. OK

Mr. McGlNLEY. The smaller shows we will take a few less.

Mr. Horn. Now, do you usually use a local promoter or do you
and your colleagues on the staff really handle most of the pro-
motion no matter where you go?

Mr. McGenley. Local promoters.

Mr. Horn. You get a local promoter. Did you play any events
where you didn't use Ticketmaster? I heard some referred to that
you didn't want to use Ticketmaster, but have you seen

Mr. McGlNLEY. There were a couple of shows where we sold tick-
ets through the box office.

Mr. Horn. I am told that in a lot of arenas, maybe 80 percent
of the tickets are sold through the box office. What is your feeling
on that?

Mr. McGlNLEY. My experience would be probably not, but I don't
know.

Mr. Horn. What do you feel it is half and half, what?

Mr. McGlNLEY. One thing, there is no question or no answer to
that question because depending on who the artist is and the size
of the venue and how fast tickets sell, there are 10 different vari-
ables that will determine when and where and how tickets sell, so
it is a difficult question to answer.

Mr. Horn. My bias as a consumer is, one, I don't like service
charges and so I know what you are talking about, and two, I pre-
fer to go to the box office because I always feel I am getting lousy
seats when it is automated, so I want to see what is the makeup
of the arena. Is the column right in front of my seat or whatever,
and my understanding based on my staffs analysis of statements
of Ticketmaster is they claim they only sell 20 percent of a venue's
tickets and that the venue sells roughly 80 percent.

Mr. McGlNLEY. For concerts I would dispute that.

Mr. Horn. You would dispute it?

Mr. McGlNLEY. Absolutely. For Pearl Jam that is definitely not
true. At the Los Angeles Forum I don't even think the box office
is open for day-of-show sales. That could have changed, but I don't
think so. I don't think they are open.

Mr. Horn. So your experience is that you mostly have had to
deal not only with Ticketmaster, but with what other similar type
operations? For instance, the Shubert organization.

Mr. McGlNLEY. I think that there may be three or four excep-
tions, but at every show we did on the last tour we used
Ticketmaster. There is really no option.

Mr. Horn. For the major arenas you are saying?

Mr. McGlNLEY. For the major arenas or even in the major cities.
In major cities in this country there is really no other option other
than Ticketmaster.

Mr. Horn. Have you or anyone representing your group ever par-
ticipated in the service charge revenue?

Mr. McGiNLEY. No.

Mr. Horn. And that would obviously include both Ticketmaster
and nonTicketmaster venues?

Mr. McGlNLEY. There was an instance where a couple shows we
did on the last tour, the Ticketmaster local affiliate randomlv
raised the service charge 25 cents. That 25 cents was rebated back
to the band. We took the money and gave it to a local charity.

Mr. Horn. What venue was that?

Mr. McGiNLEY. Atlanta and Rochester, Fox Theater.

Mr. Horn. Did you ever ask Ticketmaster to increase its service
charge?

Mr. McGiNLEY. No.

Mr. Horn. Were you ever playing in Seattle, December 1993?

Mr. McGiNLEY. Yes.

Mr. Horn. And you didn't ask them to increase the service
charge?

Mr. McGiNLEY. There was a long, complicated negotiation that
I think is set out in one of the briefs. I was not involved in that
negotiation, but there would be a 15-minute story to explain the
facts. I don't think after hearing that 15-minute story, or after
reading the brief, you would determine or you would say that we
asked Ticketmaster to raise the service charge, no way.

Mr. Horn. Do you believe organizations such as Ticketmaster,
whether it be Shubert or Ticketron, when it was going, provide a
valuable service?

Mr. McGiNLEY. Ticketmaster does provide a valuable service,
yes.

Mr. Horn. How would you put a value on that? How does one
value that?

Mr. McGiNLEY. I can't answer that question. I don't know.

Mr. Horn. The reason I ask is I looked at Ticketmaster's com-
plete financial report for 1993. They have a strange year. The year
ends in January 31, 1993, so it is that year I am looking at. They
had income of $172,003,000, and they had a net income, which I
guess we could call profit, although I am not positive, we will ask
them, of $7.5 million.

Now, that meant that basically they had a profit of 14 cents per
ticket. Would you regard that as unreasonable?

Mr. McGiNLEY. I haven't seen those figures. I would like to ana-
lyze them before commenting on it. I think there are a lot of people
other than Ticketmaster with the system that Ticketmaster has set
up that are participating that aren't reflected on that statement,
but I can't comment on it. I haven't seen it. I think they are mak-
ing more than 14 cents.

Mr. Horn. You accuse them of being a monopoly. A monopoly,
if it is, can be very inefficient. Let's face it. A lot of charges cover
a lot of costs, but just the way the numbers happen to work out
when the staff went over it was 14 cents per ticket.

Now, did Ticketmaster ever threaten to sue you or other mem-
bers of the organization?

Mr. McGiNLEY. I don't know. They have never directly threat-
ened to sue me. I believe our attorneys were warned.

Ticketmaster's attorney did contact Sullivan and Cromwell in New
York.

Mr. Horn. To your knowledge, did they ever threaten to sue any
of the arenas or promoters with whom you were dealing because
you were involved?

Mr. McGlNLEY. Say that again.

Mr. Horn. Did Ticketmaster ever threaten to sue any of the are-
nas in which you were seeking to operate or the local promoters or
regional or national promoters with which you were affiliated in re-
lation to any of the business of your particular group?

Mr. McGenley. Not having been (Erectly in on those phone calls,
but there was definitely some very tense conversations between
arenas that we have played and Ticketmaster officials, yes.

Mr. CONDIT. Mr. Horn

Mr. McGiNLEY. I don't know if lawsuits were threatened.

Mr. CONDIT. Can you wrap this up in a few minutes? We have
been at this for about IV2 hours.

Mr. Horn. I have about five questions to go.

Mr. CONDIT. Could you submit some of those in writing?

Mr. Horn. Well, let's just get them rapidly through here. It will
save everybody a lot of time.

Mr. CONDIT. I would advise you, if you want to submit them in
writing, just say so, the answers.

Mr. McGiNLEY. OK.

Mr. Horn. Well, it creates a problem on followup questions, so
if you are willing to take followup questions to your submissions,
fine, we can do that, realizing you are still under oath when you
answer in writing.

Mr. Ament. We still want to make sure that the other panel
members get a chance to talk about this stuff.

Mr. Horn. We are here all day.

Mr. Ament. They told us we were going to be here for an hour.
Actually, I have to go to the bathroom, so I will be right back.

Mr. Horn. We can understand.

What are we talking about in terms of how much the band really
makes in terms of profit on each concert? You are concerned with
Ticketmaster's profit, it seems to me fair we get on the record what
your profit is.

At an arena, in a stadium, at a field, in those three different set-
tings, what are we talking about average profit?

Mr. McGenley. It is an imiK)ssible question to answer because,
once again, there are probably 10 different variables. I could sit
down and have a 1-hour conversation with you about it, but we are
not going to answer it here correctly in 1 minute.

Mr. Horn. Could you go back and reflect on it. I know you do
big venues, little venues, medium-sized venues, what not, but can
you give us a general average, because I think it is important if
we have got a 14 cents per ticket profit here then what is the
group's profit? Is this the pot calling the kettle black?

Mr. McGiNLEY. Depending on where you are playing and what
city it is and the ticket price, there is a million, literally a million
variables that would determine what the band makes. Honestly,
there is not a real percentage I can give you.

Mr. CoNDlT. Mr. Horn, once again, the gentleman has answered
the question. If he says he doesn't know, he can't explain it, that
is an answer, and you can follow up, so let's take that.

Mr. McGiNLEY. Let me give you for an example here OK, on the
show the band did at the Paramount, they basically broke even in
New York because of the cost of the venue. There were other shows
where they made maybe 25, 30 percent of gross. It is all over the
place.

Mr. Horn. Do answer for the record if you feel you can give a
more substantive answer.

Now, let's get down to the nub of this because we are taking one
service in relation to a particular venue that is very common,
which is the ticket service. Do you believe you should be able to
decide all of the services, all of the concessionaires in an arena,
such as the food, beverage, signage, parking as well as ticketing?

Mr. McGlNLEY. Mr. Condit, I think in fairness to really answer
your questions, I should write answers to your questions, and we
should move on because this is

Mr. Horn. Let me just ask two more then.

Mr. Condit. No, Mr. Horn, if you want to submit.

Mr. McGinley. I would be more than happy to spend all the
time you need.

Mr. Condit. He said he would submit his answers in writing.
Would you agree to that?

Mr. Horn. It would take a yes or a no. Do you have a contractual
or other relationship or are you talking currently to the Shuberts
or Telecharge?

Mr. McGinley. No.

Mr. Horn. Are you planning to go on a tour in the near future?

Mr. GossARD. We don't know.

Mr. Condit. Is that fine?

Mr. Horn. That is fine.

Mr. Condit. Thank you, Mr. Horn. That concludes today's first
panel. We are not going to do another round of questioning, but
don't leave yet. Stone. I want to invite you, if you are willing to
do so, to stay at the hearing. We would love to have you stay, out
let me just say when we got involved in this issue, I did not know
very much and still don't about alternative music. I just want to
say to both of you, to Stone and to Jeff, I am not a big alternative
music fan, and I am not sure that any of the Members up here are,
but you have represented yourself and your industry very well
today.

You have been very kind with your time, and I think you have
been very thoughtful. No matter how this turns out, you have done
a g^eat service to the subcommittee, and we appreciate your being
here. Now, that endorsement may not help you with your fans, but
I want you to know that you did a good job.

Mr. Gossard. The government's band, you mean?

Mr. Condit. The government's band. Thank you very much. We
appreciate you being here. We have a seat for you if you want to
take it. Jeff maybe nad a good idea. Let's take a 5-minute recess.

[Recess taken. 1

Mr. Condit. We are going to reconvene the hearing. I appreciate
the moment of recess, and we are going to ask panel two to come

forward. Mr. Collins, Mr. Downs, Mr. Marsh, Mr. Morris, and Mr.
Rascoff. Please stand and raise your right hand.

Excuse me, apparently there is still some out in the hall. Would
you notify them in the back if they are back there or out in the
hall that we are ready for panel two.

Mr. Marsh, Mr. Downs? Raise your right hand.

[Witnesses sworn.]

Mr. CoNDiT. The record would indicate everyone answered in the
affirmative. We are going to start with Mr. Collins. Mr. Collins is
the manager of Aerosmitn, and he is from Boston, and we appre-
ciate Mr. Collins being here today. We appreciate your patience.
We know you have been here all morning. If you have a written
statement, this goes for anyone here. If you have a written state-
ment and you want to submit it into the record, that will be done,
and you can paraphrase your statements or if you feel more com-
fortable in reading your statements, you can do that as well. Mr.
Collins.

STATEMENT OF TIM COLLINS, MANAGER, AEROSMITH,

BOSTON, MA

Mr. Collins. Thank you. Mr. Chairman, members of the sub-
committee, thank you for inviting me to testify here today. My
name is Tim Collins. I am from Boston, MA, and I am the manager
of Aerosmith, one of the world's most popular rock and roll bands.
Please allow me to supply you with some quick background.

Aerosmith has sold over 50 million recordings, and we estimate
that as many as 20 million fans have seen Aerosmith live in con-
cert, most of those in the United States. Currently, they are in the
midst of a veiy successful world tour from whicn I have just re-
turned to testity here today.

The band and I are all concerned about the impact that
Ticketm aster's monopoly is having on the entertainment industry.
We view this as a very simple matter. You are either on the side
of the fans and the artists or you are on the side of the middlemen
who are in control of the American concert industry.

We recognize that Ticketmaster's monopoly provides a more effi-
cient ticket ordering and distribution system than America had
ever seen before. Its advanced systems have upgraded and sup-
ported the economic vitality of the concert business. But at a price.

Last week, I was with Aerosmith in Italy, where the band is cur-
rently on tour. We were talking about Ticketmaster and how it re-
lates to our concert business. Steven Tyler, Aerosmith's lead singer,
said to me: "Mussolini may have made the trains nm on time, but
not everyone could get a seat on that train." That is the problem
that Aerosmith and I have with Ticketmaster.

Yes, they have an efficient and profitable system, but its monopo-
listic aspects are unfair and hurtful. It hurts the fans who pay
service charges that inflate ticket prices an average of 15 percent,
according to estimates.

It hurts younger, developing artists who find that tickets to
smaller clubs where they learn their crafl are subject to surcharges
averaging as much as 25 percent, according to estimates in the
Boston Globe.

It hurts the music industry by encouraging scalping and other
forms of profiteering, such as withholding large blocks of tickets for
resale by sometimes disreputable elements.

Ticketmaster's monopoly controls access to between 85 and 90
percent of the tickets sold in the Nation's major music performance
venues, covering 42 States.

On our current "Gret A Grip" tour, Aerosmith will sell some 2 mil-
lion tickets. Most of those tickets will be sold through
Ticketmaster. Not because we want to, but because we have to, as
a result of Ticketmaster's exclusive and unregulated agreements
with promoters and venues. Ticketmaster is the only game in town
for artists and fans.

Over the years, we have heard a lot of stories from Aerosmith
fans who slept all night on hard pavements outside box offices
waiting for them to open in the morning. Even the first kids in line
were unable to get the best seats because Ticketmaster's telephone
sales commonly begin hours, if not days, before box offices open.

Later we found that some of these seats had been bought at pre-
mium prices from someone who knew somebody. So our fans are
robbed, the band is robbed, and the government is robbed of tax
revenue on illegally inflated ticket prices.

Aerosmith's determination to provide a way around
Ticketmaster's restrictive distribution policies and fees has led us
to support an Aerosmith fan club whose members can buy good
seats to our concerts with only a minimal service charge. I would
like to relate my own story of an encounter with Ticketmaster's
Fred Rosen as an example of how business is done when a band
is dealing with a monopoly.

In 1989, we approached Ticketmaster at the beginning of an ex-
tended world tour for which we expected to sell millions of seats.
We were seeking a volume rebate in consideration of the enormous
amount of business we were doing with this company. We either
wanted Ticketmaster to lower its service charge or pay some kind
of rebate to the band so that Aerosmith could in turn lower the
ticket charge to its fans.

Rosen was unwilling to support us on either of these courses of
action.

Once again, at a meeting I personally had with Mr. Rosen on
January 5, 1993, at the start of negotiations for our current world
tour, we came back to the very same issues. Once again, Rosen re-
sponded to our proposals by refusing either of these options. In-
stead, Mr. Rosen suggested that if the band would agree to adver-
tise the ticket price and the service charge together as one single
cost, he would raise Ticketmaster's charge by $1 per ticket and
split the proceeds with the band.

I told Mr. Rosen that his offer was like offering a cold man ice
in the winter. Admittedly, his solution would make us and him
more money, but at the expense of an already overburdened young
fan.

The moral of this story is that monopolies like Ticketmaster tend
to raise prices and rarely, if ever, lower them, even for their best
customers.

Aerosmith believes that Ticketmaster's nearly absolute power
over access and fees on performance tickets is corrupting the sys-

tern and working to the disadvantage of an entire industry and its
consumers.

Competition is the American way, and as a result of
Ticketmaster's monopoly position, there is almost no competition in
the ticket business anymore. Artists trying to buck the system, like
Pearl Jam, have been threatened and blacklisted. Consumers are
bein? forced to pay too much to buy tickets. Many good seats are
withheld from the market and resold at exorbitant profits that are
shared neither with the artist nor the tax man.

Mr. Chairman, Ticketmaster operates an unfair and unregulated
monopoly whose actions, Aerosmith believes, are not in the public
interest. Aerosmith urges this committee and Congn:-ess to restrain
Ticketmaster's monopoly. We support the view that the entire tick-
et distribution system needs to be open to greater competition, and
if Federal regulations are needed to ensure this, we would support
them.

We would also like to see a uniformity of regulations, since dif-
ferent States have different laws on the resale of tickets. This leads
to the current epidemic of ticket scalping and other illicit sales.

In conclusion, Mr. Chairman, monopolies have for centuries sup-
ported the interests of tyrants. Mussolini's trains and
Ticketmaster's ticket systems may run well, but they don't run
right.

Mr. Chairman and members of the subcommittee, I thank you for
the opportunity to appear before you today, and I look forward to
answering any questions.

[The prepared statement of Mr. Collins follows:]

STAJEMEN'L-O.F TIM COLLINS TO THE HOUSE GOVERNME^NT OPERATIONS
COMMITTEE 'S SUB-COMM I TTEE ON I NFORMAT I ON , JUST I CE . TRANSPORTAT I ON

AND AGRICULTURE

WASHINGTON. DC
JUNE 30. 1994

Mr Chairman, and members of this sub-committee, thank you for
inviting me to testify here today.

My name is Tim Collins. I am from Boston, Massachusetts and I
am the manager of Aerosmith, one of the world's most popular rock
n ■ roll bands .

Please al low me to supply you with some quick background.

Aerosmith has sold over 50 million recordings and we estimate
that as many as 20 million fans have seen Aerosmith live in
concert. Currently they are in the midst of a very successful
world tour, from which I have just returned to testify here
today .

The band and I are al I concerned about the impact that
T i cketmas t er ' s monopo I y is having on the entertainment industry.

We view this as a simple matter.

You're either on the side of the fans and the artists, or you're
on the side of the middlemen who are in control of the American
concer t industry.

We recognize that T i eke tmas t er ' s monopoly provides a more
efficient ticket ordering and distribution system than America
had ever seen before. Its advanced systems have upgraded and
supported the economic vitality of the concert business. But at
a price.

Last week I was with Aerosmith in Italy, where the band is
currently on tour. We were talking about Ticketmaster and our
concert business.

Steven Tyler, Aerosmith's lead singer, said to me:

"Mussolini may have made the trains run on time, but not everyone
could get a seat on that train."

That's the problem that Aerosmith and I have with Ticketmaster.

Yes, they have an efficient and profitable system. But its
monopolistic aspects are unfair and hurtful.

-2-

It hurts the fans who pay service charges that inflate ticket
prices an average of 15%, according to estimates.

It hurts younger, developing artists who find that tickets to

sma I ler clubs, where they learn their craft, are subject to

surcharges averaging as much as 25%, according to estimates in
The Bos ton G I obe .

It hurts the music industry by encouraging scalping and other
forms of profiteering such as withholding large blocks of tickets
for re-sale by sometimes disreputable elements.

T i cketmas t er ' s monopoly controls access to between 85 and 90% of
the tickets sold in the nation's major music performance venues,
covering 42 states.

On our current 'Get A Grip' tour, Aerosmith wi I I sel I some 2
million tickets. Most of those tickets will be sold through
T i eke tmaster . Not because we want to, but because we have to,
as a result of T i cketmaster ' s exclusive and unregulated
agreements with promoters and venues.

Ticketmaster is the only game in town for artists and fans.

Over the years, we have heard a lot of stories from Aerosmith
fans who slept al I night on hard pavements outside box offices,
waiting for them to open in the morning.

Even the first kids in line were unable to get the best seats,
because T i eke tmaster ' s telephone sales commonly begin hours, if
not days, before box offices open.

Later we found that some of these seats had been bought
premium prices from someone who knew somebody.

So our fans are robbed, the band is robbed, and the government
is robbed of tax revenue on illegally inflated ticket prices.

Aerosmith's determination to provide a way around T i cketmas ter ' s
restrictive distribution policies and fees has led us to support
an Aerosmith Fan Club whose members can buy good seats to our
concerts with only a minimal service charge.

I'd like to relate my own story of an encounter with
T i eke tmaster ' s Fred Rosen as an example of how business is done
when a band is dealing with a monopoly.

-3-

In 1989 we approached Ticketmaster at the beginning of an
extended world tour for which we expected to set I mill iona of
seats. We were seeking a volume rebate in consideration of the
enormous amount of business we were doing with this company. We
either wanted Ticketmaster to lower Its service charge or pay
some kind of rebate to the band, so that Aerosmith could in turn
lower the ticket charge to its fans. Rosen was unwilling to
support us on either of these courses of action.

Once again, at a meeting I had with Fred Rosen on January 5th
1993, at the start of negotiations for our current tour, we came
back to the same issues. Once again, Rosen responded to our
proposals by refusing either of these options. Instead, Mr Rosen
suggested that if the band would agree to advertise the ticket
price and service charge together, as one single cost, he would
raise T i eke tmas t er ' s charge by $1 per ticket and split the
proceeds with the band.

I told Mr Rosen that his offer was like offering a cold man ice

in the winter. Admittedly his solution would make us and him

more money, but at the expense of an already overburdened young
f an .

The moral of this story is that monopo I i es I ike Ticketmaster tend
to raise prices and rarely, if ever, lower them, even for their
best customers.

Aerosmith be I i eves that T i cketmas t er ' s nearly absolute power over
access and fees on performance tickets is corrupting the system
and working to the disadvantage of an entire industry and its
consumers .

Competition is the American way and as a result of T i cketmaster ' s
monopoly position, there is almost no competition in the ticket
business any more.

Artists trying to buck the system, like Pearl Jam, have been
threatened and blacklisted.

Consumers are being forced to pay too much to buy tickets.

Many good seats are withheld from the market and re-sold at
exorbitant profits that are shared neither with the artist or the
tax man.

Mr Chairman, Ticketmaster operates an unfair and unregulated
monopoly whose actions, Aerosmith be I ieves, are not in the publ ic
i nt er est .

Aerosmith urges this committee and Congress to restrain
T i cketmaster ' s monopoly.

-4-

We support the view that the entire ticket distribution system
needs to be open to greater competition, and if federal
regulations are needed to ensure this, we would support them.

We would also like to see a uniformity of regulations, since
different states currently have different laws on the re-sale of
tickets. This leads to the current epidemic of ticket scalping
and other illicit sales.

In conclusion, Mr Chairman, monopolies have for centuries
supported the interests of tyrants.

Mussolini's trains and Ticket ma ster's ticket system may run well,
but they don't run right.

Mr Chairman and members of the sub-committee, I thank you for the
opportunity to appear before you today and I look forward to
answering your questions.

Mr. CONDIT. Our next witness is Mr. Downs. Mr. Downs is the
attorney for R.E.M. and he is also a professor for the University of
Georgia School of Law. Thank you for being here today.

STATEMENT OF BERTIS DOWNS, ATTORNEY, R^.M., AND AD-
JUNCT PROFESSOR, UNIVERSITY OF GEORGIA SCHOOL OF
LAW, ATHENS, GA

Mr. Downs. Good morning, thanks for letting me be here. I live
in Athens, GA, As you said, my name is Bertis Downs. I am the
attorney for the group R.E.M. , a popular rock band that I have rep-
resented since I graduated from law school in 1981. As you also
said, I teach part-time at the University of Greorgia School of Law
where I teach courses on entertainment law and sports law. Also,
for the last 2 years I have served as the music division chair of the
American Bar Association's Forum Committee on the Entertain-
ment and Sports Industries.

