Skating on thin ice – exploitative activities in the secondary ticket market

Posted: December 22, 2016

Secondary ticketing is being hauled over hot coals once again.

The most recent scandal comes courtesy of an Italian investigative programme, La Iene, which challenged the Italian branch of the industry titan, Live Nation, following concerns about a number of tickets to a Coldplay concert in Milan appearing on secondary sites almost simultaneously with the general release.

Live Nation Italy’s MD, Roberto De Luca, initially said that the company did not issue tickets direct to secondary ticket platforms. When later interviewed by journalist, Matteo Viviani, he retracted this admitting that “In fact, we issue some tickets, a very limited number of tickets on other sites, in this case Viagogo”.

De Luca attempted to sweeten this by playing down the number of tickets affected. He commented that the number of tickets issued direct to secondary sites “are equal to 0.2% of our ticket sales… We are not talking about tens of thousands of tickets, but hundreds of tickets for a concert”.

Query whether that is any consolation to the hundreds of fans who are unable to secure face value tickets at the primary point of sale, or the artists, who can be left singing to blocks of empty seats when those secondary tickets do not sell.

The result of De Luca’s admission is serious. The BBC reports that several Italian artists have ceased to work with the promoter, including Vasco Rossi, and legal proceedings may be instigated.

The Italian Government is also taking a hard-line approach to ticket touting, which can abuse secondary ticket platforms. IQ, the live event magazine, reported recently that an amendment to Italy’s budget law, that would criminalise ticket touting and hold secondary ticketing sites accountable if they facilitate such illegal re-sales, has been approved.

In the UK, a cross-party campaign of MPs and peers, supported by entertainment industry figureheads, has been increasing pressure on the government to clamp down on the use of online “bots” to buy large numbers of tickets. The Culture, Media and Sport Committee’s ongoing inquiry into ticket abuse heard its latest evidence on 15 November from Josh Franceschi of band, You Me At Six, Ian McAndrew of Wildlife Entertainment, the MMF, Ticketmaster UK, StubHub and eBay (to name a few).

Evidence given during the session suggested that there may be under-reporting of income earned from secondary ticketing. Security consultant, Reg Walker, commented that “This is meant to be a £1.2 billion industry in the UK alone, and yet we can only find a turnover of around £200 million on published accounts.  What I would like to see is a full investigation by HMRC…”.  Subsequently, in early December, it was reported that HMRC will be considering the tax affairs of secondary ticketing companies.

Further, on 19 December 2016, The Competition and Market Authority (CMA) opened an enforcement investigation into potential breaches of consumer protection law in the online secondary ticketing market.  The investigation has been prompted by concerns that consumers are not being given certain key information when buying tickets on re-sale sites.  The CMA Acting Chief Executive, Andrea Coscelli, said “A night out at a concert or a trip to a big match is something that millions of people look forward to.  So it’s important they know who they are buying from and whether there are any restrictions that could stop them using the ticket.  We have heard concerns about a lack of transparency over who is buying up tickets from the primary market.  We also think that it is essential that those consumers who buy tickets from the secondary market are made aware if there is a risk that they will be turned away at the door… If we find breaches of consumer law, we will take enforcement action.”.

There has also been a huge surge in the number of UK artists and entertainment industry representatives publicly speaking out against ticket abuse. What started with a small handful taking steps to counteract the practice (for instance, by demanding that a named ticket has to be supported with matching photo ID) has expanded into a wealth of household names and the business stalwarts behind them (including Arctic Monkeys, One Direction and Mumford & Sons) clubbing together with FanFair Alliance to tackle the issue. The involvement of wider industry figures, such as Sonia Friedman, producer of the current West End production of Harry Potter and the Cursed Child, has helped emphasise that secondary ticketing affects the entertainment business as a whole, not just live music.

There is clearly a market for ticket re-sales and it would be unjust to view the secondary market as dubious across the board. The Financial Times reported that the global secondary ticketing market is worth $8bn. It is hugely positive, for the fans, the artists, the events, and the economy, that there is such enthusiasm for live events.  Twickets, a site where fans can re-sell tickets at face value or less across a host of theatre, music and sport events, has demonstrated since 2011 that secondary ticketing can be positively and fairly managed.  As reported by The Financial Times, ticketing sites, including Ticketmaster International, are also investing heavily in technology and resources to block bot activity.

Leaving aside whether re-sale is contrary to specified ticket terms and conditions, there is legislation in the UK that could potentially deal with aspects of ticket abuse (for instance under the Computer Misuse Act 1990, Consumer Rights Act 2015 and the Fraud Act 2006), but there seems to be little appetite for the impracticalities of piecemeal legislation. What is arguably needed is consolidated legislation with bite, coupled with regulation.

The problems with secondary ticketing are undoubtedly expansive and complex. We are not just dealing with alleged deals being done directly between promoter and platform without artist approval, but software touting bots and the classic tout buying first sale tickets in bulk for immediate re-sale at inflated prices. Add in touts selling fake or even non‑existent tickets, and claims that proceeds of ticket abuse fund a hive of other criminal activity, and the problems become even darker.

The issue is not the re-sale of tickets per se, but the potentially exploitative, unethical and unlawful practices secondary platforms can facilitate – however innocently.  There is no doubt that the entertainment business and its audiences are clamouring for action and the ice is wearing thin on ticket exploitation. Perhaps 2017 will be the year we see it crack.

Please note that the above is a digest that has since been extended.  To read the full article, click here.  Article written for Entertainment Law Review.

Jessie Merwood