Live Music Exchange Blog

Mastering Tickets (repost) – Martin Cloonan


In support of the Play Fair on Ticket Fees campaign launched in December 2013 by consumer standards research organisation Which?, following a report which found extra charges of more than a third of the face value price being added on to theatre and music tickets, we repost a piece by Martin Cloonan on the secondary ticketing market. First published on the Live Music Exchange blog in February 2012, in it he discusses issues of fairness and ownership in relation to tickets.

On Thursday 23 February Channel 4’s Dispatches programme was entitled The Great Ticket Scandal. In it Channel 4 reporters went under cover to investigate what happens at two leading “fan exchange” sites, Viagogo and Seatwave. They found that contrary to the sites’ claims that they are simply a mechanism for fans to mutually exchange tickets, in reality they are clearing houses for a combination of semi professional and professional touts and promoters who sold direct to these “secondary” ticket agents. It was alleged that the biggest concert promoter in the world, Live Nation, is amongst those selling directly to the secondary market and thus benefitting from sales of ticket at prices which are well above the face value. The fallout from this seems set to continue.

What was at stake in the programme was two things. The first is fairness. Here fans who were at box offices and online at exactly the time that tickets went on sale were allegedly denied them because promoters had already sold chunks of primary tickets direct to the secondary market. This was portrayed as a well-established, routine, practice. Secondly, came deception. Both the sites claimed to be fan to fan, but evidence suggested that genuine fan exchange accounts were a maximum of a third of the sites’ business. In addition in cases where Viagogo was not being allocated tickets by the promoter, it used illicit means (such as multiple credit card buying) to buy tickets on the primary market which it then sold through its own website. In both cases the seller was not another fan, but the site itself. Considerable sums of money could be made here, the sites and promoters were alleged to be complicit in the deception, although no acts were named as benefitting from it.

Complaints about unfairness and deception are certainly valid points. Fans do expect (however unrealistically) a level playing field when they are competing for tickets. That certain concert promoters sell direct to the secondary market has long been alleged and there is plenty of anecdotal evidence of it. What the programme did was to provide hard evidence in public for perhaps the first time. In addition it is not unreasonable for fans to assume that what are advertised as fan-to-fan exchange sites are actually what they claim to be. Whether all this amounts to a “great scandal” is perhaps debatable, what is not is that the whole debate around ticketing has been transformed by technology.

The internet has made the selling of all sorts of goods, including concert tickets, a 24/7 business. It has also led to the rise of the so-called “bedroom tout” – opportunist buyers who might purchase 4 tickets to a gig, use 2 themselves and sell the others at a profit to help subsidise their own attendance. Slightly higher up in the tout hierarchy are the semi-professionals who target certain shows and buy tickets to sell, never intending to go themselves. At the top are secondary ticket agencies such as GetMeIn whose business is to sell tickets bought on the primary market (and – it is alleged – tickets which come straight from promoters who hope for a slice of the mark up).

Secondary ticket agents dislike the term tout and it certainly has negative connotations. They would prefer to see themselves as entrepreneurs who take risks in order to help fans get in to gigs they would otherwise miss. Indeed some fans are clearly happy enough to pay extra on the secondary market in order to avoid having to scramble for tickets. In addition, the secondary market is perfectly legal. It is perhaps – as the programme alleged – immoral in some instances, but it’s certainly legal. Other than football matches (because of fears of crowd trouble) and the Olympics (where outlawing the secondary market was a condition of being granted the Games), there are no specific laws against “touting”. Moreover, often fans themselves cannot distinguish between primary and secondary agents and simply go with sites which appear trustworthy.

What the programme did not raise explicitly, but which is certainly important, is the question of what a concert ticket actually represents. Is it a commodity like any other which can be bought and sold, or does it have some special capacity which means that the purchaser is honour bound to use it only for themselves and those they bought it for?

In fact there has been quite a lot of work on such issues in recent years. In 2005 the Office of Fair Trading launched an enquiry into ticket agents and concluded that generally secondary agents offer a valuable service to consumers and that real problems concerned forgeries and websites which offered non-existent tickets and took customers’ money before disappearing. However the issue did not go away and in 2008 was subject to a House of Commons Culture Media and Sport Committee enquiry. Readers wishing to know some more ins and outs are recommended to look up the Committee’s report on Ticket Touting.

The Committee heard evidence from the great and the good in the world of sports events organisers, concert promoters, primary agents and secondary agents. In each case what the issue finally rested on was first the status of the ticket as property and second the issue of whose property it was.

Whatever fans might feel, it is clear that tickets can be seen as forms of property. In essence they are goods that can legitimately be bought and sold. But tickets for top events are rivalrous goods – only a certain amount of people can get in and their enjoyment of the event is partly at the expense of those denied entry. As far as I am aware the status of who “owns” a particular gig has never been subject to legal investigation. Is it the act? The venue? The promoter? Ultimately it seems that it is the latter. Certainly concert promoters view tickets as theirs. It is their event and they, in collaboration with the act, venue and (possibly) primary ticket agent, seek to determine who gets in and at what price.