I mention these affiliations for identification purposes only, and
emphasize that the views I am about to ofFer are mine alone and
not necessarily the views of any organization with which I am asso-
ciated.

My views spring principally from my representation of R.E.M.
The band was founded in 1980 and has given hundreds of live per-
formances since then. Right now, R.E.M. is actively considering an-
other major tour, possibly as early as 1995. Since my own work
largely concerns these tours, I have had a chance to observe all of
the many business components that make up the live music tour-
ing industry. If you don't mind, I am going to take a second to
draw — I am going to get into my teacherly mode.

I want to draw on the blackboard to show how a deal is put to-
gether. There have been a lot of questions, trying to get at sort of
the macro part of all this and I want to try to provide a framework
or a context for you to understand how this particular corner of the
music touring industry, ticket sales, relates to the rest of it, and
I then want to make a larger point about that.

It is a very simple relationship between talent, which I will just
put a T for talent, the act, maybe I should put a PJ there, which
enters into a contract with a promoter, which I will indicate with
a P. Generally, that is a local promoter. There are certainly pro-
moters that have a national reputation, that have national clout
and can kind of go anywhere, but the typical situation is that in
Long Beach you are going to deal with a promoter for Long Beach,
and when you move up to San Francisco you are going to deal with
a promoter from San Francisco, when you come down our way to
Atlanta you are going to use somebody there. That is your basic
contractual relationship, between an artist and a promoter.

There is a contract issued. It is issued through an agent which
is a very important intermediary that is sort of the fulcrum be-
tween this relationship. The agent is directly between talent and
promoter. The band surrounds itself with sort of this cocoon of rep-
resentatives. The representatives would include attorneys, personal
managers, a business manager, and, as I mentioned, an agent.
There are others — and I guess you can also put some of the tour
personnel like a tour manager. Incidentally, I can't think of very
many bands who would have come and sat at this table today and

stripped away all those layers of that cocoon, so as other people
have said, it is pretty laudable that these guys did that. That typi-
cally is the team of representatives, the sort of committee that is
around the band that makes — that in conjunction with the band,
to some degree, decides things like ticket prices and where they
want to play and whether it is going to be indoors or outdoors and
exactly the shape and the philosophy of the tour.

The talent is represented by all these people. They then have to
contract with a lot of third parties. They have to hire the produc-
tion, which includes things like sound companies, lighting compa-
nies, companies that build stages and sets, then the companies that
truck all those things around and put people in buses. It is a pretty
heavy-duty operation. Major tours might have a couple hundred
people on the road at any given time.

Those people have relationships with crews, production man-
agers, additional musicians, and other support functions on doing
a tour. There is a merchandising aspect of this, selling the T-shirts
and novelties. The merchandisers are a third party that directly
contract with the band.

Finally, the record company has a lot of impact on this. The
record company might provide things like tour support. They might
help promote the tour, and there is, again, another third-party re-
lationship there, that all kind of plugs in through this part of the
equation, talent.

The promoter, on the other hand, has to first secure a site or a
venue. The promoter has to hire a lot of support services, things
like transportation companies, security companies, catering compa-
nies, advertising agencies, all these things. That is the promoter's
job to put the show on and to hire these various support compa-
nies.

I forgot to put a very important one over here on the talent side,
which is insurance. The band has to buy its own insurance, the
promoter has to buy its own insurance, which includes coverage for
liability if somebody gets hurt at the show, and for nonappearance,
rain, if something happens the show can't go on. There are insur-
ance companies representing both sides of mis. Then the promoter
also has to sell the tickets to the fans, and typically in 1994, at
least for the last few years, they have had to go through
Ticketmaster and ultimately the fan gets to buy the ticket through
the promoter and come to the show. That summarizes the basic
business relationships created when a national-scale tour dis-
embarks.

I have made a little bit more readable form of this for the com-
mittee. I don't know the procedure for letting you guys — I have
done sort of a chart that helps to lay that out because you see it
has got a lot of interlocking relationships. The point I really want
to make is kind of the only point I want to make today is that if
you look — don't look at board, it is kind of ugly, if you look at that
chart, with all these various relationships on the talent side, the
promoter side, all the various third parties that are contracted
with, with the exception of one place, there is competition.

There are lots of business managers out there. If Mike McGinley
stopped doin^ a good job for these guys, there are other people that
could take his place. I doubt that will ever happen, but there are

lots of business managers out there. There are six maior record
companies, so they may have an exclusive contract with that record
company, but if that contract is ever up, and in some band's career
if they are fortunate, maybe it will eventually be up. They can go
somewhere else. They can go down the street or across the country
and they can contract with another record company.

There is also intense competition among promoters. There are lit-
tle hometown promoters and there are big national promoters.
Thev vary in scope and sU'le, and there are various promoters who
work with certain types of music. There is a lot of competition.

When a band is coming into Atlanta or coming into Long Beach,
promoters vie with each other. They make offers, they have a price
competition to secure the services of the band. In all these areas,
support services, the tour, the production company, sound, lights,
again, it is all based on price and other intangible types of competi-
tion. It is part of the key to the working of the system. There is
one exception.

At this point in 1994, for at least the last few years, there really
isn't any choice. If you want to do a major tour, a major arena level
tour in major markets, you have no choice. It comes along with the
building. It comes along with the building the same way conces-
sionaires do. Ticketmaster is the company through which the fans
have to buy tickets and the promoters have to use to be able to put
the shows on sale. That is, to me, sort of a way of explaining, and
I hope through the chart there that you are able to follow that and
to see how the ticket distribution aspect of that fits in.

I have had plenty of experiences as a consumer and as a profes-
sional with the Ticketmaster system. It is a good, efficient system,
no doubt about it. It provides a valuable service, and Ticketmaster
is entitled to make a profit, as any other business in our country
is able to do. However, I think what we have here is a situation
where there is no price competition among various ticket services.
Instead there is one that rules and that determines unilaterally, or
in conjunction with its "partner" promoter or building the service
charge portion of a ticket.

I want to explain one other little thing about that. Ticket prices,
as it has come out already today, ticket prices are really two major
components: The event portion of the charge, which is the price
people pay, the $18 or whatever that people pay to come view the
show, and then the service or handling charge or convenience
charge that is added above that. Ticket prices are determined —
there has been a lot of talk about ticket escalations and things get-
ting expensive in Eagles shows and Barbra Streisand shows and
the things that are out there approaching $100 or more. But those
changes are still governed by a marketplace.

If the group or the attraction has decided to set their tickets too
high, thev are not — they don't have the kind of altruistic ideals,
they don t have the kind of ideology that you have heard about
today. They have just decided they are going to go higher, they are
going to push it, they are going to make as much money and retire
to their castle. Well, if they price themselves out of the market by
pricing the tickets too high, people won't come to the show.

However, the service charge part of the ticket, which is substan-
tial, it is somewhere — it is hardly ever less than 10 percent, and

it is often as high as 25 percent of the overall cost of the ticket.
That is determined really, it may be determined by some sort of
calculation between promoters and the provider, but it is by and
large determined by a single provider of the service, what could, I
think, be characterized fairly as a monopoly.

There may be some problems in the system which have been
highlighted about tickets not being sold at box offices, people not
being able to get seats, I am not sure there is a limit to how high
these service charges can go, given the lack of competition. There
isn't that market competition.

I want to contrast that with the situation in Europe.
Ticketmaster, as far as I know, at this point in time, is not selling
tickets in Europe. Ticket charges in Europe, which I guess we can
kind of roughly compare our economies with, are somewhere in the
neighborhood of around 5 percent.

Somebody asked earlier, the Congresswoman from Florida asked
what is a reasonable charge. I think the answer was really a mar-
ket should determine what a reasonable charge is, but where the
market does work, if you want to buy a ticket to a concert in Lon-
don you have your choice of five ticket agencies and the service
charge is somewhere in the neighborhood of 5 to 7 percent, as op-
posed to what we are seeing which is approaching a much more
significant fraction of the overall price. The reason this is impor-
tant to bands, I think you have been able to — I think we all were
able to tell from the testimony of the two members of Pearl Jam,
the reason this is important to bands is because fans may — ^wheth-
er it is broken out on the ticket price or not, fans in a sense blame
the band for what they are having to pay. They don't really know
the politics, they don't know the ins and outs of how this stuff
works. They just know how much they are having to pay to go to
the show.

If the price gets too high, if it gets to the price where it is
unaffordable to the fans, it is really the band's goodwill. It is Pearl
Jam's goodwill. It is R.E.M.'s goodwill. That is who ends up bearing
the brunt of the fans feeling pinched or squeezed by this charge.

I want to close, and I have put a lot of this in my statement
which I think I have already submitted for the record, but I want
to close with just a little story that used to happen whenever
R.E.M. would tour. They haven't toured since 1989, so they haven't
toured during the current situation. As I said, we are very seri-
ously considering touring again next year and this will become a
very important issue to us, and it already has, but up until 1989,
the band R.E.M. used to tour, and they were always real big in
their hometown or close to their hometown of Atlanta.

Whenever they came to Atlanta to play, one of their several
nights at the Fox Theater before they gpraduated up to playing the
Omni, we would get a call. We had always used a company called
SEATS, which is a predecessor company to Ticketmaster in At-
lanta. We had always used SEATS because they had good outlets,
they had reasonable charges, and the main thing was they had
good locations. They had good locations in a particular record store,
which was the most popular record store, and the kids could go
there to buy their seats.

We would always get a call every couple of years whenever a
show was being scheduled from a competitor who ran a company
called TickExpress. We weren't as impressed with TickExpress.
They didn't have the connections that SEATS had at the time.
They weren't in the same locations. They were in some sort of far
out malls that really didn't make as much sense for the average
fan to go buy their tickets and so we always said thanks for calling,
we will consider it and we ended up never going with the competi-
tor. We stayed with SEATS — we had loyalty to the original
ticketing company we had, but the point I want to make is we did
get that call: there was a competitive element to it. If SEATS had
decided to jack things up to the point of unreasonableness, we
could easily have stopped doing business with them and gone to
their competitor, gone somewhere else.

Those potential entrants to the market aren't happening any-
more. That is no longer there. That element of competition isn't
there. As I face planning a tour for next year, I really sincerely
hope that between the various things that are going on right now,
between what Justice is doing and your political oversight, I don't
know what the solution is to this, but I really hope that some break
in the logjam occurs because I really don't see this being a work-
able system, having the price set unilaterally by someone who has
this much market power.

I really thank you for letting me be here and I think as somebody
said, they don't know much about alternative music. I am not sure
how appropriate a tag like alternative music is anyway, and Pearl
Jam, who is an alternative rock band like R.E.M., I think really,
somebody said what are you looking for, what is the solution to
this, is it divestiture, is it government regulation? I am not sure
anybody here really wants to provide any kind of a blueprint of an-
swers for this, but I think what we are really looking for is an al-
ternative to the present system.

I think what we are looking for is other ways of doing things
rather than having to go through a single source. Those are my
comments and I appreciate very much you letting me speak.

Mr. CoNDIT. Thank you, Mr. Downs, for that fine presentation.

[The prepared statement of Mr. Downs follows:]

HOUSE GOVERNMENT OPERATIONS SUBCOMMITTEE ON INFORMATION,
JUSTICE, TRANSPORTATION AND AGRICULTURE:

"Pearl Jam 's Antitrust Complaint: Questions About Concert, Sports,
and Theatre Handling Charges and Other Practices "

Testimony of Bertis Downs

My name is Bertis Downs. I live in Athens, Georgia I am an attorney for the
group R.E.M., a popular rock band that I have represented since I graduated from law
school in 1981. I am also an Adjunct Professor of Law at the University of Georgia
School of Law, where I offer courses in Entertainment Law and Sports Law. For the last
two years I have served as Music Division Chair of the American Bar Association's
Forum Committee on the Entertainment and Sports Industries. I mention these affiliations
for identification purposes only, and emphasize that the views I am about to offer are
mine alone and not necessarily the views of any organization with which I am associated.

My views spring principally from my representation of R.E.M. The band was
founded in 1980 and has given hundreds of live performances since then. Right now, the
band is actively considering another major tour, possibly as early as 1995. Since my own
work largely concerns these tours, I have had a chance to observe all of the many
business components that make up the live music touring industry.

The main point I would like to make today is that the concept of competition is at
the root of the entire concert industry except in the area of ticket distribution. The live
music touring industry itself is a complex, interlocking web of relationships:

-within a given geographical market, there is a competition among promoters,
who vie with each other for the right to offer a particular concert by a particular artist;

-there is also competition among venues or sites for concerts, which offer
different locations, different sizes, different prices and different amenities;

-there is certainly competition among attractions, relating to various levels of
groups' careers, artists' styles, changing public tastes, and so forth;

-there is competition among the many companies that offer local support services-
security firms, caterers, limousine companies and the like-which provide ancillary
services for concert touring groups;

-there is competition too among various touring support companies - soimd
companies, lighting companies, trucking companies, busing companies, companies that
provide special effects, and companies that provide stages and sets; and

-there is also competition among the several major merchandisers of novelties and
clothing at concerts.

For all of these indispensable elements of successfully mounting a show or tour,
competition is the key to the working of the system. But this is not true in one critical
area, that of ticket distribution. There, for all intents and purposes, Ticketmaster has
become the only game in town. There is no market or choice available to would-be
customers in the industry. They must deal with Ticketmaster.

Is Ticketmaster good at what it does? Yes. Does Ticketmaster provide a valuable
service with efficiency and effectiveness? Again, yes. Without a doubt, Ticketmaster
provides a valuable service and is good at getting tickets into the hands of consumers. For
these reasons, my comments should not be taken as anti-Ticketmaster. Instead, they
should be taken as pro-competition, and more specifically pro-price-competition.

To make my point, I would like to shift the focus to the other major component of
the popular music business - the recorded music industry. In that business- which along
with concert revenues represents the bulk of an artist's earning potential- there are six
major distributing companies responsible for about ninety percent of domestic record
sales. Can anyone imagine a benefit that would obtain if at some point, for whatever
reason, that were only one such distributing label? I cannot. The benefits of a
competitive system are clear, especially when contrasted with the alternative of

Qi/1 n _ 0"^ — 3

concentrating all power into a single provider of a product marketed to virtxially all
Americans.

Without market competition to consider, a monopolist can raise its prices, cut its
services, and reduce its flexibility without fear of a competitor winning away its
customers. I believe that this is the basic reason the antitrust laws were put into effect
more than a century ago - to ensure healthy competition among businesses for the benefit
of consumers and the overall economy.

How do these policies bear on the issue of concert-ticket distribution? To
answer that question it is important to recognize that ticket prices are really made up of
two major components--the "event" portion of the price paid actually for attending the
concert, and the "handling", "service", or "convenience" charge levied by Ticketmaster
for its services. It is also important to note that the Ticketmaster portion of the total
charge is always significant- - in some cases as much as 20-25% of the ticket price, and
seldom less than 1 0- 1 5%.

In other words, a substantial portion of the price of virtually every concert ticket
sold in this country is set by the exercise of unregulated monopoly power. Moreover, this
particular type of market power carries with it some special dangers. For example, the
total price of the ticket is typically "blamed" on the artist, even though the "handling
charge" portion of the ticket is not normally attributable to the attraction at all.

Everyone is aware of escalating ticket prices for concerts. The event portion of
these prices, however, is determined by market forces. If Band X charges too much for
its show, the fans will stay home or attend another concert. Handling charges for ticket
distribution, on the other hand, are shaped not by what the market will bear, but what the
single provider decides to charge. Under the present system, without the leavening effect
of market competition, is there a limit to the escalations seen in recent years with regard
to handling charges?

I would like to relate in closing a simple but true story that might provide some
insight into my main contention, that reintroducing competitive forces into the
entertainment ticket distribution industry would be a wise and useful policy to pursue.
R.E.M., the group I represent, toured a great deal prior to Ticketmaster's ascendancy to
its dominant position. During that period, when a tour stop was planned for R.E.M.'s
close-to-hometown of Atlanta, I would get a call from the owner of TickExpress, one of
the then-two ticketing companies competing for Atlanta concerts. He would try to sell me
on his firm's ability to do the business for our shows, highlighting its outlets, charges and
efficiency. We never shifted our business to TickExpress from SEATS, largely because
SEATS had superior locations including a popular record-store chain. I always
appreciated knowing, however, that we had a choice, a viable alternative in the event we
ever decided that a change would be advantageous. As I look ahead to plarming a possible
tour for R.E.M. in the years to come, I would like to get those types of calls again. We
certainly do from all the other tour-related services. And for such a critical service- the

service of actually putting fans in seats- it seems genuinely off course to see a total lack
of competition.

I would like to thank the committee for inviting me here today, and I hope that my
comments have helped you in your understanding of this aspect of the concert industry.

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Mr. CONDIT. Our next witness is Mr. David Marsh, who is a rock
and roll historian. Once again, if you want to submit your written
testimony and paraphrase, you are welcome to do that, whatever
you are comfortable with, Mr. Marsh.

STATEMENT OF DAVE MARSH, ROCK AND ROLL HISTORL^N,

NEW YORK, NY

Mr. Marsh. Thank you, Mr. Chairman. My name is Dave Marsh,
My interest in this subject is both professional and as a music fan
and historian. For the past 25 years I have written about rock and
roll as a journalist, critic, historian, and author of 15 books. I
would like to comment today on the history of the rock concert
business, communicate some problems uncovered by my research
and suggest a possible resolution.

In the late 1960's, a new style of music and performer required
a new kind of concert. The old multigroup package shows dis-
appeared in favor of solo concerts — or at most two or three acts on
a bill — which were held in theaters, ballrooms, small concert halls,
and eventually in arenas and stadiums.

For a variety of reasons, among them competence, practicality,
and basic loyalty, a select number of promoters of these new style
shows became entrenched. Competition among these promoters has
rarely been more than nominal, except in the largest cities. Even
there, a third option is a rare thing.

While the contemporary concert business lacks the central direc-
torate of the classic cartel, the fact remains that these promoters
observe unspoken boundaries, going to great lengths to avoid in-
vading each other's territories. Where possible they acquire lever-
age through exclusive arrangements with buildings and through
old-boy style associations with acts and agents.

All this severely hampers the rise of alternative promoters. One
consequence over the past decade or so: The principal promoters in
Philadelphia, Boston, and New Jersey have all signed consent de-
crees relating to anticompetitive practices. Now, stars, managers,
agents, and venues are used to operating within a monopolistic or
at least an uncompetitive structure. Many prefer it that way and
understandably so.

In a night-to-night business which is usually conducted far from
everyone's home base, familiarity, experience, and stability become
extremely attractive. Ticketmaster's role in the concert industry
and particularly the extreme latitude it has been granted emerges
directly from this context. On what other terms would the idea of
a mere ticket seller dictating business terms to a star attraction
make any kind of sense?

No matter what happens here today and no matter what the Jus-
tice Department resolves to do, business as usual in the concert in-
dustry is over, and it ended because of a single concert attraction,
but what that doesn't mean is that this dispute is ultimately be-
tween Ticketmaster and Pearl Jam.

If that were the case, this forum would be entirely inappropriate
and the entire issue would have been blown far out of proportion.
What makes this hearing appropriate is the dispute between
Ticketmaster and growing numbers of disgruntled ticket buyers.

buyers of tickets not only to rock concerts but to other entertain-
ment and sports events.

When they complained to the Justice Department, Pearl Jam be-
came the standard bearers of that dissatisfaction. In order to better
understand the ticket buyer's perspective, I recently posted mes-
sages on CompuServe's Rock Net computer bulletin board. The re-
sponses I received reflected a large degree of dissatisfaction with
Ticketmaster's prices, which did not surprise me. The responses
also revealed some Ticketmaster practices that did surprise me.

For instance, I was aware that Ticketmaster's service charge ap-
plied to each and every ticket in an order, even though not one ad-
ditional key stroke is necessary to sell the customer eight tickets
rather than one, and additional costs for those eight tickets for
paper stock and printing are very minimal. What I didn't know was
that in Detroit, Chicago, and Cincinnati, Ticketmaster, through an
arrangement with certain facilities, adds a parking fee, not to each
order, but to each ticket.

In other words, if seven fans arrived in a single van, they would
pay 7 times more for parking than a single gas guzzler. This is
true, for instance, at Detroit's Chene Park, which Chairman Con-
yers mentioned earlier and having lived in that vicinity, that is
even stranger to me because I know there is plenty of free parking
available in the neighborhood and, in fact, some people in that
community may even walk to that show. Nevertheless, if they buy
the ticket they must pav to park.

Even more than the high fees, I learned the practice of applying
the service charge and tne other charges to every ticket rather
than to every order aggravates consumers. Public statements by
Ticketmaster indicate that an important justification for these
charges involves the company's sophisticated computer system.
When I raised this, I just about got laughed off CompuServe.

The second most commonly cited complaint is dialing
Ticketmaster and receiving a busy signal sometimes for hours on
end, A sophisticated computer system would find a way to cue
calls. All of us are all too familiar with such telephone cues. I think
that is another reason why Congressman Horn doesn't like to buy
tickets that way. A sophisticated computer system would ensure
that a group of four reserved seats at a Pearl Jam show were
grouped together, and it could also make a price distinction be-
tween reserved seat shows and general admission concerts. At
present, the service charge for a GA show where seats are first
come, first served — and in some cases there are no seats — is exactly
the same as for a show with reserved seating.

Actually, this summary is somewhat deceptive. In any discussion
of ticketing among consumers the majority of complaints are about
ticket scalping. These are addressed to everyone in the chain of ac-
cess from venue employees to the acts themselves, and it must be
said that Ticketmaster s reputation in this regard is much better
than its predecessor Ticketron, which Ticketmaster absorbed 3
years a^o.

Scalpmg, per se, is under investigation presently by the New
York State Attorney Greneral and has received much scrutiny by
the California State government as well. It is a side issue here, but
an important one. Ticketmaster's absorption of Ticketron is of the

essence, however. Ticketron had a similar stranglehold on the off-
site ticket market through the early 1980's and industry dis-
satisfaction led to the development of its rival. But from the
consumer point of view, Ticketmaster has resolved few if any of the
problems that Ticketmaster presented. Its service charge per ticket
rather than per order exacerbates those problems.

