CMU Trends Live Business

Trends: Ticketing questions of both the primary and secondary kind

By | Published on Thursday 6 March 2014

Ticket Tout

It may be a new year, but the two big ticketing debates tick along pretty much as they have done for the last decade: what’s to be done about secondary ticketing, and why does the live sector continue to do nothing about the sector’s single biggest consumer frustration, add-on commissions and fees.

Secondary ticketing, the modern euphemism for good old ‘ticket touting’ (or ‘scalping’ to our American friends), remains the source of a lot of hot air in live music, even if very little has been done about it in the ten years since online ticket reselling first became an issue.

Just as the web enabled a boost in piracy, it also resulted in a boom in ticketing touting, initially via generic auction sites like eBay, and more recently via specialist secondary ticketing platforms like Seatwave, Viagogo and eBay’s StubHub. Though, with a few exceptions, ticket touting is not technically illegal, though it does often contravene the terms and conditions of the tickets being resold.

And of course, unlike with piracy for the labels and publishers, touting doesn’t directly deprive artists and promoters of income, in that they still receive the face value of any ticket sold, even if it’s then resold online.

However, the live industry doesn’t like to think of the resellers earning off their businesses without adding any real value to the events they stage (although there is risk involved with touting tickets), and fans aren’t best pleased when face value tickets for in-demand events sell out in minutes only to reappear at hiked up prices on the secondary markets.

And, of course, if you buy the argument that music fans have a finite amount of money to spend on live music overall, if they have to pay double the face value to see top level artists they love, perhaps they will spend less going to see other less famous bands. Or they’ll spend less on records, merch or added-value services. So the touts are possibly taking money out of the music industry.

But if – as most in the live sector did ten years ago – you believe ticket touting to be bad for business, the big question is: what can be done?

Some advocate the outlawing of ticket touting completely. Statutory restrictions on ticketing reselling aren’t unprecedented around the world, and in the UK it is illegal to resell tickets to football games, and in 2012 Olympic ticket touting was forbidden too. Though the touting of tickets to football matches is pretty routine, despite widely worded legislation that allows just one get out – the rules generally don’t apply if the transaction occurs outside the UK.

But even if there was an effective way of outlawing touting across the board, there doesn’t seem to be much appetite in the UK political community to introduce such legislation. This despite MPs and ministers calling on the live sector to “do something about touting” at various points in the last decade. When the live community responded by calling for new laws, government generally put the debate on the backburner.

Although officially the live sector remains concerned about ticket touting, in the decade since this debate began many have learned to live with it, some by becoming touts themselves. Live Nation’s Ticketmaster has its own resale business, operating its own ticket resale platforms; in the UK it’s called Get Me In. Meanwhile, as a 2012 ‘Dispatches’ documentary exposed, some artists, managers and promoters are now routinely reselling tickets to their own shows on the secondary market.

Those touting within the live industry generally don’t like to talk about it, but when they do they usually argue that inaction by government on the secondary ticketing problem forced their hand, and that surely the fan would rather see those involved in putting on the show get the mark-up generated by the resold ticket.

Some also argue that when they sell tickets on a resale platform they are just providing a ‘premium product’, because the fan gets a ticket late in the day, meaning the mark-up is a ‘convenience fee’. Which would be a valid argument, if said promoters weren’t often reselling tickets in this way under a secret identity.

Secondary ticketing is back under the spotlight in the UK now because the issue is the subject of two separate parliamentary investigations, one by the new All-Party Parliamentary Group On Ticket Abuse, the other by the All-Party Parliamentary Group On Music. The first is already underway, while the latter will get going later this year.

Assuming the political community remains squeamish to any proposal for an all-out ban on touting – which it almost certainly does – these may be the issues that will be discussed in Westminster:

• Can limits be put on industrial level touts, who buy up high quantities of tickets for in-demand events, usually contravening a show promoter’s t+cs? These are the resellers the French government tried to target with its anti-touting legislation.

• Can rules be made about the use of ‘bots’, or bits of software, which enable the aforementioned industrial-level touts to acquire large numbers of tickets from primary ticketing systems, even when rules are in place to stop mass-purchasing? This is the area that Ticketmaster – with its own interests in the resale market – would like the politicians to focus.

• Should artists, managers or promoters who utilise their privileged access to acquire tickets to sell through the secondary markets be forced to do so in an official rather than unofficial capacity; ie such reselling must be done under the artist, management or promoters name, rather than hidden identities?

