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Rights-holders welcome Ticketmaster’s closure of secondary sites

Ticketmaster’s decision to close its secondary ticketing platforms Seatwave and GetMeIn looks like a response to hardening of the political and legislative stance on secondary ticketing sites in Britain and Ireland. Ben Cronin examines what it means for rights-holders.

•   Seatwave and GetMeIn to be replaced with fan-to-fan ticket exchange charging 15% commission
•   Move considered a response to Competition and Markets Authority clampdown on secondary sites
•   Changes to Digital Economy Act could also help prevent harvesting of tickets by touts

Sports rights-holders and lobbying groups have welcomed a decision by Ticketmaster to shut down its secondary ticket sales sites Seatwave and GetMeIn in Europe as a positive step in the battle to combat ticket touts.

The ticket sales and distribution company announced in a blog post that no further events would be listed on the two subsidiary websites after 13 August and that it plans to replace them with a fan-to-fan ticket exchange. The latter site will allow fans to resell tickets at the price originally paid or less, with Ticketmaster taking a 15-per-cent commission, from October onwards.

The decision is thought to be a response to persistent criticisms that the two companies were profiting from touts who harvest large quantities of tickets on primary ticketing platforms only to sell them immediately at vastly inflated rates on secondary sites. Ticketmaster found itself in a difficult position given that it would often receive allocations from rights-holders to sell tickets as a primary agent only for the same tickets to end up on Seatwave and GetMeIn soon after.

“Anything where you’re not going to exploit people who really want to come to sporting events and or music events, whatever inventory they sell, is a massive step forward and fantastic for fans and it’s a really bold move,” says Steve Elworthy managing director, Cricket World Cup 2019. His organisation has a deal with Ticketmaster to distribute tickets for next year’s tournament, on the proviso that they do not later appear on any of its secondary outlets.

“We do a huge amount of diligence and research on what those ticket prices should be,” he says. “We’re putting on a global tournament, a key part of that is making sure that event is accessible as possible. Those tickets are set at a particular level so we can get people in, and I think anything over and above that really goes against the objectives we are trying to achieve for the tournament.”

Although the Ticketmaster PR suggested the decision was motivated by altruism towards fans –  “we’ve listened and we hear you: secondary sites just don’t cut it anymore,” read the blog statement – the feeling is that the firm is also responding to a hardening of the political and legislative stance on secondary ticketing sites in certain markets.

Legislation

In July, Ireland introduced legislation banning the resale of tickets above face value for events for audiences of 1,000 or more people, while in the UK, the Competitions and Markets Authority has begun to take enforcement action against secondary sites that do not comply with the 2015 Consumer Rights Act.

“Ticketmaster probably recognises that there is a wind of change blowing and that actually there are some real issues in the secondary market, so in a sense this is probably a reflection of that and also the ramping up of enforcement that is going on,” says Leigh Thompson, policy manager with the Sport and Recreation Alliance, which exists to promote and protect the interests of some of the largest sports governing bodies in the UK.

In November last year, officials from the CMA raided the offices of secondary ticketing operators StubHub and Viagogo as part of a probe into suspected breaches of consumer law and seized information about relationships with prominent ticket touts.

Thompson points to the fact the CMA then persuaded three secondary sites, Stubhub, Seatwave and GetMeIn, to commit in April this year to provide better information about the tickets being resold through their platforms as further evidence of enforcement action. It also represented a victory for the Alliance’s lobbying efforts which demanded that secondary sites comply with consumer legislation which stipulates they have to provide information about the person selling the ticket, what the ticket grants the buyer the rights to, and whereabouts in the stadium or arena it entitles the person to sit or stand. Changes in the Digital Economy Act, which were brought through recently, also now require ticket sites to show any unique number provided with the ticket.

“From a sports point of view, that’s really important because you want to be able to see which tickets are being resold where and then, if necessary, cancel those tickets that are being resold against the terms and conditions of the ticket,” Thompson says. “We’ve pushed for changes to the law, but also stronger enforcement, because it’s all very well having the legislation but unless government and the authorities are willing to actually enforce it, it’s very challenging.”

Matthew Pryke, a partner at law firm Hamlins for commercial and technology law, has acted for both sports rights-holders and secondary ticket agents in cases pertaining to ticketing. Although he also thinks Ticketmaster’s decision to stop operating its two secondary sales sites ought to be welcomed by rights-holders, he doubts whether it will have a material impact on the market and the activities of touts while other routes to market remain open.

“There are four big players, especially in the UK market, and two of those still remain in StubHub and Viagogo,” he says.