Competition can alleviate some of this. In Portland, OR, one of
the few areas where Ticketron still faces a competitor or at least
a meaningful competitor, service charges are, for instance, mark-
edly lower. But this industry's instinct, as I said, is to avoid com-
petition, and as I said, there are some sound reasons for avoiding
that competition.

Given this history, I don't think it is any longer reasonable to as-
sume that the concert industry is going to self-regulate. But maybe
having a single ticket service operating across all forms of culture
from sports to opera, maybe that even has some consumer advan-
tage in the way that we are moving to a more technological society.
If that is the case, then I believe we should declare ticket services
a kind of utility subject to governmental oversight if not full scale
regulation.

I know that this goes against the current governmental trend,
but what we are dealing with here is not only the entertainment
industry. We are dealing with what has become an important and
for many of us perhaps the most important facet of contemporary
culture, and I think that is true for millions of people. The most
significant evil a ticket monopoly creates is access to popular cul-
ture only for those who can pay very high premiums. This is folly
in the first place because it is precisely the egalitarian nature of
American popular music which has made it so powerfully attractive
not only here but in the world market, and it is folly in the second
place because what may seem like mere amusement to any of you
may be what strikes someone else to the core of their soul.

Rock music does this far more often than those who are not part
of its culture suspect, and it does it by speaking clearly to and for
people who in many cases have no other popular voice — public
voice. From Elvis to Bruce Springsteen, America's best popular mu-
sicians have interacted with and affected their audiences in exactly
this fashion. This tradition is now carried on by Pearl Jam, who
come here today not as litigants asking for dollars, but as citizens
asking for iustice, and not even justice for themselves, but justice
for those who are less powerful than they are.

If we are going to deal with these problems constructively, it
ought to be in that spirit, which is the spirit of rock and roll.
Thank you.

[The prepared statement of Mr. Marsh follows:]

Statement by Dave Marsh

My name is Dave Marsh My interest in this subject is both professional and as a music fan and
concertgoer. For the past 25 years, I've written about rockn'roll as journalist, critic, historian and
author of fifteen books Today, I'd like to comment on the history of the rock concert business,
communicate some problems uncovered bymy research, and suggest a possible resolution

In the late Sixties, a new style of music and performer required a new kind of concen The
old multigroup package shows disappeared in favor of solo concerts (or at most, two or three acts
on a bill) in theatres, ballrooms, small concert halls, and eventually arenas and stadiums For a
variety of reasons— among them, competence, practicality and basic loyalty—a select number of
promoters of these new-style shows became entrenched Competition among these promoters has
rarely been more than nominal, except in the largest cities— New York and Los Angeles. Even
there, a third option is a rare thing While the contemporary concert business lacks the central
directorate of the classic cartel, the fact remains that these promoters observe unspoken
boundaries, going to great lengths to avoid "invading" each other's territories. Where possible,
they acquired leverage through exclusive arrangements with buildings and old boy-style
associations with acts and agents All this severely hampers the rise of alternative promoters One
consequence Over the past decade or so, the principal promoters in Philadelphia, Boston and
New Jersey have signed consent decrees relating to anticompetitive practices.

Now stars, managers, agents, and venues are used to operating within a monopolistic-or
at least, uncompetitive— structure. Many prefer it that way Understandably so In a night-to-night
business, usually conducted far from home base, familiarity, experience, and stability become
extremely attractive Ticketmaster's role in the concert industry, and particularly the extreme

latitude it has been granted, emerges directly from this context. On what other terms would the
idea of a mere ticket-seller dictating business terms to acts and audiences make sense''

No matter what happens here today, and no matter what the Justice Department resolves
to do, business-as-usual in the concert industry is over. It ended because of a single concert
attraction. But that doesn't mean that this dispute is ultimately between Ticketmaster and Pearl
Jam If that were the case, this forum would be entirely inappropriate, and the entire issue blown
far out of proportion. What makes this hearing appropriate is the dispute between Ticketmaster
and growing numbers of disgruntled ticket buyers— buyers of tickets not only to rock concerts but
to other entertainment and sports events. When they complained to the Department of Justice,
Pearl Jam-intentionally or not— became the standard bearers of that dissatisfaction.

In order to better understand the ticket buyer's perspective, I recently posted a message on
CompuServe's Rocknet computer bulletin board. The responses I received reflected a large
degree of dissatifaction with Ticketmaster's prices, which did not surprise me. The responses also
revealed some Ticketmaster practices that did surprise me. For instance, I was aware that
Ticketmaster's service charge applied to each and every ticket in an order—even though not one
additional keystroke is necessary to sell the customer eight tickets rather than one, and additional
costs for paper stock and printing are minimal But I didn't know that in Detroit, Chicago and
Cincinnati, Ticketmaster, through artangement with certain facilities, adds a parking fee, not to
each order but to each ticket. In other words, if seven fans arrive in a single vehicle, they pay
seven times more than a gas-squandering loner This is true for instance at Detroit's Chene Park
which, having lived in the vicinity, I know has plenty of free street parking. Even those who walk
to the concert must pay Ticketmaster for parking.

Even more than the high fees, I learned, the practice of applying the service charge to
every ticket, rather than to each order, aggravates consumers Public statements by Ticketmaster
indicate that an important justification for these charges involves the company's sophisticated
computer system. This got a big laugh on CompuServe, since the second most commonly cited
complaint is dialing Ticketmaster and receiving a busy signal, sometimes for hours on end. A
sophisticated computer system would find a way to queue calls. (All of us are all too familiar with
being placed on hold in such queues.) A sophisticated computer system would ensure that a group
of four reserved seats at the Pearl Jam show were grouped together-and it could also make a
price distinction between reserved seat shows and General Admission concerts At present, the
service charge for a G.A. show, where seats are first come, first served (and in some cases, there
ARE no seats) is exactly the same as for a show with reserved seating

Actually, this summary is somewhat deceptive. In any discussion of ticketing, the majority
of complaints are about ticket scalping. These are addressed to everyone in the chain of access
fi-om venue employees to the acts themselves It must be said that Ticketmaster's reputation in this
regard is much better than its predecessor, Ticketron, which Ticketmaster absorbed in 1990.
Scalping per se is under investigation by the New York state attorney general and has received
much scrutiny by the California state government as well It's a side issue here.

Ticketmaster's absorption of Ticketron is of the essence, however Ticketron had a similar
stranglehold on the off-site ticket market through the early '80s, and industry dissatisfaction led
to the development of its rival. But fi-om the consumer point of view, Ticketmaster has resolved
few of the problems Ticketron presented. Its ser^'ice charge per ticket, rather than per order,
policy exacerbates them Competition can alleviate some of the problem In Portland, Oregon, one

of the few areas where Ticketmaster still feces a competitor, service charges are markedly lower
But this industry's instinct is to avoid competition-and as I said, for some sound reasons Given
this history, it is no longer reasonable to assume that the concert industry will self-regulate.

Perhaps having a single ticket service operating across all forms of culture from sports to
the opera even has some consumer advantage. If that's the case, then we should declare ticket
services a form of utility, subject to oversight, if not full-scale regulation.

I realize that this goes against the current trend in government. But we're dealing here not
only with the entertainment industry but with what has become an important-perhaps the most
important-facet of contemporary culture for millions of people. The most significant evil a
ticketing monopoly creates is access to popular culture only for those who can pay very high
premiums. This is folly, in the first place, because it's precisely the egalitarian nature of American
pop music which has made it so powerfiilly attractive in the world market. And it is folly in the
second place, because what may seem like mere amusement to any of you, may be what strikes
someone else to the core of their soul.

Rock music does this far more often than those not a part of its culture suspect by
speaking clearly to and for people who may have no other public voice From Elvis to Bruce
Springsteen. America's best popular musicians have interacted with and affected their audiences in
exactly this fashion This tradition is carried on by Pearl Jam, who come here today not as litigants
asking for dollars but as citizens asking for justice, and not even justice for themselves but justice
for those less powerful than they are. If we're going to deal with these problems constructively, it
ought to be in their spirit, which is the spirit of rock'n'roll.

Mr. CoNDlT. Thank you very much, Mr. Marsh.
Our next witness is Mr. Rascoff. Mr. Rascoff is the managing di-
rector of RZO Inc., New York, NY. Mr. Rascoff.

STATEMENT OF JOE RASCOFF, MANAGING DIRECTOR, RZO

INC., NEW YORK, NY

Mr. Rascoff. First, Mr. Chairman, let me shghtly correct that.
Although I have been squatting in New York working on a project
that you will hear about for the better part of this past year, I am
from Los Angeles. I have since 1975 been involved in the business
affairs of the Rolling Stones. I am producing the recently an-
nounced tour of the Rolling Stones, and have produced every tour
of the Rolling Stones since 1975.

First, I have no prepared statement which you may note, but I
do want to say a few things to the committee and I appreciate the
opportunity. The first thing I would like to say is clearly I have ab-
solutely no quarrel with the idealism and the fervor of the position
that Pearl Jam puts forth. I think in the context of the way Pearl
Jam operates in the marketplace and the choices that they make
in the marketplace, I think their sentiments are heartfelt. I am
here for a slightly different reason, and that is to tell the commit-
tee that as important as that position may be, it is not necessarily
the way the entire industry operates.

There is a segment of this industry manifested in the Rolling
Stones as an example, which is my experience, which has slightly
different experiences from Pearl Jam. It is not in any way to de-
tract from tne merit of Pearl Jam's position. It is simply a position
that comes from their view and their method of operating in this
industry. The Rolling Stones operate in a slightly different method
and a more broad-based method which I will explain to you.

The simple fact of the matter is — let me clarify that for a mo-
ment, the Rolling Stones have recently announced a tour it will
take us the better part of a year to complete. We hope to go around
the world, we hope to sell somewhere between 4 and 5 million tick-
ets, and this will be a tour only of stadiums. We will not play thea-
ters, we will not play clubs unless we drop in for some fun to play
there, we will not play arenas, we are playing stadiums. Stadiums
mean football stadiums, baseball stadiums, soccer stadiums. We
have not announced too manv shows thus far.

We have announced or rather put on sale nine tickets in North —
sorry, nine markets have gone on sale thus far for this tour, which
starts interestingly enough here in Washington on August 1. The
first observation I would like to make is simply this: In the nine
markets that we have gone on sale, five of those markets do not
have exclusive ticket distribution arrangements with Ticketmaster.

The fact of the matter is we are selling all those tickets, with
some exceptions, where we are allocating some tickets to local tick-
et companies, but for the most part we are choosing to deal with
Ticketmaster. We are choosing to deal with Ticketmaster not be-
cause we are forced to, but rather because that is our choice, and
why is that our choice? It is our choice for one simple reason. It
is absolutely impossible in the 1990's to route a tour of the mag-
nitude of the Rolling Stones stadium tour without the most sophis-
ticated distribution, ticketing distribution system available. If we

put one stadium show on sale, it is very important for us to know
within hours, not days and not weeks, which was the case when
I first entered this business, within hours how those ticket sales
are going, did that show sell out, should we add a second stadium
show, should we wait until next week?

How can we route a tour without knowing that and know wheth-
er we need to, for instance, hold the stadium in Detroit for next
week or we risk losine it? We can't do that unless we know how
many shows we can sell in New York the week before as an exam-
ple. So instantaneous information is essential. Is Ticketmaster the
sole repository of the infinite wisdom of instant information? I cer-
tainly nope not. But the fact of the matter is they have a very so-
phisticated system which enables us to achieve our very essential
objectives.

We look around at other alternatives, and none of them are satis-
factory, and so we choose in those markets to deal with
Ticketmaster. In those markets where we don't have a choice, I will
address that in a moment. So the simple fact of the matter is that
routing a tour of the magnitude of the Rolling Stones without a
system as sophisticated as Ticketmaster's is like running an office
without a fax machine and without a photocopying macnine. It is
just not the way to efficiently run a business in the 1990's.

The next point I would like to address, and then I will yield to
my colleagues, is pricing in the marketplace, and I must say I com-
mend my colleague on this panel, Bert Downs. He is obviously an
excellent pedagogist. I commend him for his analysis which I think
is very succinct, very complete, and probably quite accurate with
one exception, and we can address that exception. It is true that
most elements of a ticket price are determined by the marketplace,
as Mr. Downs said.

I would submit that ticket service charges are also determined
by the marketplace, not by fiat, but it is a different marketplace.
Mr. Marsh and Mr. Downs talk about the marketplace of the
consumer, and that clearly is a very important marketplace in this
business, but there is another marketplace. There is nobody, I
think, wno is suggesting that Ticketmaster agreements are unilat-
erally determined.

We go into a building that Ticketmaster has an exclusive dis-
tribution agreement with, and we learn that that is a freely nego-
tiated, or I am told in any event a freely negotiated arm's length
agreement with a limited term, and we are told the following: We
are told that if you want to distribute tickets this is the charge
that — this is the company that must impose a charge and distrib-
ute the tickets. Why?

Let's put aside the fact that I choose to work with them. Why?
Because they have an exclusive agreement. Is that the only exclu-
sive agreement that that venue has that I have to contend with?
Of course not. When we go into a venue, I may say, I would like
to use my own labor to build that stage, but I am told, I am sorry,
there is an exclusive agreement with a particular union, you must
deal with them.

I might like to have my own family park cars in the parking lot,
but I am told, I am sorry, there is an exclusive agreement with a
parking lot concessionaire. I may want to sell my own T-shirts, but

I am told, I am sorry, there is an exclusive agreement with a vend-
ing concessionaire and so forth, and all these exclusive agreements
enter into the price.

Let's not pretend that the ticket price is not devised to cover all
costs plus a profit which, hopefully, people enjoy. So there are a lot
of elements that go into a ticket price, and I think it is slightly in-
accurate to place the total focus on the ticket service charge when
it is one of many elements that go into the pricing of a ticket.
Apart from making those limited observations, frankly, I have ab-
solutely no quarrel with anything that has been said either on this
panel or by the gentlemen from Pearl Jam.

Mr. CONDIT. Mr. RascofF, thank you very much for that fine testi-
mony. We appreciate your being here.

Mr. CONDIT. Mr. Morris is the — something I know about now —
is the manager of the Nitty-Gritty Dirt Band and we appreciate
your being here very much. You are from Denver, CO, is that cor-
rect?

STATEMENT OF CHUCK MORRIS, MANAGER, NITTY GRITTY
DIRT BAND AND OTHERS, DENVER, CO

Mr. Morris. Yes, I am. I assume I was invited because my back-
ground actually is quite varied. I was formerly a vice president of
the Fay Concert Co., which is the largest concert promoting com-
pany in the West, and in the last 10 years I have had a personal
management company that includes country acts like Lyle Lovett
and Suzy Boggus and rock acts like the alternative band, Big Head
Todd, and the Monsters.

The question of Ticketmaster's positive and negative impact on
the music industry is much more involved than opponents and pro-
ponents I think have suggested. The ticket industry itself is created
by the absolute need for a centralized ticket company to replace the
horrible previous method of promoters and bands sending tickets to
a few stores to sell for shows.

This old method was slow, inefficient. Some areas had no outlets.
Tickets would run out in some stores while others had an excess.
Long lines were in some places while no lines were at others and
generally the whole system was a disaster. Tickets were lost, sto-
len, and generally the whole process created ill will toward most
of the promoters and the bands.

As the live entertainment business exploded in the 1970's, new
national computerized companies took the place of the old system
and generally gave the public a great alternative to the slow cum-
bersome tickets in a few stores approach. It opened up equal
chances for the public to wait in line for the best seats and created
for the first time tickets available on a national basis which should
only help sell more tickets, especially for large events and music
festivals.

The negative eff'ect has been that Ticketmaster no longer has any
competition and has gotten to the point where it has overcharged
both the public and the bands for their services, I believe. This
problem has been brought to the forefront by a whole new genera-
tion of musicians, much more concerned than those in the 1970's
and 1980's. Musicians of today are aware and concerned about the
bottom line for both themselves and the public.

Many such as Pearl Jam and Garth Brooks, as well as lesser
names, are very concerned about their fans not getting ripped off
and getting a fair ticket value for their performance. The exorbi-
tant Ticketmaster fee seems way out of whack with this philoso-
phy.

Toda/s yoimg musicians are very aware and sensitive about the
product they are giving to the public and the value that should be
assessed on it. A $4, $5 or $6 ticket charge added to an already
high ticket price seems both repulsive and unfair to many of the
young musicians of today.

Pearl Jam's attempt to bring this problem to the forefront is ex-
tremely admirable. I only disagree with one point, and that per-
t£iins to the assertion that there is some kind of conspiracy between
Ticketmaster and some major promoters as to a boycott of a pos-
sible Pearl Jam tour. Being an expromoter and current manager,
I have found in my 25 years in the business that no promoter in
his right mind would pass on a chance to promote Pearl Jam this
summer. Promoters are much too greedy to pass on the biggest act
in America today no matter what the situation.

Even if they aid, there are obviously other promoters within and
outside the business willing to try it, if you take note of Michael
Jackson and the owner of the New England Patriots tour about 10
years ago. I think if Pearl Jam really wanted to tour, they are big
enough to have created their own in-house ticket company, some-
what like the Grateful Dead and found alternative buildings and
promoters to do the dates.

I understand what they were talking about when they said this
was an amazingly tough job and certainly side with everything
they said before about how difficult it is and I have somewhat
learned a little today about what they would have to go through,
but I don't think it is insurmountable.

In summary, I think the solution to this complex problem should
start with a couple of changes in the whole system. One especially
is limited exclusivity between national ticket companies, buildings,
and promoters.

Two, make it illegal to charge a ticket fee on canceled or post-
poned shows, which I believe is starting to happen these days, and
three, limit the ridiculous ticket charge increases that have acceler-
ated in the last 5 years.

Thank you very much for inviting me to this.

Mr. CONDIT. Thank you, Mr. Morris. If you have got time for
some questions, we will try to get through them as quick as pos-
sible. I would like to ask everyone on the panel, let's just go down
the line and make it easy, maybe we will start with Mr. Downs.

Is Ticketmaster a monopoly? Just give me a yes or no, and then
I can

Mr. Downs. In my opinion, Ticketmaster is an effective monop-
oly, depending on how you define what the market is. If the market
is entertainment tickets across the country, I would say, yes, they
constitute a monopoly.

Mr. CoNDlT. So your answer is, yes.

Mr. Marsh.

Mr. Marsh. With similar — I mean I think it is a complicated
question about definitions, but I think in effect, yes.

Mr. CONDIT. Mr. Morris.

Mr. Morris. I am not a lawyer, but it certainly appears that
way.

Mr. CONDIT. Mr. Collins.

Mr. Collins. Absolutely in my world.

Mr. CONDIT. Mr. Rascoff.

Mr. Rascoff. As my experience indicates, the answer is no.

Mr. CoNDiT. Can you tell me why you believe they are not?

Mr. Rascoff. Well, as I said to you, we have nine markets on
sale on what we hope to be the largest tour of the coming year, all
stadium shows, and five of those markets we were free to use any
ticket distribution method we were able to.

Mr. CONDIT. I would like to ask, maybe I can get a colloquy going
just for a few moments between Mr. Downs and Mr. Rascoff. You
made the point to this chart, it appeared, Mr. Downs, when you
made the presentation, the chart we have here, which is an excel-
lent chart, we appreciate it, that the ticket distribution companies
seem to be the only place where a monopoly may occur.

Mr. Rascoff has pointed out that when you deal with the stadium
and other things that you may have to take the caterer, you may
have to take the parking. Do you have any comment on that?

Mr. Downs. Yes, I do. First of all, I wish I could have drawn it
this way for the benefit of the rest of the people. It is a little neater
and cleaner, but that is the anatomy of a deal. I didn't know that
5 out of 9 stadium shows that the Stones have just put on sale
were not Ticketmaster. It certainly doesn't sound like the numbers
I hear that at least have been dutifully reported.

Maybe Ticketmaster really truly only has 30 percent of the mar-
ket, but it certainly seems and feels like they have a whole lot
more power than that in the cities I know about.

I am equally impressed — I will return all the nice things you said
about me — with Joe's presentation, and he does it without notes,
which I really respect, but I call that the ''hot dog" argument,
which is that you have to take the — Pearl Jam can't decide when
they come to town they don't want to use a certain brand of hot
dogs. There are a certain amount of things that come with the
building, parking, there is certain labor agreements. But there are
two aspects to this, Joe.

To me, there is the exclusivity between the building and
Ticketmaster, concessionaires, the facility merchandisers, the peo-
ple who actually sell the shirts, the parking people. You can't put
your family in charge of that, I agree, but I think where the rub
really comes in and I am glad you asked me to respond, is that
there is effectively in a lot of our experience only one of the big
ticketing, national ticketing companies, and that is the real rub.

I think if we only had one hot dog company, the hot dogs would
cost a lot more. It is not the exclusive deal with the hot dog com-
pany on a market-by-market basis. It is the overall effect on a na-
tional level of ticket prices.

Mr. Rascoff. I absolutely agree there is only one effective com-
pany distributing tickets, but the question is why is that? I think
that is because they came up with a mousetrap that no one has
managed to better at an alternative price. It is not because by fiat
someone decreed that they shall be the ticket distributor.

Mr. Downs. I think we can thank the previous administration
for that, but we can't go back to that. We are now 1994. I know
there were similar arguments made about AT&T a few years ago.
I don't know if you all noticed, but the fact that AT&T has competi-
tion now, the operators are a lot more friendly. The fact that there
is competition, even though AT&T was great, it is better now.

Mr. Rascoff. Don't misunderstand what I am saving, if you were
to ask me, would I like to see a competitor to Ticketmaster, abso-
lutely, absolutely.

Mr. Downs. Good.

Mr. Rascoff. The question is, though, why are they the domi-
nant factor in the marketplace? The fact of the matter is they are
the dominant factor in the marketplace because they are good at
what they do and in tours that I do, we need that service. That is
my only point.

Mr. CONDIT. I am sorry, I appreciate you guys doing that for us
in responding to this question.

Mr, Marsh, Mr. Morris, Mr. Collins, do you want to add anything
to that?

Mr. Marsh. I just wanted to say you know from the consumer
point of view, there is not a choice in most major venues. It may
be that when you get to stadiums, you deal with a different situa-
tion. It may be that when Mr. Rascoff puts on the next Rolling
Stones show, it will be 9 out of 9 Ticketmasters. We don't know
that.

What we do know is from the consumer's point of view, there is
no choice. There used to be choice. Things were different. Prices
were lower. The Justice Department, from that point of view, may
have made a mistake.

