Online ticket touts: Digital entrepreneurs or internet fraudsters?

Profile picture for user ddpreez By Derek du Preez January 11, 2015
Summary:
The UK government seems reluctant to regulate against bulk buying of tickets online – despite calls from the industry, artists, experts and the police to do so.

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1D want change

Online touts are using complex software to buy tickets for popular events in bulk, blocking regular consumers from buying tickets direct from the vendor and then reselling the tickets at a marked up price on third party websites.

It isn't uncommon for tickets that have a face value of around £70 on day of release to be bought up and resold on third-party websites, such as StubHub, for over £1,200.

The UK is currently in the middle of debating whether this process of money-making online is simply 'business as usual' in the digital world or whether regulation should be put in place to protect consumers from paying over the odds to see their favourite artists live.

Whilst this practice has been commonplace for years, the arguments have resurfaced thanks to changes being made to the UK's Consumer Rights Bill, which is currently being voted on and is going through Parliament. Ministers will be faced with a decision today whether or not to include a clause that would force sites reselling tickets to provide information that includes the face value of the ticket, the identity of the seller and whether or not a re-sale breaches any terms and conditions.

And although this would likely hinder touts acting unfavourably and protect consumers, it seems that Ministers are ready to throw out the clause in the name of good old fashioned free markets.

The debate has prompted an open letter to be published in the Independent this weekend, which received signatories from the likes of Iron Maiden, the National Theatre, the managers of One Direction, the UK Theatre Association and the Arctic Monkeys, asking Ministers to reconsider and put the interests of fans before the profits of a select few.

The open letter reads:

As representatives from the live event industry, responsible for putting on shows ranging from international sporting fixtures and world class theatre to intimate gigs, we are committed to ensuring that event-goers have the best experience possible at a fair price.

The way that the secondary ticketing market is allowed to operate at present can seriously undermine that effort.

Clause 33 of the Consumer Rights Bill would give consumers looking for tickets basic information which the secondary platforms have been so keen to hide: who they’re buying from, the face value of the ticket, the seat number and, importantly, whether that ticket is being sold in contravention of its terms and conditions.

Sadly, the Government tried to block this Clause in the Lords, and want to strip it out of the Bill in the Commons tomorrow.

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If the secondary platforms have nothing to fear from transparency, they have nothing to fear from these simple provisions.

It’s high time the Government stopped sticking up for them, and decided to put fans first.

Ministers are due to debate the changes in the Commons later today, but it is thought that the government prefers a voluntary approach. The Department of Culture, Media and Sport has previously indicated that a change in the law wouldn't be necessary.

However, a number of investigations have found that the tactics employed by the touts are so aggressive that they leave very little chance for consumers to compete at the first round (which is the cheapest round) of tickets being sold.

For example, Channel 4's Dispatches in 2011 exposed how the online reseller platforms actively court major ticket touts and take allocations directly from promoters to sell on, way above face value, to consumers.

This was followed by a report by the Metropolitan Police, which investigated online ticket selling ahead of the Olympic games and made a number of damning claims. For example, the report found:

  • The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practice, a lack of transparency and fraud.
  • Ticket crime has links to other serious and organised crime.
  • Ticket fraud is the most prevalent form of ticket crime. It is estimated to make organised criminal networks £40 million per year.
  • The most common method for unauthorised ticket resellers and touts to obtain large numbers of tickets is from compromised contacts within sporting bodies, primary ticket agencies, concert promoters, venue operators and event sponsors.
  • Due to the surreptitious way that large numbers of primary tickets are diverted straight onto secondary ticket websites, members of the public have little choice but to try to source tickets on the secondary ticket market.
  • Figures indicate that there are over 1,000 ticket touts in the UK.

The Metropolitan Police made a number of recommendations to government, including legislation against the unauthorised sale of event tickets and regulation in the secondary ticket market. However, it seems that Ministers don't seem to agree – in 2011 Sajid Javid, now Secretary of State for Culture, said secondary ticket websites “classic entrepreneurs”.

Ticket touts work by using complex (and frequently changing) software to target sellers on an 'industrial scale', according to ticketing specialist Reg Walker. He told the BBC:

This is organised and on an industrial scale. I think everyone at one time or another has tried to purchase tickets online, [and] simply not been able to get through because they are blocked out from the system by touts harvesting tickets in bulk using extremely sophisticated software.

The software hits the primary ticket agent's system with a high-speed connection with multiple identities - different names, different credit cards, different addresses, different email address. It just simply pounds the system far faster than you or I can actually fill out our details.

Unfortunately, what happens is as soon as tickets are harvested, they are flipped straight over onto a small number

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of so-called ticket marketplaces. The public are forced then to buy at inflated prices. We've seen £75 tickets go for upwards of £1,200. So some of the mark-ups on these tickets are enormous.

My take

This is one of those instances where government regulation struggles to keep up with digital. In the physical world, Ministers would have an awful lot to say about a select few buying up stock of popular products in bulk, colluding and then selling them on at hiked rates to consumers. But in the digital world it's just business?

It's an unfair practice that does an awful lot to damage the entertainment and sports industry and it should be regulated against.