Dealing With The Heat (continued)

To make it a closed system (a closed architectural system). Other ticket companies wanted to use our distribution system and I wouldn’t let ’em. And because my thought was: you either buy the whole package or you don’t buy anything. And by the way, that’s totally legal! Music writers didn’t understand that. just did not understand it. Didn’t understand the dynamic that if you didn’t sell all, you didn’t have to sell any. Very basic premise, because in the end if you want to sell best available seat you’re in the marketing business. You’re in a marketing business that says to your clients: if I have your entire inventory, people have to believe in the integrity that when they show up, they can get the best of what’s there. Now that may be the last 10 rows, but that’s there. Let me give you a story that sort of goes underneath this, which is very funny (to me anyway): we were not giving out seat locations for Broadway. We were selling tickets for Broadway and we’d say best available seat, and we didn’t give out seat locations. Well, where the press consistently ripped us was Denver – and I always blamed it on the lack of oxygen there, you know, the air was lighter, lol. And I finally said – I couldn’t take it anymore – you know, Broadway in Denver [lasts] a couple of months, so why don’t we give out seat locations and let’s see what happens? And low and behold, here was the sea change: if I said to you, best available seat and I put you in the last row of the orchestra (because remember, outside New York almost everything is limited run. It’s not like we play until we run out. We play for two weeks here and go to another city, because Broadway touring is limited). So if I put you in the last row of the orchestra on Tuesday night, you leave that play, and you go, “They ripped us off, they said best available seat and it’s the last row in the orchestra! We got taken advantage of!” Giving out seat locations, we said: “We have no seats left in the orchestra, the only seats we have is the last row, do you still want them?” Because the theory was people wouldn’t buy the last rows in the orchestra, and here’s what we found: most people – 90-95 percent of people must go to theater in these limited runs based on the day they have [available] – not multiple times – same in Broadway too. “If I want to go Tuesday night, I gotta go Tuesday night the 5th, I can’t go when.” ok? So they said, “Wow, we were lucky. We got the last seats in the orchestra!” So you went from being: I’ve taken advantage of you” to “you gave me a service. And all the noise went away, and we took that and we went to New York. Now, that’s Broadway.

The big complaint that was always about Ticketmaster was the heat – in connection with the topic – was service charges. And here was the great disconnect in life: the writers would tell you that you’re taking advantage of the public. [But] the public never stopped buying tickets.

As a matter of fact, during the heat and the publicity, you did better as a company (which made no sense to me by the way), which sort of proved the axiom: “I don’t care what you write about me, just as long as you’re writing.” We would internalize it because we wanted people to think well of us, or we wanted people certainly not to think that we’re taking advantage of them. But the fact of the matter was, that it had no impact on your business, other than you took the heat for everybody.

I remember I was at a college a couple years ago, and I go, “Who do you think is responsible for the price of tickets?” And I said, “How many people think it’s the building?” and a few people raised their hand. And I said, “How many people think it’s the promoter?” and a few people [raised their hand]. “And how many people think it’s the act?” Nobody raised their hand. “And how many people think it was Ticketmaster?” and everybody raised their hand! And it shows you how bizarre the process is, because no one thinks that the act has anything to do with their own destiny. And that’s the process. That’s the part that’s really interesting. And then after a while like anything else, you kind of develop an outer shell that kind of says, ok, they’re going to say that, there’s nothing you can do, and who do I really care about? I care about my clients, which are the promoters and the venues. The reason that all this is happening is because I’m taking the heat for them. And so in that scope, what the music writers and the people that wrote the really horrendous stuff about it (and in many cases were really personal attacks on me) – I was an easy focal point. I wasn’t from the industry. I came from the outside. I came with a really clear idea of what I wanted to do, and every year it got clearer. The joke in 1993 that you knew all this in 1983 is silly. You learn every year from the year before and you kind of evolve. But what’s interesting was that none of my clients complained. So you’d read this, and then you’d say,ok, so let me see, what’s the fallout from this, right? I mean we’ve all seen consumer products where bad things happen and sales fall apart. So they write these terrible stories, and they go, “Your service charges are too high and you’re taking advantage.” (And they use a lot stronger words than that), and the only thing that happens to your business is it continues to grow.

In the 80s – till we sold the company – Pritzkers were my partner until we sold. They were from Chicago and Jay was my mentor. And until we first sold the business in 1993 to Paul Allen, from 1985 to 1993 our business grew at the rate of 35-55 percent a year. So here, on the left hand, you got heat; here on the right hand, you’re getting more buildings. You never got heat from your buildings because they understood the dynamic, and they understood that it was all caused by the greed of the acts. In other wards, we had a solar system where we all shared. As promoters got squeezed and buildings got squeezed, they said we need to find it. And the controversy we had in many cases with the acts, was this was a revenue stream they couldn’t control.

Ticketmaster Background

Do you think they understood I took the heat? Absolutely! I was on the phone with somebody today, he said, “You took the heat for the whole industry.” Now, do I think they appreciate it? I think they were human. Some did and some didn’t. Again, it was like, what can you do for me today? But I understood that. I never had false illusions about this business, which was why when I left it in ’98. I never came back to it. The truth was, it was a great business, it was a lot of fun, and you had a chance to create a solar system that had never been done before.

In the early 80s, I remember people had the same service charge in a marketplace, and I go, why one service charge? They have different price tickets. And I remember we were having an argument – we were having a discussion rolls eyes. Not an argument, but a discussion with a team, lol. And I said, “Why is this service charge $1 on a $40 ticket?”

  • And they said, “Well, because we have a $5 ticket.”
  • I said, “Ok, so make the $5 ticket a $1 [service charge] and make the $40 ticket a $2 service charge.
  • The team said, “Well you can’t do that.”
  • And I remember my line. I said, “Was that the tablet Moses dropped? I mean why can’t you do it? It’s a business. The guy’s buying a $40 ticket. Don’t care about the $5 ticket. He ain’t going to – (and that was a high priced ticket in those days) – ~he’s not gonna sit with a guy with $5.00 is gonna.~”
  • And I went back to the guys that devised our system and I said, “We need to have multiple service charges on the same event.”
  • They said, “We don’t do that.”
  • And I said, “what do you mean we don’t do that?! Of course we’re going to do that!”

And so you had multiple service charges on the same event; multiple service charges in the marketplace; the ability to make a dynamic, flexible ticket system that could be responsive to its clients needs. All of that was hard to imagine in 2006 sensibilities, but all of that was radical in those days, and all of that was monumental change. The business plan we wrote was: New York; Chicago; and LA was supposed to be 5 years down the road. And the fact of the matter was, we couldn’t really get arrested in New York – we did Chicago, based on the story I told you before – and we went after LA totally by a fluke, and it’s worth telling the story. This is what happened: John Ruby who worked for Barry Fay, called me up and said, “Do you want to do the US Festival? Steve Wozniak is doing the US Festival.” And I said, “What’s an US Festival?” I mean, you know?

He said, “Well basically they’re doing these weekends in Glen Helen Regional Park. We think it’s going to be a million tickets. Do you want to do this because everybody hates Ticketron, and would you consider doing this? But you have to guarantee the drop count.” Honest to God, I didn’t know what the drop count was, so of course I guaranteed it. And well, to me it was: “the ticket hit the floor – that’s a drop,” lol – but there were so many counterfeits with Ticketron that what they were really saying is, every ticket we count, you pay for, ok? Now that said, in March of ’83 (because this conversation was the end of ’82), in March of ’83, a bunch of us come out to LA (in February or March), we signed two leases on an office.