Secondary Ticketing

Tracey Crouch Excerpts

Tuesday 13th March 2012 Westminster Hall

[Mike Weatherley]

Absolutely. I agree—it is a drain on the Exchequer. Of course, some secondary ticketing organisations pay tax, but there is an amount of VAT and so on that is not necessarily reclaimed.

The issue is recognised by some of the music and sports industries’ leading names. The list of those who joined me to meet the Secretary of State for Culture, Olympics, Media and Sport last year reads like a “Who’s Who”: Melvin Benn, Festival Republic, who runs the Glastonbury and Reading festivals and is chairman of Wembley stadium; Harvey Goldsmith, legendary promoter of live events; Rod Smallwood, Phantom Music, manager of Iron Maiden; Ian McAndrew, Wildlife Entertainment, manager of the Arctic Monkeys; Anthony Addis, Brontone Management, manager of Muse and the Pogues; Emma Banks, Creative Artists Agency; John Jackson, K2 Agency and Sonisphere festival; Simon Davies, the Teenage Cancer Trust charity; James MacDougall, Sport and Recreation Alliance; Dan Fahey, Virtual Festivals; Neil Warnock and Geoff Meall, the Agency Group; Jeff Craft, X-ray Touring; Brian Message, ATC/Courtyard Management and Music Managers Forum; and Danny Newby, Big Green Coach. Those industry leaders have been joined by many others in recent months, including DJ Rob da Bank; Phil McIntyre, Phil McIntyre Entertainments; James Sandom of Supervision Management, who look after the Kaiser Chiefs; and Steve Parker of Live UK. That group cannot be called an isolated few—the industry is very concerned.

[Tracey Crouch (Chatham and Aylesford) (Con)]

I was surprised by the number of e-mails I received on this issue. Having heard that list, perhaps I should not have been. I received an e-mail from a constituent, Mr Sunderland from Larkfield. He said that a typical scenario is for tickets to go on sale on a Friday at 9 am, and by 9.10 am they are sold out. They are then listed on other websites at triple the face value, or even more, of the original tickets. Does my hon. Friend agree that we should be putting the fan, not the salesman, at the centre of the ticketing process for live music and other events?

[Mike Weatherley]

I could not agree more. I will come on to that point in a moment—it is on an industrial scale now. The intention of the person buying the ticket is important. If the intention is to make a profit, I argue that that is to the detriment of the industry.

It can be argued that there are occasions where intermediaries, such as agents, or, in this example, ticket touts, provide a supply and demand service. However, in the case of exceptional excess demand for a finite product, supply cannot be increased to match demand. With only a finite number of hours available to the performers, the free market falls down due to a restriction of supply. Ticket touts who take advantage of that market imperfection do nothing to add to our creative industries in terms of revenue and profits to those putting on the shows.

In addition to profit being driven into the hands of those who have done nothing to nurture and develop the product, there is the added consideration of who owns the product being performed. I hope that everyone listening to this debate will readily agree that a performance belongs to an artist, and that the artist has the right to be in control of the terms of that performance. Indeed, today the French Government have enacted a law stating specifically that. Any hon. Member who wishes to explore further why the protection of intellectual property rights is so important may wish to check out my “Rock the House” website, www.rockthehouse2012.com, which goes into that particular debate in some detail. The creative person should at all times be able to retain control of how the end product is produced, marketed and used.

I am well aware of the argument that artists realise the full value of the ticket sales, so who are they to complain if others also make a profit? That argument, however, falls down on three counts. First, there are many reasons why a business may wish to price at below full market value, such as market penetration and reward for loyalty. There is differential pricing in football stadiums; for example, in a young persons area where the club wishes to build a fan base. They could sell at a much higher rate, but choose to price market segment. The clubs would be disadvantaged if those young persons simply sold on their tickets for a profit—that would defeat the intention of a lower-priced ticket. I will come on to the Olympic example later.

Secondly, another reason would be to control the type of person attending—for example, crowd separation at football matches. That argument is well established in other areas, too. There are restrictions on who can buy certain properties, such as affordable housing units that cannot be bought by speculators and sold at an immediately higher value to someone not in the target housing audience. In addition, a band may wish to have a young crowd at the front of the stage, rather than people who can afford the premium pricing, which would not necessarily create the same atmosphere.

