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Secondary Ticketing

Volume 642: debated on Thursday 7 June 2018

Motion made, and Question proposed, That this House do now adjourn.—(Rebecca Harris.)

I am pleased to have the opportunity to discuss secondary ticketing, which is the process of reselling tickets for admission to events such as live music concerts, rock festivals, football matches, other sporting events, exhibitions and so on. The term “secondary ticketing” refers to tickets that have already been sold for the first time by the organiser of the event, and are then sold on by the ticket holder in the secondary marketplace. In the ticketing industry, the original issuers are generally known as “primaries”, and later sellers are known—for obvious reasons—as “secondaries”, or more typically as “secondary websites”, because the secondary ticketing business overwhelmingly takes place on the internet through online transactions paid for by credit cards.

I began to take an interest in this issue because of a constituency case, which was the reason I originally applied for this debate. However, those specific matters have recently been caught under the terms of the House’s sub judice rules—I consulted the House authorities and the Principal Clerk of the Table Office at length about that case, and I regret that I cannot now refer to it directly today. None the less, secondary ticketing is clearly a matter of widespread concern among the public whom we represent, as well as among hon. Members, who have held numerous debates on the subject in the House in recent years. The hon. Member for Washington and Sunderland West (Mrs Hodgson) is in the Chamber this evening.

Secondary ticketing is an area of great controversy that raises important questions about consumer protection, business freedom and responsibility, the ethics or legality of certain types of behaviour, and indeed the clarity of the law and whether it is applied correctly. There are also questions about the structures of the entertainment industries that put on events that require tickets. This is an area in which public policy must be got right and implemented properly, and it is fair to say that there is still considerable work to do.

Last year, two hon. Members who were active in the all-party group on ticket abuse—the hon. Member for Washington and Sunderland West and my hon. Friend the Member for Selby and Ainsty (Nigel Adams)—were threatened with arrest when they visited the offices of Viagogo, a notorious secondary ticketing website that was operating from premises at 71 Fenchurch Street in the City of London while claiming that it did not have a proper UK office. That happened simply because they wished, as Members of Parliament, to raise concerns with that company about constituents who had been repeatedly ripped off by Viagogo, after it had repeatedly ignored correspondence and requests for meetings.

Research by the consumer watchdog Which? found that as many as a quarter of tickets to popular concerts and events end up on secondary ticketing websites such as Viagogo. Which? found that 26% of tickets for a show by the comedian Jack Whitehall, and nearly a fifth of tickets to see Lady Gaga at the O2 arena in London, were available on Viagogo and three other resale sites—Get Me In!, Seatwave and StubHub. About 15% of tickets for last year’s first night of the BBC Proms at the Royal Albert Hall were found on secondary ticketing sites, including a £38 ticket with a mark-up of 279% on StubHub, and one with a 300% mark-up on Get Me In! Crucially, Which? discovered that 49% of consumers who bought those tickets believed that they were buying from official sellers, and it is clear that proper consumer protection is required in this area.

As well as the hon. Member for Washington and Sunderland West, who has campaigned on this issue for many years, and my hon. Friend the Member for Selby and Ainsty, another active campaigner is the hon. Member for Perth and North Perthshire (Pete Wishart), who secured a debate on this subject, to which the Minister responded, only last month. The Minister might be getting rather tired of having to come back to the House of Commons, but that is an index of the concern felt by hon. Members across the House.

There is a wide range of views on what reform is required and what that should look like. One might say that the bookends of the argument could be loosely characterised as ranging from the views of the hon. Member for Perth and North Perthshire, an experienced rock musician, to that set out in an Institute of Economic Affairs paper written by Dr Stephen Davies. The hon. Member for Perth and North Perthshire stated his view clearly:

“I question the need for a secondary market at all. Why is there one? If someone cannot go to a concert they have a ticket for, they should give it back to the venue, which can then resell it to someone who can go. What is wrong with a simple arrangement such as that? We usually hear from people—we have seen it in a couple of articles—that this is all about tickets finding their natural value, as if there is a sort of stock market where tickets find their real value at the hands of the touts reselling them.”—[Official Report, 2 May 2018; Vol. 640, c. 165WH.]

