The UK government is expected to announce a ban of for-profit ticket touting tomorrow, with plans to pass a new law that will make it illegal for anyone to mark up the price of a ticket when reselling it.
Just last week music industry and consumer rights groups called on ministers to urgently set out their plan for ramping up the regulation of ticket resale, expressing frustration that the government was taking far too long to make good on past promises to further restrict the touts.
Reports of the UK government’s plan in the FT caused the share price of US-based StubHub Inc - which operates Viagogo in the UK - to drop sharply, with shares trading around $12.30, nearly half the IPO price of $23.50.
The company had already seen its share price tank last week after investors responded negatively to the company’s first quarterly investor call since listing on the New York Stock Exchange in September.
That negative response was in part because StubHub boss Eric Baker declined to provide investors with guidance on the company’s financial performance in the current quarter, arguing that it’s hard to predict consumer demand because it depends on when tickets go on sale, but insisting “the demand for live events is phenomenal”.
Both StubHub Inc and its Viagogo business - and the separate company that operates a StubHub branded ticket resale platform in the UK - will strongly oppose the UK touting ban. Both platforms rely heavily on commercial touts who resell tickets for in-demand shows for profit. They’ll be hoping to water down the government’s plan as ministers prepare to take legislative proposals to Parliament next year.
Although in the short term both companies will also have to deal with a new Competition & Markets Authority investigation. It has announced investigations into the online pricing practices of eight companies as it seeks to enforce last year’s Digital Markets, Competition And Consumers Act.
Viagogo and StubHub are among those companies. With the ticket resale sites, the CMA says it is reviewing “the mandatory additional charges applied when consumers buy tickets” on both platforms and “whether or not these fees are included upfront”, as required by the law.
Music industry groups have been campaigning against online ticket touting ever since ticket resale shifting online in the 2000s, initially on auction sites like eBay before the growth of standalone secondary ticketing platforms like StubHub and Viagogo.
Some new regulation has been added over the last 20 years that touts and the resale platforms they use have had to navigate, mainly relating to communications, and the provision of information about tickets and the people selling them. However, until now the UK has declined to follow the lead of some other countries in outright banning the unofficial resale of tickets for profit.
The Labour Party committed to introduce “new consumer protections on ticket resales” in its manifesto ahead of last year's General Election. It was thought the most likely new protection would be a price cap, restricting how much a tout could mark up the price of a ticket from what they paid when buying it from a primary ticket seller.
Instead the government is seemingly planning to stop prices being marked up at all. Though the resale platforms will still be able to charge a commission on the sale of the touted ticket, and some platforms may share that commission with the reseller. However, it’s thought there will also be a cap on that commission, to stop it becoming a loophole that can be used to circumvent the touting ban.
The touting platforms like Viagogo and StubHub have presented various arguments over the years when defending ticket resale.
They argue that their platforms are mainly used by individuals reselling tickets for shows they genuinely intended to attend but now can’t - although those people will still be able to resell their tickets, just not for profit.
They also say that over regulating touting platforms will push ticket resale onto social media and into online forums where consumers will be less protected for outright ticket fraud. Though it’s thought the government's new rules will also apply to social media.
And finally they argue that the real problem with ticketing is the primary platforms and/or the market dominance of Live Nation’s Ticketmaster. Some of those who have campaigned against for-profit touting would agree there are also issues in primary ticketing, but would say that those issues should be dealt with through separate regulations.
When asked for a comment on the UK government’s reported plans by The Guardian, both Viagogo and StubHub UK went with the fraud argument.
A StubHub spokesperson said “with a price cap on regulated marketplaces, ticket transactions will move to black markets”.
While a Viagogo spokesman claimed that “evidence shows price caps have repeatedly failed fans, in countries like Ireland and Australia fraud rates are nearly four times higher than in the UK as price caps push consumers towards unregulated sites”.