Mr. CONDIT. I wanted to ask you to respond to— it has been said
several times — I concede we have done research in Ticketmaster.
They are very, very good at what they do. They seem to be profes-
sional, state-of-the-art. There is some argument, belief they are
good and they have the biggest share of the market because they
are good. Other people who have been in the market failed. They
financially could not continue to go.

Mr. Marsh. We do not know what would have happened if
Ticketron had been forced to find another buyer.

Mr. CONDIT. OK.

Mr. Rascoff. That is an interesting question. I don't know the
answer to that one. I can tell you that empirically in 1989, we put
tickets on sale at some shows where we had a parallel ticketing
distribution system. For a particular show, we had Ticketron sell-
ing. The simple fact of the matter is the service and the job done
by Ticketmaster vastly overwhelmed the job Ticketron did. I think
Ticketron failed because they did a lousy job. Not because
Ticketmaster bought them.

Mr. Marsh. The issue isn't why Ticketron failed. The issue is
whether Ticketmaster should have been allowed to buy up its com-
petition and what the consequences of Ticketmaster having made
that purchase are. Not only in the industry, but to consumers.

Mr. CONDIT. Ticketmaster — they were given the right and au-
thority to merge with Ticketron. There was nothing illegal in that
act. Do we agree with that?

Mr. Marsh. Isn't part of the issue whether or not that was a mis-
take? When the Justice Department has made such a decision, is
there no recourse?

Mr. CoNDiT. You have the right to make that as a point. I believe
that is what Pearl Jam is doing. We hear Ticketmaster is entering
into long-term exclusive contracts with stadiums and concert pro-
moters. Is that standard practice?

Mr. Morris. Yes, it is. As far as I know.

Mr. CoNDiT. Anyone else want to respond? Is that standard prac-
tice? Pearl Jam considers this a kickback in their brief with the
Justice Department. Do you agree?

Mr. Downs. I don't know the legal definition of a kickback. I
think an undisclosed rebate, I think, is characterized not as a term
of art in the legal sense but sort of a popular — Mr. Horn asked do
you consider your advance from the record company a kickback. I
never thought in those terms. I think there is probably a way to
construe a record company advance as a kickback. It became al-
most meaningless at that point.

Mr. Collins. I would like to comment that Aerosmith has been
touring in America for over 20 years. When these long-term deals
and rebates to promoters and venues started coming, we started
hearing rumors of this happening, we asked a lot of our promoter
colleagues we had been doing business with for many years if, in
fact, they were receiving these and could we, you know, be privy
to the agreements.

To this date, you know, people have until very recently, until
this — all this publicity started, people have been denjang, in mv ex-
perience, denying that. Not many are admitting to this. Is it a kick-
back? Whv was it being hid firom the artists, from my artists in
particular/ I can only testify to my experience.

Mr. CoNDiT. Mr. Rascoff, do you have any comment to that?

Mr. Rascoff. No.

Mr. CoNDiT. For Mr. Morris, you represent, I understand, several
new popular performers. Is it your opinion, based on Mr. Collins'
testimony, the new bands are being penalized by Ticketmaster?

Mr. Morris. I don't know if "penalized" is the right word. Obvi-
ously, as has been spoken before, this is one of the key parts of our
business where there is no other competition. When like a big— one
of my bands comes in and played Red Rocks Amphitheater 3 years
ago, we have no choice but to use Ticketmaster.

We have no choice but to pay a certain amount, which I believe
is 4 percent of the ticket sales that will be coming at the expense
of the show. We have no choice to do anything. When we want to
hire sound and lights that ni^t, we have a choice to go to five or
six different companies to get the best sound and best price. We
have a lot of other choices. We don't have it in this field. I think
that is the crux of this whole problem. Choices.

Mr. CONDIT. Does this mean that Ticketmaster, because of their
surcharge penalty, is sort of deciding who goes on tour and who
doesn't?

Mr. Morris. No. I don't think that is the case. I think there are
some bands that really want to stand up for certain things like
Pearl Jam that are refiising to partake. We have a right to go in
there or not go in there. We don't have a choice of what ticket com-

pany to use in certain buildings, with certain promoters, in certain
cities.

Mr. CONDIT, OK. I am going to defer to my colleague to my right,
Mr. Horn. Then we will come back to Mr. Owens.

Mr. Horn. Mr. Chairman, it seems to me we are into an eco-
nomic model here in relation to the concert industry, however de-
fined. Do you see yourself when you are setting up a venue in, let's
say, Los Angeles or Long Beach or Atlanta that you are into a re-
gional market, a local market for that concert or a national mar-
ket? What are we talking about?

Mr. Downs. Talking about a tour? A national market. The over-
all tour, 50 dates. If you are talking about an individual show, you
are probably talking about certainly a local market, somewhat of
a regional market. If you are the Grateful Dead, a national or
international market because people travel.

Mr. Horn. I think you did an excellent job, several of you, on the
interrelationship especially on the Rolling Stones tour. You need to
know to make certain additional arrangements about how that
group is doing. But when Ticketron was around, did they not have
an exclusive monopoly in a particular arena or was Ticketron and
Ticketmaster competing within the same arena? Didn't you still
deal with a monopoly?

Mr. Rascoff. I am not going to engage in what a monopoly is.
I am not an attorney. I cannot answer that. If the question is be-
fore the advent of Ticketmaster, did we go into a building and we
were told by the building you must distribute tickets through
Ticketron, absolutely. Absolutely.

Mr. Horn. Right.

Mr. Rascoff. That was the point I made earlier. I think
Ticketmaster emerged because they devised a better mousetrap
and convinced buildings they are a more appropriate party to sell
tickets than the competition.

Mr. Marsh. During that period it was very common because the
industry has grown exponentially each decade. During the period
when Ticketron first developed, it was much more common to do
tickets by straight mail order, send them to a P.O. box or sell them
at the box office or in certain other record store kinds of distribu-
tion that Mr. Downs was talking about.

It was a different, you know, the highly electronic nature of our
society hadn't yet evolved. It wouldn't have taken it nearly so much
for granted if the majority of your tickets would be sold like that.

Mr. Horn. Mr. Marsh, would you like to go back to that period?

Mr. Marsh. Would I like to go back to that period?

Mr. Horn. Right.

Mr. Marsh. No, I see no reason to stand still or go back. I want
to go forward.

Mr. Horn. You want to regulate it as a utility?

Mr. Marsh. That is one concept. Another would be to have it dis-
gorge some of what it has absorbed and go back to a more localized
group of things which has been done through congressional action
in the past. For instance, in the oil industry, and as someone point-
ed out, in the telephone industry, the airline industry. All of those
industries that have been deregulated.

And in some cases that led to the breakup of certain corpora-
tions.

Mr. Horn. What you have here, as I look at mv own local arena,
you have a city government that gets a i>ercent of the g^oss of oper-
ations in the arena. They have a vested interest in getting, in deal-
ing with a management that can fill the house. Tnat is the way
they are looking at it. Because if they do not fill the house, they
do not get their percent of the gross. In tight municipal budgets,
that means you have less police services, less fire services, so lorth
and so on.

So in a sense, isn't that the driving force to get simplified man-
agement, assure you have the most efficient management, monop-
oly or nonmonopoly; at least in your little world of that arena for
which you are responsible?

Mr. Marsh. That is one model. The other model is that culture
is itself a service. I think that one of the things that is going on
here is there is an industry dispute about what Ticketmaster's
prices are and what the right way to regulate this is within the
business community.

There is another dispute, as I try to point out, which Pearl Jam
has become the standard bearer for and because they are part of
the industry it is confusing. Because I stand in a strange relation-
ship to it, too, because I basically have reported on this aspect of
the world my whole career. But me fact is that there are overlap-
ping interests here.

There is an interest of the business community and what you
said is entirely accurate. From the interest of the cultural commu-
nity or the citizens at large, that arena may not exist simply to pay
bills. It may exist to make sure that the citizens of Long Beach or
wherever have access to culture.

Mr. Horn. Let me say

Mr. Marsh. That is a valid purpose, too.

Mr. Horn. Let me say what the citizens of Long Beach feel about
our arena, they resent outside gproups coming in, taking all the
dates so the revenue can pour into the city treasury, the promoter's
treasury, whatever and they wonder why they can't get more of the
dates for Civic Light Opera, Long Beach Light Opera, symphony,
et cetera.

Why can't we get more provisions out of the arena? It doesn't
matter if you come or not in terms of the average citizen. They
would like to know why can't I see my local performing groups.
They can't because the management, whether it be a high end sub-
sidiary or whatever and all the little submanagements say, hey, the
city wants us to fill this place; and the way we fill it is to get na-
tionally known stars, which brings in an audience way beyond the
boundaries of Long Beach.

Mr. Marsh. Having attended concerts at the Long Beach Civic
Arena, one of the things I point out to you is fi-om the point of view
of a rock fan that lives in Long Beach is one of the things you can
say is the concert industry I tried to describe the history of has ex-
isted for 25, 30 years. In this entire country of the tens, hundreds
of millions of dollars that have been taken out by promoters who
are in essence Mr. Rosen's and Ticketmaster's business partners,
not one nickel of that money has been built to create a — ^nas been

spent to create a purpose-built indoor rock concert facility in this
country. No such thing exists. There has never been that kind of
feedback to the interests of their own consumers.

Mr. Horn. Let me ask general questions. Just say yes or no, as
Mr. Condit suggested.

I take it with those of you in concert management, and have
done or are doing that, you have done deals with Ticketmaster?
Are there any of you that have not? None?

Mr. Downs. We are not in concert management. Most of us up
here are in personal management. We are not promoters. We do
not manage concerts. We manage attractions. We are on the other
side of the equation, with the artists. We do not do tickets with
Ticketmaster. Look at the chart. They deal with the promoter. We
represent the artist.

Mr. Horn. When Rolling Stone goes to our area, you have a local
promoter worrying about that?

Mr. Rascoff. I worry about it because it involves money and
ticket prices. I worry about it a lot. Yes, there is a promoter who
contracts with the building who in turn contracts with
Ticketmaster. The promoter may be a national promoter as op-
posed to local, but that is the chain.

Mr. Horn. Am I to understand in every case none of you person-
ally then have had to deal with Ticketmaster or have you?

Mr. Rascoff. Deal on a contractual level?

Mr. Horn. Yes.

Mr. Rascoff. I have not.

Mr. Marsh. I have not.

Mr. Downs. I have not.

Mr. Horn. None of you have? Is that correct?

Mr. Downs. Because of our role in the industry; that is correct.

Mr. Horn. I want to get straight where we are coming from on
this.

So has Ticketmaster ever threatened to sue any of you?

Mr. Downs. Not yet.

Mr. Horn. The basic question we mentioned parking. Mr. Rascoff
went through a litany of the other things that are there as an ex-
clusive agent, the people that build the sets that has upset the
local people when they try to get in there and have to pay very
high prices. You just add it to the ticket, a very popular group if
you are on tour. Do you think Ticketmaster is entitled to be paid
for the service it provides? I take it the argument is over the de-
gree to which you feel they are getting money because of their ex-
clusive monopoly in a particular local setting?

The fact that in your judgment if vou are on a national tour,
from your standpoint, you think they have too many local settings
which, as I listened to your testimony, that would make them a
monopoly in major markets as far as you are concerned? Is that a
fair statement of what you are feeling? Do you feel something dif-
ferent?

Mr. Marsh. Well, isn't — I just look at it this way: what is to pre-
vent— let's say Pearl Jam wants to go out and have $18 tickets.
There is nothing, as I understand it, if they decided to work
through Ticketmaster's system to prevent them from saying you
can play for $18 a ticket. Your service charge is another $18. We

have tx) amortize our expenses in working with the Justice Depart-
ment on what you did. We will take it out by charging an $18 serv-
ice charge. There is nothing to prevent that.

Mr. Horn. Reality is they don't do it.

Mr. Marsh. Reality is we don't know what they are going to do.

Mr. Rascoff. I think there is something to prevent that, Dave.

Mr. Marsh. What is it?

Mr. Rascoff. I don't know who is in this room at the moment.
If Ticketmaster charged $18 on an $18 ticket there are people who
would say let's get together and go into the ticketing business.

Mr. Marsh. You wouldn't be able to do it.

Mr. Downs. How about — ^how would we be able to do it in terms
of the Omni? Some of us want to get into the ticket industry. I
don't personally. I would just as soon leave it to somebody who is
good at it. Would-be entrants into the field, that is the problem
with a monopoly. There are barriers to those entrants. Those bar-
riers include the long-term contracts.

Mr. Marsh. There was a merger in the recording industry about
14 years ago that was declined by the Justice Department on ex-
actly this basis. The recording companies of Warner Communica-
tions which is now Time-Warner and Polygram, the Dutch-German
company wanted to merge. CBS Records, now Sony, protested say-
ing that this would create an anticompetitive situation.

One of the things the Justice Department said in ruling that this
merger could not go forward was that it — to create the kind of dis-
tribution system that would be eliminated would cost $2 to $3 bil-
lion. That was a ground for declining the merger. Interestingly
enough, that was during the Reagan administration.

Mr. Horn. You rapidly get through three others that relate to
Ticketmaster. The next round we can finish up.

I take it from the testimony that Ticketmaster helps in planning
national tours because of the rapid data return? Now, my query to
you is does Ticketmaster help in your accounting and settlements
for a particular venue to make sure that you get the revenue you
feel due to you?

Does it help or doesn't it?

Mr. Rascoff. My experience is rather neutral in that area. We
do not look to them.

Mr. Horn. As a promoter?

Mr. Rascoff. Yes.

Mr. Horn. Somebody has to account for those tickets. Supposedly
Ticketmaster dues to the promoter; is that the way it works?

Mr. Rascoff. Yes. Or the building.

Mr. Horn. The building. You can go in and out on it if you think
your promoter has done you in; is that correct?

Mr. Rascoff. Of course.

Mr. Horn. So is it a useful service? In your accounting in your
settlement, how much did we take in for this area?

Mr. Morris. My opinion absolutely is a necessary and useful
service. They have been very, very good at that, actually, as far as
handling of the money, accounting for the money, showing how
many tickets were sold when, how, all of the — they have been very
good at that.

Mr. Horn. Hnve they ever not paid you the money or your pro-
moters that is in the contract? Have they ever not paid the money
that was due?

Mr. Morris. I was a vice president of a promoting company for
10 years, although I left before Ticketmaster really blossomed. No,
we never had any problem getting paid.

Mr. Horn. Have they ever paid earlier than the concert? Given
you, in a sense, advance income prior to the date, full billing by
your g^oup?

Mr. Morris. They never paid the groups earlier. As far as I
know, I think that is also in most areas, in most States, you cannot
do that. I could be wrong about that.

Mr. Horn. Have your promoters ever had any say in the parking
prices of the building or the concession stands in the building, to
your knowledge?

Can you negotiate that? Have you ever negotiated that?

Mr. Morris. I think a promoter, especially a major promoter in
a city that does a lot of shows, has a lot of say with buildings and
certain aspects of pricing, but again it depends on the city and the
promoter and on all sorts of things like competition.

Mr. Downs. I think the answer to whether a band through its
representatives can influence a promoter and building into what
the concessionaires, the facility merchandisers will charge, the an-
swer is yes there may be limits. Some may start off charging 40
percent who are willing to come down to 30 percent on a scaled
basis. Bands, I know — as has been reported. Pearl Jam did this
thing, are able to influence the downward movement of facility
merchandising charges.

Mr. Horn. Mr. Downs, I found your testimony very interesting.
You mentioned TickExpress and SEATS. Are they still in business?

Mr. Downs. TickExpress went out of business. SEATS was ac-
quired by Ticketmaster. That is my point. They are not still in
business. We no longer have the choice. When we play Atlanta next
time, unless something changes, we will be dealing with whatever
promoter we use in Atlanta. There is no other game in town.

Mr. Horn. As I said earlier, one of the things that worries me
when I go through any ticket computer system is that I am not get-
ting the best seats. Those promoters are holding out the good seats.

Maybe if I went to the box office, they have better seats, et
cetera. Is it feasible in this day of computers to allow a multiple
ticket distribution system in your judgment; and is that what you
would prefer to get competition into the marketplace? What is the
reaction?

Mr. Rascoff. The competition I think would not be in the sale
of a particular show. I mean from my experience, it would probably
be rather inefficient to have two ticket distribution companies sell-
ing tickets to the same show.

Where the competition might be very helpful and interesting is
if we — there were a competitor to Ticketmaster with whom a build-
ing could negotiate for the best arrangement to sell the tickets for
their shows. But that is where the competition would come in for
the privilege of getting the contract for the right to sell the tickets.

Mr. Horn. Very good. Now Mr. Marsh, as a rock and roll journal-
ist, you advocated the price regulation of concert tickets much like
the utilities we mentioned.

Mr. Marsh. No, I haven't.

Mr. Horn. You haven't?

Mr. Marsh. No, I didn't say anything about price regulation. I
said Ticketmaster and its service charges ought to be subject to ei-
ther oversight or regulation.

Mr. Horn. In essence, a public utility to me is the telephone
company or the gas company. It has a monopoly. There is a State
agency that says is this a reasonable profit arter your service is
covered. I assume that is what you are talking about.

Mr. Marsh. Right. I was talking about Ticketmaster, not

Mr. Horn. I am talking about the price regulation of concert
tickets which you would have to do if you set the profits of that
particular monopoly.

Mr. Marsh. I don't understand that, sir.

Mr. Horn. All the phone company is doing is passing on the
charges to those of us who use the telephone. If you have a State
regulation system and thej^ say $1, $2, $3 is a fair price for that
service, thev are simply going to pass it on to whatever the ticket
is. You might work out a volume discount or a one purchaser who
buys seven discoimt.

Mr. Marsh. There is a difference between deciding that the New
York Yankees, to use a sports example, are going to charge $8 for
a box seat and deciding that — and regulating that; and regulating
the service charge whether that should be 50 cents or another $8.
I am not talking about regelating the ticket price. You may be. I
am happy to answer questions about that.

Mr. Horn. Can they avoid that now or can they if they go di-
rectly to the box office?

Mr. Marsh. In many cases — last summer, my — I had a daughter
who died of cancer. We did a benefit last summer at Madison
Square Garden, Bruce Springsteen was the headline attraction.
Ticketmaster was the only vendor at that event that refused to ne-
gotiate a lower price. Madison Square Garden gave us a lower
price. The booking agency worked free. The artist obviously worked
for free. Merchandisers — which is a rare thing — worked for almost
nothing, et cetera. We got major, major concessions from every con-
cessionaire but Ticketmaster.

They wanted to sell the tickets — just a moment. We wanted to
sell the tickets at the Madison Square Garden box office and we
were told that we could not. Their Ticketmaster contract prevented
it. So the answer I am afraid is — in my experience is no.

Mr. Horn. I am interested in vour experience. To all of you, that
simply I would say is it true ana is it your feeling listening to your
promoters as they deal with venues around the coimtry that per-
haps 80 percent of the tickets are bought by the fans at the box
office, not through a computerized system, whether it be
Ticketmaster or Schubert, whoever? What is the feeling on that?

Mr. Rascoff. That is not the case with the Rolling Stones. In the
case of the Rolling Stones, almost all tickets are distributed
through the computerized ticketing system at outlets or by tele-
phone.

Mr. Downs. When U-2 played Atlanta last year, they played a
16,000 seat arena before they came back and played the stadium.
If Pearl Jam is the biggest band in the world, U-2 is up there with
them. When they played, there was a volume of 2 million phone
calls placed to buy 16,000 tickets. It blew the phone system out.

There aren't a lot of tickets to go buy at the box office when you
walk up there at the show. That is the dynamics of the industry.
It happens quickly. The show sold out in something like 16, 17
minutes once they got the phone system going. The box office thing
is sort of a red herring. It is really not that much at issue.

Mr. Horn. One last question. Does Ticketmaster help reduce
scalping?

A lot of fans are concerned they can't find all the sweet deals
that are given by the local promoter, hoarding the tickets on very
popular concerts up in the attic. Presumably, if you go through a
set ticketing system, you would think and you would limit it to so
many or whatever it is per tickets per person. You would put some
limit on scalping. Do you feel that that is a relevant factor?

Does that concern you, the scalping of tickets?

Mr. Marsh. As I said in my testimony, experience shows
Ticketmaster as opposed to Ticketron — and again I don't want to
go back, I would like to go forward — ^Ticketron was — had a bad
problem in that area, was well known among fans and well known
in the industry.

One of the reasons why certain people advocated Ticketmaster
early on was precisely because they do have a much, much better
record in that area than their predecessor.

Mr. Horn. Any feelings?

Mr. Collins. In my experience, Ticketmaster has not helped
with scalping. I am not accusing Ticketmaster of scalping, but I can
only relate my experience. At a show at the Los Angeles Forum
last year, I personally, at the request of my band, went out and
interviewed with three members of my staff the entire fi*ont section
of the floor. I found that every single person I interviewed had pur-
chased their tickets from a scalper. In Philadelphia

Mr. Horn. Did they tell you what particular scalper? Did you
find out how he or she got the tickets?

Mr. Collins. We have a list of those. We did not find out how
they got the tickets.

Mr. Horn. Kids in line? How did they get them?

Mr. Collins. I don't have the answer to that question, Mr. Horn.

Mr. Horn. You don't know Ticketmaster did it?

Mr. Collins. As I said, I am not accusing Ticketmaster. In my
experience, scalping has gotten to epidemic proportions.
Ticketmaster has not helped with this.

Mr. Horn. Any other comments?

Mr. Rascoff. I think the methodology by which Ticketmaster
sells tickets probably does help. I am not suggesting there is an
overt aid to eliminating scalping. That is not my point. The
Ticketmaster system is a "best ticket available" system.

If you have 50 outlets selling tickets, if you walk into any one
of those outlets at the same moment, you will get the next best
available ticket on the system. So in theory, consumers who de-
spair of getting the best available ticket would, I think, turn to a

scalper more readily than they might if they were able to know
that no matter where thev went, which outlet, they would get the
best available ticket. In tneory, I think the system should help in
the scalping problem, but I don't think that that is necessarily any-
thing unique to Ticketmaster. It is unique to the Ticketmaster sys-
tem.

Mr. Horn. Thank you, Mr. Chairman.

Mr. CONDIT. Mr. Owens of New York.

