This article originally appeared on VICE UK.
For the thousands of you who I'm certain have been following the passage of the Consumer Rights Bill, last Monday was a big day. After quite some tussle, the government approved crucial amendments tabled by the House of Lords, and the bill—which updates our consumer rights in response to commerce moving online—will become law by July, a monstrous 17 months after it was introduced into the Commons.
It's been, one peer said in the Lords, a "cliff-hanger." The bill covers a wide range of rights in a multitude of trades, but it got caught up on a single point—whether to regulate the secondary ticketing market, which allows fans to sell on tickets for events they can't attend. Of course, for many years now it's been suspected that secondary ticket platforms are being used for touting and fraud on an industrial scale. If you're a music or sports fan, you'll be well aware of this. You may have even bought a counterfeit ticket on open, seller-to-buyer secondary marketplaces like Viagogo, Seatwave, or Stubhub, or watched in horror as tickets for high-demand events sell out on the primary market in moments, then end up on the secondary sites for sometimes five times their face value moments later.
How does that happen and is this something the government needs to interfere with? Those have been the two key questions as secondary ticketing has been fiercely debated in the Commons and Lords. Former banker Sajid Javid, Secretary of State for Culture, Media, and Sport, maintained right up to the last moment that while selling counterfeit tickets is already a crime, touting was "classic entrepreneurism" that needed no regulation in law. However, he met an impressive adversary from his own party—Conservative peer Lord Moynihan—who persuaded him otherwise.
"One of the major reasons why you can't get tickets for high-demand events as a member of the public is because there's specialized software available to touts which sweeps up the supply within a nanosecond of them going on sale," Lord Moynihan told me after the government—making quite some U-turn—agreed to back the amendment he'd tabled. "I want to see a transparent, effective, legal secondary market—I'm in favor of that. But I respectfully disagree with [Sajid Javid's] view. The tout market works as a highly sophisticated sweep of tickets. It is not a free market."
Mike Weatherly MP, co-chair of the All-Party Parliamentary Group on Secondary Ticketing, summarized the new legislation—called "a veritable alphabet soup of amendments" by MP Jo Swinson—in a statement. It will, he said:
1. Provide greater transparency for fans, with the following details required to be provided by resellers—seat number or standing information, if any restrictions apply (student price or under 18), face value.
2. Compel the Secretary of State [Sajid Javid] to review measures relating to secondary ticketing in 12 months and report to parliament.
3. Put a duty on ticket resellers to report criminal activity.
Each of those points is interesting, saying much about what politicians think of the secondary market. But let's deal with the third one first—a last-minute addition to Lord Moynihan's amendment that surprised even MPs who were close to the behind-the-scenes negotiations.
"What criminal activity are they talking about?" asked Oliver Wheeler from Viagogo. "I have no idea. Really, I have no idea. What I do know is that if we're ever—and it's very rare, but it does happen from time to time—approached by the police or any other body or authority expressing concern about X, Y, or Z in any category of our business, we respond and we help them with it."
The duty to report criminal activity was possibly included based on two things: a National Fraud Authority figure that suggested fraud in the market amounted to a staggering $2.2 billion in 2012, and findings from a 2013 Metropolitan Police report on ticket crime. It said: "The lack of legislation outlawing the unauthorized resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency, and fraud." And also, "Ticket crime has links to other serious and organized crime," and, "Ticket fraud is significantly underreported."
The big four secondary platforms—Get Me In!, Seatwave, Stubhub, and Viagogo—all offer guarantees to consumers that counterfeit tickets will either be replaced or refunded, but for Reg Walker from Iridium Security, an expert on secondary ticketing and a government source, the duty to report criminal activity is the most telling factor of the new legislation. "It's a damning indictment of the industry that you have to force them to report crime," he says. "I think I'm right in saying that the only other time that has ever been done in law was when the banks, in their worst days of excess, refused to report money laundering. So, congratulations second ticketing, you're now up there with banking."
It's hoped that including the precise details of tickets listed on the secondary market (point one of Mike Weatherley's above summation of the new legislation) will reduce fraud, stamp out the curse of speculative sales (non-specific tickets sold on secondary platforms before they're available from event organisers) and also make it easier to identify sellers who are sweeping tickets on the primary market to resell. Once identified, they can be blacklisted and/or fined (to the tune of $7,000, the legislation dictates) and event organizers can nullify their tickets—all good news for fans, but dig deeper into the legislation and annoying complications arise.
In 2012, MP for Walthamstow Stella Creasy tried to buy a ticket for the Stone Roses reunion shows at Heaton Park, Manchester—an event that fans, she said in the Commons, "had only dreamed of for many years." When she went to make a purchase, she noticed tickets on the secondary market were being "advertised at more than $1,500 only minutes after they had sold out. Their original face value was $80." Those shows were non-seated events, creating an immediate failing of the regulations when they come into effect. If they seek to combat fraud and touting by ensuring block, row and seat details of a ticket are listed on secondary sites, what if the event is general admission, as many music events are? Surely they'll be harder to track and could still be subject to speculative sales?
