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Parking tickets? An overview of the secondary market regulation debate – Adam Behr

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With an amendment to the Consumer Rights Bill finally making some provision for greater transparency in ticket sales, Live Music Exchange’s Adam Behr takes a look at the long history of attempts to regulate the secondary ticketing and calls for continued vigilance in the run up to next year’s review of it.

 

The news that the government has backed down on its objection to any regulation whatsoever of the secondary ticketing market and accepted Lord Moynihan’s amendment to the Consumer Rights Bill has been cause for some qualified celebration amongst practitioners and parliamentarians alike who have been pushing for progress on this. Still, for as long as this ball has been in play, and notwithstanding the milestone in moving things forward, the matter is not entirely settled. So with a review of the secondary market planned for a year’s time as part of the recent success, and further lobbying in the offing across the board, now seems a good time take stock of the story so far.

The question of the secondary ticketing market has been bubbling through the regulatory and policy realms for a long time, brought to the forefront – as was the case with changes across the music industries – by the disruptive potential of the Internet, and the massive scaling up of activity that it afforded from the late 1990s into the 2000s.

Growing concern about fraudulent websites, as well as the fees charged by primary ticket agents, led to the first official inroads into the matter with the Office of Fair Trading launching a study of the market in June 2004 (its report published in January 2005). I’ve written elsewhere that the Internet moves faster than legislation but in this case the gap between the first regulatory interest in ticketing and any kind of parliamentary commitment to address it is a little over a decade.

To put that in some kind of context, since the secondary market first appeared on the policy radar we have seen: three Prime Ministers, two Olympic games, Twitter, the i-pad, One Direction’s entire recorded career to date (or the Arctic Monkeys’, if you prefer). Also, within the live music industry: the birth of Live Nation (the biggest live music company in the world), the merger (not incidentally) between Live Nation and Ticketmaster, the opening of the Leeds First Direct, 02, Glasgow SSE and Liverpool Echo Arenas.

The background to all of this was a massive growth in the live sector in general – the Office of Fair Trading (OFT) report noted an increase in turnover of 150% between 1999 and 2003. It also noted growing concern about the secondary market, which had accounted for half of all complaints to the Trading Standards Department and 75% of those submitted to the OFT (OFT 2005: 3). But it concluded that, “Secondary agents can provide a useful function and benefit to consumers. Their existence arises in particular because, for some events or individual performances of a play or other entertainment event, the actual demand for tickets turns out to be greater than expected.” (ibid: 73).

Evidence of fraudulent activity wasn’t discounted, but was found to be in contravention of existing laws (ibid: 80). So ultimately the OFT recommended more stringent enforcement of the legislation that was already in place, rather than anything new to address the new Internet enabled marketplace.

However, the scale of the secondary market (and the size of the mark-ups therein) continued apace. By now, the promoters were becoming concerned. The context for this, as Martin Cloonan has described in detail (2007) was a governmental pivot towards the creative industries in general as a driver of economic growth, including much greater engagement with the music industries. Promoters, who were deeply unhappy about the expansion of the secondary market – making accusations of unethical behaviour at fans’ expense that put nothing back into the industry – therefore got the attention of ministers.

In 2007, the cross-party parliamentary Culture, Media and Sport Committee launched an inquiry into the secondary market – referred to in this case by the more vernacular (and rather less complimentary) label of ‘touting’. This took evidence from across the sector, including vehement denunciations of the touts from members of the Concert Promoters Association (CPA) and equally strenuous defensive statements from re-sellers like Viagogo.

As Cloonan has noted (here and here) there are interesting underlying issues revealed by the testimony to the inquiry that relate to what the exact status of a ticket ultimately is – a piece of property, or a contract, and whose property it might be across its usable lifetime. But the CPA was ultimately unable to convince the committee of the need for legislation, partly hindered by the legal ambiguity of the terms and conditions attached to tickets in the primary market, which allowed the re-sellers to argue that tickets are transferrable property and that refusal to admit the holder of a genuine ticket (whoever had bought it in the first instance) would be both unfair and in contravention of trading legislation.

