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Westminster Hall

Thursday 24 April 2008

[Mr. Mike Weir in the Chair]

Ticket Touting

[Relevant documents: Second Report from the Culture, Media and Sport Committee, Session 2007-08, HC 202, and the Government’s response, Cm 7346.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Liz Blackman.]

2.30 pm

Mr. John Whittingdale (Maldon and East Chelmsford) (Con): I am pleased that we have the opportunity to debate the Select Committee report on ticket touting. It is one of the most interesting subjects that the Committee has considered, particularly as it provokes extremely strong views on both sides of the argument. The Department for Culture, Media and Sport has been wrestling with the problem for some time, and the Government have organised several summits on the topic. It is fair to say that they have so far failed to achieve a meeting of minds among the various competing interests, and it was with that objective that the Committee embarked on its inquiry.

It was not only among our witnesses that we found a polarisation of views; different viewpoints were also represented in the Committee. I was sad that we were not quite able to achieve a unanimous report. All Committee members signed up to the report, with the exception of my hon. Friend the Member for Shipley (Philip Davies), who will doubtless explain his position in due course.

As I said, there are two viewpoints. The first is that the secondary ticketing market is a perfect example of the free market in operation.

Philip Davies (Shipley) (Con): Hear, hear!

Mr. Whittingdale: That is obviously my hon. Friend’s view.

That market functions because it puts people who own a commodity that they are willing to sell together with others who wish to purchase it at an agreed price. In doing so, there is a maximisation of utility; and there is no loss to the original vendor of the tickets, as he has already achieved the price that he set. So, what is the problem?

Mr. Mike Weir (in the Chair): Order. I remind hon. Members that jackets cannot be removed in the Chamber.

Mr. Whittingdale: I sympathise with you, Mr. Weir, as I frequently have to reprimand the hon. Member for Newcastle-under-Lyme (Paul Farrelly) in Committee.

The opposite view was expressed by Harvey Goldsmith, in his usual forceful manner, when he took me out to breakfast. Mr. Goldsmith takes the view that those running the secondary market are essentially parasites who feed off the creative efforts of artists and sporting
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organisations, make obscene profits, put nothing back into the industry, and prevent legitimate and genuine fans from being able to buy tickets. That view is held by a number of people in the sporting world and concert promoters. The Committee started its inquiry to find a solution that would go some way towards satisfying both viewpoints.

There have been ticket touts for as long as events have been held for which tickets have been sold. I recall going to the Hammersmith Odeon as a youth and frequently taking advantage of touts to sell tickets that I did not need, and sometimes to buy tickets if I had been unable to do so earlier. That sort of activity has a slightly bad reputation. It conjures up a vision of rather shady individuals in mackintoshes lurking on street corners. However, the entire secondary ticketing market has been transformed by the advent of the internet, which has made it far easier for fans to obtain tickets for extremely popular events. It has resulted in greater equality; no longer does one have to queue outside a venue for hours before tickets go on sale, although that might be easier in London than elsewhere in the country. It is now a race as to who can press the website button first.

The internet has also made it far easier for touts to snap up the majority of tickets, sometimes with no intention of using them but to sell them on, often within no more than 15 or 20 minutes of them first going on sale. Tickets can frequently be found for sale on sites such as eBay, or specific ticket sites like Seatwave or viagogo, within a very short time of their going on sale. I heard from one concert promoter a few weeks ago that tickets for a particular concert had sold out rapidly. On investigation, it was found that 2,000 separate purchases of tickets to that event had emanated from one IP address; one computer had been used for those transactions, although different credit cards had been used. The fact that such things are possible with the internet is clearly fuelling the secondary market.

The secondary market exists only because the primary market does not operate as a market-clearing mechanism. It would be very easy to get rid of the secondary market; one would simply need to set a market-clearing price. As a result of doing so, all those who were willing to pay that sum would be able to obtain tickets; and those who were not so willing should not expect to be able to purchase tickets.

However, concert promoters and sports bodies take the deliberate decision not to set the price of tickets at the market-clearing level. As a result of setting it below that level, demand inevitably outstrips supply. They do that for perfectly valid reasons—indeed, for admirable reasons. They explained to the Committee that they want live performances and games to remain within reach of the ordinary grass-roots fan. In the sports world, it is obviously important to sustain the supporter base and to reward those who show consistent loyalty to teams. Equally, in the music world, people want to sustain a fan base. They want to ensure that fans who buy records are able to see their favourite performers give concerts, and they can made additional revenue, which might have been lost by not setting a market-clearing price, through the sale of merchandise and other associated products at concerts.