The IEA, as one might expect, takes a different view, stating:

“The fundamental cause of disappointment for many would-be buyers or their having to pay more than a nominated but below-market price is that in these cases”—

that is to say where there is enormous interest in obtaining the tickets—

“(which to repeat, are not the norm) there is a massive excess of demand over supply. Far more people want to go to the event than can physically attend.”

The IEA paper is certainly worth reading, although personally I do not think it places sufficient emphasis on the very serious consumer protection issues that have become apparent.

It is of course true that for any good or service where there is a fashion or fervour to obtain it, the price can be bid up very easily. That happens with Nike, where the manufacturer of very popular training shoes tries to limit supply. It is every supplier, every manufacturer, and every commercial business’s dream to have people fighting over their product and bidding up the price. I remember that when the IKEA store opened in north London, there were literally fights outside because so many people wanted to get in. That might have created a small disturbance, with the police having to be called, but the fact that there was now an IKEA store in that part of north London was all over every newspaper in the country.

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?

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.

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?

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.

I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing this debate, which is timely given the start of the summer sporting season with many events to which fans will want fair access.

It has become ever more difficult to buy tickets at face value with powerful new technologies being deployed against the interests of consumers. However, as my hon. Friend acknowledged, there is a role for responsible secondary ticketing platforms, if only to give fans the opportunity to resell at a reasonable price tickets for events they are genuinely no longer able to attend. Nevertheless, I am concerned that these genuine fans are being crowded out on these platforms by professional resellers, who harvest hundreds of tickets on the primary market with no intention of using them themselves.

The Government recognise that the process of distributing and buying tickets can often be a cause of public frustration and concern. We are determined to crack down on unacceptable behaviour and have made quite a bit of progress to date, which is not to say that there is not more to do, and I thank my hon. Friend for his suggestions for further consideration.

The Consumer Rights Act 2015 imposed a duty on sellers to provide information to fans including the face value of the ticket, information to enable the buyer to identify the particular seat or standing area at the venue, information about any restriction limiting the use of the ticket to persons of a particular description, and information about the identity of the seller—for example, if they are an operator of a secondary ticketing facility or an event organiser. Section 105 of the Digital Economy Act 2017 introduced an additional requirement for ticket sellers to provide a unique ticket number, where one has originally been given, when putting a ticket up for resale. This provision is now in force, and I know that some event organisers are beginning to look at how it can be used, along with other measures, to improve access and protections for fans.

Under the secondary legislation, we also introduced the “anti-bot” provision which is well on course to come into force next month. This will make it a criminal offence to purchase more tickets than the maximum permitted for an event where the purchase is made electronically through the use of software designed for the purpose and where the intent is to obtain financial gain. We hope these regulations will significantly improve the current situation.

The legislation is of limited use unless properly enforced, so I welcome the Competition and Markets Authority’s recent announcement that it has secured commitments from three of the four largest secondary platforms on additional information on cost to be provided with tickets being resold through their platforms, and that it has notified the outlier Viagogo of its intention to pursue court action if it does not fall into line and address the CMA’s concerns satisfactorily.

The Government are also now giving approximately £15 million annually to National Trading Standards for national and cross-boundary enforcement. It has committed to take forward investigations against power-sellers from within its annual budget, and I thank trading standards officers across the country for the excellent work they are now doing in this area.

The Advertising Standards Authority has recently taken action against the main four secondary ticketing sites, banning the misleading presentation of pricing information on their websites. Companies will now have to be clear and transparent. In addition, Google has introduced new rules for ticket resellers, requiring certification on the Google platform. To apply for certification, it will require solid information.

I do not have time to tell the House everything the Government are doing but hope I have been able to give a flavour of the majority of our actions.

Question put and agreed to.

House adjourned.