Motion made, and Question proposed, That this House do now adjourn.—[Mr. Roy.]
I am delighted to have secured this debate on transparency and competition in charging by ticket agents. As a nation, we spend more than £1.5 billion a year on advance ticket sales—a figure that has risen by more than 150 per cent. since 1999—for pop and rock concerts, west end theatre or shows, opera, stand-up comedy and sporting events. Of that huge sum, more than a third was spent with ticket agents.
Going to such events has become an increasingly popular leisure activity. The number of these events has increased. People have more disposable income and are able to purchase tickets easily via the internet. In most other markets, that demand would be met by greater supply, but in respect of pop concerts and, to a lesser extent, other top-end productions, it puts not only the acts but the ticket agents—through exclusive deals—in a powerful position. For example, Kylie Minogue’s come-back concert sold out in six minutes; if there had been as many tickets as punters willing to pay upwards of £50, several Wembley stadiums could have been filled.
Given the massive discrepancy between supply and demand, it is paramount that we keep a careful check on those who—quite properly—seek to make commercial gain in that market. However, that is quite separate from the legitimate debate about the increase in size of the secondary market in the resale of tickets. I am concerned only with the primary market and I shall argue that, although ticket agents perform a perfectly useful role, we need to do much more to ensure that their pricing is transparent and fair, so that the punter can see exactly how much he or she will pay. In addition, given the sometimes high stakes involved, we should question whether the relationship between promoters and agents should not be further scrutinised.
These days, it may be inevitable that people who decide to see a show or concert are charged at least one fee, if not two, on top of the ticket’s face value. However, although it may be inevitable it is not always expected. People quite legitimately budget on the basis of an advertised price. One might baulk at a £55 ticket for the Monty Python musical “Spamalot” but accept the fact that the show is obviously popular. What might cause more irritation would be to find out later in the transaction that a surcharge of £15 was to be added by the agents, as I understand has occurred. Although that may be a top-end example it is not uncommon to find companies charging in the region of £5 on top of the face value for the privilege of buying a ticket from a particular agency.
Information is power, however. For many events, it becomes apparent only late in the transaction—crucially, perhaps after the decision to purchase—that there are to be added fees. As the Office of Fair Trading 2005 report “Ticket agents in the UK” recommended, information should be provided on advertisements to indicate, if not to specify, the price range of the tickets to be sold, as well as the fact that there will be a booking fee. Welcome guidance issued by the Committee of Advertising Practice before the OFT report was published required advertisers not to mislead, for example by quoting only the lowest price or by not indicating clearly that a booking fee applies. However, that had the unintended consequence that, rather than display more information, advertisers simply removed it altogether—as they were perfectly entitled to do under the guidelines. I appreciate that booking fees vary between agents, which is a good reason to shop around, but if agents are primarily or completely in charge of selling tickets on behalf of the promoters of the concert or show, it is only right that the consumer should be fully aware that they will take their cut and, furthermore, that the amount of that cut is known at an early stage.
The names given to fees are often confusing and sometimes downright misleading. Sometimes they are referred to as booking fees, and at other times as service charges, processing fees or administration fees. Most of those descriptions give the impression that the fee is incurred to meet an expense involved in the processing of the transaction, but in reality it is simply how the agents make their money. Why cannot that be made clear? If it is not made clear, the situation is similar to that for banks—albeit on a lesser scale—where the charges generally bear no relation to the actual costs incurred and are merely a way of making money. I acknowledge that ticket agencies are legitimate companies operating as useful intermediaries between promoters and customers, but we should be able to demand some honesty about their role. The same is true about their use of the phrase “postage and packing”, which can cost very much more than the price of a first-class stamp.
A corollary of the assumption implicit in labelling such charges administration fees, or whatever they may be called, is that the marginal cost of administering extra tickets for the same recipient should be small—in fact, so small as to be non-existent—but that is not the case. In the vast majority of instances, the same fee applies to each ticket, whether the purchase is of one or 100. Again, we come back to the misleading impression that fees are merely expenses being passed on to the customer.