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Mr. Don Foster (Bath) (LD): The hon. Gentleman rightly gives a long list of organisers and their reasons for wanting a maintained ticket price. Would he add to his list the ability, particularly regarding sporting activities, to reward volunteers who provide a range of forms of support—for instance, by acting as stewards at events?

Mr. Whittingdale: The hon. Gentleman is undoubtedly right. That is another valuable opportunity for sporting bodies to demonstrate that volunteers who act out of love for the game can gain some benefit. Equally, sports bodies often allocate blocks of tickets for particular clubs as a reward for their efforts. It is all the more regrettable, in their eyes at least, when clubs that receive tickets decide not to use them, but to sell them on the internet.

To address the problem of the secondary market, as they see it, sporting bodies and concert promoters have tried to impose conditions on the sale of tickets—most tickets say “not for resale” on the back. Clearly, that has proved singularly ineffective in preventing the secondary market from operating, but there is also a question mark over its legality. There is a view that a situation in which no legitimate refund mechanism is available for people who purchase tickets and, for perfectly legitimate reasons, find themselves unable to use them, breaches of the Unfair Terms in Consumer Contracts Regulations 1999. There is a question mark against whether it is legal to attempt to ban the secondary market if people cannot obtain a refund through a mechanism that has been approved by the sporting body, for example. The Committee examined that and expressed disappointment that the precise state of the law had not been established and that there had not been a test case. The hon. Member for Newcastle-under-Lyme felt strongly that what the Office of Fair Trading did to establish a clear legal position regarding the status of the banks could have been done equally for the secondary market. I hope that there is now some possibility that we will soon achieve agreement between the OFT and the ticketing agencies on that point.

We considered the possibility of instituting a blanket refund policy, but we fully recognise that there are several drawbacks. If, a week before a major event such as the Glastonbury or Reading festivals, the weather forecast showed that we were going to be hit by thunderstorms, it would be likely that a large number of people who had purchased tickets would decide that they wanted refunds. I remember going to the Reading festival and emerging covered in mud from head to toe, but many will not relish that prospect. A refund mechanism would make it difficult for a concert promoter organising such a major event to bear the risk, given the uncertainty of the British weather. The whole thing might prove to be a financial disaster because three quarters of tickets sold might be returned if the forecast was bad.

Equally, it was put to us that providing a right to a refund would provide the touts with a one-way bet. They could buy up tickets in the hope that demand would exceed supply, which would mean that they would make large profits. However, they would also have the knowledge that if that did not happen, they could get their money back by returning the tickets.
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There are problems with a blanket refund policy, but the Committee believes that more should be done by the ticket vendors and organisers of concerts and sporting events to allow refunds for legitimate reasons. There is a refund mechanism for some events, and we welcome the fact that some of the sporting bodies are working with ticketing agencies to try to provide such mechanisms.

The Committee concluded that even if such mechanisms were in place, the secondary market, in the main, provided benefit to consumers. It is interesting that other countries have legislated to prevent the secondary market from operating but, in the United States, a number of states are repealing what are known as anti-scalping laws, because they believe that a secondary market serves the consumer.

The one matter on which there is almost complete agreement in the primary and secondary markets is that certain practices are quite clearly unacceptable or, indeed, fraudulent. To some extent, that blurs the bigger argument about the desirability of the secondary market. Perhaps the most notorious example is an agency called Getmetickets that was closed down, but re-emerged shortly afterwards as the London Ticket Shop. That was in turn closed down only to re-emerge as London Ticket Express. All were operated by Mr. Michael Rangos, based in Hungary, who was selling tickets that he did not have. People who bought tickets actually never received them. Clearly, that was fraud, and the Department for Trade and Industry was correct to move swiftly to tackle the problem and to close him down, but that demonstrates that more needs to be done to stop such people simply starting up under a different name. Almost everybody in the industry would accept that that is a wholly unacceptable practice that brings into disrepute legitimate secondary agencies, or those that offer consumer guarantees, such as Seatwave or viagogo.

We felt that there were two other ways in which some agencies behaved in a fashion that should not be allowed and on which agreement was necessary, the first being the sale of tickets for free events. eBay agreed that it would not sell tickets to the Princess Diana concert, but the Minister’s predecessor, the right hon. Member for Sheffield, Central (Mr. Caborn), had a long argument with the site about Radio 1’s Big Weekend festival. Again, tickets for that were distributed free, but they reappeared on eBay at a considerable price. Additionally, the promoter of a series of concerts to be given by Bryan Adams brought the matter to my attention a few weeks ago. Bryan Adams was going on tour to perform an acoustic set, which he had not done before, and the promoter decided that it was going to make tickets available free for the concerts, as an experiment to see how the fans reacted. The tickets were distributed to fans in each area. Even though the tickets did not really exist, they were appearing for sale in the secondary market. We felt strongly that free tickets should not be charged for in the secondary market.