[The prepared statement of Mr. Owens follows:]

STATEMENT OF CONGRESSMAN MAJOR R. OWENS

BEFORE THE INFORMATION, JUSTICE, TRANSPORTATION

AND AGRICULTURE SUBCOMMITTEE ON THE

TICKET DISTRIBUTION INDUSTRY

June 29, 1994

I want to thank Chairman Condit for having a hearing that is bound to have a profound
impact on every consumer in this nation. Each and every one of us here today has bought
tickets for an entertainment event, and thought the tickets were overpriced, but did not know
why. Now, I guess we have our answer. There is only one national agency controlling all
ticket prices. The consumer, and :^>parently the entertainers, have only one option.
Hcketmaster or bust

As the only Librarian in Congress, I am a strong advocate of the public's right to know
the truth. As I understand it, hardly any consumers are aware of how much money diey pay
the ticketing agency just to process the ticket because the majority of tickets are purchased over
the phone by credit card. In fact, I am anxious to find out from the Ticketmaster rqpresentative
exactly what the ticketing charge covers, since Ticketmaster charges the same fee if you
purchase the ticket over Ae phone or in person.

Peail Jam brief filed with the Dqaitment of Justice raises the even more serious question
of whether Tlcketmaster is unfdily using its power to ensure that entertainers accqit dieir prices.
As we have found in other industries where one large conglomerate has contrdled prices — the
telecommunications industry, for exanq>]e — Federal regulations to ensure competition and
consumer choice are necessary. I hope this hearing will shed more light on the steps that we
as members of Congress can take to protect our constituents and ensure they are getting what
they pay for.

Mr. Owens. Mr. Chairman, I will try not to be redundant. Many
of the questions I have have already been asked. I learned a lot
about the business. I think most of you seem to agree with the law-
suit brought by Pearl Jam. Would you say you represent the major-
ity of the people in the industry, artists, promoters? Is that general
agreement that you want to move in that direction?

Mr. Downs. I have a hard time conveying the depth of feeling
within the industry that Pearl Jam has unleashed. I think that the
mail that you all will be getting soon, the interviews the Justice
Department does will bear this out. There have been a lot of people
for a long time wishing that someone would fight this battle.

A troubadour friend of mine last week in Los Angeles told me
they thought the appropriate thing would be to build statues of
Pearl Jam. There is a lot of admiration for what they are doing.
I don't think you will find very many people in the artistic end,
which is what those of us up here represent, who are happy com-
pletely with the lack of competition in the industry.

Mr. Owens. They focused on Ticketmaster, there are no other
problems the artists have with the other

Mr. Downs. Artists have lots of problems, sure.

Mr. Owens. Unhappy with Ticketmaster only, promoters?

Mr. Downs. They are

Mr. Owens. A lot of people on your chart get a piece of the ac-
tion.

Mr. Downs. Most are unhappy with attorneys and managers,
too. I think the system by which — of that chart there, where every-
thing is in a competitive relationship, when they are unhappy with
somebody, they can go down the street and find somebody else.
Where that breaks down is at a critical part and something impor-
tant to artists, which is the price of the ticket, the service charge
portion of the ticket which is controlled really in most of our expe-
rience by a single provider.

Mr. Owens. You also mentioned several times that you wanted
something similar to what happened with the telephone industry
being broken up, the oil industry, antimonopoly action by the Jus-
tice Department.

Why do you think there are no competitors in this situation? The
amounts of money necessary to capitalize in these other industries
are tremendous. Oil and telecommunications, those are billions of
dollars we are talking about.

What kind of money are we talking about in a situation like com-
petitive for Ticketmaster? What kind of capitalization are we talk-
ing about? What kind of overall g^ross does Ticketmaster realize?
How do you make the comparison with oil or telecommunications?

Mr. Downs. I don't think the ticketing industry is as big as the
telephone industry or the oil industry. I cannot sit here and tell
you I am an expert. I couldn't tell you how it would be done. I also
don't think we can go back and undo 1991. To move back in time,
that is not the idea.

There are people at the Justice Department both on the legal and
economics level asking those questions. It may be at the end of the
day after you guys did your hearing and Justice has done its inves-
tigation that the system that is here, it may not be perfect, may
not be optimal, but as Mr. Rascoff says, it may be the best possible

system available. I think most of us don't think that is the case
that may be the conclusion.

Mr. Owens. Does anybody have an idea what Ticketmaster
grossed last year?

Mr. Marsh. Mr. Horn had the numbers earlier this morning. If
I remember right, it was in the $700 million area a year; $172 mil-
lion.

Mr. Owens. Gross is $172 million?

Mr. Marsh. That is the number read out this morning. No.

Mr. CoNDiT. Mr. Marsh, the numbers I have, Mr. Horn said
$172.

Mr. Marsh. The net was seven.

Mr. CONDIT. Seven point five as indicated on these notes.

Mr. Owens. That was the profit?

Mr. Condit. You can define that as Ticketmaster can certainly
clarify.

Mr. Owens. Do you think there is some kind of illegal activity
here in terms of intimidation or criminal activity that allows them
to maintain a monopoly on the places where the performers per-
form? Is there something that they have that s^ves them the edge
on their competitors? Any one of you? You donX think there is any
illegal activity of a criminal nature? Any kind of intimidation?

Mr. Condit. Can we get a nod?

Mr. Rascoff. I think the answer to that is no, from my stand-
point.

Mr. Marsh. Or at least we don't know.

Mr. Owens. We are all talking about high-tech advantages they
have of being there first.

Mr. Downs. By being the only

Mr. Marsh, lliey are not the first. Ticketron was the first. The
advantage they have is that in 1991 they were allowed to buy their
only meaningful competitor.

Mr. Downs. It has been hit on how did they get so big. It is a
complex question. There are two components. One, they are very
good at what they do. There is no doubt about it. They are good
at computerized distribution of tickets on a national level for con-
certs. You can get information instantaneously.

The other thing is they were able to acquire all of their — ^most
of their significant competition, and it has been said that they built
a better mousetrap. A more apt metaphor is that they invented a
better padlock.

Mr. Condit. Thank you, Mr. Owens.

Ms. Woolsey from California?

Ms. Woolsey. Mr. Chairman, I wasn't here for most of the testi-
mony, so I will wait until the next set of questioning. Thank you
very much. I think most questions have been asked and answered.

Mr. Condit. Thank you.

You have been a very impressive panel. We appreciate your time
very much. There may be additional questions submitted to you. I
hope it is OK if we can expect a response in writing. Thank you
very much.

Mr. Marsh. Thank you.

Mr. Condit. Panel three.

Please rise and raise your right hands.

[Witnesses sworn.]

Mr. CONDIT. Let the record indicate they answered in the affirm-
ative.

I know you both have been here for the entire hearing and you
have had the patience to listen to all of this, Mr. Rosen. I appre-
ciate that very much. You have been kind to share information
with the committee. I appreciate that very much. You have what-
ever time you need, understanding we do have time limitations.
Try to tell your story. If we run into problems, we will let you
know.

Mr. Rosen is the chief executive officer of Ticketmaster, Los An-
geles.

STATEMENT OF FRED ROSEN, CHIEF EXECUTIVE OFFICER,

TICKETMASTER

Mr. Rosen. First of all, Mr. Chairman, I would like to thank you
for the opportunity to speak. I think what I will do rather than
read my statement, which you have been given, is deal with some
of the questions that you may want to ask me. I think it would be
most informative to answer your questions and address some of the
issues that have arisen here this morning. I think that might be
most helpful in the time that I have.

To begin with, we support what Pearl Jam is trying to accom-
plish, keeping tickets inexpensive. We have no issue with that. We
do not set ticket prices. I keep reading stories that we are respon-
sible for the price of all tickets in America. We have nothing to do
with the pricing of tickets. The acts determine their own price.
Teams determine their own price. Family attractions determine
their own price. We have nothing to do with that.

While we applaud their efforts, it should be pointed out that in
connection with this particular matter, various promoters spoke to
the group — we had no direct contact with them — and told them we
would compromise on this matter. We agreed to lower our service
charge to $2.25 or $2.50, depending upon the area.

The fact is that if Pearl Jam had been willing to "compromise" —
something that this great institution of Congress is built upon —
this problem might not have risen to this level today.

But, as is clear from both the band's statements today and the
memorandum they submitted to the Justice Department, they said
"this is it, take it or leave it." This unwillingness to compromise
caused some of the problem.

Let me address some of the comments that have been made
today, some of which I find remarkable. Dave Marsh criticized
Ticketmaster for collecting parking fees. It is true that we collect
parking fees. But we do not collect them for ourselves. We collect
them for the building. Ticketmaster is an agent for the building
and acts on its behalf, collecting fees as it determines, like parking
fees.

We provide a computerized inventory control system for build-
ings. While most of this discussion has focused on offsite ticketing,
you must imderstand that we provide various other functions for
buildings: season ticketing, group ticketing, various accounting
functions, providing arenas, venues, and teams with computer

equipment, and so on. So we do much more than just provide off-
site ticketing.

Congressman Conyers mentioned earlier that he did not under-
stand why Ticketmaster would have a service charge at a building's
box office. I didn't understand that either, so I had someone call
the building and find out what charge Congressman Conyers was
discussing. It turns out that the building has a facility charge. This
is part of the confusion of charges often attributed to us that are
collected on someone else's behalf Facility charges belong to the
buildings, not to Ticketmaster,

The service charges belongs to us. Facility charges, parking
charges, and other charges that buildings might add onto the ticket
price belong to the buildings and we, as their agent, collect those
charges for them.

There are a number of issues that I want to address concerning
Ticketron. In the prepared statement which we have given to all
of you, there are affidavits that Ticketron filed in 1991 with the
Justice Department in support of our purchasing certain assets of
their company. What those affidavits show is as follows: Ticketron
had lost $2 million in 1988, $2 million in 1989, $7.5 million in
1990, and were projecting a loss of $8.5 million in 1991. The fact
of the matter is that in 1991 Ticketron was not a viable competitor.
The Justice Department did not allow us to purchase Ticketron's
proprietary software. That was purchased by a competitor of ours,
the Shubert organization. All we bought were certain contracts and
certain equipment.

Unfortunately, because Ticketron neglected to segregate their cli-
ents' funds from their operating accounts, if Ticketron had been al-
lowed to file bankruptcy, the public, the buildings, the arenas, and
the entertainers would have suffered a loss of somewhere between
$13 and $16 million. Such losses would have been a black eye to
the entire ticketing industry. As a result, the Justice Department
allowed Ticketmaster to purchase some of Ticketron's assets.

Now I would like to address Ticketmaster's service charges.

[The information referred to follows:]

85-914 O - Q5 - 4

Peat Marwick

nCKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of
Ticketmaster Holdings Group, Ltd.)

Consolidated Financicil Statements

January 31, 1994 and 1993

(With Independent Auditors' Report Thereon)

Peat Marwick

Certified Public Accountants

725 Souih Figueroa Street
Los Angeies. CA 90017

Independent Auditors' report

The Board of Directors
Ticketmaster Corporation:

We have audited the accompanyirtg consolidated balance sheet of Ticketmaster Corporation and
subsidiaries (a wholly owned subsidiary of Ticketmaster Holdings Group, Ltd.) (the Company) as of
January 31, 1994 and the related consolidated statements of income, shareholder's equity (deficiency)
and cash flows for the year then ended. These consolidated financial statements are the
responsibility of the Compemy's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial statements for
Ticketmaster Corporation and subsidiaries as of and for the year ended January 31, 1993 were audited
by other auditors whose report dated May 1, 1993 expressed an unqualified opinion on those
consolidated financial statements.

We conducted our audit in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable cissurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the eimounts and disclosures in the finandid statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overeJl financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opiiuon, the 1994 consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Ticketmaster Corporation and subsidiaries as of
January 31, 1994 and the results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

As discussed in note 6 to the consolidated financial statements, two subsidiaries of the Company are
codefendants in legal actions, the ultimate outcome of which cannot presentiy be determined.
Accordingly, no provision for any liability that may result from this litigation has been recognized in
the accompanying consolidated financial statements.

As discussed in note 1 to the consolidated firumdal statements, the Company changed its method of
accotmting for income taxes to cortform with Statement of Financial Accoimting Standards No. 109.

April 11, 1994, except for
note 9, which is as of
April 15, 1994.

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TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Consolidated Statements of Income
Years ended January 31, 1994 and 1993

1994

1993

IiKome:

Ticket operations
Licensing fees
Interest
Other

171,838,000

2,412,000

1,499,000

14,026,000

189,775,000

152,523,000

2,392,000

1,483,000

15,605,000

172,003,000

Costs and expenses:
Ticket operations
I'hone center
Sales and marketing
Data processing
General and administrative
Other

72,350,000

19,927,000

7,161,000

18,370,000

46,611,000

815,000

165,234,000

63,451,000

18,124,000

7,967,000

17,797,000

33,704,000

848,000

141,891,000

Income before depredation ea\d amortizatioiv
interest expense and minority interest

Depreciation and amortization
Interest expense
Minority interest

Income before income taxes

Income taxes

Net income

24^1,000

14,205,000
1,435,000
2374,000

6,027,000

4,600,000

30,112,000

13,677,000
1,607,000
1,728,000

13,100,000

5,600,000

$ 1,427,000 $ 7300,000

See accompanying notes to consolidated financial statements.

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J

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Consolidated Statements of Cash Flows
Years ended January 31, 1994 and 1993

1994

1993

Cash flows from o{>erating activities:
Net income

Adjustments to lecondle net income to net cash provided by
operating activities:
Depreciation and amortization
Income allocable to minority interest
Deferred income taxes
Changes in operating assets and liabilities:
Accovmts receivable, other
Accounts receivable, ticket sales
Inventory
Prepaid expenses
Accounts payable, trade
Accounts p>ayable, clients
Accrued exfjenses
Deferred income and other

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of equipment and leasehold improvements
Other intangible assets

Net cash used in investing activities

Cash flows from fiiumdng activities:
Investments by minority shareholders
Distributions to nunority shareholders
Proceeds from long-term dd>t
Reduction of long-term debt
Redemption and retirement of preferred stock
Payment of dividends

Net cash used in financing activities
Effect of exchcmge rate on cash emd cash equivalents

Net increase in cash emd cash equivedents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

(Continued)

$ 1,427,000 $

7,500,000

14,205,000

13,677,000

2,874,000

1,728,000

(60,000)

(55,000)

(269,000)

123,000

(5,379,000)

(5,186,000)

(655,000)

3,000

(44,000)

(540,000)

(81,000)

1,678,000

5,302,000

10,674,000

1,821,000

1,016,000

1,409,000

3,205,000

20,550,000

(431,000)
(527,000)

(4,728,000)

1,750,000
(5,450,000)
40,966,000
(24,769,000)
(10,593,000)
(15,749,000)

(13,845,000)

4,000

1,981,000

30,257,000

33,823,000

(8,648,000)
(6,613,000)

(15,261,000)

4,180,000
(3,915,000)
10,020,000
(14,936,000)
(2,986,000)
(3,261,000)

(10,898,000)

(97,000)

7367,000

22,690,000

$ 32,238,000 $ 30,257,000

100

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Consolidated Statements of Cash Flows, Continued

1994

1993

Supplemental disclosures of cash flow information:
Cash paid during the yeai for:
Interest
Income taxes

$ 1,435,000
4,743,000

1,607,000
5,053,000

See accompanying notes to consolidated financial statements.

101

nCKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of 'Iicketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements
January 31, 1994 and 1993

£U gummary <?i Significant Accovmting Pgliae?

Ticketmaster Corporation (Company) is a wholly owned subsidiary of Iicketmaster Holdings
Group, Ltd. (Holdings). The Compemy provides automated ticketing services to organizatioiis
that sponsor events in order to allow their customers the ability to purchase tickets to those
events from oudets or via the telephone.

Principles of Cor^solidation

The consolidated financial statements include die accoimts of the Company, its subsidiaries ju\d
certain less than wholly owned joint ventures where ttie Conr^any has operating control, after
elimination of all material intercompany balances imd tremsactions.

Cash and Cash Equivalents

The Company considers all highly liquid debt instnmtents purchased witti a maturity of three
months or less to be cash equivalents.

Inventory

Inventory, consisting of systems hardware and supplies, is stated at the lower of cost (specific-
identification) or mcirket

Equipment and Leasehold Improvements

Equipment and leasehold improvements are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the related assets
or, for lecisehold improvements, the term of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost is removed from the asset account and the corresponding
accumulated depreciation is removed from the related allowance account and any gain or loss is
reflected in results of operations.

Cost in Excess of Net Assets Acqvtired

The cost in excess of net Eissets acquired is being amortized by the straight-line method over
terms of up to ten years.

Revenue Recognition

Income from ticket Ojjerations is recognized on the accrual betsis as tickets are sold.

102

TICaCETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

Income Taxes

In February 1992, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires a
change to the asset and liabUity method of accoimting for income taxes and supersedes SFAS 96,
"Accounting for Income Taxes." Under the SFAS 109 method, deferred tax assets and liabilities
are recognized with respect to the tax consequences attributable to the differences between the
financial statement carrying values and tax bases of assets and liabilities. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which these temporary differences are expected to be recovered or settled. Further,
the effect on deferred tax assets and Liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.

The Company adopted SFAS 109 as of February 1, 1993. The cumulative effect of this change in
accounting for income taxes is not material to the consolidated financial statements.

Concentration of Credit Risk

The Company places its temporary cash investments principally in commercial paper with
large domestic and intematiorud companies and limits the amount of credit exposure in any one
company.

Translation of Foreign Currencies

Foreign assets and liabilities in the consolidated balance sheets have been translated at the
current rate of exchange on the balance sheet dates. Revenues and expenses cire translated at
the average exchange rate for the year. Unrealized translation adjustments do not affect the
results of operations and jure reported as a separate component of shareholders' equity.

Reclassifications

Certain reclassifications have been made to prior year consoUdated financial statements to
conform with the current year presentation.

(2) Stock Transactions

The Series I and II preferred stock is entitied to receive an annued c\imulative dividend of $.12
and $.024 per shctre, respectively. The Company may, at its option, redeem the outstanding
Series I and n preferred stock at any time at a redemption price (liquidation preference) of
$1.00 and $.20 per share, respectively, plus accrued and unpaid dividends. The Series I
preferred stock has no voting rights, while the Series II preferred shareholders are entitied to
one vote per share.

During June and December 1992, the Company repurchased 2,985,439 outst<mding shares of its
Series I preferred stock at a redemption price of $1.00 per share and paid dividends in arrears
of $3,261,000. Dividends in arrears on the preferred stock outstanding at January 31, 1993
approximated $11,887,000.

103

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

In November and December of 1993, the Company repurchased the 9,452,982 and 5,700375
outstanding shares of its Series I smd Series II preferred stock at a redemption price of $1.00 and
$.20 per share, respectively, and paid aggregate dividends in arteais amoimting to $12,848,000.

(3) Other Intangible Assets. Net

Other intangible assets consist of the following:

1994 1993

Purchased user agreements $ 22,556,000 $ 28,673,000

Covenants not to conq^ete 2,034,000 2,627,000

Other 1,597,000 1,585,000

$ 26,187,000 $ 32,885,000

During fiscal years 1994 and 1993, the Company acqiiired user agreements with venues in
selected geographical areas of the United States (U.S.) and the United Kingdom (U.K.). The
acquired user agreements allow the Company the exclusive right in the U.S. and the non-
exclusive right in the U.K. to provide ticketing services for the related venue.

The purchased user agreements and other intangible assets are being amortized gei\erally in
accordance with the contract terms: either on a stredght-Une basis or based upon yearly ticket
sales by the facilities, including any annual minimum guarantees specified by the contract. The
lives of the contracts generally range from two to ten years. The covenants not to comf>ete are
being amortized using the straight-line method over the lives of the noncompetition
agreements, remging from 2 to 25 years.

a) Long-Term Debt

Long-term debt at January 31, 1994 and 1993 is as follows:

1994 1993

Note payable to bank, collateralized by certain
Company assets, interest at the London Inter-Bank
Offering Rate (3.125% at January 31, 1994) plus the
applicable margin <ts defined (1.75% at Jsinuary 31,
1994), payable in quarterly installments through
October 31, 1998 $ 33,250,000 $ —

Notes payable to bemk, collateralized by Company
assets, interest at the bank's prime rate (6% at
January 31, 1993), payable at various dates through
March 1996 — 10,012,000

104

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

1994 1993

Notes payable to bcink, collateralized by Company
assets, interest at the bank's prime rate (6% at
Jamuary 31, 1993) plus 3/4%, payable in monthly
installments through April 30, 1996 $ — $ 5,812,000

Note payable to bank on $5,000,000 revolving line of
creidit, collateralized by certadn Compciny assets,
interest at the bank's prime rate (6% at January 31,
1994 and 1993, respectively), payable through
October 1998 and 1993, for the years ended 1994 and
1993, respectively 550,000 1,550,000

Note payable to bank on $6,000,000 and $8,000,000
commitment on January 31, 1994 and 1993, respec-
tively, collateralized by certain Company assets,
interest at the bank's prime rate (6% at January 31,
1994), payable through October 1998 and 1993, for
the years ended 1994 and 1993, respectively 350,000 —

Note payable for acquisition of joint venture partner's
interest, interest at prime rate (6% at January 31,
1993), paid in full on April 1, 1993 — 446,000

Obligation payable for assets acquired, imputed
interest at 9.4%, payable in monthly irtstallments
through November 30, 1997 473,000 567,000

Obligation payable for assets acquired, imputed
interest at a foreign bank's base rate, payable in
equal amoxmts through fiscal 1995 262,000 520,000

Obligation payable on a revolving line of credit,
collateralized by Company assets, interest at the
foreign bank's base rate plus 1.5%, payable through
April 30, 1994 174,000 223,000

Other 528,000 260,000

35387,000 19,390,000

Less cvirrent portion (including revolving line of credit) 8,651,000 9,344,000

$ 26,936,000 $ 10,046,000

105

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

Annual principal payments due subsequent to January 31, 1994 are cis follows:

Year ending January

31:

1995

8,651,000

1996

7,331,000

1997

7,175,000

1998

7,167,000

1999

5,263,000

35,587,000

The revolving line of credit and notes payable to bank aggregating $34,150,000 and $17,374,000
at January 31, 1994 and 1993, respectively, are subject to certain restrictive covenants relating to
net worth, cash flows euid capital expenditures. The Compcmy weis in compliance with its
restrictive covenants or has obtained the necessary waivers from its bank for the fisc<il years
ended January 31, 1994 and 1993.

The Comjwny has an imused loan commitment from the bank for $14,000,000 for funding
acqiiisitions which expires October 1998. Additionally, the bfink had issued standby letters of
credit for approximately $308,000 as of January 31, 1994.

(5) Income Taxes

As discussed in note 1 , die Company has applied the requirements of SFAS 109 as of
February 1, 1993. Ihe cumulative effect of this change in accoimting for income taxes is not
material.

