CMU Trends Legal Live Business

Trends: Tackling the touts in 2016 – A recap

By | Published on Monday 19 December 2016

Ticket touts

Back in July, CMU Trends reviewed the secondary ticketing debate from the early days of online touting through the various occasions the issue has appeared on the news or political agenda to the launch of the music industry’s FanFair campaign this summer. Since then there seems to have been more discussion on this issue than at any time before, certainly in the UK, but also in the US, Italy and elsewhere. All of which has prompted this follow-on review.

In the UK, the latest round of debate on the secondary ticketing market began with the Consumer Rights Act in 2015, in which MPs Sharon Hodgson and Mike Weatherley successfully managed to insert a little regulation of the resale of tickets online, forcing sellers to provide seat numbers, the face value of the ticket being sold and any restrictions put in place by the promoter.

Whether any of that has had any real impact as yet is debatable. No one is really enforcing the new rules, and Hodgson and Weatherley failed to get through a key extra measure that would have forced sellers to reveal their identities. The CRA also obligated the government to commission a review of the secondary ticketing market though, which it did. Professor Michael Waterson’s report was subsequently published in May.

The impacts of Waterson’s review and subsequent proposals to date are also debatable. The result of the European referendum meant that the government had things on its mind other than ticket touting, and ministers are yet to formally respond to the professor’s findings. However, CRA debates in Parliament closely followed by Waterson’s review kept touting on the agenda long enough for those in the music community who oppose rampant touting to rally and organise.

After early efforts to regulate the then emerging secondary ticketing market in the UK pretty much failed a decade ago, it seemed that artists, agents, promoters and managers opposed to touting learned to accept it as an unavoidable consequence of working with in-demand artists. Others in the industry adopted an “if you can’t beat them join them” approach, touting their own tickets, or doing deals with touts or touting sites that allowed them to share in the profit of tickets being sold on the secondary market.

This time the anti-tout brigade seems more confident that it can, if not stop touting outright, at least limit the number of tickets that flood onto the secondary market, while making things trickier for the industrial-level touts who pull the most profits out of the resale domain. That can be achieved as much by making improvements to the primary ticketing market and embracing new technologies as pushing for extra regulation, though that is part of it too.

In the UK, most progress has been made in recent months on the bots issue; which is to say in the push for new regulation outlawing the use of special software by the touts to buy up large quantities of tickets off primary sites as soon as they officially go on sale. The bots are why the touts often beat fans in getting tickets off the primary sites for in-demand events, forcing the latter to buy their tickets from the former at a mark-up via a secondary ticketing site.

Outlawing the use of bots is arguably the easiest bit of anti-touting regulation for the music community to lobby for. First because the touts using technological tricks to basically push in at the front of the queue seems wholly unfair. Secondly because the secondary ticketing sites like Viagogo, eBay’s StubHub and Live Nation’s Seatwave and Get Me In! – which generally oppose the regulation of the resale market – say they support a bots ban.

Indeed, when Nigel Adams MP – the Conservative chair of the All Party Parliamentary Group for Music – proposed inserting a bots ban into the Digital Economy Bill that is currently working its way through Parliament, StubHub told reporters that it “supports legislation to tackle bot misuse. The misuse of these programmes harms all aspects of the ticketing industry, most importantly fans. We have consistently supported anti-bots legislation and recently gave evidence to the US Senate Commerce Committee on this subject”.

For its part, the UK government officially agrees that something should be done about the bots, though initially urged Adams to withdraw his DEB amendment on the basis that the use of such software may already be illegal under the Computer Misuse Act. However, when Parliament’s culture select committee called a special hearing to consider the issue, the secondary sites in attendance performed so poorly, members of the committee called for the specific bot ban in the DEB to be reinstated.

So it looks increasingly likely that we’ll have confirmation one way or another that it is illegal to use ticket tout bots in the UK at some point next year. Meanwhile US lawmakers have got their ban on the statute book quicker, with Congress passing its Better Online Ticket Sales Act in time for President Obama to sign it into law.

To date, most debate about regulating the secondary ticketing market in the US has occurred at a state rather than US-wide federal level, with New York State being the most prolific in this domain. Indeed, New York State recently ramped up its own bots ban so that touts using such software could soon face jail time.

Issues around the resale market – and especially the bots issue – started to get some consideration in Washington last year, leading to the BOTS Act, which was passed by Senate first and then the House Of Representatives earlier this month. As a result of the legislation, the use of ticket tout bots will be defined as an “unfair and deceptive practice” under the Federal Trade Commission Act, which will empower the FTC to pursue cases against people using such technology.

Proving once again that these moves are, officially at least, supported by the secondary ticketing sites, Live Nation’s Ticketmaster – which operates various resale sites around the world in addition to the aforementioned Seatwave and Get Me In! – responded to the BOTS Act becoming law by saying: “On behalf of artists, venues, teams, and especially fans, Ticketmaster is pleased that the BOTS Act is now a federal law. Ticketmaster worked closely with legislators to develop the BOTS Act and we believe its passage is a critical step in raising awareness and regulating the unauthorised use of bots”.

