VIP Sales Rocking Ticket Business

In mapping out her 39-date summer “Re-Invention” tour, Madonna sold expensive VIP tickets through her website.

The Madonna Platinum Package commanded $700 for a seat near the stage, in the same area where other tickets went for $300. But Madonna’s special package came with schwag that included a poster, a laminated VIP tag and access to a VIP lounge.

Some of the Madonna packages sold for even more money -- from $1,000 to as much as $1,800 -- through what has become a growing aftermarket for elite concert tickets. Companies that do business with her sold the packages through online bazaars where brokers resell tickets at big markups.

How the “Re-Invention” tickets wound up selling at such a broad array of prices says a lot about the shifts that are rocking the ticket business. InterActiveCorp’s Ticketmaster remains the dominant player in the field and retains control of most concerts’ original ticket inventory. But artists, concert promoters and Internet marketers are employing new tactics to jump into the resale market and claim their own pieces of the fan wallet.

Major acts routinely grab 8% to 10% of their concert tickets to sell to their most loyal fans -- typically before shows even go on sale to the public.

The upshot: Artists are building a side business by charging fans for early or exclusive access. Rock singer Rod Stewart, for example, charges $49.95 for a fan membership, which comes with the right to buy seats in the first 30 rows of his performances. Madonna’s fan club, which charges $38 for a membership, offered early access to “Re-Invention” tickets.

Lately some artists have taken their ticketing business a step further by striking deals to sell tickets to the highest bidder via online auctions. Artists’ representatives defend the practice, saying the musical act is getting the money instead of ticket brokers -- long the nemesis of artists and their representatives for charging fans high prices for resold tickets.

But critics argue that the free-for-all is backfiring by opening another avenue to what amounts to legal ticket scalping.

“It’s the whoring of the business,” said veteran agent Tom Ross, founder and former chief of the music division at Creative Artists Agency. “Any artist that gets into business with brokers is selling out to the devil.”

In Madonna’s case, the VIP ticket package was created by licensing firm Signatures Network Inc. of San Francisco and Musictoday of Charlottesville, Va., which runs fan clubs and other artist services.

Under their deal with Madonna, an estimated 10,000 tickets were set aside to be packaged with laminates and other fan come-ons to create VIP packages, according to the artist’s representatives. The main outlet for the packages was supposed to be an authorized website, madonnaviptickets.com, where tickets were sold at the designated $700 price.

But sources said Signatures sold as many as 30 VIP packages for each performance through Razorgator, a ticket distributor that posts tickets from brokers online and sometimes acts as a broker itself. Signatures offered the Madonna VIP tickets on Razorgator for as much as $1,800, a price that included the website’s own commission of about 20%.

Signatures and Musictoday also sold batches of tickets to the highest bidders on EBay Inc. and another online auction site, StubHub Inc., where they fetched as much as $1,000 each.

Signatures Chief Executive Dell Furano said the notion of auctioning the tickets through such sites as Razorgator “really wasn’t part of our pitch” to the pop star’s management but “really was up to us.” Furano said he sold tickets through the broker and auction websites to reach a bigger audience and “to see how it works.”

Although auctioned tickets represented a small percentage of Madonna’s sales, her management nonetheless expressed outrage that any were bid up at all. The star’s manager, Caresse Henry, said she authorized the sale of tickets at the set $700 price on the auction sites but insisted there was to be no bidding up of the price. She said she never permitted the sale of any tickets on Razorgator.

“It’s definitely not sanctioned by us whatsoever,” Henry said. “I wish there was a way to stop it. They are not the deals we made. I’m pretty upset.”

Andrew Snowhite, executive vice president of business development for Musictoday, said that “I think there’s some misunderstanding” over whether tickets could be sold to bidders on the auction sites.

“We definitely feel it was pretty clear,” he said. He noted that “artists have seen that, depending on the specific market demand, the tickets can be worth more than the face price. Some artists have chosen to capture some of that spread.”

Sales through online fan clubs and the creation of souvenir-rich VIP packages are an outgrowth of the broader shift toward online ticket purchases.

Madonna isn’t the first act to delve into the secondary ticket market. Veteran rock band Bon Jovi auctioned seats to a performance in Atlantic City, N.J., last year. Pop-rock act Third Eye Blind sold tickets to its small-market shows on EBay. And a wide array of acts, including Britney Spears and Creed, have sold their own tickets through the StubHub online market to raise money for charity.

Artists’ representatives say they are flexing their muscle to reward fans who have proved their loyalty by joining clubs and to offer those with deep pockets a richer concert experience. For $1,000, veteran rock band KISS offers a ticket in the first two rows, some face time and a photo with the band (in its full stage makeup) as well as a stage tour.

But buying on the secondary market, including purchases from artists, can carry risks. When such acts as Aerosmith and Christina Aguilera recently canceled performances, fans who had bought VIP tickets from their fan clubs found themselves out of luck. The fan club service company in those cases, FansRule, went belly up, leaving the ticket holders with little prospect of ever seeing a refund.

Concert promoters too are taking their own allotments of tickets to sell through ticket clubs or VIP deals. Industry giant Clear Channel Entertainment Inc., for example, has been offering a package for Sting’s tour that includes a seat in the first 10 rows of the venue, a leather CD case and access to a “private hospitality area” for $300.

For everyday fans, however, it means even tighter supplies. VIP tickets come on top of hundreds, even thousands, of other tickets reserved for record labels, radio stations, concert venue owners and others. In some cases, as much as 25% of a 16,000-seat arena may be spoken for before the box office even opens.

To some artists’ representatives -- even those who embrace the VIP concept -- making tickets available for brokers to resell crosses an ethical line with fans.

“You’re scalping your own tickets,” said KISS manager Doc McGhee. “You’re getting way too greedy. If you set a price for a ticket, you set a price for a ticket.”