The Great Ticket Scandal - Good Things Come To Those Who Wait (Feature)
Monday, 27 February 2012
Written by Heather McDaid
Last Thurday night saw hoards of music fans tune in to Channel 4 following the announcement that the channel had won a legal battle to screen its undercover investigation of two secondary ticketing websites: viagogo and Seatwave. In the controversial documentary, Dispatches: ‘The Great Ticket Scandal’, the ticketing websites found themselves under fire for some of their practices, unfairly labelled as glorified ticket touts by the shows producers, leaving fans infuriated at their conduct yet without a full and balanced picture. The ticketing landscape was shaken to its core as stakeholders from all sides pitched in their tuppence worth.
The report itself focused on the tactics, viagogo in particular, used to acquire tickets. It was alleged that viagogo assisted staff to bulk purchase tickets during on-sales and working with UK’s leading promoters to sell tickets to supposedly sold out events. It has been a major PR setback for the technology-led secondary ticket marketplaces, who had been representing themselves to buyers as entirely fan-to-fan outlets. Seatwave have since distanced themselves with the allegations of corporate ticket touting with this blog post by CEO Joe Cohen.
The sensationalist approach to the documentary, whilst certainly warranted in a sense, left the trust in these companies at an all time low and fans were outraged by the findings of the investigation. Yet the documentary felt biased and agenda driven, failing to offer a balanced overview of why these ticketing sites, as well as Ticketmaster’s own secondary platform GetMeIn!, had become such key components in the industry as a whole.
Should we base our trust in the secondary ticketing industry solely on the depiction presented in this prime time entertainment show? The consumer could easily damage the secondary ticket resale industry through boycotting, but with so little objective discourse in this whole debate in the days following the airing, Stereoboard felt it necessary to provide an overview of the industry in which these secondary websites sit.
Despite the overwhelming negativity cast over the secondary ticketing market, there were a great number of positives of the marketplace overlooked. The agencies’ hidden acquisition of tickets, by various means, is where the real issue lies for fans, believing they, and only they, should have first dibs on tickets when they go on sale to the public. But if we overlook this core concern for a moment we can see why these websites are providing a fundamental safety and security to fans of live events.
Firstly, consumers are given the option to enter into a safe and guaranteed sale for the event of their choice. The price some tickets list for on these sites has always raised a few eyebrows, but it is always at the buyer’s discretion as to what price they are willing to pay for tickets - and generally what people are willing to pay is usually where the prices start as market forces dictate the pricing strategies of sellers.
Let’s say for a moment that your favourite band is Metallica and come 9.30am on the day tickets go on sale, the show has already sold out; Your immediate response may be to head straight over to the secondary market in the hope of acquiring a ticket that you failed to secure on the official sale. Perhaps the original face value of the ticket was £40, yet they’re selling for £80 on the likes of viagogo or Seatwave – it is now up to you, as the consumer, to decide if you wish to pay this if you want to attend the event. Or alternatively you could wait to see if ticket prices drop when demand declines, which is something we’ll come on to later.
If you were desperate to go to the show, chances are you would buy the ticket regardless of whether a promoter or fan was selling them. Whether or not you are lucky enough to pay £40, or decide to fork out £80 for your ticket, Seatwave and viagogo would guarantee that a genuine ticket is yours and protect your purchase should the event be cancelled.
The secondary exchange sites have drastically cut the number of fraudulent transactions of ticket sales: you’re getting exactly what you pay for, no risk of fakes. You’re given the opportunity to keep tabs of your order; You’re not being promised a product from a company that could disappear once you’ve confirmed payment.
While pricing may be argued over in terms of it being ‘too much’, you’re not being subject to hidden charges once they’ve got your details - and you have a choice to decide whether the cost is bearable to you. Simple economics dictate if the market feels the cost is unbearable, prices will inevitably fall to a price the market deems fair. Tickets are perishable items, so it’s in no one’s interest to keep hold of tickets that fans are unwilling to buy.
The problem for fans, seeking tickets, is to see them appear on the secondary sites before they go on general sale, and of course when tickets sell out the problem is ever more apparent to those that sadly miss out. The reason for this is the numerous pre-sales on offer, and fans not knowing how many tickets actually go on “general sale”. We’d like to see the end to advanced presales, and transparency by the promoters on exactly how many tickets are made available on the general sale. But that’s a topic for another time.