He adds that it was far easier for Ticketmaster to close down its secondary ticket sites because they represented just a small part of a business whose core focus is on providing primary sales functions for venues and rights-holders. A report by Europe Economics for the UK’s Department of Culture Media and Sport in 2009 estimated the UK primary ticketing market to be worth roughly £300 million and that Ticketmaster had around 50% of the market share. The same report estimated the secondary ticketing market to be worth between £800m and £1bn.

Pryke thinks it would be harder for a company like Viagogo to divest itself of its secondary ticketing operations because they make up the majority of its business. Unlike the other three major secondary ticket platforms, the Swiss firm has so far ignored the CMA’s calls to provide fans with more transparent information about the tickets for sale on its site and looks to be firmly in the sights of the regulator. “This platform has not currently agreed to make changes the CMA considers necessary. Therefore, the CMA has notified them it will take action through the courts, unless they promptly commit to satisfactorily addressing its concerns,” the regulator has said.

The possibility remains that Viagogo will argue that UK law doesn’t apply to it. The terms and conditions on its website say all ticketing agreements are “governed by and interpreted in accordance with the Swiss laws” and that customers “consent to the exclusive personal jurisdiction and venue of Swiss courts”.

Free market

Pryke says the fact the company is selling tickets to UK consumers means its sales are governed by UK law and the CMA ought to be able to overcome this obstacle. But he thinks Viagogo would have a stronger case invoking laws governing restraint of trade. “From a legal construction perspective, I have always been of the view that certain aspects of a lot of rights-holders’ ticket terms and conditions, if they are ever challenged, would not be enforceable,” he says. “A lot of these ticket terms and conditions say they are not capable of being transferred or resold and, in my view, that would be quite difficult to defend because it isn’t the sort of restriction that we put on any other good or service.” Such a defence, he says, could also “highlight the inevitable contradiction of many such terms when, in reality, tickets are usually bought in groups and ultimately ‘re-sold’ often to friends and family when attending events”.

He says rights-holders have to offer a good reason why tickets cannot be transferred, the best example being UK football teams which invoke legislation relating to hooliganism and safety in their terms and conditions. Beyond that, he believes the most sensible way for rights-holders to protect themselves is to provide a mechanism for fans to transfer tickets – but one that is within their control. This could be by entering into a partnership with a secondary ticketing platform, or by developing a system themselves.

The ticket ballot for next year’s Cricket World Cup provides a good example of the way rights-holders are increasingly entering into partnerships with ticketing agents in an attempt to control the secondary market. The organisers worked with Ticketmaster to create an official primary sales platform for the tournament, and in October the two parties will work together to open an official resale platform. “It is like a face-value fan exchange for any fan that’s changed their mind or has other plans, so we’re controlling how fans are able to pass on their tickets should their plans have changed,” says Adrian Wells, director of marketing and communications and ticketing for the tournament.

Pryke refers to the ticketing programme for the London 2012 Olympics, which was also run by Ticketmaster, and even Manchester City’s relationship with Viagogo as further examples where rights-holders have sought to take control of their secondary ticket sales by entering into a pact with the platforms that might ordinarily provide scalpers with a sales outlet. Such agreements allow the rights-holders to manage the basis upon which tickets can be sold and could include agreements about categories of tickets the secondary ticket agent is forbidden from selling, limits on reseller fees and other aspects of the secondary ticket agent’s operations which may be of concern.

“The weakness of this approach is that a commercial rights owner is only likely to enter into a single exclusive arrangement with one secondary ticket agent,” says Pryke. “On this basis it means that other competitors of this secondary ticket agent will neither benefit nor be constrained by a similar contractual arrangement.”

But Thompson sees further hope for rights-holders in the shape of other recent changes to the Digital Economy Act. These include legislation that attempts to ban the use of bots to harvest large quantities of tickets the moment they come on sale in the primary market, thereby circumventing restrictions preventing individuals from accessing multiple tickets. A separate piece of secondary legislation creates an offense of breaching limits on the purchase of tickets.

“One concern would be whether creative touts find ways around that,” says Thompson. “Will they potentially go back to using banks of phones and humans to harvest tickets?”

The other question is whether the resale platform Ticketmaster proposes creating to replace Seatwave and GetMeIn will prove sufficiently popular as a resale mechanism to prevent fans from searching other unsanctioned secondary sites for tickets. As a starting point, Pryke says the 15-per-cent levy Ticketmaster proposes on each ticket resale seems high and that the rules of supply and demand mean customers will inevitably investigate other sites to serve their need for tickets.

“My sense is that the site won’t be sufficient or won’t meet the demands of all events or all individuals,” he says. “Some things in the world are popular, and if they are, and the demand outstrips supply, then the price goes up, that’s just economic theory.”

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