Deferred income taxes result from temporary differences in the tax and financial reporting bases
of certain assets and liabilities. At January 31, 1994, the sources of these differences and the tax
effect of each were as follows:

Assets

_$_

Liabilities

. *_

Total

irrent - state tax expense

76,000

mcurrent

Amortization of intangible assets

Accelerated depreciation

Other

120,000

(1,013,000)
(13,000)

(1,026,000)

120,000
(1,013,000)
(13,000)

Subtotal - noncunent

120,000

(906,000)

Total

196,000

(1,026,000)

(830,000)

106

TIC3CETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketnuister Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

The provision for income taxes consists of the following:

1994 1993

Current

Federal

3,736,000

4,330,000

State

924,000

1,325,000

Deferred

(60,000)

(55,000)

$ 4,600,000 $ 5,600,000

The differences between the statutory Federal income tax rate and the effective rate as
reflected in the consolidated statements of income are attributable primarily to state taxes,
non-deductible capital transaction costs, entertainment expenses and loss from foreign
operatioiis.

<6) Commitments and Contingencies

Two subsidiaries of die Company, certain licensees of the Coo^any and certain venues and
professional sporting organizations operating in Florida are codefendants in a consolidated
dvil antitrust class action suit filed in the Federal District Court of South Florida. The
complaints allege violations of the Sherman Act, the Federal RICO Act, and multiple Florida
statutes concerning the sale of off-site tickets.

The above action is in the preliminary stages, and legal counsel is unable to make a prediction
of its outcome. The Company denies any liability, intends to vigorously defend ti\e action and
expects that its outcome will not have a material effect on the financial position of die
Compemy. The consolidated financial statements do not include any amount for the ultimate
liability, if any, in cormection with the disposition of this matter.

A subsidiary of the Company which operates in Southern California and a licensee of the
Company operating in Northern California are codefendants in a coiuoUdated dvil antitrust
class action in the Superior Court of the State of California, County of San Frsmcisco. The
compUints allege violations of state unfair competition and imfair trade practices statutes and
the California Cartwright Act Each of the four consolidated actions seeks injunctive relief and
treble damages.

The above action was settled in April of 1994. Certain plaintiffs have opted out of the
settiement and have filed a motion for summary adjudication. The Comp2my believes that the
ultimate outcome of dte disposition of these matters will not have a material adverse effect on
the financial position of the Company.

The Company is involved in various other litigation and claims arising out of the normal
conduct of its business. In the opinion of the Company's maiuigement none of these proceedings
will have a material adverse effect on the Company's firumdal position.

107

TICKETMASTER CORPORATION
AND SUBSIDIARIES

(A Wholly Owned Subsidiary of Ticketmaster Holdings Group, Ltd.)

Notes to Consolidated Financial Statements, Continued

The Company leases office space and equipment under various operating leases that expire at
various dates through 2003. Future minimum lease pa)Tnents are as follows as of January 31,
1994:

Year Amount

1995

5,270,000

1996

4,866,000

1997

4,482,000

1998

4,327,000

1999

3,826,000

Thereafter

7,031,000

29,802,000

Additional rental payments may be required for the Company's pro rata share of certain
operating expenses associated with office space leases.

Rental expense for fiscal 1994 and 1993 amovmted to approximately $5,207,000 and $6,032,000,
respectively, imder operating leases.

The Company, as a minority interest partner in a joint venture, hjis committed to contribute
amounts up to $10 million during a several-year period representing the development and early
operating stages of a cable television channel

(7) 401(k) Plan

The Company has a 401 (k) plan covering all eligible employees, which contains an employer
matching feature of 25% up to a maximum of 6% of the employee's contribution. The Company's
contribution for the plan years ended December 31, 1993 and 1992 was $236,000 and $194,000,
respectively.

(8) Subsequent Event

On April 15, 1994, the Company completed the formation of a joint venture with Wembley pic
to develop, design and service computer ticket systems to be used in various venues including
motion picture theaters, stadiums, arenas and amusements parks. Under the terms of the
agreement, Wembley pic contributed certain assets of its U.S. and U.K. companies smd the stock
of a German subsidiary (Wembley companies), all of which have similar operations to those of
the joint venture. The Compciny contributed $16 million in cash for its 50% interest Jind the joint
venture assumed certain liabilities of the Wembley companies approximating $10 million.

The $16 million contribution was funded by utilizing $12 million of the $14 million loan
commitment for acquisitions (note 4), with the remaining $4 million having been provided from
operations.

108

Mr. CoNDiT. Mr. Rosen, we have an easel over here.

Mr. Rosen. We need to set up a couple of these charts, if we
may.

Mr. CoNDiT. We will try to accommodate you.

Mr. Rosen. There has been a lot of discussion about what our
service charges are and how much they have risen. I thought it
would be helpful to provide you with charts which have been taken
from our audited financial statements that summarize
Ticketmaster's service charges.

In 1990, we sold 29 million tickets through outlets and over the
phones, which provided a service charge revenue of $78 million —
the average service charge was $2.69. In 1991, we sold 39 million
tickets with a service charge revenue of $113 million, and the aver-
age service charge was $2.90. In 1992, approximately 145 million
tickets were sold; the average service charge was $3.02. And in
1993, 51 million tickets were sold, with an average service charge
of $3.15.

If we go back to the other chart, what you will see is that the
percentage increase in Ticketmaster's service charges was less than
4 percent from 1989 to 1990; less than 8 percent from 1990 to 1991;
approximately 4 percent in 1992; and approximately 4 percent in
1993. These increases are hardly outrageous, they are essentially
in keeping with the rate of inflation. That is hardly monopoly pric-
ing.

In connection with the materials we have given to you, our profit
after taxes over the last 2 years has been $7.5 million in 1992 and
$1.4 million in 1993. The numbers speak for themselves.

We built our company up from nothing by being responsive to
consumers. If we were not responsive, we would not have grown.
I hear a lot of talk of dissatisfaction these davs with Ticketmaster
as a company. But when you get 3 million call attempts in 20 min-
utes, there is no way you are going to answer all those calls. Last
year we answered approximately 38 million phone calls, of which
approximately 7.5 million resulted in orders. We are an informa-
tion source for Ticket buyers and every call for the consumer is
free. Every call to Ticketmaster is answered by an operator. We
provide an information service at no cost to consumers throughout
the markets that we serve. Even telephone companies today charge
people for information. We recognize that we are in a field that is
highly competitive.

What the panels — and they have all been very good — all missed
was that our contracts with venues expire. Contracts have dura-
tions of 3 to 5 years. There are probably 30, 40, even 50 companies
out there today that are bidding against Ticketmaster for ticketing
concessions across the countiy.

As we move into the age of the information highway, you will see
cable companies, telephone companies, computer companies, and
data companies looking to enter this business. This business is
highly competitive. We do not simply sell tickets to rock and roll
concerts. We are a mass merchandising distribution system that
serves all events: sports, concerts, family shows, theater, trade
shows, ski lift tickets, et cetera. Wherever there is an admission
ticket, we can provide the distribution network. In the universe of
tickets sold in America today, there are approximately IV2 billion

109

tickets sold for live events per year, and we only sell approximately
51 million of those tickets.

Unlike many other services that provide the same product to
every consumer, we can never provide everyone with the same seat.
The fact of the matter is that when you sell front to back, half the
people will be sitting in places thev do not want to sit. So there
are some problems Ticketmaster will never to able to solve.

I will be happy to respond to any of the questions you may have,
and I thank you for the time you have given me.

Mr. CONDIT. Thank you, Mr. Rosen.

Next we have Ms. Rothman, the Greneral Manager of the Los An-
geles Forum in Inglewood. Thank you for being here.

STATEMENT OF CLAIRE L. ROTHMAN, GENERAL MANAGER,
LOS ANGELES FORUM, INGLEWOOD, CA

Ms. Rothman. Thank you, Mr. Chairman.

At the risk of repeating so many things that have been discussed,
I will forego the formalized statement that I wanted to make. I
would like to have an opportunity to make just a few statements
in answer to some of the things that have been said in an effort
to clarify.

First of all, I want to commend every one that has spoken today.
I think it represents sincerity in their positions and passion in the
dedication that they feel about this industry.

I have been fortunate enough to be in this marvelous industry
for about 27 years. So I have seen many changes, from the times
that we dealt only in hard tickets where we could hardly find
enough room to rack 29 performances of a circus, where men with
garters around their shirt sleeves fanned tickets to their ear and
very often accurately said there's 100 tickets in this pile.

A venue is a very important part of the mix that is being dis-
cussed today. We are inevitably joined because a venue needs an
act, an act needs a venue, and we both need a means of selling the
tickets or none of us are able to operate.

As a venue operator, contracts are very beneficial to us. We have
contracts for the softdrinks that we sell. We have contracts for the
food concessionaire. We have contracts about naming the building.
Novelties are sold by contract.

And in answer to one of the remarks that was made, the building
has nothing to do with the price that an act sells its merchandise,
its T-shirts or its programs for. Those are things set by the act. So
if he is interested in controlling the costs of those, he makes them
less expensive.

The Forum is one place at which you can always come to buy a
ticket. There is never a service charge at the Forum, and we have
fought assiduously to keep it that way.

Someone made the remark this morning that there are two sides
to this: the promoters, the managers, the agents on one side;
Ticketmaster on the other. Well, I would like to say we are the guy
in the middle.

Mr. Rascoflf talked about being with the Rolling Stones since
1975. I would like to remind him and educate you to the fact that
in 1975, when we had an exclusive contract with Ticketron, Mr.
Rascoff decided or the powers that be decided that we would put

110

the Rolling Stones on sale when they made an announcement in
New York at 12 noon, making it 9 a.m. in Los Angeles.

We put five shows on sale. Our box office was open from 9 a.m.
until 10 p.m. that night. We had every window opened and had
backup sellers. Even though the demand was there, we were un-
able to physically sell out all the tickets in that 1 day in that 13-
hour period of time.

Another point that was brought up is how would we deal with
a computerized ticket service that might charge the same thing for
a service charge or a fee, a convenience fee as the price of the tick-
et. Well, in this case, the venue does have some power. We are in
business to stay in business, to have the opportunity to continue
to present the wonderful acts that are available.

Surely, as good business people, we would never allow the con-
tract to remam in force over which we could not stop a totally un-
fair price.

I also remember back to mail orders, and I certainly hope we
never go back to that. I remember a particular time when so much
mail came that we attempted to assess the amount of orders and
the number of tickets that were held in each bag, and it was deter-
mined that perhaps 14 bags of mail would sell out a particular
show. So we sent all the other mail back unopened so that we
didn't have to process everything and make a list of everything.

Well, our calculation was incorrect. And, therefore, we had to put
some tickets on public sale. It wasn't a very fair method of distribu-
tion.

One other thing I would like to address. Mr. Collins said that at
his most recent show at the Los Angeles venue, the Great Western
Forum, that he questioned the people in the first several rows as
to how they got their tickets. Tickets are distributed over a wide
number of outlets.

There is no way that the venue, no matter how sincere we are
in trying, can control the person's ultimate distribution of what
they do with their six tickets that they buv. They may sell them
all to somebody else. They may give some of them away. They may
sell them to a broker for profit.

But I assure — I would like to go on the record that the Forum
follows the directions of the promoter who, in turn, is following the
directions of the act as to how the tickets go out of the Forum.

Thank you for this opportunity.

Mr. CONDIT. Thank you very much.

[The prepared statement of Ms. Rothman follows:]

Ill

STATEMENT OF

CLAIRE L. ROTHMAN

General Manager, Great Western Fonnn

Vice President, California Sports, Incoiporated

President, California Forum

Before

Information, Justice, Transportation and Agriculture

Subcommittee

of the

Committee on Government Operations

June 30, 1994

112

STATEMENT
CLAIRE L. ROTHMAN

The venue deals with a promoter and sometimes an agem and sometimes a manager of an act
to determine the dates, the confirmation of your venue and the ticket price. Oft times, the venue
can interject a thought about what the market will bear, that in comparison to other acts it's too
high, it's too low, but in the final analysis, it is die act that has the power to determine the
venue, the dates, and the price. TicketMaster has m voice whatsoever in determining the
pricing of a ticket in our venue.

Service charges are determined by negotiation reduced to a contract, similar to contracts that we
have with the food concessionaire, Doveities concessionaire, not too different from the sale of
signage in the building, sponsorships of a team or the building, or even die naming of the
building, security contract, almost anything for services and/or products are reduced to a
contraa after a period of negotiation.

Wc have a great need for a ticketing network in a far-fiuag geographic area like Los Angeles.
The days of small venues within neighborhoods which afforded you an opportunity to trot down
to the venue, buy a ticket and return diat night are long gone. Niany of our patrons are traveling
40-45 miles and further to come here. There is no way they are going to come to the building,
buy a ticket, go back home and return again. A network allows us tremendous speed in selling.
Twent>' years ago in our very building, we thought it was miraculous that we were able to sell
100 tickets a minute or 6.000 tickets an hour. Today, we almost have die capacity to sell in a
minute what took us an hour twenty years ago. And just seven years before that, we were
dealing in hard tickets where it took an entire box office to rack a two week stand of the circus,
and where miraculous men with garters on their sleeves would take a pack of tickets that had
been rubber-banded, ^n them by their ear and say there's 100 tickets here.

Computerized ticketing gives us accuracy of inventory. Ticket reports are based on what's
unsold; your inventory is critical so you're not paying out more money than what you've taken
in. In the days when hard tickets were distributed to a few outlets, you had limited access to
the inventory in different locations because die seats just weren't there. You had an expense to
distribute tickets to outlets and run around all over a city and try to collea day by day the
information on what had been sold. You always had die fear, that lump in your tummy, would
the outlet be able to pay you. If they didn't do business, you were concerned you placed your
tickets in the wrong place; if they did do business, you were concerned would they have the
money to pay you. We had tremendous expense in holding ticket sales on our own property as
well as selling them from the outlets. We could never sell as quickly on our propeny as the
oudets, so we'd have to suspend sale at the oudets and the phones in order to try to guess how
many tickets we needed for the people in our parking lot There is great expense to do this.
Sometimes rwo or three days before the sale, we had to secure the parking lot, discourage people
from lining up, we certainly needed a lot of security, stamping hands, handing out numbers, we
needed a great many ticket sellers, and after it was all over, success or failure, you sure had a

113

dirty parkiiig lot.

A ticketing network gives us a source of research and development. From this source, we were
able, in concen with TicketMaster, to customize our computer to speak to TickctMastcr's
computer through the use of a PC. This enabled us to pull season seats off, to charge our
customers for individual sales, to have our inventory updated by TicketMaster, and to continue
to sell all year long while having the ability to connect both computers so that the billing and
the inventory remained accurate. (Met research and development allowed TicketMaster to
specialize for us a method to service our subscr^tion tickets, which arc all event tickets. We
have had as many as 4,000 of these seats, so it was like owning a little theater within our own
building. Some owners have the same seat for every event. With the multiplicity of events in
our building, some seat holders have a different seat for hockey, another location for basketball,
an entirely different location for boxing, another location for tennis, another location for
concerts, family shows, or any combinadon thereof, and we are able to pull a ticket for an
account number, and the computer knows which location that account number gets for each
event.

We also have customized tickets so that when you buy a ticket at the Forum, you can identify
it easily as a Forum ticket because our logo is on the face. Our equipment, and maintenance
of that equipment, is done by TicketMaster.

We see little change for us since tiie end of Ticketron. We have the same advantages and
disadvantages of dealing with the public.

There is a very interesting note. In 1967, when the Spectrum opened in Philadelphia, it was
outfitted to sell all hard tickets because Ticketron and Computicket, two computerized ticketing
services that were yet to emerge in the east, had not approached us. The Great Western Forum,
which was at the time in December 1967 when it opened known as the "Fabulous Forum" was
the first buildmg in the United States to be totally computerized, and Ticketron was the
company.

114

Mr. Rosen, If I may, there was another thing I would like to
raise. I received this letter this week. I will give copies to all of you.

Mr. CONDIT. We will place it in Uie record.

Mr. Rosen. The letter is to me from Pam Lewis, Garth Brooks'
manager. Obviously, Grarth Brooks' name has been mentioned here
this morning and nas been mentioned in various newspaper arti-
cles as supporting Pearl Jam. However, the letter reads as follows:

I would like to send you a letter of apolo^ and clarity regarding the recent article
involving the pending Pearl Jam legal activity with Ticketmaster and my reference
in the press. I made it clear to the press in our case tickets are printed with the
base price and with a listing of additional surcharges so that Garth's fans would
be informed. This is in keeping with the overall philosophy of this organization. We,
like Pearl Jam, care greatly about the fans and are concerned about high ticket
prices, whatever the cause. It is the intention of Garth for the fans to know where
their ticket fees are going — ^the rising building costs, security, parking, et cetera.

Garth Brooks does not have a quarrel with your organization, and I hope my com-
ments did not make it appear as though that was the case. He was not in touch
with the press at all on this issue nor did he speak to anyone or give a quote to
any media on this matter.

Garth has been very happy with his association with Ticketmaster. I spoke from
my perspective not Garth's and Fve tried to make this clear.

It is signed by Pam Lewis, and a copy was sent to Garth Brooks.
I feel it is important to put tnat in the record.

Mr. CoNDiT. At your request, that letter will be placed in the
record.

[The information referred to follows:]

115

^ i III tt n «..S e' a 'is n. t

June 22. 1,994.

t ■

I I . ■ . .

Mr. Fred Rosen

CEO'. - ' •' •.

Ticketmaster -

3701 Wilshlre Blvd.

#74 ^ ' . .'.

Los Angeles. CA 90010-

Dear Sir

I would like to send you a tetter cf apology and clar% regarding the recent .
article involving the Impending Pearl Jam legal activity with ticketmaster and 'my
reference in the press, i made it dear to the press tt^t in our case, tidcets are
printed with the base price alOng witB a llstinErof additional surcharges so that
Garth's fans would be/infdnned. This is in keeping with the overall phHosophy.of -
this organization. We, like Pearl Jam. <iste greatly about the fians and are
concerned about high tic*{e<, prices whatever the cause. It isthe intentipn of '
Garth for the fans to know where their ticket fees are going •. the rising building •
costs, security, parking, etc. •

Garth Brooks does not have a quarrel vwBi your organtzatran and J hope my
comments did make if appear as though that was the case. He was not in -^
touch with the press at all on this issue nor did he speak to anyorie or give a
quote to any media on this matter. Garth has been v^ry happy With his
associatton with Ticketmaster. I spoke fi'om my perspective not Garth's and
I've tried to make this dear.

Best regards.

PamL
ec; Garth Brooks

116

Mr. CONDIT. Mr. Rosen, why do you think Pearl Jam filed a com-
plaint with the Justice Department?

Mr. Rosen. I am not sure, sir.

Mr. CONDIT. Why do you think you are the victim in this issue?

Mr. Rosen. Because Pearl Jam was not willing to compromise.
We tried to compromise. We had various promoters contact Pearl
Jam to try and reach a compromise. However, Pearl Jam at-
tempted to dictate our service char^je to us. The $1.80 service
charge was proposed to us on a take it or leave it basis. We chose
to leave it. If they wanted to tour, they clearly could have done so.
But we were not willing to lose money distributing tickets for Pearl
Jam.

Ticketmaster is certainly an easy target to pick on.

Mr. CONDIT. Is there anybody else they should have picked on?

Mr. Rosen. No. They should have been willing to resolve the con-
flict. They should have compromised. There are various ways it
could have been resolved.

Mr. CONDIT. We heard this morning from the band and from oth-
ers in the music industry although — ^you just read a letter, taking
issue with their statement there is much support in the industry
for Pearl Jam's position. Do you believe that is so? If you do, why?
If you don't, why not?

Mr. Rosen. I think all of us support low ticket prices. But I don't
think that is the issue. Ticketmaster does not set ticket prices. I
think it is commendable that the band wants to hold their ticket
prices down to $18. I have no problem with that; but we don't set
the price, whether it is $300 or $16.

The fact of the matter is that to keep its ticket price at $20,
Pearl Jam could have agreed to a $17.50 ticket and $2.50 service
charge or a $17.75 ticket and $2.25 service charge.

If you look at our profit margins, we would have lost money if
we charged any less. We should not have to do something that es-
sentially costs us money just to resolve a conflict with a rock band.

Mr. CONDIT. What is your profit margin?

Mr. Rosen. If yoxi look at the financial statements, we made
about 10 cents a ticket, last year.

Mr. CONDIT. What is that net?

Mr. Rosen. Last year was $1.4 million; the year before that our
net income was approximately $7.5 million. >fet income for the 2
years together was about $9 million. And we sold approximately
100 million tickets. If you calculate it, that's about 10 cents a tick-
et.

Mr. CONDIT. Mr. Rosen, I use — I made reference to this amount
as well. I read the paper. I have seen it in the trade publications.
We are talking about handling charges $5 to $8, although you point
out today it is $3.15. How did we get to the $5 to $8?

Mr. Rosen. I have seen service charges as high as $15, but all
that money doesn't go to Ticketmaster.

When you have a $350 ticket sold over the phone, there is a $15
service charge. The money collected for the ticket is divided such
that: $350 goes to the artist; $9 to $10 goes to the credit card com-
pany; and $5 to $6 goes to us.

Mr. CONDIT. Tell me about your company. How many people do
you employ? Where are they located?

117

Mr. Rosen. Today, we employ 4,100 people throughout America.
We have regional phone rooms in 13 or 14 cities with an extremely
diverse labor force. We have provided opportunities for many young
people in entry-level positions in which they learn how to use PCs.
We are very proud of the fact that we have been able to create so
many jobs over the last decade.

Mr. CONDIT. So the total is

Mr. Rosen. About 4,100 people.

Mr. CoNDlT. Do you consider those full-time employees or part
time?

Mr. Rosen. There is a combination of full time and part-time em-
ployees. I would say there are somewhere between 1,300 and 1,400
individuals who work full time.

Mr. CONDIT. Average salaries?

Mr. Rosen. I don't know.

Mr. CONDIT. Do the part-time people receive benefits? They don't
receive benefits?

Mr. Rosen. Part time people do not receive benefits.

Mr. CONDIT. Out of the 4,200 employees how many are part time
versus full time?

Mr. Rosen. I think there are 2,500 or 2,700 part-time employees.
I will supply you with the specific numbers.

[The information follows:!

The number of part-time employees is 2,712.