What is the alternative if the likes of Seatwave and Viagogo didn’t exist? There has been calls to restrict or – more drastically – ban the websites following Channel 4’s Dispatches expose. If we didn’t have the option to willingly go to the secondary market and procure tickets in a safe & transparent market, then we’d likely return to the dark days of waiting outside venues looking for spares and that demoralising task of negotiating with street touts - not knowing if you’d be turned away at the door. Is it worth the risk? If the demand for tickets is high enough, you could pay just as much, if not more, than you did online with no guarantee that you’re even buying a legitimate product and certainly no form of recourse with the seller. Street touts lingering around venues has been visible for years; remove the safer & convenient online option and the touts will still exist, but with more power to dictate prices.
In truth we’re all willing to pay over the odds for an in-demand product or service when the occasion calls for it; the online secondary market at least offers a safety for those entering into the transaction that the physical purchase of tickets certainly doesn’t.
Another call following this programme is that there should be legislation to cap what people can resell their tickets on for. Sharon Hodgson – a Labour MP – suggests a maximum increase on ticket prices should be set at 10% above face value. The member’s bill got talked out of parliament in 2011, after a second reading. Her thought process is that the cap would cover postage and charges, offering a minimal profit to the seller who is genuinely looking to sell on unwanted tickets.
Joe Cohen, CEO of Seatwave, believes that a price cap simply will not work. He explains, “We believe — and more importantly, every economist in the world will tell you — that if you cap prices, you push the market underground. Less scrupulous people who know they can command high prices for in-demand tickets will sell them illegally (outside venues, down dark alleys), exposing fans to fake tickets and scams. Search Google for “Chelsea Tickets” and you will see what I mean. This is exactly the situation we’re trying to tackle with Seatwave.”
It all comes back to a sense of security. People would argue that not having a cap is just an excuse to sustain a high profit margin from higher ticket prices. This is very misleading though, with the average margin for ticket speculators believed to be around 30% overall. Significantly lower than most commodities, products and other types of retail commerce. The idea that ticket speculators are raking in vast profits is a popular misnomer, reinforced by opponents of the secondary industry. In fact, most live music promoters embrace ticket speculators as an important element of the industry - they purchase large volumes of tickets in advance, which can help to spread the risk of booking expensive artists and putting on shows.
Some fans were also outraged by the amount that some sellers were asking for tickets on these sites, sometimes as much as £1,000 for a £50 ticket and substantially above the cheapest tickets on offer through the site. Nigel Sachdev, MD of Stereoboard.com told me, “The show sensationalized the amount some "chancers" were asking for tickets on these exchanges. These people are obviously not serious about selling their tickets. One of the issues faced by these sites is that it is completely free for anyone to list their tickets on the secondary ticket sites and can encourage this kind of non-selling. Of course this then looks really bad on those sites when prices are taken out of context. In reality though, no-one is stupid enough to buy these tickets and the seller is best advised to remove the listing.”
Another great misconception is that all tickets sell at an astounding profit. In actuality, a high percentage of tickets on the secondary market sell for below their original value when supply outweighs the demand for the event, which accounts for as much as 40% of events. Speaking of tickets resold at a lower value, Nigel adds, “It happens an awful lot these days due to the proliferation of ticket brokering, and with this tough recession demand for tickets at rising face value prices has waned. If a buyer is truly price sensitive, we’d always advise to wait until closer to the event as typically prices will fall to face value or below. We’re currently seeing tickets for upcoming tours from Florence and the Machine, Drake, JLS, Steps, Westlife and more shifting for below face value. These are all tours that sold out during the day tickets went on sale. Rather surprisingly to many fans, this occurs on many sold out events, including Coldplay and Take That in 2011, and is one of the major benefits of a free and open market.”
The other main target in the investigation by Channel 4 Dispatches was the live music promoters – including UK live music behemoths SJM Concerts (promoters of Take That, Coldplay, Snow Patrol, V Festival) and Ticketmaster’s Livenation (Westlife, Bruce Springsteen, Madonna) – who allegedly allocate a percentage of tickets straight to the secondary market without offering those tickets to fans at face value - an issue fans are most outraged by, and rightly so.
It was also revealed that those promoters received 90% of the ticket sale price, same as any ticket seller on the platform, money which incidentally goes straight back into the music industry.
Ed Parkinson, UK director at viagogo, told BBC News, "We allow anyone to sell on our marketplace and the overwhelming majority of our sellers are individuals but it also includes larger sellers which can include concert promoters. We don't discriminate. We allow anyone to sell on our market place as long as they deliver the tickets that they sell."
Despite the lack of transparency on these allocations, the fact that promoters are selling tickets directly via the secondary market allows them to effectively “cut the market” on speculators. The result is that speculation on ticket prices by touts on these events prove unprofitable, when all the fees are taken into consideration. Touts are forced to reduce their prices to compete and shift unwanted inventory. Where tickets are dynamically priced in this way, with promoters adding around 30-60% to the original face value, it helps to bring down ticket prices on the secondary ticket marketplace while increasing the volume of tickets available in the secondary market to sustain reductions in resale prices - further squeezing out the touts.