The Committee baulked at legislating against the secondary market:

“Any attempt to ban the secondary market outright would also be a very serious step in that it would criminalise what has been a perfectly lawful activity, which is evidently valued and freely made use of by many consumers, in order to support the industries’ endeavours to target particular audiences. We do not consider that it would be either practicable or right to do so.” (Culture, Media and Sport Committee 2008: 4).

Its recommendations and conclusions stated that “more work needs to be done” (ibid. 38), that the potential for “voluntary agreements” (ibid. 35) should be investigated and, ultimately, that “regulatory intervention should be considered only as a very last resort” (ibid. 40). A DCMS Consultation on touting in 2009, similarly, called for consultation, codes of best practice and better information and service, stating that “the industry itself is best placed and has the necessary expertise to provide day-to-day consumer information” (DCMS 2010: 17). In other words, the long grass beckoned.

At the same time, of course, the market was moving briskly. Promoters and primary sellers, having failed to get the legislation they were after, moved to protect their interests commercially. In 2008, Ticketmaster bought the re-seller GetMeIn.Com, arguing that bringing it into the fold would at least provide a degree of security for fans. Matters became further complicated, and divisions blurrier, when Ticketmaster merged with Live Nation in 2010 (itself the subject of a Competition Commission enquiry, which ultimately let the merger go ahead).

Nevertheless, a campaign to ‘Stamp out the Touts’ rumbled along in the background, with some support from the All Party Parliamentary Group on Music, although as the waters got muddier over what exactly constituted the secondary market, the legislative bar for what was being sought was lowered. An outright ban on the secondary market was off the menu, although in 2010 – appalled at the difficulty in obtaining Take That tickets on the primary market, and their cost on secondary sites – Labour MP Sharon Hodgson launched a Private Member’s Bill calling for a 10% cap on the mark-up in resales. The Sale of Tickets (Sporting and Cultural Events) Bill 2010-12 was filibustered by Conservative backbenchers on its second reading in January in 2011 and fell there.

And there things may have languished, but in early 2012 Channel 4’s Dispatches documentary ‘The Great Ticket Scandal’ brought the issue hurtling back into the limelight with stark allegations of collusion between major promoters and re-sellers like Viagogo through the direct allocation of tickets to the secondary market. Notwithstanding the veracity or otherwise of that particular accusation – and Viagogo’s attempt at an injunction against the programme on the grounds of ‘breach of confidence’ was roundly dismissed by the High Court – the sight of stacks of credit cards and botnets being used to scoop up face value tickets for re-sale at swingeing prices reignited the debate.

Concern that the scale of the secondary market was locking fans out of access to events also coincided with the high profile of debates and crime surrounding tickets for the 2012 Olympics. The Metropolitan Police became involved in the Olympic ticket market, its Operation Podium releasing a report on Ticket Crime in February 2013 that, again, flagged up the scale of the secondary market (£1billion) and also noted that, “The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency and fraud.” (Metropolitan Police 2013: 3)

If nothing else the fact that the International Olympic Committee’s demand that the resale of tickets be banned was met (as a precondition of getting the games), alongside a ban on the resale of football tickets (on public safety grounds), showed that, free market aside, it was possible to legislate in the area. By the end of 2013 campaigning by Hodgson, and Conservative MP Mike Weatherley, led to the formation of the All Party Parliamentary Group (APPG) on Ticket Abuse with the stated aim of pushing, “on a cross-party basis for Government action to reform the secondary ticketing market in the interests of consumers and rights holders, particularly by increasing the transparency of ticket supply”. This included a public facing ‘Put Fans First’ campaign (with obligatory hashtag).

It’s worth noting that the proposed legislative bar for intervention in the secondary market had, again, been lowered – from an outright ban, to a financial cap, to ‘transparency’. The group leveraged the proposed Consumer Rights Bill in an attempt to piggy-back requirements for ticket sellers onto the wider ranging provisions of the Bill and set up an investigation into the market, its 2014 Report calling for amendments to the Consumer Rights Bill “which would ensure that all relevant information about a ticket sold on a secondary platform, including on the individual selling them, is available to consumers [and] that secondary platforms should make clear at every stage of the purchasing process where tickets are being resold in contravention of the terms and conditions stated on them” (APPG Ticket Abuse 2014: 5).