These days, it is becoming harder and harder to buy directly from a box office, and having agreements in place and clear information on the options is rare. To take one example, Ticketmaster operates a “box office” service on behalf of a number of venues, in addition to those owned by Clear Channel, including, for example, the Manchester Evening News arena, the Metro Radio arena in Newcastle and the Brighton centre. Tickets are usually still available directly from those venues, but that fact is not advertised prominently on venues’ websites and the impression given is very much that using the agent is the sole means of obtaining tickets.
When people phone the automated inquiries and booking line for the MEN arena, no mention is made of the fact that tickets can be purchased directly, without incurring a fee. Tickets to see Ricky Gervais, for example, have a face value of £25, but then there is a £4.95 booking fee per ticket, plus £2 for postage. That latter charge applies even when people pick up tickets at the box office. That means that a party of four would pay nearly £22 in additional charges, or a mark-up of 20 per cent., for the privilege.
I do not seek to single out Ticketmaster in particular. When judged against the rest of the industry, it is as good or as bad as many others at providing information. However, given the money to be made, it is not surprising that its results for this quarter, which were announced only last week, were so healthy. The website of its parent company, IAC, boasts of Ticketmaster’s revenue worldwide jumping 44 per cent.
“due primarily to increased revenue in the United Kingdom and Canada”.
Tellingly, it adds that there was a 10 per cent. higher than average revenue per ticket. One can speculate on the causes of that, but it certainly does not seem to illustrate any downward pressure on margins.
Although the Office of Fair Trading found no evidence of a lack of competition in the ticket agents market, it did uncover some potentially distorting arrangements between promoters and agents: for example, preferential contract rights in exchange for access to a proportion of the tickets allocated. That may take the form of some of the revenue from the sale of the tickets by agents being returned to the promoter, who may then pass it on to the artist or to his or her agent. Thus, as the OFT found, it is often directly in the interests of the promoter for additional fees to be charged. The OFT talks of competition operating at a level not visible to the customer: between agents competing to attract promoters by offering financial inducements in the form of higher fees. Surely that is not right. It could even sometimes be called a bung. In some circumstances, if an allocation of tickets is bought up completely by one agent, that may be regarded as a closed shop.
It is not that these arrangements always necessarily disadvantage the consumer. The OFT points out—I think rather naively—that sources of income from booking fees
“can mean that face value ticket prices are lower than they would be otherwise.”
That may or may not be the case, but would it not be better to have a standard, transparent system so that everyone knows where they are? Most would agree that, given the unprecedented demand for tickets to rock and pop concerts, and perhaps to a lesser degree to west end shows, once an agency secures a large ticket allocation, in effect it has a licence to print money.
It is not all doom and gloom. Plenty of theatres operate without the need for ticket agents and the associated hefty booking fees. As I am a Merseyside MP, I instance Liverpool’s Everyman and Playhouse theatres, as well as the Liverpool Philharmonic, which charge a fee only for internet transactions. Transactions made in person or by phone are free. In the first two examples, the fee is a flat rate, regardless of the number of tickets involved. As Liverpool is the European capital of culture next year, it might be fitting if, for example, the city’s new Kings Waterfront arena, which will no doubt host many big events, could take a lead which other similarly big venues may follow by keeping booking fees to a minimum or at least ensuring that the option to buy directly is fully advertised and that transparency rules.
Ticket agents perform a useful role for people who have neither the time nor the inclination to buy directly from the venue, but many people resent charges being levied, especially when they pick up the tickets from the venue on the night. There are things that we should be doing to ensure greater transparency and competition. First, we should work to encourage venues and promoters to agree guidelines under which a proportion of tickets for each event would always be available directly, without fees applying, with that fact advertised prominently. That is less of a problem with west end shows than it is with pop concerts, but tickets for some of the more popular shows are available only through agents.
