Bots! Transparency! ‘Drip Pricing!’ Online Ticketing Takes Center Stage At FTC Workshop

A state of the ticketing union was provided at the Federal Trade Commission’s “That’s The Ticket” online ticket sales workshop in Washington, D.C., June 12, broaching the subjects of bots, transparency, “drip” pricing and various other aspects of consumer protection in ticketing for concerts and sporting events.

The workshop was originally scheduled to take place in March, following up on the 2016 passage of the Better Online Ticket Sales (BOTS) act. Recordings of the first and second sessions are available through the FTC website.

In the coming years the market may well see “all-in” pricing, including fees early on in purchases, become standard, as FTC Commissioner Rebecca Kelly Slaughter stated in her opening remarks that “opaque and deceptive ticket pricing has passed its boiling point. Consider yourselves on notice.” Keynote speaker Eric Budish of the University of Chicago Booth School of Economics said he also felt much could be learned from the airline industry’s adoption of up-front fee inclusion in pricing.

 

During a panel discussion reference was made to a Government Accountability Office report that found 14 out of 23 Ticketmaster events didn’t disclose fees until clicking through several screens. Ticketmaster Canada’s Patti-Anne Tarlton, however, explained that has since changed and all-in prices are now available to users earlier in the process. Reference was also made to a National Advertising Division position that StubHub did not sufficiently disclose its fees, though StubHub’s John Lawrence explained that the company “respectfully disagreed” with the NAD’s assessment and most consumers understood fees would be added later on in the process. 

There seemed to be general consensus that consumers were entitled to an “all-in” price that included fees before the checkout process starts and that StubHub, SeatGeek, Ticketmaster and Eventbrite would all support legislation mandating this behavior, freeing them from a “prisoner’s dilemma” where adopting behavior in a market that doesn’t enforce regulations puts one at a competitive disadvantage. 

The panel discussions also broached a subject often couched in mystery: why so many fees? Obviously there is a distinction between primary platforms, whose fees largely go to stakeholders in the event (artist, promoter, venue), and secondary platforms, whose fees mostly just go the platforms themselves. When asked what Ticketmaster’s different fees were for, Tarlton said facility fees, taxes, and credit card commissions were all fairly self-explanatory and it was the per ticket/per order fees that are “revenue that is generated and could be shared at different rates.” When asked whether demand is taken into account in the setting of fees, Tarlton said that these commercial deals were negotiated on a “client-by-client basis,” (in other words, sometimes yes).

When bots were discussed, Ticketmaster’s David Marcus said, “bots are probably the single biggest impediment to fans getting the tickets they want,” citing the 10 billion attempted transactions by bots in 2018 that were blocked by Ticketmaster. As that panel wore on, though, many on the panel pushed back, claiming many fans couldn’t get tickets because Ticketmaster holds inventory and releases tickets through various onsales after its initial announcement. 

Marcus responded to accusations that TM holds tickets for its own gain, saying, “The reality is, we make money selling tickets, Bob [Roux] makes money selling tickets, we don’t make money holding tickets. The goal is to get as many paying fans in the building as possible. That’s how artists build careers, the model the business is built on. The argument that the industry is conspiring not to sell tickets to fans doesn’t make sense on its face.”

Responding to calls for TM to disclose inventory, Marcus said: “If you can show me consumers that would behave differently, that want tickets more or less based on knowing how many are available, I would consider it.”

Bob Roux, Live Nation’s president of U.S. Concerts, stated on a panel that most shows do not sell out and that he considers the term “holdback” a misnomer, as the intention of a series of onsales is always to get tickets into the hands of fans.

On the subject of bots themselves, the workshop’s panel largely agreed that there has to be better enforcement to deter bot users. “Overall, people are not going to jail for what I would say is a significant public harm,” Joseph Ridout of Consumer Action said. Panelists also took aim at Gary Adler of the National Association of Ticket Brokers after he could only recall one instance of having penalized a member of the NATB for bot use. Adler made clear that he rejects the demonization of brokers and that they are legitimate players in the industry who take on risk and invest in tickets. 

A recurring theme of the day was that legitimate marketplaces and regulators need to be more coordinated to protect consumers. Speaking to Pollstar after the panel, SeatGeek co-founder Russ D’Souza said a vast majority of the business is conducted in major marketplaces and it is very possible to ensure fans only see valid tickets, rather than fraudulent or speculative ones, through better cooperation. 

The final panel at the FTC was on deceptive tactics, which may include “white label” sites misrepresenting themselves as official sites and the practice of “speculative” ticketing, selling tickets that are not actually held in hand. John Breyault from the National Consumers League cited figures estimating that speculative ticketing was worth $91 million in sales over six years and that the potential for deception in this market is high. 

Don Vaccaro of TicketNetwork, whose platform allows speculative ticketing and is associated with numerous “white label” sites, said the vast majority of speculative ticket orders are filled and a much larger number of tickets are sold through primaries before venues and show dates are 100 percent locked in. He also explained that companies affiliated with TicketNetwork are within regulations of the law and catering to search algorithms is a key part of many company’s business. 

Still, most panelists and sources Pollstar spoke with agreed there is a legitimate need for better regulation around speculative ticketing and deceptive practices, and this is an area the FTC can step in. D’Souza told Pollstar such regulation “should be enforced federally, not on a state-by-state basis.” 

One challenge in implementing regulation, with any of these issues, is volume. The FTC can police major marketplaces, but there are multitudes of small sites engaging in deceptive practices and new sites are constantly popping up. To top all of this, bad actors operating only online can be very difficult to track down and if they operate only internationally they may fall out of the FTC’s jurisdiction. 

A Ticketmaster rep told Pollstar that after the passage of the BOTS Act, the company expected the amount of attempted bot activity on the site to decrease, or for it to at least move overseas, but challenges in regulation have meant not much has actually changed. 

Budish’s keynote suggested that more restrictions on resale and initially pricing tickets to market value will get more stubs directly from rights-holders to real fans. Both approaches negatively effect brokers though, meaning the tension between the secondary and primary players is unlikely to go away any time soon. 

Overall, the workshop showed clear areas of agreement among most participants: practices of speculative ticketing should be regulated, particularly on sites that can confuse less-savvy consumers; practices for catching bot users need to be improved and penalties harsher; and “all-in” pricing, showing total cost including fees, should be available to consumers early on in every purchase. 

With ticketing once again the topic of conversation, the Better Oversight of Secondary Sales and Accountability in Concert Ticketing (BOSS) Act has been re-introduced by Reps Bill Pascrell Jr. (D-NJ) and Frank Pallone, Jr. (D-NJ) and Sen. Richard Blumenthal (D-CT). 

That bill is backed by the National Association of Ticket Brokers, but it would probably be heavily modified before having a chance at becoming law, as its initial form requires primaries to disclose total number of tickets and to not restrict resale and secondaries to disclose the face value of all resold tickets, all potential dealbreakers.  

Whether the industry and government will be able to coalesce around these issues enough to bring meaningful change remains to be seen, but there seems to be consensus that the industry and government can and should do better to cooperate and protect consumers.