SJM Concerts and Livenation, in particular, dodged the scathing attack that the secondary websites in question received - the potential involvement by artists in this collusion was also conveniently ignored.
The Concert Promoters Association, who represent these live promoters, released a statement to explain the necessity for their actions: “Promoters, artists and managers ... operate in the secondary market in order to catch the lost revenue on behalf of the artists and event owners so that this money would at least stay in the industry. If promoters put tickets into the secondary market then the result is that prices are brought down whilst also ensuring that some of the tickets available in the secondary are actually genuine ones.”
“In this respect the secondary market is effectively being used as a premium-price primary market for those fans who wish to use it for convenience. We are sure that those fans who use the secondary market for convenience and are prepared to pay a premium would be happier that the premium went to the artist via the promoter rather than went to a tout.”
The issue, in reality though, is not the practice of using the secondary market for offloading tickets at “premium” prices; it’s the transparency of it all. Fans use the secondary market in good faith that they are buying tickets from other fans, when in actuality sometimes they weren’t - purchasing unsold face value tickets directly from the promoters at twice the price. The scandal would have been dampened if fans had been informed where tickets were coming from - fans, touts or promoters. Organisers should have told fans that if they want the best tickets, they should head straight to the secondary market and pay over the odds for this allocation. That would be real transparency. And yet again it comes down to choice, if a fan decides to pay this “premium” it is their right - just as it is to refuse to pay this premium for in demand tickets.
The realisation that promoters were working directly with the secondary market is what has led this scandal and the call should not be to cap prices, to stop promoter allocations or to limit these websites in any way, but to ensure that all allocations are clearly explained to the consumer up front and to reinforce that the secondary market is a secure and positive place to purchase tickets. Which it is.
The public have also taken to the Internet to voice their opinion on this issue. One commenter calls for a dynamic pricing strategy, he said, “The programme (Dispatches) is about commercialised touting. In some situations Promoters/Venues offer a (large) proportion of their tickets to secondary ticketing sites to sell at inflated prices (for a large fee!). No one gets the opportunity to buy these tickets at face value. The concept of face value is meaningless for this allocation. The primary sellers misrepresent the show as "sold out" to create demand for the inflated secondary market. Supply and demand argument does apply but it's the representation here that's wrong. Don't say "it's sold out but if you really want to go we can get someone to sell unwanted tickets for a 300% mark-up". Make it clear that it's easyjet pricing. First come - lowest price. There's a batch available at 'face value' (meaningless phrase) and then another batch at a higher price. That would be a more honest way to exploit the fact that there is genuine excessive demand for some shows.”
To summarise, Dispatches sensationalised a problem caused by perceived lack of transparency, and in turn it has thrown the whole secondary market into disrepute. ‘The Great Ticket Scandal’ questions the representation of who is supplying and selling the tickets, when in actuality the marketplace is a more complex and diverse - one that highly benefits the consumer’s needs.
Any changes to the ticket industry that follow in response to the programme should surround upfront honesty from all parties involved. Fans should know where to get the best tickets and more importantly where they’re coming from, not being lured into a false fan-to-fan transaction, especially where tickets are coming directly from the event’s organisers.
Ticket buyers should also keep it in mind that the ticket exchange marketplace was established for the benefit of them and – in the grand scheme of things – it has greatly helped to combat the prevalence of fraudulent scam websites, street touts and fake tickets - and finally the simple economics of supply and demand helps to bring prices down for fans after the initial sold-out buzz subsides.
Surely having access to tickets for sold out events, and sometimes at a price below face value, can’t be a bad thing. The virtue of patience has never been a more apt one in this regard. Good things come to those who wait!
Last year, Stereoboard produced a viral video to warn fans against disreputable scam ticket operations. ‘Access All Areas’, which has received 30,000 views so far, follows the fate of a group of music fans who opt to go ‘off road’ obtaining their tickets unofficially, to blag their way backstage at a major gig. They ultimately get left out in the cold in the video. The film can be viewed at www.youtube.com/StereoboardTV or you can of course view the video below.
For disclouse, Stereoboard is a safe ticket comparison site - as such we work with viagogo, Seatwave and GetMeIn! to compare sold out ticket prices, for which we usually receive a commission on tickets bought. We also provide links to purchase tickets at face value where available - in most circumstances we don't get paid commissions for doing so. Our aim to to help music fans find tickets at the cheapest possible price, and avoid ticket scams.
NOTE FROM THE EDITOR
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