Thirdly, there is criminality relating to ticket forgeries and organised crime, which I will come on to later. I should point out at this point that I am not totally against the on-selling of tickets. There must be a mechanism that allows ticket buyers to recover the price of their ticket, and maybe make a small profit for their troubles, if they cannot attend. That could be done via a fan-to-fan website. That is an essential safeguard, but it is the intention when buying the ticket that is the most important consideration. We saw recently, with the debenture ticket holders story at the Royal Albert hall, that some were buying their debenture—or season ticket, if you prefer—with no intention of going to the shows, but because they were able to make a profit of 10 times the face value.

At the moment, with huge profits available for popular events, tickets are being purchased on an industrial scale, with no intention of going to the event itself. People up and down the country are contracted by ticket organisations—or are freelance themselves—that make it their job to sit at banks of computers to buy the maximum allocation of tickets at face value as soon as they go on sale. As we saw on the “Dispatches” programme a few weeks ago, some companies are willing to use their staff, and credit cards obtained for this specific purpose, to buy tickets and resell for a profit.

Before I move on, may I just address the issues brought up in the “Dispatches” programme? A lot of the focus of the programme was based on artists, promoters or venues holding tickets back and using free market mechanisms to sell tickets at an additional profit to the benefit of those putting on the concert or event. I see nothing wrong with that if it is done with the copyright holder’s permission. It seems that that was given, since it would appear that the promoter ticket allocation, for example, was in the contracts. That was known to all parties and is no different from premium pricing at the front end. It is simply a mechanism that reduces the risk to the artist on pricing, and shares that with those operating the system for them. Some artists grade their tickets from the outset at a higher premium value. We have heard about certain artists charging £1,000 for tickets in the front row. The mechanism on fan-to-fan websites is no different from that; it just uses the free market to set the price. What was wrong, as mentioned earlier, was where the secondary ticket seller was buying, via a network of intermediary operators, for the specific purpose of on-selling at a profit to them, not to the artist.

That brings me on to the Olympics. As is well known and accepted as a matter of principle, it is against the law to on-sell an Olympic ticket, whether at a profit or not—it must be sold back to the organiser. It strikes me as baffling that the Government accept this for a specific sporting event and promote strong enforcement, but are reluctant to take action for the benefit of our creative industries. Some 6.6 million Olympic tickets have been sold to the public, raising £527 million. That figure could have been much more, but the price was set and the Government seek to enforce it so it remains a “games for all”, and not just those who can pay the premium. Some 25% of tickets have been held back for other purposes, such as corporate sales and other premium pricing, but a decision was taken that 75% of the tickets should go to enthusiastic fans at a specific price below market value. The atmosphere inside the arena will benefit as a result, contributing to what I am sure will be a fantastic games.

The Home Secretary is so determined to crack down on touts, the fine was raised from £5,000 to £20,000. In May 2011, she said:

“The 2012 Games will be a once-in-a-lifetime opportunity to experience the Games on home soil. By increasing fines for touting we are sending a clear message to criminals…that it is not worth their while and they are not welcome.”

The police, under Operation Podium, have announced that every ticket tout caught will also be pursued to recover their assets, with no maximum limit to the amount that can be recovered. Additionally, internet companies such as eBay and Gumtree could also face action if they do not take immediate action, once notified of illegal activity.

The worry about the effects of ticket touting goes further. Detective Chief Inspector Nick Downing, in charge of Operation Podium, said:

“we have already seen the demand for Olympic tickets which gives criminals greater opportunity to run scams, sell non-existent tickets and even steal your personal and credit card details to use in other crimes…As soon as you allow things to go out of control, opportunities for criminals grow. And I do not want London to be associated with disappointment at finding out all the money paid out was to criminals and no tickets exist”.

That last point could have been echoed by any bank manager, who I am sure would worry about exactly the same thing.

Although examples that I have given show that extensive action is, and can be, taken to prevent ticket touting at the games, it only serves to highlight the lack of action taken against ticket touts at other events. Without legislation, artists are forced to think of innovative ways to prevent touts. Glastonbury, for example, uses a picture of every ticket holder and other events have insisted that people bring with them the credit card used to purchase tickets. But this fails in a number of ways, from the father wanting to give a present to his kids, to those who do not have a credit card or driving licence as proof of identification. Such approaches can also create problems with crowd surges before curtain-up: checking 10,000 IDs will add to entrance delays, which venues are not geared up to handle, and there are obvious safety concerns—and anyway, it adds to the Big Brother state, which surely we should avoid if we can.

I am pleased that the ticket sales for the games have gone well. The Olympics are inspirational in so many ways and I hope that the Minister will be inspired by the ticketing arrangements for the London games and use that inspiration to help all our creative industries and events that could benefit similarly from Government and police assistance.