The initial tranche of provisions in the clause inserted into the Bill by the House of Lords last year was rejected by the government with a majority of 87 in January of this year. This was unsurprising. A majority within the government expressed qualms that ‘red-tape’ would impede fans with legitimate cause to sell on their tickets. Culture Secretary Sajid Javid, a dyed in the wool free-marketeer, had previously gone as far as praising the secondary websites as “classic entrepreneurs” and castigating opponents of the secondary market as “chattering middle classes and champagne socialists, who have no interest in helping the common working man earn a decent living by acting as a middleman in the sale of a proper service”.

But backing for changes to the secondary market had started to reach a tipping point with support coming from ever higher-profile music industry personnel. Iron Maiden – of whom Weatherley has been a long-time self-professed fan – and their management threw their weight behind the Put Fans First campaign. They were amongst a host of signatories from the music and sport worlds – which included the Musicians’ Union, Harvey Goldsmith, and the Event Services Association as well as other artists – to an open letter calling for greater transparency.

As archaic as some of our Parliamentary procedures may be, the traffic between the Lords and the Commons provided a way through. Upon the Bill returning to the Lords, Moyhnihan inserted an amendment similar to the one initially rejected in January, which was accepted by the upper House. Faced with the prospect of the whole Bill failing to pass in the back-and-forth between the Houses, Javid climbed down. The FT quoted a senior government figure saying, “We didn’t have much option; we don’t have parliamentary time to get involved in a game of ping-pong with the Lords over this and risk the entire [consumer rights] bill falling.”

So, a decade on and with three months until the Bill becomes law, regulation of the secondary market (diluted at each turn) is in the offing. Hodgson and Weatherley, whilst conceding that they had not achieved every change they had hoped for, each lauded a “step in the right direction”.

Certainly, there’s no outright restriction on re-selling tickets at hugely inflated prices, but important information will now be available to purchasers, including: the original face value of the ticket, any entry restrictions, any additional charges, the location of the seat in the venue (including information about restricted views). There will also be fines of up to £5,000 for failure on the part of re-sellers to report any criminal activity with regard to the sales. Crucially, the Bill also mandates the Secretary of State to review the Secondary Market within twelve months.

So, a victory of sorts, but not the end of the affair. Ticketmaster has promised to work with the government to implement the new rules, with Viagogo saying that the basic principles of its operation remain unchanged. But there is still resistance, with StubHub threating to review its UK operations and looking to see if the legislation complies with European law. Notwithstanding the passage of the Bill, many Conservatives remain opposed to regulating the market, Lord Borthwick sidestepping the unbalancing effect of the huge scale of online reselling to express concern that it will push the market back to “pubs, clubs and car parks”.

Ticket touting is an age-old activity, going back to at least the 19th Century, and is unlikely to go anywhere soon given the returns involved. The difference between the current situation and its historical antecedents, however, is that the technological component allows the secondary market to distort the primary one. Communications technology opened the door to wholesale touting, and there are moves afoot to use technology to mitigate it as well. ‘Dice’, for instance, is an app that looks to circumvent secondary agents by placing the exchange in the hand of artists whilst ‘Twickets’ works on a fan-to-fan basis, but with a rule of face value exchange only.

These may take a while to reach mass penetration nationally, however, and have a lot of ground to cover against the dug-in major operations. Meanwhile we can expect vigorous lobbying in the run-up to the review of the secondary market. It’s been a long journey to get to this point, and the review is crucial to maintaining transparency and preventing further degradation of access to those without deep pockets. A week might be a long time in politics but, as we’ve seen, a year is a very short time in the debate about regulating the ticketing industry. So it’s important to watch the space, and book seats for the next round now.

