Secondary Ticketing

Debate between Richard Bacon and Sharon Hodgson

Thursday 7th June 2018 Commons Chamber

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

The hon. Gentleman is making an excellent speech. Does he agree that in the cases he outlines, with regard to how much the tickets should be sold for and whether face value is below market value, artists such as Ed Sheeran, Adele, Kate Bush and others should be able to set that price on the basis of what they deem their fan base can afford and what would be fair for the majority of their fans?

[Mr Bacon]

I do agree. Of course, there are a variety of other considerations that also help to set the price. Some artists only do a small number of shows. A Korean boy band is coming over to the UK shortly. I would tell you its name if I could remember it, Madam Deputy Speaker, but to be honest when I was told, I had to admit I had never heard of it and I cannot now remember its name, but apparently the band is very popular—God, I sound like Sir Bufton, don’t I? There are people flying in from Korea to hear this boy band and the official ticket price has been set at £165. That is an indication of the importance of this extremely successful sector to the UK economy, given all the flights and hotels, and the tourism that will take place while people are here. It is therefore very important that there is probity and regularity in the sale of tickets, and that the artist and promoter can set the price.

There are other considerations. If the performer is a bloke with a guitar—yes, I have heard of Ed Sheeran—the cost of putting on a simple show may be much lower than that for a very sophisticated show that, while still a rock concert, may be more akin to a west end or Broadway show, with the concomitant costs. That will also influence a promoter’s decision about the ticket price, as will how much the artist wishes to get or how much the promoter is willing to pay the artist. The hon. Lady is quite right that those are decisions for the promoter and the artist, but they cannot be taken in isolation.

As for the other issue, this is where people sometimes struggle with the argument from those who think that there should be no secondary market at all. I remember when I first tried to buy an iPad. I knew, because I had been past the shop, that there was a big Apple store on Regent Street. I foolishly thought that by going to the Apple store, I would be able to buy one, only to discover when I got there that the fervour that often occurs was such that there was either the actuality or the illusion of great scarcity. I was told after wandering around the store for some time that there was absolutely no possibility of my buying an iPad from the store, and that I had to do that online and it would take several days before I could possibly get my hands on one. This was of course because of the excessive demand for iPads compared with Apple’s ability, even working at full tilt, to manufacture them through its plants. Again, that is a nice problem to have, but when that sort of thing happens, we cannot be surprised that it ends up pushing up prices.

I had the opportunity to discuss some of these issues briefly with the hon. Member for Washington and Sunderland West yesterday. I pointed out that tickets for the 100 metres final at the London 2012 Olympics were going for £2,000. I do not mean that they were being traded on the secondary market for £2,000. If someone wanted to sit at the finishing tape for the final of the 100 metres—the blue-riband event, which is watched by billions all over the world—that was the price that LOCOG, the London Organising Committee of the Olympic Games and Paralympic Games, was charging them. Of course, people could sit elsewhere in the stadium and still get a reasonable view. I had the pleasure of selling souvenir programmes for the 1978 Commonwealth games, which was an alarmingly long time ago, and had the chance to see some very exciting live athletics. I can understand why people want to do that—it is a very exciting thing to watch—but the point is that many people thought that it was worth paying a lot of money. I am sure that many of the people did not spend the £2,000 personally—perhaps wealthy corporations paid for them—but the fact is that the promoter decided to set the price at that level, and I think that we need to have some regard for that.

[Mrs Hodgson]

Does the hon. Gentleman recognise that the organiser set that price for all the reasons that he cited and was confident that tickets would not be touted? The tickets were protected, which was a proviso of the International Olympic Committee, although that was not extended to the Rugby Football Union for the Rugby world cup, for example. Those tickets could probably have gone for £20,000 on the open market, but they were protected at the price that the event organiser decided. Does he agree that that should be the way that this goes forward?

[Mr Bacon]

I would like to see a regular and orderly market. In a moment, I will say something about the analogy with the stock market made by the hon. Member for Perth and North Perthshire, because for different reasons from the ones that I think he meant, it has some interesting things to tell us. The regulation of the stock market is very concerned with an orderly market. I am sure that the hon. Member for Washington and Sunderland West is right that those tickets could have gone for considerably more, and I do not understand why the provisions that were extended to the Olympics—that was mainly because the contract that our country had to sign with the International Olympic Committee in order to get the Olympics to come here absolutely required us to put in those provisions—were not also extended to the Rugby world cup, particularly when we know that the Rugby Football Union was begging for that to happen. I do not personally understand that at all. I think it was a mistake.

