Q's With Stephen Lee, Chairman Fair Ticketing Alliance: "There's A New Breed Of Brokers"

The Fair Ticketing Alliance (FTA), which was launched two months ago, is working with the U.K.’s Competition and Markets Authority and Trading Standards to develop a framework that allows ticket resellers to operate in a regulated ecosystem that allows for a free-market ticket exchange. Its chairman Stephen Lee believes there’s a new breed of brokers, who are honorable businessmen, who provide a service for which there is a clear demand, and that these businesses should be a part of the ticketing ecosystem alongside primary sellers and fan-to-fan ticket exchanges.

The FTA today released its new code of conduct, which sets guidelines for brokers who want to conduct business responsibly and within the law. The code prohibits the use of bot technology, it demands that brokers respect any restrictions artists and promoters place on tickets and calls for transparency. Pollstar met Lee in London to ask him about secondary ticketing at the moment.

– Stephen Lee
Chairman of the Fair Ticketing Alliance

What’s your ticketing background? How did you get into the business?

I’m a fan, that’s how I got into it in the first place. I used to go around all the concerts in London. Years and years ago, me an my wife had a need to to get a refund, we couldn’t get one, and we ended up stumbling into the secondary ticketing market, which we didn’t even know about. We put our ticket on sale, and it sold in five minutes.

I got scammed on Gumtree in the early days, and this was a big thing for me, it really drove my passion to try and do something, and get tickets safely into the hands of fans, [because] all of these sites like Gumtree are unregulated places. I started doing tickets part-time, and in the end left my job to do it full time. I had a lot of customers, friends and colleagues asking me to try and get ticket for them. They were happy to put ten pounds on for saving the stress of [looking for tickets themselves].

We built the business through friends and family, who got involved, and I spoke to accountants and lawyers to make sure we set up a business model that works. We had explicit permissions from real people, [there was] no fraud going on or anything like that. We signed contracts, making [the resellers] aware of their tax responsibilities, it was properly set up. And then we’d just manually try and get the tickets. Over the years it has gotten harder and harder.

What are the reasons for that?

There are several reasons for that. Probably people using bots. We think, though we don’t know, that tickets go straight from promoters to secondary ticketing sites, lots of them. And you’ve got all the tickets that get held back, debenture tickets given out to venues, artist pre-sales and God knows what. So when it comes to Friday, 9 a.m., I’m absolutely certain that sometimes there’s nothing there.

I’m quick, I’ve got a quick laptop, a quick internet connection, I go on, and I usually get one shot, and I might get seats. And I think that’s the same for anybody else. I have the same chance as anybody else, it’s just that I know there’s other places to try.

Do you remember the website you used to resell your first ticket?

I used Seatwave, which used to be good back in the days. I then started using Seatwave to buy tickets from. There were some real niche concerts I wanted to go to in London, like the White Lies in Bethnal Green, and you couldn’t get a ticket anywhere. I tried to get them on wherever they went on sale in the primary, couldn’t get any. But Seatwave had tickets, although they were £75 or something like that. They’re face value was probably £30, but it was a date for me and my new wife, we wanted to go, so the price of that ticket was what it was worth for me.

The true value of a ticket is what someone is willing to pay for it, it’s not what the face value says.

Many promoters claim they spend a lot of time figuring out the right pricing for tickets.

When we look at promoters pricing those events, they don’t have the expertise that we’ve built up in the secondary market with our business models, and particularly risk models that I and a couple of other guys use, and dynamic pricing. We know exactly what that ticket is worth at that time, and we make sure that we don’t buy too many tickets to the detriment of fans trying to get them. We go to all the different primaries that fans are not aware of.

What do those risk models look like?

There’s a new breed of brokers now, and they’re business men. There was an opportunity, and they seized it, and they treat it like a stock market: they use economic models, risk models, dynamic pricing, exponential moving averages, all this stuff is going on in the background within all these businesses running properly. They’re not just trying to get 100 to 200 tickets, we’ve got to try and meet the actual demand. When my own business tries to purchase tickets, we use streaming stats, artists’ fanbases, gig venue sizes.

You have to cater for possible roll dates, and sometimes the risk model will say, ‘don’t go and get any tickets’, because they’ve got a potential to add three more dates, and the demand and prices will just drop. We follow around 20 different parameters, we’re a bit geeky. I love the statistics, we’ve got all of the concert details of the last seven years of our own sales, so that we can accurately determine the popularity of a band. You’ve got to have a knowledge of the music itself to determine what the demand is going to be. This is the new face of secondary ticketing, it’s what it needs to be.

What is Fair Ticketing Alliance aiming for with its new code of conduct?

We want to bring all the brokers onto this code, which lists that you must only list on compliant exchanges. You have to have the facility to put your business details in, seat number, face value, and so on. So as well as being compliant when we purchase tickets with our business model, we need the ticket exchanges to be compliant with the CMA guidelines as well. It’s 50 percent their responsibility, 50 percent ours.