Mr. CONDIT. It is also — I guess this is something that those of
us out of the industry can sort of gravitate to. We hear that, you
know, the surcharge thing again, where a family comes in, buys six
or seven tickets. Each one of them is charged a surcharge. Is there
any merit to why they should have to pay each time for each tick-
et? Why don't you charge for the one transaction. Why can't you
charge one service fee for the entire purchase?

Mr. Rosen. The unit of measure in this industry is per ticket.

I think Ticketron invented the per-ticket charge. That was their
unit of measurement, and it has become the industry standard.

Mr. CONDIT. OK. It also has kind of come out of this hearing as
well that Pearl Jam as well as some other people here made the
suggestion it would be nice if we could identify what the service or
handling fee is on the ticket. I consider this truth in advertising.

I don't know if that solves the problem, but I think for some peo-
ple such as the entertainer who has to get on the stage, the fami-
lies that are making all the money on the ticket — it might be help-
ful to them, for the fans, to know what the total cost for conven-
ience, service, or handling fees are on the ticket stub or someplace
else on there. I consider this truth in advertising. Can you do that?

Mr. Rosen. We do print the service charge on the face of the
ticket.

Occasionally, there can be an all-in ticket price. I would say 99
percent of tickets that we print, however, have the service charge
printed on them.

Mr. CONDIT. So is the average $3.15?

Mr. Rosen. Service charges vary. Sometimes the service charge
is $1.50, $1.25. Sometimes it is $5 or $6. It depends on the event.

118

This gives me an opportunity to clarify certain misconceptions
that exist in our business.

Mr. CoNDiT. That's why we have you here today.

Mr. Rosen. I appreciate that very much.

We negotiate all our contracts. The service charges are set in the
contracts through arm's length negotiation with the venues for
which we provide the ticketing concession.

Ticketmaster does not have the right to unilaterally set whatever
service charge it wants. If we did, we wouldn't be in business very
long.

Furthermore, as many of the previous panel noted, Ticketmaster
is not a broker. We are not a scalper. We are not in the business
of reselling tickets. We have taken a very strong stand against
scalpers over the years and have tried various procedures to make
sure that the tickets get into the hands of the people they are sup-
posed to, namely the public and the fans.

Mr. CoNDiT. Mr, Rosen, do you believe the Justice Department
is doing a real investigation? What do you think they are going to
do with the investigation?

Mr. Rosen. I believe thej^ are doing a real investigation.

Mr. CONDIT. OK I will yield. Then we will come back to you, Mr.
Rosen, Ms. Rothman, to my colleague from California, Mr. Horn.

Mr. Horn. Thank ^ou very much, Mr. Chairman.

Mr. Rosen, you might have gone over this, but, just briefly, how
do you set your charges for a particular venue when you negotiate
the contract to be the exclusive agent? Is that a percent of what
the basic ticket price is going to be?

Mr. Rosen. No.

Mr. Horn. Is there a general policy here? Is it just what the traf-
fic will bear?

Mr. Rosen. No. It is certainly not what the traffic will bear.
When you negotiate with an arena, their primary concern is bring-
ing as many people to it as possible.

Ticketmaster is an extension of the box office. We are not in lieu
of the box office. We are an alternative to the box office. We call
it a convenience charge because you don't have to go to the box of-
fice if you choose not to. Rather, with Ticketmaster, you may
choose the convenience of purchasing a ticket at an outlet or over
the phone.

When we sit down and negotiate a contract, various factors are
involved in it: How much equipment are we supplying? How much
support does the building need? How msmy people do we have to
put on that account? How much money in advertising and other
promotional items do we need to supply: The contract is negotiated
on those terms.

Mr. Horn. Is there a basic price that is in most arena managers'
contracts as to what they need to recoup from you to in turn pay
the city or the governmental entity that often owns these arenas?

Mr. Rosen. We are a concessionaire in the building, sir, and
every building wants to see how much they can maximize their rev-
enue. As a result, we are contractually obligated to pay the venues
consideration for the right to sell their tickets.

I might point out that the State of California in their State parks
ticketing contract, which we do not have, the ticket company is re-

119

quired to provide financial consideration to the State in return for
the ticketing concession. I think all buildings, when they sit across
the negotiating table from the concessionaires want to see to what
extent they can derive the maximum revenue.

Mr. Horn. Are there any venues where you also operate the tick-
et office at the venue?

Mr. Rosen. You mean that we operate the box office?

Mr. Horn. The box office.

Mr. Rosen. In a very few places we do, but for the most part
each box office is operated by the venue or the owner of the venue.

Mr. Horn. Where you don't do it, what is the percent of tickets
sold that comes from the box office versus Ticketmaster?

Mr. Rosen. When you provide an inventory control system for a
venue, there are various events that take place in that building. A
building might have a hockey team, basketball team, family shows,
concerts, wrestling. So if you add up the universe of tickets that
our system generates or provides the accounting for, Ticketmaster
sells somewhere in the neighborhood of 20 percent of the tickets in
a major arena, maybe more for certain events than others.

Let me give you some statistics. Major league baseball last year
sold 70 million tickets. We sold 5 million. The NBA sold 17 million
tickets. We sold approximately 1.1 million. It is interesting in our
business that as a team does better, season ticket sales go up,
group ticket sales go up, mini plan and package sales go up. Thus,
there are fewer tickets for Ticketmaster to sell. The better the
team, the fewer the tickets.

Mr. Horn. In the venue, the building, do you have an exclusive
contract with most of them to sell for all the events they are hold-
ing or just select events?

Mr. Rosen. No. When you enter into a contract with an arena,
you acquire the exclusive right to provide tickets for all the events
that take place in that building.

Mr, Horn. OK We have seen once sacrosanct fees such as those
of real estate brokers, those of stockbrokers that used to be a fixed
percentage change rapidly in the last few years so they are nego-
tiated based on volume discounts and, very firankly, what the test
of the market and competition will bear. Why aren't more fees in
this industry negotiated or are they?

Mr. Rosen. They are all negotiated.

Mr. Horn. But you negotiate a sort of set fee for a certain price
ticket with the venue, so they know what revenue to expect from
you if you have got 20 percent of their sales? How does it work?

Mr. Rosen. You define contracts by type of event. Different
events have different service charges that are negotiated, and reve-
nue streams are determined based on the service charge.

Mr. Horn. Now, is the service charge paying the credit card?

Mr. Rosen. In some instances, yes, in some instances, no,

Mr. Horn. How do they vary? Aren't you performing the same
task for every type of ticket that crosses your box office or wher-
ever it is?

Mr. Rosen. No, This business was built on choice. If you don't
want to pay a service charge, you go to the box office. If you want
a lesser service charge, you can drive to an outlet. And if you don't
want to leave your home, you can pick up the phone and call.

120

When you get into the phones charges, there are some interest-
ing issues. In some instances the buildings pay the credit card fee
and the service charge is lower. In instances where artists and
bands come in the building and can dictate the terms of their con-
tract, they say to the building, we don't want to pay the credit card
fees. The building in turn will call us, and we adjust the service
charge to reflect the credit card fee. So, there is no universal an-
swer to your question.

Mr. Horn. Can you name some of the rock bands that do not use
Ticketmaster to distribute their tickets and what percentage rough-
ly do not use your services?

Mr. Rosen. I don't know, sir. I don't keep track of that.

Mr. Horn. You don't really look at your potential customers?

Mr. Rosen. We feel we have two customers. Our actual clients
are the buildings. We compete for their business every time a con-
tract comes up.

Mr. Horn. How often is that generally? Is it year-to-year, or
longer, such as 5 years?

Mr. Rosen. Contracts are typically for 3 to 5 years. The fact is
that with the technology as it exists today, many facilities have the
ability to do their ticketing themselves. Venues can acquire very in-
expensive computer systems to provide essentially the same service
we do. So the reality is that we are in a competitive environment.

Mr. Horn. What sort of competitors' service charges, what are
they compared to vour own? You must look at your competitors be-
cause they might be bidding against you on the next contract. How
do your fees stock up with those of your competitors?

Mr. Rosen. I think that you will find that our fees have always
been competitive. When we bid for ticketing concessions, buildings
want to maximize their revenue, but at the same time they want
to maintain what they consider to be a fair price that people will
pay for the service. When we go through this process we are com-
petitive with the other people who bid. We provide a fair price as
well as a fair return for the buildings.

Here in Washington we do not own the ticketing system, we li-
cense it. Wolf Trap, however, is ticketed by a competitor of
Ticketmasters called ProTix; it is not a Ticketmaster building. So
there are competitors around who clearly can do the same job we
do.

Mr. Horn. I believe the chairman wanted to follow up.

Mr. CONDIT. Mr. Rosen might have responded to that. A lot of
people you notice, when you say your competitors, those people who
believe you have a monopoly, they want to know who your competi-
tors are, maybe you could identify some of those. You have done
that in written form, but maybe you could share that. I am sorry,
thank you for yielding.

Mr. Horn. No problem.

Mr. Rosen. Competing with Ticketmaster today are: The Home
Shopping Network, Art Soft, Laser Gate, Prologue Select, SofTix,
and Sun Micro Systems. I could name more. There are many peo-
ple that feel this is a good business to get into and we hear of new
competitors on a regular basis.

Mr. Horn. If I were the chief executive of your firm I would start
looking at where are the 50 major cities based on population, re-

121

gional population because those are your customers that are going
to pay your charges and want to go to the events and assuming
there is a decent forum or a variety of forums, stadiums in the
area.

As you look at the 50 or 100 major cities in declining order of
population — ^New York, Los Angeles, Chicago, so forth — now many
of those do you have the exclusive contract?

Mr. Rosen. How many of those does Ticketmaster have?

Mr. Horn. How many of those 50, 100 most populous cities do
you have with the major arena the exclusive contract for ticket
services?

Mr. Rosen. I don't know, sir.

Mr. Horn. Could you furnish it for the record?

Mr. Rosen. Certainly.

[The information can be found in the appendix.]

Mr. Horn. Obviously, what I am interested in is the degree to
which you have a domination of the most obvious market iot cul-
tural services.

Mr. Rosen. Let me give you two examples, if I may. If you go
to New York, for example, we do not do the ticketing for Shubert
Theaters, we do not do the ticketing for the U.S. Open, we do not
do the ticketing for Lincoln Center, we do not do the ticketing for
Carnegie Hall, we do not do the ticketing for the New York Mets.
The New York Mets do the ticketing themselves, as do a lot of
other people. There are probably a dozen other venues in New York
that we don't have contracts with.

In Seattle, Pearl Jam's home, we do not have exclusive contracts
with the Kingdome and the Seattle Coliseum. I can probably name
about 40 buildings where we don't have exclusive contracts.

What is more, we do not have exclusive contracts with 90 percent
of the promoters. In fact, we do not have contracts with two of the
largest promoters in the country, Michael Cohl of CPI, who is pres-
ently promoting the Rolling Stones and is probably the largest pro-
moter in North America, and Bill Graham Presents in San Fran-
cisco. And there are many more large promoters who we do not
have contracts with either.

Mr. Horn. My last question is on the nature of these contracts
you do have. Have you ever faced a lawsuit by a venue owner?

Mr. Rosen. No, sir.

Mr. Horn. Has a venue owner ever declined to extend a contract
with you?

Mr. Rosen. Absolutely.

Mr. Horn. OK, then. So that is based on a competitive bid basis?
What usually was the concern of the venue owner, you didn't seem
to be delivering the crowd or the money or what?

Mr. Rosen. Sometimes you lose contracts with venues because
they want to try something new. Sometimes they want to try
ticketing a different way. Sometimes we may not have been as re-
sponsive as we should be. The lesson of Ticketron was that if you
are not responsive to the needs of your clients you will go out of
business. There are always competitors ready to take the contracts
from us if we don't remain responsive.

Mr. Horn. You said your length of contract was generally 3 to
5 years. Do you have any longer than 5 years?

122

Mr. Rosen. A few. Not very many.

Mr. Horn. What are we talking about, 7 years?

Mr. Rosen. Yes, 7 years. I don't believe there are any 10-year
contracts anymore.

Mr. Horn. Thank you.

Mr. Rosen. Certainly.

Mr. CoNDiT. Thank you. Mr. Rosen, Ms. Rothman, I want to ex-
plain to you, I have to leave. I made a commitment for 12:30, and
I thought we would be out of here by 12, I am going to try to get
back, but I wanted to explain my absence to you, that I didn't leave
because the band just left. I am clearly interested in your com-
ments, and I want to say, Mr. Rosen, you have been very candid
and very open for us when we have asked for information. You
have been on the record, you haven't hidden anything, and we ap-
preciate it very much, and I just want to acknowledge that before
I leave.

I will try to get back to ask some additional questions. If I have
additional questions, I will forward them to you and maybe you can
respond in writing, and just so that you know, we are in the proc-
ess of putting up some followup hearings, and we will ask for your
participation in that. You personally won't have to be here, but
your participation in that.

I just want you to excuse me and not take offense to the fact that
I have to leave.

Mr. Rosen. We appreciate the opportunity to speak, and if it
would help, we would like to invite all of you, if you have the time,
to come see what we do in person. I think if you see what we do
it will give your some perspective on our philosophy as a company.
You would be welcome at any time in any of our regional offices
so that we could give you a demonstration of what it is we do.

Mr. CONDIT. I am going to leave you in excellent hands. Ms.
Woolsey is going to Chair the meeting while I am gone. So thank
you very much.

Mr. Rosen. Thank you.

Ms. Woolsey [presiding]. I don't know if we can believe him
about not following the band, but nevertheless, we will keep going
and for all of our benefit probably get through this before our chair-
man gets back. I do have a question of you, Ms. Rothman.

Does the Los Angeles Forum not contract with Ticketmaster?

Ms. Rothman. No. The Los Angeles Forum has a contract with
Ticketmaster.

Ms. Woolsey. So in your contract you then can sell your own
tickets onsite?

Ms. Rothman. Well, we do sell tickets onsite.

Ms. Woolsey. So that is part of that?

Ms. Rothman. We have two professional teams, NHL hockey and
NBA basketball. We sell all our own season tickets. We sell all our
own season packages. We sell subscription tickets and we sell indi-
vidual tickets.

Ms. Woolsey. So what would you do if you had an arrangement
and were not allowed to sell your own tickets?

Ms. Rothman. Well, we would never enter into a contract in
which we could not sell our own tickets.

123

Ms. WooLSEY. Then, Mr. Rosen, that is my question, do you have
some arrangements where the venue or the location cannot sell
their own tickets?

Mr. Rosen. No, Madam Chairman.

Ms. WooLSEY. That was something I was not clear about. Mr.
Rosen, what kind of recourse does Ticketmaster have if one of the
talent or one of the groups chooses not to go through Ticketmaster?
I mean, do you do anything about that? Have you ever threatened
a venue or a gp^oup?

Mr. Rosen. If I threatened a venue, I don't think I would be in
business very long. When we had discussions with various people,
we told them that we felt it would be proper for them to honor
their contracts. I didn't find anything wrong with that then. I don't
find anything wrong with it now.

Ms. WooLSEY. Do you believe that service charges would be low-
ered if there were competition, and if so, by how much?

Mr. Rosen. There is competition now. I think service charges
have risen to the level that tney have because there is competition.
Because the buildings require you as a concessionaire to pay them
for the rights to sell the tickets, competition among concessionaires
leads to higher concession fees, which leads to higher service
charges. In a lawsuit against Ticketmaster in San Francisco, the
economist for the plaintiffs stated that if there was greater com-
petition, prices would probably go up. He stated that
Ticketmaster's service charges were what he would expect in a
fully competitive market and that consumers had not been dam-
aged.

Ms. WooLSEY. What do they base that on?

Mr. Rosen. Because the service charge is based on a competitive
bid for the ticketing concession. That is the free-market system.

Ms. WooLSEY. All right. I would like to then ask my colleague,
Mr. Owens, from New York if he has some questions.

Mr. Owens. Just one question. I have an appointment I am late
for also. The terms, "kickback," and, "payofT have been thrown
around. I think you have partially answered it, but in particular
what are thev referring to? Are there any agreements you have
with venues that

Mr. Rosen. That term, which a New York judge called a term
of opprobrium or distaste, supposedly describes the consideration
that we pay to a building contractually for its ticket concession.
When I make a contract with the Meadowlands, I provide the
Meadowlands with financial consideration as part of the contract to
obtain the ticketing concession. Because the Meadowlands is a mu-
nicipal building, the money we pay to provide the ticketing conces-
sion is a matter of public record. As a concessionaire we pay for the
right to do the ticketing — it is like a royalty.

The band's attorneys have characterized this as a kickback. It is
an offensive word to me because it implies that we have done some-
thing illegal. We have not.

Mr. Owens. But it is not only in writing, it is also public?

Mr. Rosen. Yes, it is public.

Mr. Owens. Thank you.

Mr. Rosen. Thank you.

Ms. WooLSEY. Mr. Horn has a couple more questions.

124

Mr. Horn. Thank you, Madam Chairman. Perhaps you answered
this, Mr. Rosen. I was out of the room temporarily, but in his testi-
mony, were you here when Tim Colhns spoke?

Mr. Rosen. Yes, I was here.

Mr. Horn. Do you recall, I don't know if you had a chance to an-
swer what he said, but let me just read it to you.

In 1989, we approached Ticketmaster at the begianing of an extended world tour
at which we expected to sell millions of seats. We were seeking a volume rebate in
consideration oi the enormous amount of business we were doing with this company.
We either wanted Ticketmaster to lower its service charge or pay some kind of re-
bate to the band. At a meeting I had with Fred Rosen on January 5, 1993, he re-
sponded to this proposal by remsing either of these options. Instead, Mr. Rosen sug-
gested that if the band would allow the ticket price and the service charge to merge,
to roll them into one price, he would raise Ticketmaster's charge by one dollar per
ticket and split the proceeds with the band.

I told Mr. Rosen that his offer was like offering a cold man ice in the winter. His
solution would make us and him more money at the expense of an already overbur-
dened young fan.

Do you have a reaction to that description of your meeting of
January 5, 1993?

Mr. Rosen. He also testified, sir, that we put tickets on sale over
the telephone 3 and 4 days in advance of them going on sale
through the box office. That is not true. The fact of the matter is
that when events go on sale, all tickets to the public are made
available at the same time, so— —

Mr. Horn. Well, is he accurate in his description of the January
5, 1993, meeting?

Mr. Rosen. I don't particularly remember the full details of that
conversation with Mr, Collins.

Mr. Horn. Are there any other types of meetings, let's say, with

f»romoters or concert tour managers, however they want to describe
ocal or national, where you have been willing to negotiate, put up
the price in terms of Ticketmaster's charge and make a split of the
proceeds with the touring group? Is this the only incident?

Mr, Rosen, No, it is not the only incident, but primarily we deal
with promoters and buildings,

Mr, Horn. So you are saying there is give in certain situations?

Mr. Rosen. Certainly,

Mr, Horn, And that is an economic judgment?

Mr, Rosen, That is correct,

Mr, Horn. And what the traffic will bear, to be honest about it,
depending on the price, isn't it?

Mr, Rosen. It is not what the market will bear. In many in-
stances, the market will bear much more than what people are pre-
pared to charge for a ticket. As I said before, we see ourselves as
a mass merchandising distribution system. Some people have sug-
gested that we should have a one-pnce ticket, like an airline does,
and there shouldn't be any fee, so we have experimented with that,

Mr, Horn. Well, I am on the Aviation Subcommittee and I must
say I have been confused by the airline pricing system, too. Pearl
Jam claims that they have been boycotted by Ticketmaster. This
question is to Ms. Rothman and you also, Mr, Rosen, obviously.

The cancellation of the Pearl Jam tour resulted in lost revenues
for venues. One would imagine that those venues would be angry
with Ticketmaster for this loss of income. On the theory that it is
easier to replace a ticket service agency than a stadium or an

125

arena, one would think the venues would be furious with
Ticketmaster, Is that the case, Ms. Rothman.

Ms. Rothman. Well, in this case we were not fortunate enough
to be on Pearl Jam's tour, so I can't really address myself to what
happened.

Mr. Horn. But have you seen similar situations at all where
anybody that uses you on any regular basis feels that they have
been bovcotted by Ticketmaster?

Ms. Rothman. In my 20 years at the Forum, I have never had
that experience.

Mr. Horn. And Ticketmaster has been the agent over that pe-
riod?

Ms. Rothman, No, they have not. We had a contract in 1967
when the building first opened, we were the first building in the
country to be totally computerized, and our computerized system
was with Ticketron, and we remained with Ticketron until, I be-
lieve, 1983 when Ticketmaster came in.

Mr. Horn. Then you moved to Ticketmaster?

Ms. Rothman. Yes.

Mr. Horn. What were the basic reasons you had for making that
change?

Ms. Rothman. A very interesting set of reasons. We had an ex-
treme desire to have the technology to allow our computers to talk
with Ticketmaster's computers so that when we billed our season
seat holders and our subscription seat holders, that we would auto-
matically get our statements, and our inventory would decrease
automatically rather than having to handle two inventories.

Ticketron really didn't have any interest in helping us pursue
this and had put it off for a couple of years. With the emergence
of Ticketmaster, they said they would dedicate themselves to that
end, and, in fact, between 18 months and 2 years after they came
aboard we did achieve that end, and it has been copied.

Mr. Horn. So they met your need. Now, when does their contract
come up with you? Is it a 3 to 5-year contract?

Ms. Rothman. Yes.

Mr. Horn. Is there anyone that competes for that business when
the contract is up?

Ms. Rothman. Well, I recently had a conversation with someone
in a ticketing business that came to call upon me and said they
would like to come again when our contract nears its end. We al-
ways listen.

Mr. Horn. Well, do you feel there is sufficient competition in the
market, in this case tne Los Angeles region, which would include

Erobably four counties or five in your case, so that you can get the
est deal you want from the ticketing agency, whether it is
Ticketmaster or a rival company? Do you feel that you have only
one person to make a deal with, one entity, namely Ticketmaster
and all the others are inferior?

Is it a matter of service? Is it a matter of price, et cetera? I would
think a lot of these issues would be of concern to you?

Ms. Rothman. Well, I approach this much as I approach all the
other contracts that we deal with. Am I getting the kind of service
that I want? Are thev putting out to the public the face I like? Are
they doing the job? Are they maintaining what I have and supply-

126

ing new equipment and new technology as it goes along? Putting
all those things in, all those elements in, and adding a source of
loyalty to someone that you have dealt with, much as my food con-
cessionaire or the person that has named the building, I sav I can
negotiate a good deal with a fair return, and they are perwrming
their service admirably, then I have no reason to feel that I would
be better off if someone else were knocking at my door,

Mr, Horn. As a venue manager, are all of you venue managers
organized in a national association:

Ms. ROTHMAN. Yes, we are. It is called the International Associa-
tion of Arena Managers.