I was talking about the IEA paper and, as it were, the IEA view of the world. Although I do not necessarily subscribe to every jot and tittle of what is in the paper, I found it interesting to read. As I said, it did not necessarily focus on the consumer protection issues as much as I would have wished, but it is certainly true that many consumers have been seriously ripped off by secondary sites and have found huge difficulty in obtaining redress. There is a need for proper consumer protection and the right regulatory environment.

I think it is probably fair to say, as a generality, that I might be a little more interested in the papers produced by the Institute of Economic Affairs than the hon. Member for Perth and North Perthshire, but the reason why I like his stock market analogy is that there are a number of areas of read-across. The stock market of publicly traded securities is subject to very tight regulation and strict rules. Participants in the market must all be treated fairly. Information conveyed to the marketplace must be conveyed to all participants simultaneously. There are strict rules about how minority shareholders must be treated. For the issuing and trading of Government securities, it is normal to have a primary dealer, or a set of primary dealers, who are allowed to buy Government securities directly from the Government, or Governments, and in return for the Government’s conferring these privileges on primary dealers, the dealers also have to agree to specific responsibilities.



When I left university and started work in an investment bank, I had to pass an examination in order to become what was then known as a registered representative. It was binary: either you were a registered representative or you were not, and if you were not, there were certain activities that you could not undertake. I do not want to stretch the analogy too far, but it seems to me that in the area of secondary ticketing, consumers and campaigners are looking for clarity and simplicity. They want strong rules that are fair, enforced, and easy for everyone to understand. I believe it is possible that part of the solution would be registered ticket dealers—a solution that is analogous to what I have just said about the stock market. At the moment it feels like the wild west, and people are getting hurt.

I might add that some who have been in the business of offering tickets to events for many years, and who have great knowledge and experience of the sector, also feel that they are getting hurt. The Proceeds of Crime Act 2002 allowed for the freezing and seizure of assets by administrative fiat, without the process of going through a court trial of a prosecution. That legislation, which was designed to deal with international money launderers and drug dealers,

“undermines the very foundation of our freedoms, which is that people are innocent until they are proved guilty, that the state cannot merely seize the property of the individual but must establish that the individual has forfeited his liberties under the rule of law… The new power of civil forfeiture is born of an understandable frustration at our inability to pin things on certain individuals, but it is a sloppy and dangerous short cut to improving our criminal law.”—[Official Report, 30 October 2001; Vol. 373, c. 814.]

Those are not my words, but the words of George Osborne during the passage of the legislation on 30 October 2001. I believe it is at least possible that that legislation is now being misused and misinterpreted.

Let me return to the question of what a suitable regulatory framework would look like. I think it is obvious that self-regulation through the assorted trade bodies that have cropped up from time to time in recent years has failed, and that the consumer rip-offs have been continuously getting worse—even in recent years, during the very period in which parliamentarians, the Government and the competition authorities have been paying more and more attention to the subject.

We need firm and clear rules, including, where appropriate, adjustments to the statutory framework, as well as vigorous enforcement, for which the required resources could be found quite easily. For example, a 1% levy on all tickets sold on websites for events in the UK would produce tens of millions of pounds to pay for consumer protection. It would not be very difficult. Many industries pay part of the cost of their own regulation: Ofwat is an example of that. The system could be revenue neutral, or—I think my hon. Friend the Minister would like this even more if she were trying to persuade the Chancellor—it might even make a profit.

A prime area for attention are the massive conflicts of interest that exist within the events industry. One company, Live Nation, is a venue owner, a promoter of events, an artist management company, and an operator in the primary ticketing business through its ownership of Ticketmaster. It also owns two of the leading secondary websites, Get Me In! and Seatwave, which have attracted so much controversy. That is a very obvious source of conflicts of interest.

The most common complaint is that when tickets for a very popular and oversubscribed event such as a rock concert are sold out at their face value within a few minutes of going on sale, the same tickets appear only a few minutes later on the secondary sites at a much higher price. The old question “cui bono?” applies: who benefits? Well, plainly the holders of the tickets purchased at face value, who have now sold those tickets at a much higher price, benefit considerably; but so does the secondary trading website through which the exchange takes place, because the website charges a commission for facilitating the transaction. The commission can easily be 20%, 30% or even 40% of the new sale price. If, say, a £55 ticket is resold at an inflated price of £250, which is perfectly plausible, the commission alone on the resale of the ticket, at just 20%, will be £50, and could easily be £75 or £100—more than the total original face value of the ticket.