Secondly, we need clear advertising of fees, so that people know what they are paying, or what they are likely to pay, both when they see the event advertised initially and when they inquire further. Thirdly, the industry should agree a standard wording for fees, so that it is made clear that people are paying not merely the expenses incurred but the profit of the intermediary. Fourthly, we should scrutinise more closely the relationship between promoters or venues and agents to ensure that there is no question of collusion either to inflate booking fees or to exclude non-agency sales from the equation. On all those aspects, it might be timely for the OFT to look again at its 2005 report and examine this important issue in depth.
I congratulate my hon. Friend the Member for Wirral, South (Ben Chapman) on securing a debate on an important subject that is of lively and continuing interest to hon. Members on both sides of the House and to many of our constituents. I should declare a lively personal interest: I am an avid theatre-goer and opera-goer, and the mother of an aspiring theatre director. We all want the situation to be right.
I am, of course, aware that consumers are often concerned by what they feel are very high fees charged by ticket agents. Most consumers accept that taking advantage of the benefit of using a ticket agent will involve some extra cost, but many of us dislike paying the fees charged by primary ticket agents and others on top of the face value of a ticket. Many consumers think that the charges are too high, and trading standards services and the Office of Fair Trading report that consumers have concerns about slowness of transactions and the non-delivery of pre-paid tickets.
As my hon. Friend said, these issues were explored in the OFT’s 2005 report on ticket agents, which examined the services provided to consumers, and I want to talk about the work that the OFT is undertaking. Collectively, ticket sales in the UK are now a very large market. These figures are somewhat out of date, but in 2003 the estimated total value of advance tickets sales in the UK was about £1.4 billion, of which about £580 million came from sales through primary ticket agents—those in which my hon. Friend has the most interest—which have agreements with the promoters of events. Again, although the figure may be a little conservative, the OFT estimates that the business between 1999 and 2003 grew by about 150 per cent. That increase resulted in part from more events being held—we all welcome that—but we also believe that it was partly due to consumer demand for greater convenience when booking a ticket, and the increased use that we all make of the internet to buy tickets.
Tickets sold through primary ticket agencies will usually include the face-value price, as printed on the ticket itself, a booking fee charged for each ticket and the additional processing fee for the transaction, which relates to the printing, postal charges and other administrative costs involved. Event promoters negotiate with artists’ agents for the number of appearances, and they determine the face value of tickets and the allocation and distribution of tickets between the venue box office and ticket agencies. Artists and their agents may also require a share of available tickets, which they may distribute as they see fit.
As we all know, the demand for tickets for some events may turn out to be greater than expected. That excess demand provides secondary agents with an opportunity to resell tickets at an even higher price to those who really want to attend and who are prepared to pay a premium to get the tickets.
As my hon. Friend said, whatever the source of the tickets, one of the main concerns is that consumers need to be properly and clearly informed about all charges so that they can make an informed choice. Consumer law on price indications imposes a requirement on all traders to give information on pricing clearly to consumers, so that they can compare prices in different outlets and make informed choices about what is best value for money. Although it is for the consumer to decide whether to buy a ticket that is being resold, it is important to ensure that they have clear information on which to base that choice. There are specific legal requirements on ticket agents that resell tickets to provide consumers with the price and any other details that appear on the ticket, such as the location of the event or the seat number. That is to ensure that potential buyers have the relevant details before they buy.
Trading standards services have taken enforcement action against a number of ticket agents in cases in which breaches of the legislation have been identified as causing collective harm to consumers. The OFT will, of course, continue to work with trading standards to ensure that all ticket sellers comply with the relevant consumer protection legislation, and it will take enforcement action when it believes it to be necessary. As my hon. Friend probably knows, the current regulations will be replaced as part of the implementation of the unfair commercial practices directive, which we are transposing into UK legislation. We expect the regulations to come into force in April 2008, and they will be a major piece of legislation that will ban unfair marketing and selling practices in the ticket market. They will require all ticket traders to provide consumers with the material information that they need to make an informed purchasing decision.
There are also understandable concerns surrounding bogus ticket agents advertising fake entertainment events or tickets that they do not have. Those are plain and simple frauds, and they too can be prosecuted when the victims bring the evidence to the attention of trading standards officers. Another concern to consumers is the use of unfair terms in ticket agencies’ standard terms and conditions. The law on business to consumer contracts requires businesses not to use unfair terms in their contracts.
