Who needs tickets?

There was an interesting twist yesterday in the growing debate over property rights in virtual and digital goods. A committee of the California State Assembly voted to scrap a provision in a bill that would have made the sale of paperless tickets for live events illegal in the state. Paperless tickets are already illegal in New York, and a measure to restrict them is currently pending in New Jersey.

The California bill was strongly backed by StubHub, which operates an online exchange for paper event tickets and fears that growth in the use of virtual tickets could limit the highly lucrative secondary (i.e. scalper) market it dominates. Paperless tickets are tied to the buyer’s credit card and typically can only be redeemed by the original buyer at the venue by swiping the card and showing ID. Thus, the can’t be re-sold in the secondary market (paperless tickets differ from e-tickets, which are typically scanned from a mobile phone and can be resold through exchanges).

The bill was backed by Ticketmaster (owned by Live Nation), which operates its own online ticket exchange but trails well behind StubHub in the secondary market. Ticketmaster claims the paperless tickets allow promoters and artists to ensure that a certain number of tickets will remain at their face value, rather than getting bid up by scalpers, and act to counter ticket buying “bots” that buy up tickets in bulk by making it appear as if they’re going to different buyers.

On one level, the battle over the bill was simply a typical bit of legislative ground war between well-heeled industries. What made it interesting was the tenor of the debate that arose in the California Assembly over the measure. According to the Wall Street Journal, yesterday’s vote came after a philosophical debate broke out over what a ticket — whether real or virtual — actually represents, and the rights that should confer on the buyer of the ticket.

From the Journal account:

Live Nation’s camp argued that ticket holders don’t “own” their seats; tickets are just a license to occupy the space for several hours, which venues can revoke for bad behavior.

But StubHub and its supporters say ticket holders own the rights to their tickets until they walk in the arena door, at which moment the revocable license kicks in.

“Until that point they own the rights to the ticket and therefore should be able to sell them,” said StubHub spokesman Glenn Lehrman said. “It [was] really a property rights bill.”

That exchange could have come right out of the oral arguments in the ReDigi case, or in Kirtsaeng v. John Wiley & Sonsor from the debate beginning to stir on Capitol Hill over the balance of property rights between content creators and consumers in the digital realm.

In the ReDigi case, the court ruled that owners of MP3 files do not have the same property rights as the owners of physical CDs. In the Kirtsaeng case, the Supreme Court seemed to tip the balance or rights in favor of the buyer, rather than the rights owner. But as the legislative battle in California shows, the fundamental debate over virtual property rights is not likely to remain limited to recorded or published media.