Music Ally

A storm may be brewing in the secondary ticketing market, following the death of Michael Jackson last night. With 750,000 tickets sold for his planned run of gigs at London’s The O2 venue – many of which have been re-sold through the secondary market – the after-effects could shine a spotlight on secondary ticketing – and specifically how trustworthy it is, and how honest ticket resellers will prove to be.

While Michael Jackson’s official Sony-hosted site, the Seatwave and Viagogo secondary ticket sites have acknowledged the pop icon’s death, concert promoter AEG’s MichaelJacksonLive.com is still displaying the same buzz and hype as it did in the days prior to his death. At the time of writing, Ticketmaster.co.uk is still allowing fans to explore dates for Jacko’s O2 concert run as if the star wasn’t dead. Ticketmaster has now taken the O2 dates off the site.

It is expected, though not yet fully confirmed, that legitimate retailers will offer full refunds to ticket buyers, leaving promoter AEG out of pocket to the tune of tens of millions of pounds. UPDATE: Seatwave has confirmed this, according to BBC News Online. But Jackson’s concert run was arguably the biggest yet to provide official blessing to secondary ticket retail through partners such as Viagogo, with yet more tickets sold at marked-up prices through eBay.

The early dates of Michael Jackson’s O2 run were already postponed last month, meaning that those who had opening night tickets for July found themselves being offered replacement dates in February 2010. Fans on Michael Jackson’s official site were complaining that retailers such as Viagogo, Seatwave and GetMeIn were not responding to messages requesting refunds.

Given that Seatwave and Viagogo both offer guarantees it is expected that fans and sellers will not be left in the lurch. But there has not yet been confirmation of how refunds will work and how they will be delivered. Indeed at the time of publishing, a statement on Viagogo’s site said only that “at this stage we do not have any information regarding the refund policy for the planned shows at London’s O2 arena.”

Remember, the secondary tickets being sold had not even been delivered to most original buyers yet. Because TicketMaster planned to send out tickets ten days before each date, most Seatwave and Viagogo users were reselling what amounted to virtual tickets: promises of tickets once they had arrived.

It is unknown whether TicketMaster still plans to print and send tickets out, but it is highly unlikely that they will incur that cost at this stage. This means that if there are any physical tickets in circulation they may become valuable collectors’ items, but everyone else involved in the ticket sale and resale cycle will have to be refunded.

Although the costs to companies such as Seatwave and Viagogo are intangible (they don’t have to build sets or hire concert venues) they are likely to face a major financial hit and the story will likely damage confidence in the whole notion of paying in advance for tickets that haven’t yet been sent out.

Some fans – particularly those who bought through auction site eBay – may never get their money back. Jacko’s death will prove a real test of how scrupulous eBay sellers can be. Some sellers will have auctioned off tickets that they hadn’t yet received, for hundreds of pounds each. And given that AEG released a new batch of tickets as recently as Wednesday, there are still some auctions underway on eBay right now.

Those eBay users who placed bids for those tickets may be expected to pay up. Sellers will be refunded their initial £70+ ticket price by TicketMaster but will those fans refund the larger eBay amounts to their auction winners Undoubtedly some will have spent the money and won’t be in a position to pay back their buyers. Already we are hearing reports on Twitter of fans mourning up to £1,000 that they have spent on touted tickets.

So where does the buck stop? A lot will depend upon the nature of the contracts AEG had with Michael Jackson and the insurance the company was able to acquire. Reports suggest that USD $30 million has been spent on the production, money that AEG is unlikely to recoup back.

In addition it will be saddled with 50 empty nights at the O2, some of which it will be able to rebook or pass off to other productions. There was also a reported USD $40 million advance paid to Michael Jackson; it is quite possible that most or all of that amount will be taken from Jackson’s estate by creditors further ahead in the queue than AEG.

But according to reports, AEG was only able to access around $23 million in insurance backup and even then only covering the first ten dates. Worse still for AEG, it’s possible that insurers will wait upon the results of a post-mortem on Jackson: if overdose or suicide is implicated then it’s possible that the insurance may not be valid.

A report in Reinsurance magazine estimated the potential liability to AEG at around GBP £300 million. AEG Live’s CEO Randy Phillips stressed that doctors representing the insurance firms had given Michael Jackson a clean bill of health, but Phillips also admitted that he was prepared “to self-insure to make up the dates”.

Right now it’s looking like AEG may have to do just that.

Tags: AEG, michael jackson, seatwave, Ticketmaster, viagogo

This entry was posted on Friday, June 26th, 2009 at 9:44 am and is filed under Digital Music News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.