Both the OFT and trading standards services act in a number of ways to try to improve the terms of consumer contracts. They may do so through campaigns to raise consumers’ awareness of their rights, through guidance that is published and by taking enforcement action to prevent the use of unfair terms in a contract. In 2003, the OFT published guidance on unfair terms in consumer entertainment contracts to ensure that the standard terms used in the contracts and in the ticket sector are fair. Work continues on identifying and tackling ticket sellers who do not comply with the law.
As my hon. Friend has said, the OFT has reported on the ticket agents market. The study concluded that consumers need better information about tickets to enable them to shop around for the best deal, but it also concluded that some ticket agents’ standard terms may contain terms that the OFT would generally consider potentially unfair. The report noted that event promoters and primary agents can impose conditions on the sale of their tickets and can invoke laws, such as those to do with breach of contract, to prevent the resale of tickets. The OFT is currently working with the ticket agency industry’s representative bodies, such as the Society of Ticket Agents and Retailers, with the aim of producing fair model terms and conditions that could be used by all members. That is a significant advance in the market.
My hon. Friend expressed concern about the level of competition in the ticketing industry which, as he knows, was an issue considered by the OFT, as the promotion of competition and the enforcement of competition law are central to its functions. Its report considered whether there is a lack of competition that could result in disproportionately higher fees being applied than would otherwise be the case. It looked, in particular, at the effect of the vertical agreements between event promoters and primary ticket agents. However, as he knows, the report did not find any evidence that those agreements hinder competition. The OFT concluded that competition between rival ticket agents to secure agreements with promoters tended to enable lower costs to be passed on to consumers in the form of lower prices.
As I mentioned, however, the OFT has made recommendations to improve information for consumers. Most consumers tend to make an initial decision on whether or not to go to an event on seeing an advertisement, but full information on charges is often only available within the transaction itself. It is very often the only way to obtain accurate price information without contacting the ticket seller. That can make it much harder for consumers to opt out of the purchasing transaction, especially if they think that the event that they want to attend is likely to sell out quickly. It is an essential part of consumer protection that advertisements do not mislead consumers. It is important that they inform people.
The OFT is looking at the rules governing event entertainment advertising. It found that the code of non-broadcasting advertising practice, written and enforced by the industry committee of advertising practice and independently administered by the Advertising Standards Authority, is less than satisfactory, as non-broadcast advertising tends not to carry price information. The report therefore recommended that the guidance on event advertising be reviewed and amended to include, among other things, the requirement that advertisers display the face value of the ticket, while indicating where additional fees may apply and whether they could vary depending on the sales channel and the ticket seller used. It recommended, too, that event organisers follow up any amended guidance to provide consumers with the fullest possible information when advertising events.
In general, the OFT study found that where consumer protection regulation is applied, it appears to be working well and that most consumers express high levels of satisfaction with the ticket-buying process. However, as my hon. Friend pointed out, there are areas for improvement, and the Government fully support the OFT’s initiatives to secure these improvements. My hon. Friend suggested a number of measures to make the market in tickets more transparent and to make it work better for consumers, which, broadly speaking, fall within the scope of the OFT report.
As regards clearer advertising, the OFT recommended that the guidance be amended. I will pass on to the OFT the full text of my hon. Friend’s speech so that in further discussions it can take account of what he has said. I will ask, too, for its views on the other proposals that he has made, as they are closely related. I will write to him with details of those views. The OFT will certainly wish to have the opportunity to consider his proposals, discuss them with interested parties and, if appropriate, make further recommendations on the market.
In conclusion, I thank my hon. Friend for raising these important issues and for giving me the opportunity to explain the protections that already exist for consumers and the work that we have in hand to offer better transparency and more information. I will ask the OFT for its views on his suggestions. Like him, we want consumers to be informed and empowered in the marketplace. We will therefore continue to work closely with the OFT and other authorities to achieve that shared objective.
Question put and agreed to.
Adjourned accordingly at ten minutes to Seven o’clock.