Secondly, the Committee felt that there should be agreement for restraint on tickets for events that are set up to raise funds for charity. It is welcome that eBay has accepted that since the report was published. As I said, it is working to reach agreement with the organisers of charitable events, so that if tickets are
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resold on the site, the organiser of the event would benefit financially. Such a voluntary agreement is welcome.

We have seen a lot of progress on the establishment of a code of practice. As I said, bodies such as Seatwave and viagogo offer consumer guarantees, but a system whereby all secondary agents offer such guarantees is desirable. The Association of Secondary Ticket Agents has established a code of practice, and it would be desirable to encourage all those in the secondary market to sign up to it.

Mr. Tobias Ellwood (Bournemouth, East) (Con): Before my hon. Friend finishes his point, the summary of the report mentions the production of model terms and conditions by the OFT, which might go some way to providing a sensible code of conduct, but it suggests that that is yet to come about. Can he provide more detail on where we are on that?

Mr. Whittingdale: We are much further forward. There has been an exchange between the Association of Secondary Ticket Agents and the OFT to try to reach an agreement on an acceptable code of conduct. The Minister may have more information.

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): I spoke to John Fingleton from the OFT prior to the debate. He told me that discussions are ongoing and that he is hopeful for a solution and that an agreement will be reached very shortly.

Mr. Whittingdale: I am grateful to the Minister, but that has been the position for the last year or so. I do not quite know what “very shortly” means.

Mr. Ellwood: We can rejoice that there has been an announcement, because there was a commitment in the 1997 Labour party manifesto to provide model terms and conditions. The announcement is a cause for celebration.

Mr. Whittingdale: I hope that “very shortly” will actually prove to mean shortly.

Up to this point, there has been general agreement in the conclusions reached by the Committee and the Government’s conclusions. However, when the Government recently published their response to the report, they suggested that there is a need to go further. Specifically, it referred to events that are unique and of national or international significance. It was proposed that they might well look similar to the events known colloquially as the crown jewels, the sale of broadcasting rights to which are restricted.

The crown jewels consist of the Olympics, the football World cup final, the FA cup final, the Scottish FA cup final, the grand national, the Derby, the Wimbledon tennis finals, the European football championship finals, the rugby league challenge cup final and the rugby world cup final. Obviously, there are already restrictions on some of those events—for instance, the secondary market for tickets for the Olympics will be banned as part of the International Olympic Committee’s conditions for London’s hosting of the games, and there are restrictions on the sale of
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tickets for designated football matches, which include the vast majority of matches in which professional clubs play. We are therefore talking about events such as the Wimbledon tennis tournament, tickets for which change hands at huge prices, the rugby league challenge cup final and the rugby world cup final.

To some extent, the rugby world cup final seems to be a good illustration of one of the problems. A rugby fan might put in a long time ahead to buy tickets for the rugby world cup final. A France fan might do so in a spirit of patriotism and the belief that their team was going to play in the final. Equally, a supporter of the All Blacks might think that they had a very good chance. I am not sure how many England fans put in for tickets for the rugby world cup final—they might have done so in a spirit of hope over realism—but as it turned out, despite all the predictions that we would be knocked out in the first round, England made it through to the final. As a result, a huge number of France and All Blacks fans held tickets that they no longer wanted, and lots of England fans wanted tickets. It seems completely wrong to say that a France fan should not be allowed to sell his ticket to an England fan. That applies not just to rugby but to other events.

The proposal would also create a two-tier system. It would essentially amount to saying that people could not sell their tickets for certain events—probably the most popular ones—but that it would be fine to do so for any other event. Although it might be reasonably easy to identify the kinds of sporting events to which such restrictions should apply, the Government suggest that they could also apply in the cultural field and to concerts and artistic events. There are one or two possibilities that I suppose are fairly obvious: the last night of the Proms, for instance, although one of the Minister’s colleagues might wish to impose other restrictions on the sale of tickets to that.

There are also other events, such as the one-off concert given by Led Zeppelin for which the huge demand for tickets way outstripped supply. Will the Government suddenly decide that Led Zeppelin is a crown jewel? If so, should Robbie Williams become one? How far would we go? Would the proposal include any major event where the artist can command a vast audience and the demand for tickets far outstrips supply? How would it be done? One has visions of the Government introducing orders and secondary legislation to designate Robbie Williams as an icon of national importance that needs protection.

Mr. Sutcliffe: The hon. Gentleman will see in our response that we are formulating a policy for sporting events and free music concerts, not the general music market that he is talking about.

Mr. Whittingdale: That is interesting, because I do not think that the response quite says that. It says that

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