Dynamic Ticket Pricing

Nusrat Ghani Excerpts

Tuesday 10th September 2024 Commons Chamber

[Dame Caroline Dinenage]

I am very fortunate to have been re-elected as the Chair of the Culture, Media and Sport Committee, but we do not have any members of the Committee yet. Any decisions about what the Committee will look at will very much be a group decision jointly taken, but this is certainly something I will be putting forward. I know the Minister has already announced some consultation of his own.

To return to dynamic pricing and the laws of supply and demand, mentioned by the hon. Member for Strangford (Jim Shannon), this is something that is used across different marketplaces. Uber employs a smart dynamic pricing mechanism that adjusts the cost of journeys in line with changing variables, such as traffic and current rider-to-driver demand. Hotels and airlines are another market that uses dynamic pricing, but they are very different. If people are stuck at Waterloo station, as I sometimes am, an Uber is not the only option of travel and, when people go on holiday, multiple airlines offer flights to the same city and different hotel options, but when it comes to live music, particularly in cases such as this one, there is one artist and one opportunity to buy a ticket.

The imperfections of the dynamic pricing mechanism were obvious to anybody who attempted to buy a ticket on this occasion, but whatever the rights and wrongs of its suitability for music ticketing and this market place, the most important issue is that fans were not warned about the use of dynamic pricing before they entered the digital queue. Those are the faults that led the Competition and Markets Authority to open its investigation into this debacle. It meant that people had no idea how much a ticket would cost when they logged in. Many fans ended up paying at least double the original listing price of £148, so four standing tickets could cost an eye-watering £1,400 once service and order processing fees were included. The CMA says that it will investigate whether fans were given “clear and timely information”.

Any free market economist would call this a classic case of information asymmetry. There was certainly a lack of clarity over how high ticket prices might eventually go, with the additional chaos of a time limit putting pressure on fans to make an imminent decision about whether they were going to buy.

Ticketmaster claims that the dynamic pricing mechanism is the best way to deter ticket touts, the logic being that any tout buying tickets in bulk would increase demand and therefore see his or her prices and margins slashed. The Guardian has already said that secondary ticketing platforms are advertising more than 4,500 tickets for this tour already, including from one tout who claims to have at least 33 tickets for Cardiff, Wembley and Murrayfield listed, for a combined price of over £26,000.

I am glad that this summer the Government announced a consultation on the secondary ticketing market, where tickets are sold in bulk by touts who often use bots to scout for tickets at face value and sell them well beyond the market value, but will the Minister set out the parameters and timescales for the work? When will it happen and what is it likely to include? He has now announced that the investigation will be widened to consider dynamic pricing and what happened in the Oasis situation, so can we have a reassurance that the eye will not be taken off the ball of the original consultation that he announced in the summer?

There are so many aspects at play. This method of resale is also the culprit for a large amount of money lost to fraud, with Lloyd’s estimating that £1 million was lost to scammers during Taylor Swift’s Eras tour alone. Will the Minister tell me whether the secondary market consultation will include conversations with digital search engines that are signposting customers into the hands of touts and not doing enough to get them direct to principal sales sites?

There is scope for an entire primary market review and for ticketing to be reviewed on a much wider scale. The Oasis episode has opened the eyes of fans to potential anti-competitiveness within the industry. As complaints about the ticketing process began to flood in, Oasis said it was their management and promoters who had agreed a dynamic pricing strategy with Ticketmaster. But, of course, their three tour promoters all have links to Live Nation, Ticketmaster’s parent company and, in effect, they are all the same party. So that party is making money hand over fist through the system, which keeps everything under the Live Nation umbrella.

For a typical tour, a Live Nation subsidiary promoter might take 10% of the face value of a ticket. A service charge of perhaps a quarter of that face value will then be applied, and some of that money will be going to Live Nation-owned Ticketmaster. The venue will take a cut at this stage, which, in all likelihood, will be a Live Nation-owned venue, too, as it owns 28 festivals and venues UK-wide. The process is repeated at resale, if people go through Ticketmaster at a higher cost than before, leaving Live Nation with an even greater cut.

The Minister does not need to be a public intellectual to see that there is a real perverse incentive for Ticketmaster to see tickets in the hands of touts. He will know that the US Department of Justice has slapped Live Nation with a lawsuit, citing anti-competitive conduct, while it is now well established that the company has a near monopoly in the UK.

Dynamic pricing is quite an effective way of rewarding a near-monopoly, with no upper limit on ticket prices, meaning a greater cut for the parent company. The great sadness of all this is not only that the system is punishing the fans—in this case, those Oasis fans for whom the music was so totemic, so life changing back in the ‘90s—but that, to add insult to injury, there is no trickle down to the live music ecosystem, like the grassroots music venues that Oasis first played in while honing their skills, the venues that made them, such the Boardwalk in Manchester and King Tut’s in Glasgow.

Although Oasis have since announced further tour dates, tickets to new dates will be sold at face value via invitation-only ballot. I cannot help feeling that the fans who paid through the nose via dynamic pricing are going to feel very hard done by.

