House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Second Report

The call for regulation

69. DCMS told us that it had held four high level meetings, "the ticket touting summits", working with stakeholders across the markets to understand the issues arising from the growth in the ticket resale market, and identify whether industry-led solutions could be delivered, or whether Government intervention was required.[206] "Summit principles" were agreed by summit members in April 2006 to underpin the way in which the sector would operate, and we heard how some practical changes were being made, by both primary and secondary operators, to improve the market place. One of the principles was that the ticket distribution industry should "establish a minimum industry standard where all relevant distributors are working to a common set of principles and standards to ensure best practice and consumer care": an action plan announced by Mr Woodward in July 2006 included a pledge to continue working with the industry and OFT to draw up an over-arching code of practice for both primary and secondary ticket sellers.[207] However, we heard that eBay had been the only regular attendee of the summits from the secondary market,[208] and it appears that, such were the differences of opinion, it was not felt constructive to issue further invitations to the Association of Secondary Ticket Agents (ASTA) following the first of these sessions, which was held in November 2005.[209]

70. DCMS told us that it had hoped that the market place could find solutions but that market-based voluntary agreements to deal with the concerns did not appear to be working well enough, citing the example of eBay's refusal to prevent listing of tickets for the BBC's free Big Weekend road show. [210]

71. The Department told us that its present position was that it did not propose to legislate to ban secondary sales in general, but was concerned that the secondary market as it operates could undermine sporting and entertainment events, consumer confidence and the country's ability to continue to attract world class events: it was now considering whether ticketing for particular events (akin to the "Crown Jewel" events, for which live broadcast coverage must first be offered to generally available free-to-air channels)[211] should be protected, either through voluntary or regulatory means, with non-regulatory measures such as voluntary agreements between Government and internet-based sites being investigated first, and regulatory intervention remaining an option, but only as "a very, very last resort".[212]

72. Some of the written evidence submitted to the inquiry suggested that promoters had been under the impression that DCMS ministers had already concluded that a statutory approach was necessary.[213] Promoters' own conclusions were that they, themselves, had done as much as was within their power to protect events and consumers from ticket touting, that self-regulation had reached its peak in the industries and primary markets, and that the impossibility of achieving voluntary regulation in the secondary market was already evident, so that statutory regulation of ticket resale was now needed. [214]

73. Organisers maintained that the legislation criminalising unauthorised resale of football and Olympic tickets should be extended to all events, that that legislation amounted to recognition that touting was "wrong", and that it was inconsistent to protect some events, but not others, in this way.[215] The Football Association and Wembley Stadium said that the stadium hosted various different events with different regulatory structures, which led to confusion and disaffection among fans:[216] similar points were made about touting being an offence at Wimbledon and at Lord's only when they hosted 2012 Olympics events.[217] The Concert Promoters Association suggested that another option would be to adopt the Queensland model, which makes it an offence to resell at more than 10% above face value.[218] Although the main sporting associations were in favour of legislation extending anti-touting protection to designated nationally important sporting events such as the existing "Crown Jewels",[219] concert promoters were understandably not enthusiastic about simply singling out sports events for special protection. Clearly, they said, it was not possible to set out a "Crown Jewels" of music.[220]

74. Evidence from the organisers showed that they did not anticipate that extending the criminal offences would cause increased demands on police resources for enforcement. They expressed some confidence that self-policing would be easier and more efficient, opportunist individuals would refrain from selling which was illegal, and that the trading platforms would no longer be able to allow such sales.[221]

75. DCMS acknowledged that there were concerns about the anomalies created by a two-tier approach, but said that the existing legislation had been introduced for reasons other than to prevent profiteering on reselling and any extension needed justification in its own right.[222] While the legislation regulating sale of football tickets was justified by issues of public order and safety, Mr Woodward told us that the Olympics legislation was required because there would be huge demand for Olympic tickets, including international demand, and scope for gross exploitation by a secondary market on a massive scale as well as exploitation of the brand, which could bring the Olympics themselves into major disrepute.[223] He, and Mr Fingleton, the Chief Executive of the OFT, also said that 90% of the market worked very well, and that trying to regulate for the other 10% without damaging the part which was working well would be extremely difficult.[224]

76. We do not underestimate the difficulty of eradicating abuses of the market without imposing unnecessary fetters on areas of the market which cause no problems. As we have observed, there is no consensus as to what proportion of the market is problematic: the case for intervention would be strengthened if it were demonstrated that there were real problems affecting more than a small minority of events.

77. We also believe that more can be, and should be done, to seek a voluntary solution. Since it is the secondary market which gives rise to the industries' concerns, and regulation of that market (voluntary or otherwise) which is sought, it is not realistic to expect to find solutions in a forum where that market is virtually unrepresented. So long as one contingent seeks the effective abolition of the other, which is therefore fighting for its very survival, hopes of agreement must be forlorn.