We want to take the code to the CMA, alongside our business model, and try to get a license for responsible secondary ticketing.

We realize there’s a lot of bad apples in this industry, exchanges as well as brokers. We want to clean it up, we feel that licensing will enable us to do that. We’ll have responsible brokers that don’t list on non-compliant exchanges, and have a proper business model to follow as a standard. The family and friends model that we’ve set up is our way of getting tickets as businesses, because we feel that in this day and age you should be able to buy tickets online commercially.

I’m a professional business man. I don’t want to be tarnished with working with Viagogo or any other non-compliant exchange out there. We don’t get involved in restricted events. Our businesses are built on trust, we’re not going to rip our customers off, we want them to come back. We are professionals, we make a living out of this.

– Fair Ticketing Alliance
The UK now as a body representing ticket resellers

Does your code of conduct ban the use of bots?

Yes, we’re totally against that. There’s a big difference between someone manually trying to get tickets, and someone using software that gets him 100 to 200 tickets with one click. This stops me and other responsible people from getting tickets.

What are your main issues with the secondary market?

I think, at the moment, you’ve got this perception of bad selling practices born out of the non-compliant exchanges. This is driving prices up. You’ve got customers coming onto these exchanges, which will tell you one price, and then you put in your credit details, and right and the end a lot of fees are added. The person is made to feel panic, they’ve got to buy the ticket, otherwise there’s non left. All of that is not needed, it’s a real hard sell, it’s given everybody in this industry a bad name, and you’re getting unhappy customers. And there’s irresponsible brokers fueling that.

At least you’ve got the compliant exchanges like StubHub or Getmein, which are at least transparent, even if the prices aren’t brilliant. There’s a gap there for some good companies to come along and offer for cheaper prices.

And what are your issues with the primary market?

There has to be transparency. A fan coming along at 9 a.m. needs to be able to make an informed decision. Sometimes when we used to list our tickets on the secondary websites, we’d already see the other dates [programmed in] there. So we knew there was going to be another two concerts, but the fans didn’t. And that’s a bad thing: The primary market is creating a scarcity, which is not really there.

‘How many tickets are left? Do I fancy I have a chance to get one? I don’t know, maybe I’ll wait, and see what happens later on and get it on the secondary market’. It just needs to be a transparent ecosystem with responsible people in it and fair prices. [And for that] we all need to work together.

How do you get artists on board?

London has a fantastic gig scene, and beautiful iconic venues, amazing artists. I followed bands through their careers, I remember seeing

If artists knew how the primary market worked, and what services the secondary market can offer, they would support that. We’re just getting tickets out to their fans. Alt-J eventually played the O2 Arena, and I really felt that I was helping them with my service.

What about the few cases where prices will remain at a very high level all the time?

Sometimes prices get expensive, but as long as there’s no bad selling practices [those prices are determined by demand] they won’t sell at [an inflated] price, those guys will have to come down to a price that will work for the fan.

If an artist insists on keeping tickets below a certain price, would you have a way of accommodating that?

We respect that, it’s their choice. But we do feel there’s a better solution to that, mainly through technology. Combine technology with licensed, responsible operators in the secondary market and some transparency in the primary market.

Are you thinking blockchain?

Maybe. [It would bring] transparency into every part of any transaction that’s happening along the process of getting it from artist to fan.

Let’s get to the biggest point of criticism the secondary market is facing: that the profits don’t flow back to artists and promoters. How do you address that?

We had an idea regarding the licensing fees, and that we could put money back into the industry through that. I don’t know how exactly it would work, it’s just an initial thought we’ve had on that. For me, it’s not just about profits, it’s about being fair to the fans. And as long as we can earn a living from it as well, we’re happy to provide the service and make it fair.

But everyone in that ecosystem needs to be fair, you need to get rid of all the greed that’s in there, and tools that give people the chance to be greedy.

What are those tools?

The non-compliant exchanges, where they can use bad practices, charge whatever price, you don’t know who the ticket’s coming from, you don’t know what you’re getting as a fan. Look at the Ed Sheeran tour right now, all of these people turning up, being told that their tickets are invalid. Fans are the ones that are losing out at the end of the day. All of those things need to be resolved, and I think they can be, if you have licensed operators and compliant exchanges.

Ticketmaster and AXS have already started listing primary and secondary – or premium – tickets together, and the lines are bound to blur with the uptake of dynamic pricing. Does that worry you?

There’s a big monopoly there. There’s no choice for the consumer. Those primary agencies and promoters have realized that they can get more money on the secondary market, so they put more allocation towards Platinum. They are going to try and corner the whole lot, you’ll have the vertical integration of Live Nation, Ticketmaster, Ticketmaster Resale. It’s not healthy.