It remains to be seen if this year’s parliamentary investigations are enough to convince ministers that something needs to be done about touting in the UK.

Though few in the anti-touting brigade are holding their breath. Most who oppose the touts are now hoping that mobile-ticketing can restrict the touts down the line, which is a solution to consider another day.

While the live sector itself might want the political community to do something to regulate secondary ticketing, many consumer rights groups are as critical of the primary ticketing platforms mainstream promoters routinely utilise.

Indeed some argue that confused consumers may be frequently buying overpriced tickets from resale sites without realising they are not buying from a primary ticketing agency, because said consumers are used to irritating add-on charges being applied to their ticket purchases, which usually require payments significantly higher than the face-value of the ticket they are acquiring.

The commissions and add-on charges routinely applied in the ticketing space were back under the spotlight recently thanks to a Which? magazine report and subsequent online petition.

Most of the major players in UK ticketing have since committed to make all and any commissions and add-on fees clearer from the outset of the online ticket-buying process, so that consumers know what they will be paying in total from the first page they land on within any ticket agency’s website.

Although most reports suggested these commitments were in response to the Which? report and petition, Ticketmaster insists that the way commissions are communicated has been under review for nearly a year now, with the ticketing industry working closely with the Advertising Standards Authority on this point.

While moves to better communicate commissions and add-ons in the primary ticketing domain will be welcomed by consumer rights groups, the extra fees themselves will remain. During the latest reporting on the commissions debate Ticketmaster was keen to point out that the add-ons are not about “ripping off” the consumer, rather the commissions are often the ticketing agencies’ only income from the sale.

Which is true, though that argument doesn’t really deal with consumer frustration over the way commissions and add-on fees are nearly always added on ticket purchases. Indeed, it’s proof that ‘commission culture’ is totally ingrained in the live entertainment domain that agencies would automatically assume that any criticism was down to unfounded assumptions that the ticket sellers were somehow ripping customers off; rather than being the result of consumer bewilderment as to why commissions are necessary at all.

If tickets for every gig were always available via more or less every ticketing agency – each applying their own booking fees based on the service they provide the consumer, and therefore competing with their rivals for each ticket-buyer’s business based on service level and price-point – then commission culture would make sense. It’s still a complicated way for the live sector to sell its product, but there’s a logic to it.

But as we know, that’s not how it works. Ticketing agencies don’t really compete with each other for the business of music fans; rather they compete for the business of promoters, and deals that enable them to become exclusive sellers of tickets for shows and tours. That is to say, ticketing agencies are first and foremost B2B service providers to the live sector, rather than to the ticket buyer.

Which makes the commission culture illogical, especially in e-ticketing where the one fee that might vary from purchase to purchase – postage – is taken out of the equation. Ticketmaster may have to cover all its costs and make a profit from just the commission on a ticket. But Tesco has to cover all its costs and make a profit when it sells a bottle of Coke, but doesn’t quote the wholesale price at the shelf, and then add its costs at the checkout, which is basically what the ticketing sector continues to do.

It’s no secret that consumers hate the add-on fees – not because they feel the final asking price is too expensive for the show they want to do see, but because they feel cheated every time the commissions are applied. And as a result, the big ticketing brands are probably amongst the most hated by consumers in the entertainment industry (yes, even more than the big bad major record companies).

Yet, to date, there has been no momentum within the industry to do anything about the commissions, beyond “better communicating” the add-on fees to shut up the likes of the ASA and Which?

Why? Well, there are reasons behind the scenes why the live sector sticks with the commissions system, mainly because of the way old-fashioned tour accounting works. And there is no real commercial incentive for the live sector to change, because fans who want to go to a gig will rarely bail out of their ticket purchase when eight pounds of booking fees are added at the last minute. And while you do have a pissed off customer, that anger is rarely extended to the artist, and ticketing agents can live with being hated, because their real customers are the promoters.

Of course, sitting on so much valuable data as they do, some in the ticketing space have ambitions to become destination online music hubs in their own right. Meanwhile some artists are increasingly seeking to sell tickets direct to their fans via their own websites, a process that will more closely link said artist to the unpopular add-on fees. Both these trends could result in the live sector finally addressing its unpopular commissions culture.

Though, it has to be said, there’s no sign of any major changes incoming in this domain.