Adam Behr

Bibliography

APPG on Ticket Abuse (2014), Secondary Market Investigation: Putting Fans First, Available at: < https://appgticketabuse.files.wordpress.com/2014/04/appgta-final-report.pdf> Accessed 5 March 2015

Behr, A. (2015), ‘Net interest: Internet infrastructure and the public interest’, Eastminster website, Available at: <http://www.ueapolitics.org/2015/02/06/net-neutrality/>, Accessed 5 March 2015

Cloonan, M. (2007), Popular Music and the State in the U.K: Culture, Trade or Industry?, Aldershot: Ashgate

Cloonan, M. (2010), “Live music and music policy: some initial thoughts”, IASPM Journal, 1:1, Available at:< http://livemusicexchange.org/wp-content/uploads/Frith-Cloonan-Brennan-and-Webster-IASPM-Journal.pdf> Accessed 5 March 2015

Cloonan, M. (2012), ‘Mastering Tickets’, Live Music Exchange, Available at:< http://livemusicexchange.org/blog/mastering-tickets/>, Accessed 5 March 2015

Cooke, C. (2015), ‘Government now backs light regulation of secondary ticketing, rules added to Consumer Rights Bill’, Complete Music Update website 26 February 2015, Available at: <http://www.completemusicupdate.com/article/government-now-backs-light-regulation-of-secondary-ticketing-rules-to-be-added-to-consumer-rights-bill/>, Accessed 5 March 2015

Culture, Media and Sport Committee (2008), Ticket Touting: Second Report of Session 2007-08. London: The Stationery Office

Department of Culture, Media and Sport (DCMS) (2010) Consultation on Ticketing and Ticket Touting 19 February – 15 May Summary of Responses and Government Response. London: DCMS.

Dredge, S. (2014), “Dice gambles on shaking up gig tickets: ‘We’re getting rid of the friction’”, The Guardian website, 20 October 2014, Available at:< http://www.theguardian.com/technology/2014/oct/20/dice-gig-tickets-app-touts>, Accessed 5 March 2015

Gammon, J. (2015), ‘Government caves in on touts’, Pollstar website, 25 February 2015, Available adt:< http://www.pollstar.com/news_article.aspx?ID=816698>, Accessed 5 March 2015

Ingham, T. (2013), ‘Ticket exchange platform Twickets launches iPhone app’, Music Week website, 18 February 2013, Available at: <http://www.musicweek.com/news/read/ticket-exchange-firm-twickets-launches-iphone-app/053636>, Accessed 5 March 2015

Malt, A. (2015), “Iron Maiden call on fans to support secondary ticketing legislation”, Complete Music Update website, 5 February 2015, Available at:< http://www.completemusicupdate.com/article/iron-maiden-call-on-fans-to-support-secondary-ticketing-legislation/> Accessed 5 March 2015

Merrick, J. (2015), ‘Ministers let online touts of the hook and ignore pleas from arts and sports’, The Independent website, 11 January 2015, Available at:< http://www.independent.co.uk/news/uk/politics/ministers-let-online-touts-off-the-hook-and-ignore-pleas-from-arts-and-sports-9970345.html>, Accessed 5 March 2015

Metropolitan Police (2013), Ticket Crime: Problem Profile, London: Metropolitan Police

Morris, N. (2014), “Ticket touts are ‘classic entrepreneurs’ who should be allowed to operate without interference, says new Culture Secretary Sajid Javid”, The Independent website, 10 April 2014. Available at: < http://www.independent.co.uk/news/uk/politics/ticket-touts-are-classic-entrepreneurs-who-should-be-allowed-to-operate-without-interference-says-new-culture-secretary-sajid-javid-9252429.html> Accessed 5 March 2015

Office of Fair Trading (2005), Ticket Agents in the UK, London: Office of Fair Trading

Rigby, E. and Blitz, R. (2015), ‘Ticket reselling rules to be tightened’ Financial Times website, Available at: < http://www.ft.com/cms/s/0/5fc4c858-bc36-11e4-a6d7-00144feab7de.html#axzz3TeLsZCEQ> Accessed 5 March 2015

 

 

 

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