Mr. Horn. So when you get together and talk shop, you talk
about the type of services you have. What do you hear about
Ticketmaster when you go to these meetings? Do they seem to have
satisfied customers?

Ms. RoTHMAN, Well, I think you find a fair abundance of people
that are satisfied and continue to go on for the very reasons that
I set out before you, and you will always find people that have
some dissatisfaction. You will find people that will make a com-
plaint about a phone room or a complaint about how quickly the
lines were dissipated at the outlets, and that is what keeps your
purveyor on his toes if he listens to your complaints and addresses
himself to them,

Mr. Horn. Now, did you ever have Ticketron?

Ms. Rothman. Yes, we did.

Mr. Horn. Up to 1983, was it?

Ms. Rothman. From 1967 to 1983.

Mr. Horn. Ticketron, I gather from your testimony, simply didn't
meet your needs and didn t update the equipment, the software, so
forth, is that basically the case?

Ms. Rothman. But it was not true all of the time. It was true
within the last 5 years, I would say, that we were under contract
with them. We still had the same equipment as when we opened
the building.

Mr. Horn. Had they been taken over by another firm and is that
the reason they didn't update the equipment, they were just trying
to milk the system?

Ms. Rothman. No, it was the same firm.

Mr. Horn. Well, then, we see what happened to them. That is
what happens in the American enterprise system. You go out of
business if you don't satisfy your customer. Thank you. Madam
Chairman.

Ms. WOOLSEY, Thank you, Mr. Horn. Well, we will bring this to
a close in just a minute. I want to talk a minute about ticket bro-
kers. Do you ever, Mr. Rosen, hold blocks of tickets back, or Ms.
Rothman, and distribute them through ticket brokers?

Mr. Rosen. No, Madam Chairman.

Ms. Rothman. No, Madam Chairman.

Ms. WooLSEY. OK. So then where does all this come when we
hear about scalpers? I mean there are such things, I have a group
of children in my family from 27 to 33 years old, and they go to
a lot of events. They experience scalpers, and if they don't get a
ticket they can always get one through one,

Mr, Rosen, May I share a story with you?

127

Ms. WOOLSEY. If you would like.

Mr. Rosen. Scalping and brokers are of concern to all of us. In
California resale of tickets is legal, and the ticket brokers are very
diligent. They round up people to stand in line. I have seen them
bring people by buses to outlets.

There was a very famous artist who was doing five shows at a
competitor of Ms. Rothman's venue, and we scrambled the seats so
that the tickets were randomly dispersed. The tickets were $18,
and there was a $3 service charge, so four tickets were $84. This
young lady was so excited because she was going to see her hero,
and sne walked out of the outlet with tears in her eyes.

When the girl walked out of the store, there was a scalper stand-
ing there. He looked at her and asked, "Where are you sitting little
girl," and she said, "Second row, third night." The scalper offered,
^$1,000." She said, "No." He offered, "$1,250." She said, "No." He
said, "$1,500." She said, 'TSTo." Then he looked at her and said, "Lit-
tle girl, two grand is a lot of money." She took the money.

The fact of the matter is in a lot of the cities, the pressure on
young people when they get good tickets is tremendous. There are
only so many good seats, and there are people willing to pay for
them. The brokers know that.

Ms. WooLSEY. First of all, that young woman shouldn't have
done it just for being called little girl.

Mr. Rosen. No, I didn't mean it like that.

Ms. WooLSEY. But second of all, what is the role you are playing
to prevent this? Is Ticketmaster doing anything to stop this?

Mr. Rosen. I think that is a very good question, Madam Chair-
man. We catch brokers and scalpers, and we take them to the local
authorities. In today's world, however, it is very difficult to get any-
body to prosecute a scalper. The police don't regard this as a real
crime. They regard this as a victimless crime. I can't tell you how
many times that we have sat with attorneys general, different law
enforcement agencies, and different regulatory bodies to try and
address this problem, but everybody prioritizes what they view as
important issues, and they don't see this as that compelling.

Ms. WooLSEY. Ms. Rotnman, you looked like you wanted to re-
spond to that, too.

Ms. Rothman. The building spends hundreds of thousands of
dollars in an attempt to control the scalping because they have a
myriad of other effects on the building. If the tickets aren t sold in
advance, they are roaming around through your parking lot. They
are often sold by unsavory people in the parking lot who intimidate
your customers.

If you have tickets left to be sold, your inventory sits in the box
office while they are selling in the parking lot. So it has been some-
thing that I have worked on since the day I came to the Forum,
and I have seen all of that money and all of my efforts not result
in any more control but of a business that grows year afler year,
and when I have an opportunity to travel somewhere else to a
major event, I can pick out the scalpers in the lot because I have
become so well acquainted with them over the years, so it is a mul-
timillion, billion-dollar business.

All we can hope to do is control it. Yes, they have no risk. We
have the risk. They have no risk.

128

Mr. Rosen. Madam Chairman, our company helped Garth
Brooks in pursuing an antiscalping and antibroker law in Ten-
nessee. Our counsel has also often worked with various State agen-
cies, both in drafting these laws and trying to work with them to
police this infraction.

Ms. WoOLSEY. OK, good. Mr. Horn, do you have any other ques-
tions?

Mr. Horn. No.

Ms. WooLSEY. Well, we would like to thank you for coming and
being here through the entire hearing, and we may have some ad-
ditional questions in writing, and we will hold this hearing open for
an additional week and thank you. The hearing is adjourned.

Mr. Rosen. Thank you for the opportunity to speak.

Ms. RoTHMAN. Thank you.

[Whereupon, at 1 p.m., the subcommittee adjourned, to reconvene
subject to the call of the Chair.]

[Additional information submitted for the record follows:]

Additional Information SuBMirrED by Ned S. Goldstein, Vice President and

General Counsel, Ticketmaster

Pursuant to your request, and to my discussions with Mark Brasher of your office,
I have compiled a list, for the top 50 populated cities in the United States (per the
1994 World Almanac), of various venues with which Ticketmaster does and does not
do business on an exclusive basis.

As Mr. Brasher and I agreed, the list is not exhaustive, but rather it details sev-
eral of the more well known or larger venues in each city, indicating where
Ticketmaster has an exclusive ticketing agreement with said venues for outlet and
telephone sales. The list was compiled in response to your request, as no such list
existed prior to your request.

Please note that while Ticketmaster may not have an exclusive contract with a
particular venue, in certain instances it may still be the ticketing agent for an occu-
pant of the venue. For example, in Buffalo, New York, Ticketmaster does not have
an exclusive contract with tne Buffalo Memorial Auditorium, however, it does the
ticketing for the Buffalo Sabres who play their home games at such venue.

I thiiuc you will agree that the list is factual proof that many of the allegations
against Ticketmaster are unfounded and spurious.

If you have any questions or conmients regarding the enclosed, please do not hesi-
tate to contact me.

Exclusive Contracts

NEW YORK. NEW YORK (1)

Stadiums:

Shea Stadium « No

Yankee Stadium No

Giants Stadium Yes

Downing Stadium No

National Tennis Center No

Forums, Major Arena, etc.:

Madison Square Garden Yes

Byrne Meadowlands Arena Yes

Nassau Coliseum Yes

Carnegie Hall No

Shubert Theatres No

Lincoln Center No

LOS ANGELES (2), LONG BEACH (32), CAUFORNIA

Stadiums:

Rose Bow) No

Los Angeles Coliseum Yes

Dodger Stadium No

Anaheim Stadium No

Santa Bartwra County Bowl No

129

Exclusive Contracts — Continued

Forums, Major Arena, etc.:

Great Western Forum Yes

Anaheim Arena Yes

LA Sports Arena „_ Yes

Hollywood Bowl No

Long Beach Arena - Yes

CHICAGO. ILUNOIS (3)

Stadiums:

Soldier Field _ No

Comiskey Park „ Yes

Wrigley Field __ __ Yes

Dyche Stadium No

Forums, Major Arena, etc.:

Rosemont Horizon Yes

Poplar Creek _ Yes

World Music Theatre Yes

Chicago Civic Opera House No

Chicago Orchestra Hall No

HOUSTON. TOAS (4)

Stadiums:

Astrodome Yes

Rice Stadium „ No

G. Raleigh White Stadium (Texas A & M) „ No

Butler Stadium No

Forums, Major Arena, etc.:

Summit Arena Yes

G.R. Brown Convention Center No

Astro Arena Yes

Houston C.C.C. Coliseum No

PHILADELPHIA, PENNSYLVANIA (5)— NONE '

SAN OIEGO. CAUFORNIA (6)

Stadiums:

Jack Murphy Stadium „ No

Aztec Bowl (SD State) „ No

Lake Elsinore Diamond _ No

DeVore Stadium (Southwestern College) „ No

Forums, Major Arena, etc.:

San Diego Sports Arena Yes

San Diego Convention Centre Yes

Starlight Bowl „ „ No

Emtiarcadero Marina South _„ No

DETROIT. MICHIGAN (7)

Stadiums:

Tiger Stadium „ „ Yes

Pontiac Silverdome Yes

University of Michigan Stadium (Ann Art»r) No

Forums, Major Arena, etc.:

Cotx) Arena _ Yes

Joe Louis Arena „ „ Yes

Palace of Auburn Hills Yes

Pine Knob „ Yes

DALLAS, TEXAS (8)

Stadiums:

Texas Stadium No

Cotton Bowl „ No

Forums. Major Arena, etc.:

Starplex Amphitheatre Yes

Reunion Arena No

PHOENIX (9) and TUCSON (33). ARIZONA
Stadiums:

Sun Devil Stadium (ASU) No

130

Exclusive Contracts — Continued

Arizona Stadium (U of A) No

NAUSkydome No

Peoria Sports Complex Yes

Scottsdale Stadium No

Forums, Major Arena, etc.:

Veterans Memorial Coliseum No

America West Arena No

ASU Activity Center No

McKale Center No

Tucson Convention Center No

SAN AffTONIO, TEXAS (10)

Stadiums:

Alamodome* No

Forums, Major Arena, etc.:

Hemisfair Arena * No

Sunken Gardens No

SAN FRANCISCO (14)/DAKLAND (39)/SAN JOSE (11), CAUFORNIA— NONE '

INDIANAPOLIS. INDIANA (12)

Stadiums:

Bush Stadium No

Hoosier Dome Yes

I.U.P.U.I Stadium No

Forums, Major Arena, etc.:

Market Square Arena Yes

Deer Creek Yes

Hinkle Fieldhouse No

WASHINGTON, D.C. (19)/BALT1M0RE, MARYLAND (13)— NONE ^

JACKSONVILLE. aORIDA (15)

Stadiums, Forums, Major Arena, etc.:

Gator Bowl No

Florida Theatre Yes

Jacksonville Coliseum Yes

Jacksonville Civic Auditorium Yes

COLUMBUS. OHIO (16)

Stadiums:

Ohio Stadium No

Cooper Stadium Yes

Forums, Major Arena, etc.:

Polaris Amphitheatre Yes

St. John Arena No

MILWAUKE, WISCONSIN (17)

Stadiums:

Milwaukee County Stadium No

Wisconsin State Fairgrounds No

Camp Randall Stadium (Madison) No

Lamljeau Field — Green Bay No

Forums, Major Arena, etc.:

Bradley Center Yes

Alpine Amphitheatre Yes

Marcus Amphitheatre Yes

Dane County Expo Center No

MEMPHIS, TENNESSEE (18)

Stadiums:

Liberty Bowl No

Forums, Major Arena, etc.:

Pyramid/Mud Island Yes

Mid South Coliseum Yes

* Note. An sdusMe contract with the CMy ol San Antonio is currently beinj nejotiated.

131

Exclusive Contracts — Continued

BOSTON. MASSACHUSETTS (20)

Stadiums:

Fenway Park No

Foxboro Stadium _ Yes

Alumni Held (BC) „ No

Harvard Stadium No

Fiton Field (Holy Cross) „ No

Forums, Major Arena, etc.:

Boston Garden _ Yes

Centrum (Worcester) Yes

Great Woods F/T Performing _ Yes

Tanglewood , Yes

Boston Opera House _ „ No

SEATTLE (21)/rAC0MA. WASHINGTON

Stadiums:

Seattle Center Memorial Stadium „..„ No

King Dome No

Husky Stadium No

Cheney Stadium No

Forums, Major Arena, etc.:

Seattle Center Coliseum No

Tacoma Dome Yes

Puyallup Fair Grandstand No

Hec Edmundson Pavilion (UW) No

EL PASO. TEXAS (22)

Stadiums:

Sun Bowl Stadium „„ No

Special Events Center at UTEP „ No

Forums, Major Arena, etc.:

El Paso County Coliseum „„ Yes

El Paso Con. Center Hall „ Yes

McKelligon Canyon Amphitheatre No

NASHVILLE/DAVIDSON. TENNESSEE (23)— NONE*

aEVELAND. OHIO (24)

Stadiums:

Cleveland Municipal _„ No

Jacobs Field „ Yes

Rubber Bowl (Akron) No

Forums, Major Arena, etc.:

Gateway „ Yes

Blossom Yes

Playhouse Square Center:

Palace Theatre No

State Theatre No

NEW ORLEANS. LOUISIANA (25)

Stadiums:

Superdome Yes

Ted Gorm ley Stadium No

Forums, Major Arena, etc.:

UNO Lakefront Arena Yes

Audubon Zoo Amphitheatre No

Marconi Meadow No

DENVER. COLORADO (26)

Stadiums:

Mile High Stadium No

Folsom Field (Boulder) No

Falcon Stadium (Colorado Springs) „ No

Hughes Stadium (Ft. Collins) „ No

Forums, Major Arena, etc.:

McNichols Arena No

Coors Event Center (Boulder) _„ No

132

Exclusive Contracts — Continued

Denver Coliseum No

Red Rocks Amphitheatre No

Fiddler's Green Amphitheatre Yes

AUSTIN, TEXAS (27)— NONE'

FORT WORTH, TEXAS (28)

Stadiums:

Amon G. Carter Stadium No

Forums, Major Arena, etc.:

Tarrant Co. Convention Center No

Will Rogers Memorial Coliseum No

OKLAHOMA CITY, OKLAHOMA (29)— NONE*

PORTIANO, OREGON (30)— NONE '

KANSAS Cirr, MISSOURI (31)

Stadiums:

Arrowhead Stadium No

Kauffman Stadium No

Forums, Major Arena, etc.:

Kemper Arena* No

Municipal Auditorium No

Sandstone '.. Yes

ST. LOUIS, MISSOURI (34)— NONE

Stadiums:

Busch Stadium No

Forums, Major Arena, etc.:

Riverport Amphitheatre No

Keil Arena No

St. Louis Arena No

CHARLOTTE. NORTH CAROLINA (35)

Stadiums:

American Legion No

Forums, Major Arena, etc.:

Charlotte Coliseum Yes

Blockbuster Pavilion Yes

Grady Cole Center No

ATLANTA, GEORGIA (36)

Stadiums:

Atlanta Fulton Company Stadium .'. No

Forums, Major Arena, etc.:

Georgia Dome Yes

The Omni Yes

Lakewood Amphitheatre Yes

Fox Theatre Yes

Chastain Park No

Atlanta Civic Center No

Georgia World Congress Center No

NORFOLK/PORTSMOUTH/NEWPORT NEWS, VIRGINIA BEACH, VIRGINIA (37)

Stadiums:

Harbor Park No

Forums, Major Arena, etc.:

Scope Yes

Hampton Coliseum Yes

ALBUQUER(3UE, NEW MEXICO (38)— NONE*

PITTSBURGH. PENNSYLVANIA (40)

Stadiums:

Three Rivers Stadium Yes

Pittsburgh Stadium No

'Ticketmaster has an exclusive agreement with the City to operate the facility bat office on the City's behalf, but does not have an exclu-
sive facility agreement with the City for outlet and telephone sales.

133

Exclusive Contracts — Continued

Forums, Major Arena, etc.:

Pittsburgh Civic Arena No

Star Lake Amphitheatre - Yes

SACRAMENTD/STOCKTQN. CAUFORMA (41)— NONE*

MINNEAPOUS AND ST. PAUL. MINNESOTA (42)

Stadiums:

HHHMetrodome No

Municipal Stadium - No

Forums, Major Arena, etc.:

Target Center - Yes

Met Center ~ No

Williams Arena - No

St. Paul Civic Center Yes

TULSA. OKLAHOMA— (43)-^«0NE

Stadiums:

Oral Roberts Univ.— Johnston Stadium — No

McClain Stadium No

Webster Stadium No

Lafortune Stadium ~ No

S.E. Williams Stadium No

Univ. of Tulsa — Skelly Stadium No

Forums, Major Arena, etc.:

Tulsa PAC. — Chapman Music Hall _ No

Reynolds Amphitheater No

Expo Square — Pavilion No

Tulsa Convention Center Arena - No

Oral Roberts Univ.— Mabee Center No

HONOLULU. HAWAII (44)— NONE

Stadiums:

Aloha Stadium - No

Forums, Major Arena, etc.:

Neal Blaisdell Center— Concert Hall — — No

Neal Blaisdell Center— Waikiki Shell No

Neal Blaisdell Center— Arena __ « No

aNCINNATl. OHIO (45)

Stadiums:

Riverfront Stadium — « No

Nippert Stadium « Yes

Forums, Major Arena, etc.:

Riverfront Coliseum No

Riverbend Yes

MIAMI, FLORIDA (46)

Stadiums:

Joe Robbie Stadium - : Yes

Orange Bowl No

Miami Baseball Stadium No

Forums, Major Arena, etc.:

Miami Arena Yes

AT & T Amphitheatre No

Gusman Center for the Performing Arts _ Yes

FRESNO/VISALIA. CAUFORNIA (47)— NONE "»

OMAHA. NEBRASKA (48)

Stadiums:

Music Hall Yes

Orpheum Theater Yes

Univ. of Nebraska — Fieldhouse No

Univ. of Nebraska — Al Caniglia Field No

Rosenblatt Stadium „..„ Yes

Forums, Major Arena, etc.:

Aksarben Coliseum — Arena No

BOSTON PUBLIC LIBRARY

134 3 9999 05982 458 9

Exclusive Contracts — Continued

Omaha Civic Auditorium Yes

TOLEDO, OHIO (49)

Stadiums:

Univ. of Toledo — Glass Bowl Stadium No

Forums. Major Arena, etc.:

John F. Savage Hall No

Masonic Auditorium Yes

Toledo Sports Arena Yes

BUFFALO, NEW YORK (50)

Stadiums:

Rich Stadium No

Forums, Major Arena, etc.:

Buffalo Memorial Auditorium No

> The entity operating In Philadelphia, Pennsylvania as 'Ticketmaster", Is not owned, operated or managed by TIckelmaster Holdings Group
or its atflllales. It is merely a licensee o< the '7ickelniaster System" and mark. Ticketmaster Holdings Group and Its attiliates do not have
any acluslve ticketing contracts with any stadiums, arenas, etc in Philadelphia, Pennsylvania.

'The entity operatmg as "Bass Tickets" in San Francisco, Oakland and San Jose, Calitornia, Is not owned, operated or managed by
Ticketmaster Holdings Group or Its attiliates. It is merely a licensee ot the "Ticketmaster System" and mark. Ticketmaster HokJIngs Group and
Its attiliates do not have any exclusive ticketing contracts with any stadiums, arenas, etc. In San Francisco, Oakland or San Jose, California.

'The entity operating as 'Ticketmaster" in Washington, D.C and BaHlmore, Maryland is not owned, operated or managed by Ticketmaster
Hoktings Group or Its attiliates It is merely a licensee ot the 'Ticketmaster System" and mark. Ticketmaster Hckjings Group and Its attiliates
do not have any exclusive ticketing contracts with any stadiums, arenas, etc In Washington, DC or Baltimore, Maryland.

*The entity operating as 'Ticketmaster" in Nashville/Davidson, Tennessee is not owned, operated or managed by Ticketmaster Hoktings
Group or Its attiliates It is merely a licensee at the 'Ticketmaster System" and mark. Ticketmaster Holdings Group and Its attiliates do not
have any exclusive teketing contracts with any stadiums, arenas, etc. in Itashvllle/Davldson, Tennessee.

'The entity operating in Austin, Texas as 'Ticketmaster", is not owned, operated or managed by Tictetmaster Hokllngs Group or Its attili-
ates. It Is merely a licensee ot the 'Ticketmaster System" and mark Ticketmaster Holdings Group and Its attiliates do not have any aclusrve
ticketing contracts with any stadiums, arenas, etc in Austin. Texas

■The entity operating as 'Ticketmaster" in Oklahoma City. Oklahoma Is not owned, operated or managed by Ticketmaster Holdings Group or
its attiliates It is merely a licensee ot the 'Ticketmaster System" and mark. Ticketmaster Holdings Group and Its attiliates do not have any
exduswe ticketing contracts with any stadiums, arenas, etc in Oklahoma City, Oklahoma.

'The entity operating as "G I. Joe's Ticketmaster" In Portland, Oregon Is not owned, operated or managed by Ticketmaster Hokllngs Group
or Its attiliates It is merely a licensee of the 'Ticketmaster System" and mark. Ticketmaster Holdings Group and its attiliates do not have
any eiclusive ticketing contracts with any stadiums, arenas, etc. In Portland, Oregon.

*The entity operating as 'Tictetmaster" In Albuquerque, New Mexico is not owned, operated or managed by Ticketmaster Holdings Group or
its attiliates It is merely a licensee ot the 'Ticketmaster System" and mark Ticketmaster Holdings Group and Its attiliates do not have any
exclusive ticketing contracts with any stadiums, arenas, etc In Albuquerque. New Mexico.

■The entity operating as "Bass Tickets" In Sacramento and Stockton, Calitornia s not owned, operated or managed by Ticketmaster Hold-
ings Group or Its attiliates It is merely a hcensee at the 'Ticketmaster System" and mark Ticketmaster Holdings Group and its affiliates do
not have any excluswe ticketing contracts with any stadiums, arenas, etc in Sacramento or StocMon. California

>°The entity operating as "Bass Tickets" in Fresno and VIsalia, California is not owned, operated or managed by Ticketmaster Holdings
Group Of Its affiliates It is merely a licensee of the "Ticketmaster System " and mark Ticketmaster Holdings Group and its affiliates do not
have any exclusive ticketing contracts wrth any stadiums, arenas, etc in Fresno or Visalia. California

85-914 (140)

ISBN 0-16-0A7228-8

9 zsoiaoHzzzs?

90000

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