If the secondary trading website is owned by the primary providers of the tickets—the concert promoters—they may make more money from the resale of the ticket than by having originally issued it, although in the second transaction they are acting only as brokers; provided, of course, that the secondary trading websites have enough tickets to sell. There is, then, a massive incentive for any primary provider that owns a secondary platform to ensure that the secondary platform has enough tickets. That type of conflict of interest is very clear and should be dealt with firmly. There is also, of course, a massive incentive for secondary platforms to encourage other ticket holders to engage in dubious behaviour to make sure they have enough tickets to sell on the platforms. There should be an investigation into firms such as Live Nation and whether their vertically integrated ownership structure is harming consumers and leading directly to abuse. My personal opinion is that it is.

There is even controversy—the Lord alone knows why—about whether the secondary trading platforms are brokers. They plainly are—they make promises and offer guarantees—and if they were correctly seen as brokers taking money in payments, they would fall under the supervision of the Financial Conduct Authority. As brokers, they routinely lie. They offer for sale tickets that they purport to have access to but which they do not have access to—what are called specs, or speculative tickets—in the hope that they will find the required ticket in time. If they were treated and regulated as brokers, this would be much easier to stop.

I would like to offer the Minister some propositions that I think command widespread consent and which should inform the Government’s thinking as they reform this area. First, the promoter or vendor should have the right to choose to whom it wishes to sell its tickets. Secondly, the promoter of an event should have the right to decide at what price the tickets should sell and to impose terms and conditions, so long as they are not unreasonable. The prices for those tickets will vary considerably depending on the nature of the event, and it should be perfectly in order for there to be massive price variations that reflect the desirability of the event.

As a constituent told me this morning—he was a Chelsea season ticket holder so had access to the tickets—he paid £140 to go to the FA Cup final, in which Chelsea were victorious. He would expect to pay on average £20 per normal premier league game, having paid £940 for a season ticket. Somebody attending a game against Accrington Stanley would expect to pay considerably less. I mentioned the £2,000 charged for the best seats at the Olympics for the 100-metre final. That price was set by the promoter. There is nothing wrong with such massive variations; it reflects the reality.

Fourthly—this goes back to the first point—it should be entirely in order for the promoter to operate a discriminatory pricing policy for favoured customers for a wide number of different reasons, which may include assisting activists in the sport, as happens often in rugby, assisting supporters clubs or exposing an event to young people, as theatres and opera houses often do. It may, of course, be a more expensive package for corporate clients that helps the event make more money.

If a promoter sold every ticket at £40, it is possible that, in the case of many shows, if they were of the elaborate variety, it would not cover its costs. Promoters need to be able to discriminate in their pricing and to offer packages to favoured customers. A few years ago, Wimbledon had a people’s Sunday—it was not expecting to have games on the Sunday, the rest day, but it did because of rain—for which unreserved seats were readily available at low prices, which allowed those of more limited means to sit on the best show courts and see the best tennis. That sort of thing ought to be within the gift of the promoter to decide.

Fifthly, it should not be possible for a promoter to cancel a ticket because it has been resold, unless it has been acquired unlawfully or in breach of the promoter’s reasonable terms and conditions. Sixthly, one should not be able to oblige a vendor to repurchase a ticket, but equally, and seventhly, a ticket holder who can no longer use a ticket should, at the ticket holder’s own choice, have the clear right in law to sell it either back to the vendor, at the vendor’s discretion, or to another party. From that, it follows that there should be registered ticket dealers that can have different classes of licence—rather like different classes of drivers licences—depending on whether they are operating online or outside venues. Anyone doing business with the public should also have liability insurance, which should be visible to the customer. That is not a complete list, but I hope it is a useful contribution for the Minister.

There is one area of considerable importance that I have not had time to mention so far but would like to touch on before I sit down. Some of the worst offenders in harvesting tickets for immediate resale using sophisticated software are to be found in the organisations with the most up-to-date IT infrastructure—the fastest fibre links and the mainframes with the fastest processing speeds—such as the big banks in the City and big accounting firms, and certain people in the NHS and even in one or two police organisations. I hope the Minister will reflect on that because sometimes Government investment in IT is assisting this pernicious trade. Members who have read the book “Flash Boys” about high frequency trading will immediately get the point.

I hope my remarks have given the Minister a little food for thought and I look forward to hearing her reply.