I doubt if many people dispute this. But what is in dispute is what happens when a ticket is sold. Does the purchase of a ticket signify a transfer of ownership from the promoter to the purchaser? Logically one might think so. If I buy a can of beans, it becomes my can of beans and I can do what I like with it, including selling it on to another bean enthusiast. Surely the same applies to a concert ticket? Well, not exactly. Check the terms and conditions on the backs of tickets and the conditions on many primary ticket agent sites and you’ll find that they include a set of rules that people attending concerts have to adhere to. One of these is often not selling the ticket on. In some cases it is explicitly stated that the ticket remains the property of the promoter until the event is over.

Previous research has found that fans tend to think that this is nonsense. When a ticket is in their hand it feels like their property. In addition it appears that the fine print on tickets has never been tested legally and that promoters who have turned fans away from gigs because they had bought tickets from touts exceeded their legal powers. It has even been suggested that Glastonbury’s rules about how people can buy tickets may be subject to legal challenge. But thus far no one appears to have the legal stomach to bring cases.

Nevertheless a number of promoters have argued that the tickets are their property and, as such, fans do not have a right sell them on. (Let’s leave the fact that some promoters sell direct to the secondary market, seemingly in contravention of their own rules to one side for the moment). Unfortunately promoters tend to be somewhat entrepreneurial sorts whose business nouse is for the big buck, not necessarily the moral high ground. Thus while their collective body, the Concert Promoters Association (CPA), spoke out against the secondary market, it is clear that a number of promoters saw the secondary market as a chance to make money in a world where margins were increasingly tight and top acts asking for an increasingly large share of the box office. One result of the latter phenomenon is that promoters have to look to other avenues to make money and here the secondary market is an obvious attraction.

After all the evidence was gathered the MPs decided against recommending the outlawing of the secondary market. Instead they called for a Code of Practice and tighter regulations. Reviews by the Department of Culture Media and Sport (DCMS) reached much the same conclusion. In sum, this was that tickets are property. Despite what some promoters claim there is a transfer of ownership and a healthy secondary market is good for all.

The result of this is that is that it’s effectively open season. Some promoters will talk of selling direct to the secondary market. Some say that for all their public pronouncements about loving their fans, acts themselves ask promoters to sell direct to the secondary market and split the dividends. (Hard evidence of this is, understandably, somewhat difficult to come by. It’s not exactly going to be written into the contract). Others talk of the introduction of “dynamic” pricing and of the secondary market playing a key role in this.

Underpinning all this is the fact that while promoters often see themselves as risk takers, their daily praxis often involves trying minimise risk. In this case a ticket’s face value is not necessarily its optimum market price. This is because selling tickets at the maximum price which the market will bear may be too risky. It is risky for some acts who may want prices kept down in order to be seen as good guys and to keep fans loyal. In addition it may also be too risky for promoters who often argue that they are in a long-term game and that there is a danger people will not come back if they feel ripped off. Here a ticket priced at optimal market price may not pay long-term dividends if the experience fails to match the expectations. Overall there are various reasons why tickets with a face value of £50, may actually be worth  £70 (or much more) in the market place. Effectively the secondary market may reflect the actual value of a ticket as opposed to its face value.

And, of course, we live in a market economy. If a fan is willing to pay £300 for a ticket with a face value of £20 in order to see No One and The Nobodies, then what’s wrong with that? The fan may or may not be a mug, but they have gained (albeit at a premium price) access to the experience they want. In addition their idol gets paid, as do all those involved in putting the gig on. At this level even if touting were illegal, it would be a victimless crime.

Except that life isn’t quite that simple. As the example above helps to show, for fans the ticket is more than an economic exchange. As promoters fully realise, it’s access to a unique (as in one-off) experience. In other words, it has what might best be termed a cultural value. And if we believe  – as I certainly do – that the widest possible range of people should be able to access the widest range of cultural events, then restrictions on the selling of tickets may well be justified on the grounds of helping to ensure such an outcome. It is presumably for such reasons that tickets for the Olympics are covered by the law. The ballot for Glastonbury offers further evidence of a desire to extend its experience beyond simply those with the biggest wallets and/or a superfast internet connection. Indeed, promoters also seem to recognise that live music is about something more than economic exchange and in their evidence to the Culture Committee some argued that all they wanted was parity so that the laws covering football and the Olympics should be extended to their events.

Restrictions on selling tickets only make sense if tickets are seen as particular commodities with special attributes related to the uniqueness of cultural events. There is a difference between a tin of baked beans and a Bruce Springsteen ticket. One is mundane, the other special. I can buy a tin of beans anywhere, anytime but I can only experience a certain act on a certain day at a certain venue once.

Tickets provide access to events which inevitably more people want to go to than can. If openness and fairness are desirable in the allocation of cultural events – and, along with many fans, I suggest that they are – then the secondary market (where sellers are often hidden) seems an unlikely place to find them.  The sorts of dubious practices unearthed by Dispatches seem even less likely to yield the necessary results.

