Examination of Witnesses (Questions 60-77)
MR NICK
BLACKBURN, MR
JONATHAN BROWN,
MR TOM
WRIGHT, MR
CHRIS EDMONDS
AND MR
PAUL WILLIAMSON
26 JUNE 2007
Q60 Paul Farrelly: We got rid of
resale price maintenance a few years ago. In July independent
booksellers will be screaming blue murder about the latest Harry
Potter novel. Clearly, manufacturers quite often want to influence
the price so they put a recommended retail price on their product.
If I go into a newsagent's and try and buy a can of Coke that
has been marked up twice from that price, I can see it; I can
make a comparison and say, "Yes" or "No, it's a
rip-off." You have prices on your tickets. Should at the
very least resellers have to advertise the price at which the
tickets were issued, and, for security and public protection,
also the seat numbers?
Mr Brown: Legally, if they are
reselling a ticket, they have to declare the face value.
Q61 Paul Farrelly: Do they do that
at the moment?
Mr Brown: Not always, I think
is the answer to that.
Q62 Paul Farrelly: Should they?
Mr Brown: Yes.
Q63 Paul Farrelly: Under the code
of practice, if not legislation?
Mr Brown: The majority of our
members or agents are actually outside the scope of those regulations
because they are acting on behalf of the event organiser. The
STAR code actually bring them back into that and insists that
they do display the face value and obviously the booking fee that
they charge.
Q64 Paul Farrelly: Do you think that
should be extended to all agents?
Mr Brown: Absolutely.
Q65 Philip Davies: This is a bit
rich, is it not? We are expected to believe that Ticketmaster
and friends are the champions of the consumer, the champions of
the customer, standing up for the customer's best interests, despite
all the articles we have seen. There have been articles in the
past about how Ticketmaster rip off their customers. Let us just
find out what a big champion of customer rights you are. You are
a group of people who charge customers handling fees, processing
fees, you charge people for postage and packing about £3
when it costs 26p for a stamp. Why should we believe that you
lot are the champions of the consumer? All you want to do is make
sure that you can rip off the customers rather than the ticket
touts ripping off the customers.
Mr Blackburn: That is absolute
rubbish. Our average mark-up is 12%, and that is not profiteering,
by any business. We provide a very good 24-hour service. We provide
all the checks you look for. It is absolutely wrong to say that.
When you talk about the postage charges, what people forget is
we have to send out a lot of tickets by Recorded Delivery and
the cost of that is a lot higher, when the Government takes most
of that in VAT or the Post Office takes it. We do have to say
that a lot of our tickets go out by Special Delivery. That is
why the postage charge is so high. The average mark-up we operate
on is around 12% and you cannot say that is profiteering by comparison
with any other business.
Mr Williamson: The way our business
works is we charge a booking fee on tickets we sell. Out of that
booking fee we are paying the credit card charges, we are paying
the VAT on the booking fee, we are paying for 24/7 phone rooms,
we are paying for internet sites that do not fall down when people
try and book on them, we are then paying for dispatch to the customer.
With the Millennium Stadium, for example, we now have to send
all tickets by Recorded Delivery, which costs more money, because
they have had problems with tickets disappearing in the post and
refusing to issue duplicate tickets for security reasons. We are
having to pass those charges on. Nevertheless, our charges, we
think, are reasonable and we do not get any payment at all if
we do not sell a ticket.
Q66 Philip Davies: So you do not
make any mark-up on postage and packaging?
Mr Edmonds: No, absolutely. There
has to be a margin there to support our business. Ticketmaster
as a company employs over 700 people in the UK and we are selling
a lot of tickets. What those fees cover is also the cost of processing,
but it also covers the cost of investment in new technologies.
If you look back to when booking fees first came into the UK,
it was when the credit card/debit card culture came in. Before,
15 or 20 years ago, if you wanted to go to a big event, you would
have to take a day off work and queue for 24 hours plus to get
hold of your tickets. What happened with the credit card culture
here is that phone rooms were set up and we now have internet
sites. Those take a significant amount of investment in terms
of new technologies.
Mr Blackburn: I think also the
customer always has the chance to go to the box office and buy
tickets without paying a booking fee. In all the theatres within
our group they can do that. They have that choice. People choose
not to because of convenience, and we provide 24-hour convenience
at a reasonable price. Whether it is the combination of booking
fee and transaction fee, as I have said, we feel the mark-up is
fair to cover all our costs and the services we provide. We always
make sure tickets are available at face value.
Mr Edmonds: You also have to look
at the fact that everyone knows what the fees are when they are
purchasing a ticket. They have that choice to make and there is
a degree of choice across the marketplace. The other issue is
we do not increase our fees if we could say more. For example,
our average booking fee is between 9-12.5%. If we think we have
a venue where we know the demand for tickets will far outstrip
supply, we do not increase our fees to 25% to profiteer on that.
They are proportionate to the ticket price. They are open and
they are agreed with our promoters on every single event.
Q67 Philip Davies: Basically, your
position is that you are quite happy for punters to pay over the
ticket price to pay your profits, but you do not want them to
pay over the ticket price to buy something from eBay from a tout.
That is, in a nutshell, your position.
Mr Williamson: Not at all. The
STAR guidelines Jonathan has just outlined—
Q68 Adam Price: It is your position,
with respect.