Assuming that the UK Parliament follows Congress’s lead and passes a bots ban in 2017, the next interesting test is if and how the new rules will be enforced on either side of the Atlantic. The secondary sites will say that they can’t monitor where their sellers source their tickets, and will argue that it’s the primary sellers who should be doing more to stop bots from accessing their platforms (though – in Ticketmaster’s case – that’s one part of the business passing the buck to another part of the business).

It seems certain that in order to be effective the state will need to enforce the ban, which means the FTC in the US and, most likely, trading standards in the UK. Though that needs budget, and Mike Andrew of the UK’s National Trading Standards’ e-Crime Unit recently told the BBC that budget cuts make it hard for trading standards officials at a local level to invest time into enforcing rules on things like ticket touting.

Even if a bots ban could be effective, it is very much step one towards tackling the touts. Industrial scale touting operations source tickets from various sources, some having teams of people who manually tap primary sites, while others access tickets from contacts within the music industry.

Indeed, when the Daily Record recently challenged a Canada-based tout selling tickets for UK shows at hiked up prices, he said “we have contracts with venues that allow us to buy certain allotments in exchange for a yearly fee, so we reduce their risk in case they can’t attract the big acts”.

It’s still not clear if that’s him exploiting schemes intended for companies seeking tickets for hospitality purposes, or whether his contacts are knowingly passing tickets over to the secondary ticketing market in return for a share of the profit. It’s possibly both.

Probably the next step in regulating the touting market after any bots ban has been introduced is pushing for a whole load more transparency, through both new legislation and industry-led initiatives. That includes separating occasional resellers from industrial-scale touts, reviewing the operations of those who tout as a business, and trying to identify the source of tickets being resold.

Although the Consumer Rights Act only introduced light specific regulation of ticket touting, Waterson pointed out that those touting on an industrial scale – ie who are truly in the business of reselling tickets – are subject to a range of general consumer rights laws that don’t apply to the more casual reseller. To that end, he said, secondary sites should be doing more to distinguish the kinds of resellers – ie casual v industrial.

The resale sites probably do need to take the lead there, voluntarily or by force. Could and would Parliament achieve that through new laws if voluntary measures aren’t taken? Certainly at the aforementioned select committee on ticket touting, it’s fair to say MPs were not impressed by the responses offered by representatives of the secondary sites present.

While Ticketmaster subsequently complained that the meeting strayed from its intended remit – ie bots – into more general issues around secondary ticketing, meaning it didn’t have the right people in the room to answer the committee’s questions, it does feel that there is now more support in Parliament for further regulation of the ticketing market than at any time before.

For its part, the government seems somewhat less keen to go beyond the bots ban, though it is preparing to finally respond to Waterson’s report, and some of his key recommendations could be achieved without any additional new laws, by enforcing those rules that already exist and clarifying the obligations of the secondary sites under those regulations.

Meanwhile, an investigation by HMRC into the alleged under reporting of income by some industrial-level touts – requested by the select committee – could provide some further insight into those reseller’s operations, or at least identify who they are.

The FanFair Alliance will continue to put pressure on lawmakers and officials on all these issues, while also sensibly encouraging artists, managers, promoters and primary ticket sellers who oppose rampant touting to do everything they can to limit to flow of tickets to the secondary sites.

Partly because that in itself should result in more tickets being sold direct to fans at face value, and partly because it stops government from resisting further enforcement or regulation where required by using the classic argument in favour of inaction: “well, really the industry should be doing more itself”.

No one in the UK is currently proposing an outright ban of touting, with Waterson questioning the effectiveness of the more extreme regulation introduced in France.

Though all eyes will be on Italy, where ticket touting has also been a big talking point of late, partly the result of a TV show exposé of the resale market and the boss of the local Live Nation division admitting on that programme that his company had provided a small number of tickets to a small number of its shows to the secondary market.

On the back of all that, the Italian parliament passed a law basically outlawing ticket touting across the board, meaning that only companies or individual’s approved by a show’s promoter can sell or resell tickets to said show.

Of course, somewhat ironically given the hoo haa around the local Live Nation chief’s comments, that wouldn’t actually stop his company from putting tickets to its own shows onto the secondary market. However, the new legislation could still constitute the most draconian anti-tout law in the world.

Political upheaval in Italy following a recent referendum on constitutional reform could as yet delay or scupper the touting ban, and there still remains the issue of if and how the ban will be enforced. Though it will be interesting to see what happens next in Italy, and whether it will counter the often held assumption “banning touting outright just won’t work”.

Either way, as we head in 2017, it feels like there is now an unprecedented momentum within the music community – especially in the UK – to try and limit the number of tickets that flow from primary to secondary sites, and to ensure that as many members of an artist’s core fanbase as possible can get tickets at the face value price.

If nothing else, that puts pressure on those within the music community who have in recent years got themselves involved in the touting game, in one way or another. And, of course, that also means Live Nation and Ticketmaster.

For now the live music giant remains adamant that the secondary market can be a legitimate part of the wider ticketing game, and that the best approach is for the industry to embrace the ticket resale business. But what happens if it gets to the point where that puts Live Nation – as dominant as it may be in live music – at odds with pretty much everyone else in the music community?

Meanwhile, there are those who reckon that technology rather than regulation will ultimately stop the touts. We’ll see if that anti-touting ticketing technology gains any traction anytime soon.