Football is special. The Olympics are special. But so is popular music. After all the talking is done there still seems no reason to me to treat popular music fans as any less worthy of protection than those eager to see Manchester City or Usain Bolt. If it is possible to protect football and Olympics fans from the excesses of the market, then it is possible to do the same for music fans. Responsible capitalism surely requires no less.

Martin Cloonan


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4 thoughts on “Mastering Tickets (repost) – Martin Cloonan

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  1. Hmmm, “responsible” and “capitalism” may constitute an oxymoron. I mean, isn’t capitalism defined through capital flowing according to the natural equilibrium of market supply satisfying demand? Responsible capitalism suggests intervention. How would one control the secondary ticket market? Legislation… licensing…taxation…? You will most likely find that any of these approaches will unwittingly force prices higher for purchasers because controlling supply does not satisfy demand. For instance, I remember a 2012 Olympics ticketing fiasco, whereby blocks of stadium seats to oversubscribed events none-the-less remained empty because these blocks were given to corporate sponsors who were unable to pass unclaimed tickets on.

    But let’s be clear what we are talking about here. We are discussing what music-biz pundit Bob Lefsetz would call “blockbuster” music events — those events featuring artists, usually in large arenas, whose tickets sell out in minutes (seconds even) of going on general sale. According to Lefsetz, we are in the era of the blockbuster event, whereby less than 10% of artists generate over 90% of the revenue in tickets sales.

    Is a £250 ($400) stand seat to a Beyoncé concert, say, worth 10 times more in price than a £25 entry to a good live gig at a decent club? Obviously, to some, the answer is yes, and probably more-so…

    So, perhaps the debate should shift as to why so few artists do create such demand, whereas the large majority do not?

    In his newsletters, Lefsetz often states that it is because the large majority of musical artists are not good enough. By this he isn’t talking about musicianship, per se, but rather that a majority of musical artists just don’t have the capability in terms of reputation, determination and industry support (and musicianship) to succeed in the blockbuster stakes. Rather than make it any easier to enter the realm of the blockbusting artist, the Internet has made it even more imperative for an artist to rise above the flotsam and appeal to the attention of a large ticket purchasing fan base.

    Regarding the question of who “owns” a ticket. I would reframe the question in terms of who has the largest “stake” in the ticket. It is the promoter, usually, because they are taking on the majority risk of losing money, because the venue and artist in these sorts of events usually receives a guaranteed fixed payment, subject to contract.

    In purchasing a ticket, the concertgoer or fan also has a “stake”, because there is a risk that the artist will either not deliver according to expectation (the concert was not worth the ticket price) or the event will be cancelled and the price of the ticket not refunded.

    What makes things complex is that fans view their ticket as a promise to them from the artist, not the promoter, that they will enjoy a fantastic experience with them. When that doesn’t happen it is the artist who loses reputation in the fans eyes and not the promoter.

  2. Thanks for the comments, always good to get comments.

    My comment about “responsible capitalism” was meant to be ironic. As I recall the phrase was being used by David Cameron around this time.

    As for why a few big acts make most of the cash, I would have thought that looking at the starmaking machinery would be important. A useful analogy might be films. Ever wondered with the same actors appear again and again? Perhaps it’s that old devil capitalism again?

    I take your point re the “ownership” of the ticket. Yes, promoters take risks and certainly perceive of themselves as risk takers. Our research suggested that it was an important part of many promoters’ psychology. But, like any savvy business, they also try and minimise risk – hence such things as co-promotions, taking a slice of the booking fee, trying to eliminate or nobble the opposition, and building empires.

    I’m not aware of many major events being cancelled and refunds not being made.

    But I do still think that if music is something more than a commodity and if we want to get as many people as possible to access as many varied musical experiences as possible then that means legislating on the secondary market. If it can be done for football it can be done for music.

    Thanks again for the comments.

  3. Ha — well, that shows just how much senior politicians understand capitalism.

    Yes, I agree. First class musicianship today seems secondary (almost cursory) to the amount of music industry “machinery” that is required to project an artist up out of the “noise” of mass media and the Internet and into the public consciousness. One can argue that the current crop of so-called blockbuster artists: Justin Bieber, Lady Gaga, Miley Cyrus, One Dimension, etc. display even less depth of musicianship than the generation that preceded them. Will any of them manage to sustain? Does anyone even care?

    Your film (and TV) ‘star’ analogy offers a good parallel, yet the present world of blockbuster music artists seems even more superficial and puerile.

    Okay, so how successful has legislation been in controlling secondary ticketing of premier football matches — I mean, would you say that fans are principal beneficiaries of legislation? How readily can the same model and principles be applied to large music concerts and festivals; or indeed any event where demand for tickets easily outstrips supply?

  4. Pingback: Cómo la piratería está cambiando el panorama de la industria de la música « La Universal radio

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