I encourage the Minister to look at ways to amplify fans’ voices within the live music ecosystem. He might start by responding to the Culture, Media and Sport Committee’s report into grassroots music, which I have already mentioned. It was published in May. I know that we have had the small matter of a general election since then, but I would like to know when the response is likely to be forthcoming and whether the Government are minded to accept its recommendations. The recommendations include one for a fan-led review of music—something like the fan-led review of football that was led by my still friend, my former hon. Friend, the former Member for Chatham and Aylesford, Tracey Crouch—to look at how the music pyramid functions and how the money trickles down from the big players to those small venues and fledgling songwriters and artists.

The recommendations included a targeted VAT cut, which to grassroots venues would have represented a final hour of salvation in a sector that is widely accepted to be in crisis, and a live music levy, which would take a small proportion of the service fee from the pockets of the big venues and bring them right down to the struggling businesses at the grassroots. What is most pertinent to me about all this is that, while many of the 28 venues and festivals in which Live Nation owns a stake are flourishing, grassroots music venues are closing at a rate of two a week.

I am sure that the Minister is aware that, of the 34 music venues in which Oasis played on their first tour back in 1994, only 11 are still open today. And those venues are so crucial. They are absolutely fundamental to incubate our world-renowned talent. They are the R&D department for the music industry. They are a massive feeder into something that is fundamental to the UK economy and crucial to our soft power around the world. In a ticketing market gone wrong, there might have been a gram of comfort to some of the fans paying through the nose for their ticket if they knew that, in paying it, some of the money was protecting grassroots music venues in their communities and germinating the Oasis of the future.

I know that, like me, the Minister wants nothing more than to see our musical talent continue to thrill fans both at home and around the world, but behind every great act is a chance performance at a low-capacity venue that is struggling to keep the lights on, that is at financial breaking point, and that is a hair’s breadth away from closing its doors.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Minister.

--- Later in debate ---

[Chris Bryant]

We would not want half-empty venues—despite looking around the Chamber—due to tickets being priced too high, nor venues and festivals that are not economically sustainable. What we should not accept, however—I am very clear about this, as are the Government —are practices that see fans of live events blindsided by price hikes, either because they were not provided with the right information up front or because that information was not provided clearly enough. Doing so might be in breach of existing consumer law, which requires businesses to be fair and transparent in their dealings with consumers. It is the responsibility of the CMA to investigate potential breaches of consumer law arising from or involving the use of dynamic pricing methods, and to take enforcement action where appropriate. I have already referred to its investigation in this case.

It is the responsibility of Government, however, to confront the wider policy questions around the use of dynamic pricing for tickets to live events. We have already said that we will look at this issue further to establish whether consumers are adequately protected under existing law, or whether more needs to be done. The hon. Member for Gosport asked whether this means that we are going to take our eye off the ball on the secondary ticketing market—it does not. We are very clear: we have a set of manifesto commitments, and we will bring out our consultation this autumn. Once we have completed that consultation, we expect to take the necessary action that we committed to in our general election manifesto. Since most of that action is in line with what the Select Committee was advocating before the general election, I hope we might still enjoy the Committee’s support for it.

The hon. Lady is right that we will also be looking at websites: that is part of the whole panoply of action. She also effectively referred to vertical integration within the ticketing system. Of course, that has to be part of our considerations, because it is another part of making sure that the market works for humanity—for fans, artists and the creative industries—rather than all of us having to operate as slaves of the market.

The Prime Minister has said that we are committed to putting fans at the heart of music and ending extortionate resales. As I have said, we will launch a consultation this autumn to work out how best we can do that. That consultation will look at tickets for live events, and a call for evidence on the topic of price transparency, including dynamic pricing, will be sent out. That will help us understand the needs of fans and the live events industry. To be absolutely clear with the House and the hon. Lady, that will be about tickets for live events, not the whole of dynamic pricing across all industries in the UK.

The hon. Lady asked when we will respond to the grassroots venues report from May. We have been getting our feet under the table as fast as we possibly can, and I am very eager to respond to that report in swift order. I take the responsibilities of Select Committees very seriously—I sat on the Culture, Media and Sport Committee from 2001 to 2005; it is one of the most important things I have done as a Member of Parliament—so we will respond as soon as we can. It will certainly be in the autumn, and I would like it to be as soon as possible after the Committee is fully formed.

In conclusion, I would like to thank the hon. Lady for securing this debate. I am not allowed to refer to what she tried to get as urgent questions, but I have now. We have a world-class live events sector in the UK, and I am absolutely determined that fans have every opportunity to experience it at first hand.

There is nothing better than someone standing in an audience—in a crowd, along with hundreds of other people—either experiencing an artist they have never seen before and suddenly realising, “My God, that’s just pierced right through to my heart”, or going to see somebody they have seen 50 times before, having listened to the album 75 times in the past week, and having that joyful moment. They will be different artists for every single one of us, but I want far more people in this country to be able to enjoy that opportunity. I want every child to have a creative education, and I want them to have the opportunities that so many others enjoy in my constituency and every other.

I acknowledge that dynamic pricing can help match supply with demand, resulting in both higher and lower prices, but when it is used as a business model it needs to be transparent and fair, and that is what we want to ensure.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

It was wonderful to hear from two musicians, and Sir Chris Bryant has given away his true old age.

Question put and agreed to.