Mr Blackburn: Our position is
to provide a service at the right price which is not based on
demand. Anybody can go to Blood Brothers on a Wednesday night.
We charge the same for selling a ticket for Blood Brothers as
we do for Glastonbury, the same percentage, so it is not driven
by demand. It is driven by the cost of the service we provide.
We try and keep our booking fees fair and in line with what the
public will pay and what we do not want to see is a load of tickets
going out to people who are instantly profiteering on them when
we are trying to get tickets to the public at the right price.
Mr Brown: It is also worth remembering
that by buying through the primary market, through a primary agent,
you are in direct connection with the event organiser, so if there
is a problem with the event, if the event is cancelled, the refunds
will be processed. If you move out of that market into the secondary
market, you are divorced with that relationship and you may have
no rights in terms of going back to the event organiser.
Mr Wright: The primary market
is authorised, is transparent, it offers refunds, it offers a
service. Those are things that consumers are willing to pay for
and it is entirely transparent what the ticket is, what the price
they are paying is, what the booking fee is. Most of all, they
possess the tickets. That is fundamentally a critical part of
any fair market.
Q69 Philip Davies: It is a cartel
really, is it not?
Mr Williamson: Actually, the OFT
inquiry two years ago found precisely the opposite, that it was
a very fiercely competitive industry.
Q70 Chairman: Can I just try and
establish something? There are two pictures being painted. One
is of a mechanism to allow consumers who purchase tickets and
then for some reason find that they are unable to go to have a
means of selling their ticket, which most people would accept
is perfectly reasonable. The other picture, which is the one which
you paint and some of the previous witnesses painted, is of gangs
of essentially organised criminals who buy up vast quantities
of tickets within the first five minutes of their going on sale
in order purely to exploit their dominant position in the market
to obtain massive profits. Which is true? Obviously, both go on
but when we are looking at the secondary market, how much do you
believe is people who never had any intention of going to a concert
or event in the first place, and how much are genuine consumers
just trying to sell tickets they are not able to use?
Mr Blackburn: We think about 30-35%
of the tickets go out to people who want to resell them and do
not go to the concert. Equally, when a ticket limit is six, you
might get people who want two but they will buy six and get rid
of the other four to cover the cost of the two they have bought
as well. What is occurring is what is clearly colloquially known
as bedroom touts. There are a lot of people who sit out there
and trade on eBay and they see tickets as a commodity they can
trade in fairly easily. That has really grown with the growth
of the Internet and people like eBay and viagogo and so on. It
has given them an opportunity to trade in tickets very easily.
Mr Williamson: I think it depends
entirely on the type of event because there are hot music events,
hot sports events, where people are trying to over-buy and then
sell on, and there are lots of day-to-day events going on week
in, week out, where ticket touting is far less of an issue.
Q71 Chairman: Tom, your effort to
establish a refund scheme: in your evidence you say STAR cannot
support any suggestion that customers should be able to return
tickets and obtain refunds if they are unable to attend or change
their mind. But you then go on to talk about how you are working
to establish a system of authorised resales but that will not
therefore comprise an automatic refund scheme.
Mr Brown: For the very reasons
that Rob Ballantine outlined before, there are distinct commercial
reasons why it would be very difficult to offer returns in that
way but resale mechanisms and being able to exchange tickets within
the terms and conditions of sale, provision can be made for that.
Q72 Chairman: So your message essentially
to the consumer who buys a ticket which he then finds he cannot
use because his aunt has died, is that unless the event has sold
out and therefore an authorised resale scheme is in place, he
should not be allowed to sell his ticket?
Mr Brown: No. We are saying as
far as entertainment tickets are concerned—and I think there
is a distinction between the concerns of sport and entertainment—they
should be able to sell that to a friend for the amount they paid
for it.
Q73 Chairman: To a friend?
Mr Brown: Perhaps to anybody.
Q74 Chairman: How do they find the
other person who wants to buy it if you have outlawed the secondary
market?
Mr Brown: If you have an authorised
secondary market therefore you have a means by which people can
offer tickets for resale.
Q75 Chairman: But you are not proposing
to put in place an authorised secondary market unless certain
conditions are fulfilled.
Mr Brown: I think there is scope
for an authorised secondary market.
Mr Williamson: We are introducing
with a number of our clients exchange and resale policies and
practices. Geoff Ellis talked about it for T in the Park. We are
doing the same with the Brighton Centre. We have done it for events
at Wembley Arena, at the theatres, and I think, very interestingly,
we are introducing it with Arsenal football club this summer for
season ticket holders and for members so that they can resell
tickets for matches they cannot go to. We are trying to play our
part. We are trying to move that exchange and resale forward as
well.
Mr Wright: Just to be clear, the
draft terms and conditions absolutely allow customers to resell
their tickets provided they are not doing so for profit. So it
fully recognises that need and over 65% of all the venues we have
polled in terms of STAR membership already offer some mechanisms
for customers to dispose of unwanted tickets through the venue.
As the earlier commentators said, as we all move forward, we will
strengthen and expand that exchange mechanism.
Q76 Chairman: So you have no objection
to websites in the secondary market which do not impose vast mark-ups?
Essentially, if it is only a small margin over the face value
you would be content with that?
Mr Brown: Certainly there are
sites which exist for fans to exchange tickets at face value.
Q77 Chairman: And you have no difficulty
with that?
Mr Brown: No.
Chairman: Thank you.
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