The secondary ticket market needs to "clean up its act," according to a report released January 10th by a U.K. government select committee, but the government shouldn’t be the one applying the disinfectant – at least not yet.
The Culture, Media and Sport Committee of the House of Commons released a 54-page report that concluded that while the Internet has greased the skids for opportunistic and unscrupulous ticket resellers to make huge profits while contributing nothing to the live industry, it stopped short of recommending a legal solution. Instead, it urged the industry to come up with a voluntary plan to police itself and share the bounty.
"The Internet has increased the opportunities for secondary sales of tickets and for large profits to be made by businesses and consumers who make no contribution to putting on the events or to the industry," the CMSC reported. "The practice is unfair and must be addressed, but … a voluntary solution is infinitely preferable to statutory regulation." It added that government intervention should "only be considered as a last resort."
The report slammed suspect practices within the secondary market, particularly by "touts" – or scalpers, in the American vernacular – and encouraged resellers "to clean up their act by, at the very least, not advertising tickets which cannot possibly be in their or their customers’ possession at the time."
The CMSC would "welcome an across the board commitment not to list tickets distributed free of charge, for example for charity events, to particular attendees, such as children or the disabled."
The committee acknowledged the difficulty an all-out ban would present to enforcers, as well as the burden it would place on the individual consumer who could theoretically be committing a criminal act by reselling an unused ticket for more than face value.
The lack of a blanket refund policy for tickets and the industry’s voluntary practice of selling tickets at prices perceived to be, in some cases, far below market value were cited for creating conditions the secondary market is able to easily exploit. However, the committee seems to concede that it’s unrealistic to attempt to bring market forces into supply-and-demand balance by fiat.
The long-awaited report was met with praise from resellers including viagogo chief exec Eric Baker and condemnation from promoters such as Harvey Goldsmith, who recently produced the benefit Concert for Ahmet Ertegun featuring the reunion of Led Zeppelin.
Goldsmith attempted to control access to tickets for that historic gig by establishing a lottery for the prized ducats through an event Web site. The rush of would-be concertgoers crashed the site, caused a raft of bad publicity and didn’t prevent tickets from turning up in the secondary market. One fan reportedly paid £21,000 for a ticket via eBay.
"The threats made that if you can’t beat [resellers], join them, is not in my opinion the solution," Goldsmith told Pollstar. "It is clear that the secondary market led by eBay have no interest in cleaning up their act. My letters to eBay imploring them to stop Led Zeppelin tickets being traded were completely ignored.
"I am getting more and more reports from punters who have spent large amounts of money from these so-called legitimate sites only to find that the tickets either do not exist or are not what was represented to them. Yet there is no redress whatsoever from these sites," Goldsmith continued.
Baker differentiates his company from secondary ticketing agents and touts, acknowledging a "gray area" in the market – and the committee included an entire section of its report devoted to the definition of "tout."
There is "a lot of confusion," Baker told Pollstar. "Consumers and fans are very happy; they want the right to resell but what they don’t like is that section of the market where you have agents who are reselling fraudulent tickets and tickets they don’t have. It’s like the wild west. Those are the people who need to clean it up. They need to clean it up, and shape up or ship out. We view it as a completely different thing [from viagogo’s business]."
Goldsmith doesn’t agree there’s a difference, and is concerned that the committee report gives a blanket cloak of legitimacy to resellers.
"We are in danger of undermining public confidence in the legitimacy of a ticket," Goldsmith said. "I believe that the public have not responded sufficiently because of the total confusion of legitimacy. We have a duty of care with our public. If we do not respect that, we will all suffer in the future.
"The Select Committee believes that we should enter dialog with the secondary market, make peace with them, and jointly agree on protection mechanisms. Can anyone honestly see that with eBay, London Tickets, GetMeIn, and so on?
"Seatwave and viagogo boast openly how well they are doing. Yet when a punter is blatantly ripped off they offer absolutely no redress, only claiming ‘buyer beware.’"
But Baker said viagogo is already working with the industry in Europe, citing its recent partnership with Live Nation in the Netherlands, relationships with Warner Music Group and other record labels, and its contracts with numerous sports clubs including soccer teams such as Chelsea.
One effort to facilitate dialogue cited by the CSMC report is that of the Music Managers Forum, which promotes a plan in which resellers would pay a percentage of profit to the organizers of events to be distributed in the same way as the original amount paid for tickets.
While Baker is pleased that the MMF, which represents artists, has accepted the "inevitability" of the secondary market, the plan amounts to an unacceptable "tax" on consumers.
"The one aspect is that a few of the promoters want the government to actually enforce a tax so that people who resold a ticket would have to pay a tax to the artist, so they’ll essentially be paid twice. … That’s not collaboration, that’s just taxation. Good luck, but that’s not happening.
"We work with the industry. We work for the fan. Taxing the fan is not working for the fan," Baker said in flatly rejecting such proposals.
Goldsmith also had some choice words for the MMF.
"I am gobsmacked that the Managers Forum’s efforts to set up their own auction site has met with such approval from the Select Committee. All this is doing is fueling artists’ greed," Goldsmith said. "I firmly believe that a ticket is ‘currency,’ not a ‘commodity.’"
The select committee report may not have solved the problem of abuses in the secondary ticket market, but it does appear to have energized those on both sides of the debate.
"The way we look at it, this is a big victory for fans here and therefore a big victory for viagogo," Baker said. "We passionately believe if you paid for a ticket, you have a right to resell it and other fans have a right to buy it in a safe, secure way that doesn’t involve dealing with someone on a street corner."
Baker believes an outright ban on the resale market makes no sense and would be unenforceable. He said the report "completely blesses the phenomenon of secondary ticketing" but that he also agrees there must be standards in the secondary market.
"It talks about exactly what we do and why we started in this market, which is to guarantee every transaction and make sure the buyer gets an authentic ticket, registers the reseller and gets rid of all the monkey business that goes on with eBay or Craigslist," Baker explained.
"At viagogo, we already do this and we are the gold standard. The only people who need to worry about changing their conduct or getting up to snuff are the agencies or types of people who aren’t providing that service. All around, it’s a great outcome."
Goldsmith clearly disagrees.
"I believe that now is the time to come together and fight tooth and nail to protect our collective industry," Goldsmith said. "For example, I have spoken to the Chairman of MTV Networks Worldwide who has agreed to help create a TV ad warning the public not to buy from unauthorized sources.
"There are other simple methods that can be constituted to explain our beliefs in maintaining confidence with the public who keep us alive and thriving," Goldsmith continued.
"Allowing the secondary market to grow faster than it is already doing is not the answer. Joining them is definitely not the answer. … I for one will continue the fight."