Testimony of Tom Giovanetti
President, Institute for Policy Innovation (IPI)
Before the Texas House of Representatives
Business and Industry Committee
April 2, 2013
Protecting Secondary Markets for Tickets
HB 3041 / SB 1558
Mr. Chairman, and members of the Committee, my name is Tom Giovanetti, and I am the president of the Institute for Policy Innovation, a 25 year-old free-market think tank in Dallas. IPI does not lobby, and we do not represent clients, but we do appreciate this opportunity to share our thoughts with you on HB 3041 / SB 1558.
IPI commends this committee and the bill’s sponsor for taking action to protect secondary markets in tickets.
The basis of the belief in limited government and free markets is our recognition of spontaneous order and the ability of people to self-organize and to self-govern. Our founders recognized that free people naturally create markets and organize themselves for the betterment of the community and for economic efficiency. We don’t need governments to do this for us. Government doesn’t create markets—markets happen naturally. We are not suspicious when a market naturally, spontaneously appears “out of nowhere”—that’s simply the latest example of natural self-organization of people into markets. Rather, our suspicions are aroused when somebody tries to squash or monopolize such a naturally occurring market.
The secondary market for tickets is a great example of a natural, spontaneous market. People have always given away or resold tickets that they didn’t want or couldn’t use. It’s a natural, spontaneous, secondary market, and it’s the kind of self-organization that it is our duty to preserve, if we believe in spontaneous order, self-organization, and limited government.
And secondary markets create greater economic efficiency, for all parties involved. The original ticket purchaser can be made whole, and the seats will still be filled, which is in the venue’s best interests. And no one is harmed.
The folks on the other side of this issue may try to bring up licensing as a way to try to cloud the issue. We at IPI also do a lot of policy work on intellectual property. In fact, I’m an accredited observer with the World Intellectual Property Organization in Geneva, Switzerland. Arguing that the ticket is a license and not real property doesn’t actually change anything in this argument. It is still improper for them to try to extend their envelope of licensing such as to kill or monopolize the secondary market. And it’s completely appropriate for the legislature to define the rights of ticket purchasers and to make sure that licensing terms and conditions are not used improperly to kill or monopolize the secondary market.
There are, of course, reasonable terms and conditions for venues to place upon ticket purchasers. But as venues, promoters and ticketing companies increasingly try to extend the terms and conditions for a ticket beyond those reasonable and necessary for the first sale of those tickets in order to eliminate or monopolize the secondary market, it’s important for government to step in and clearly define the rights of ticket holders to participate in secondary markets.
The legislation before you (HB 3041 / SB 1558) is an attempt to protect these natural secondary markets for tickets against those who seek to extinguish or monopolize them. It is a perfectly appropriate consumer protection, especially since no one is harmed from a vibrant secondary market for tickets, as venues have already received whatever price they chose for the ticket. It is appropriate for governments to protect these markets by limiting the attempts of venues to improperly extend their fine print restrictions so as to squash these secondary markets.
The Institute for Policy Innovation (IPI) commends you for taking up this important legislation and for moving to ensure that vibrant secondary markets for event tickets are protected in Texas. This legislation is a win for Texas consumers, for free markets, and don’t forget that no one is harmed by this legislation.
IPI would be delighted to work with you as you continue to work on this important legislation. Thank you.