78. We agree with DCMS that regulatory intervention should be considered only as a very last resort. While intervention was justified on grounds of public order and safety at and around football matches, and may be an international requirement for hosting some major sporting events, we have reservations about the criminal law being used as a way of supporting organisers' efforts to select the audiences for their events, essentially as an aid to their self-policing of touting. We are also concerned by the real risk that a convenient market, which some consumers have grown accustomed to use and trust, would be driven underground, to the detriment of consumers and stakeholders. We appreciate, however, that international pressures may make it necessary for existing legislation to be extended as a condition of the UK being eligible to host major international sporting events, but we are not persuaded that it would be right to legislate more widely at this stage.

79. While we appreciate that the concept of "Crown Jewel" events is viewed as a possible interim measure, rather than as a long term solution, we are not optimistic that this approach would do more than exacerbate the confusion inherent in the existing two-tier system. In the absence of a voluntary code, it is understandable that pressure will continue to extend special protection to the 'Crown Jewel' sporting events and many popular music events. We urge eBay and other operators in the secondary market to follow the lead of those marketplaces which already refuse to list tickets for free events or tickets which have been allocated for specific groups, such as children, the disabled or amateur sports clubs. There is no arguable justification for profiteering from these.

A middle way?

80. Shortly after we took oral evidence, we heard that the Music Managers' Forum had joined with TixDaq, a data and intelligence supplier to the live entertainment sector, to devise a "middle way".[225] The kernel of what was proposed was that entertainment industry stakeholders should endorse secondary ticket exchanges which complied with an agreed code of conduct, and agreed to pay over part of the profit (to be shared between the artistes and organisers of the event). In this way some part of the extra value would go back into the creative industries. The proposal would give the creators rights akin to the "droit de suite" or resale royalties which entitle authors of original works of art (such as paintings, engravings, sculpture and ceramics) to a royalty each time one of their works is resold in a sale involving an art market professional. That intellectual property right was created to implement an EU Directive and the provisions came into force in the United Kingdom in February 2006. The royalty is subject to compulsory collective management so artists cannot claim their royalty independently but must receive it through a collecting society.[226] We note that the initiative by the Music Managers' Forum has recently led to the formation of the Resale Rights Society, which will have two main aims: to introduce a kitemark scheme for ticketing sites, and to ensure that artists and the live music industry share in the proceeds of resold tickets. The Society aims to finalise agreements with online ticketing exchanges by the end of March 2008.[227]

81. It is encouraging to see a move towards constructive dialogue between creators and secondary marketeers and we urge all the interested parties to join in this debate. It could provide the seed for the co-operation which has so far been lacking between the stakeholders. As presented, the proposal may be no more than a different machinery whereby those responsible for providing events would be able to share in profits which can now be made in the secondary market. But it does introduce new potential for a recognition of the legitimacy of the secondary market by the entertainment and sports industries, alongside an acknowledgment of their moral right to share in profits made by others out of the events for which they are responsible and in which they have invested talent, funding and organisation. At the same time it provides scope for the acknowledged benefits of the secondary market to the consumer to be preserved and developed, with added protection for consumers and a real incentive for effective self-regulation throughout the ticketing industry. For example, tickets could be sold subject to terms and conditions which provided that resale through an approved secondary marketplace was permitted (with an agreed levy passing back to the industry through a collecting agency), so that consumers could be given more information about the tickets being offered for sale, without any risk of finding that tickets have been cancelled because they have been sold on. Approval would be dependent on an agreed code of practice covering consumer protection measures as well as arrangements for collecting levies. A great deal of work needs to be done on the detail of how such a scheme might operate but, at the least, this initiative could lead to joint engagement towards a solution in which the convenience of the secondary market could continue while at the same time supporting the industries on which it relies. We commend it and strongly encourage all those involved to consider it seriously.

206 Ev 71 Back

207 "Industry put on notice to sort out the touts" DCMS press release 100/06 Back

208 DCMS Ev 71 Back

209 QQ 128-9 Back

210 DCMS/DTI Ev 72, 76 Back

211 Ev 72 and Q 154. See also memorandum by DCMS to the Committee's inquiry into Broadcasting Rights for Cricket: HC 720, Session 2005-06, Ev 49. This definition applies to Group A listed sporting events . A further category - group B events - may have live coverage on pay-TV provided that secondary or "highlights" coverage is offered to free-to-air broadcasters. Back

212 DCMS/DTI Ev 72, Mr Woodward Q 125 Back

213 Five Sports Ev 104, Sports Rights Owners Coalition Ev 91 Back

214 Concert Promoters Association Ev 20 Back

215 Rugby Football Union Ev 2, Football Association Ev 7, All England Lawn Tennis Club Ev 10, Concert Promoters Association Ev 20, Ticketmaster Ev 32, Society of Ticket Agents and Retailers Ev 37, Five Sports Ev 109 Back

216 Ev 7 Back

217 All England Lawn Tennis Club Ev 10, Five Sports Ev 109 Back