"For general admission tickets, this amendment may not be able to solve the problem in terms of the information given," says Sharon Hodgson MP, co-chair of the All-Party Parliamentary Group on Secondary Ticketing with Weatherley. "But due to the new obligations on the secondary ticketing operators to report any suspicion of criminal activity, it does strengthen the oversight of the entire market."
If, over time, it does seem like the legislation is skewered towards all-seated sporting and cultural events, it's not hard to understand why. Hodgson and Weatherley's "put fans first" campaign only truly took flight after older MPs and peers began to understand the secondary market on their own terms—when tickets for the Rugby World Cup this summer and Benedict Cumberbatch playing Hamlet at the Barbican in the autumn ended up on secondary platforms for over $1,500 months in advance. Also, noticeably, it was Lord Moynihan—a former Olympic rower and ex-chairman of the British Olympic Association—who tabled the amendment in the Lords and negotiated for it to be reinstated in a new form after the Commons threw out his original draft in January.
The legislation, called "light-touch regulation" in the Lords, is weaker now, but from Hodgson and Weatherley's point of view it's still a good start that can be built upon in the statutory review (point two of Mike Weatherley's above summation), which is more of a concern to Weatherley than whether the new regulations favour all-seated events. "There has to be a determination to get this review correct and for it to not be just window dressing," he says. "And there has to be action on the recommendations—whatever they may be. At the moment that is not legislatively required, but I would like to see all parties commit to taking action if so advised."
Another thing: under the Computer Misuse Act, it's illegal to use botnets—defined on Wikipedia as "a collection of internet-connected programs communicating with other similar programs in order to perform tasks"—to harvest tickets on the primary market, but it's not an offense to resell tickets purchased legitimately (unless they're for the football). If an event organizer or venue approaches a secondary site to cancel tickets being sold for a performance, it's because the action of reselling breaks the terms and conditions of the original sale, rather than the law. To confuse matters more, some ticket-sweeping technology is now more advanced than bots and not yet criminalized, creating ambiguity in the definition of a tout. Could fans who chance their arm by buying four tickets for a gig that they guess will sell out, before flogging two of them at profit to offset their costs—a practice that Sajid Javid would greatly admire—end up becoming identified, blacklisted, and fined as if they're professional sellers?
The new legislation does address this issue by including a clause on whether the terms of primary sellers are fair, and Weatherley says, "All providers of live events I have spoken to have stated categorically that they will allow genuine fans to resell at face value—or nearing face value—and I am satisfied that this isn't an empty promise." But you can understand why eBay-owned Stubhub told the Guardian recently, "We need greater legal clarity on this point."
Secondary platforms don't like promoters meddling in their affairs because, Oliver Wheeler from Viagogo claims, canceling tickets is unpopular with consumers: "What we've seen around the world—when they started doing that in the US a few years back, for example—is that fans hate it," he said. "It creates a backlash against event organizers—assuming they're interfering for non-fraudulent reasons—and they very quickly stop doing it."
The biggest of the secondary platforms is Viagogo, a company that was exposed by Channel 4's Dispatches in 2012 to be selling allocations of tickets they'd received direct from promoters while advertising itself as a fan-to-fan network, manipulating market price, colluding with "power sellers" (touts in all but name), and mass-buying tickets on the primary market, which they then sold on (a practice they've since given up, Wheeler says). Perhaps they were unlucky that Dispatches specifically concentrated on their business, while also revealing suspect activity at Seatwave (now part of a giant, global conglomerate that includes promoters Live Nation, primary agency Ticketmaster, and another secondary business, Get Me In!), but they've done little to ingratiate themselves since. After Dispatches aired, Viagogo changed its company name in the UK (where it was founded), liquidated, and moved its operation to Switzerland, raising concerns about whether this new legislation even applies to them (yes it does, says Reg Walker).
Wheeler, echoing statements that the other secondary platforms made in response to the legislation, says, "If these amendments are designed to give more information to people, which we support, and to cut down on fraud, then I don't see a problem," but he won't provide an exact breakdown of the sources of tickets of the four million tickets currently being sold globally on Viagogo ("that's commercially confidential"), mentioning that they come from a variety of sources—fans, hospitality. and travel companies, sponsors, venues, promoters, musicians, and professional sellers.
A report prepared for the Department of Culture, Media and Sport in 2009 suggested that 20 to 40 percent of tickets for "high-end" music events (they used Kings of Leon as an example) were being resold, with that number jumping to 60 to 70 percent for "very high-end" (Madonna or the aborted Michael Jackson concerts) concerts. What percentage of those amounts are sourced by professional sellers remains unclear, but Dispatches found a YouTube of the then-CEO of Seatwave, Joe Cohen, telling a conference in 2010 that a staggering 68 percent of tickets on the site at that time were from "brokers." He later went on the record saying 35 percent, but Paul Latham—COO of Live Nation in the UK—in a piece he wrote for Music Week in 2012 claimed it's actually 70 percent.
The secondary sites claim that fraud and the influence of shady characters with multiple personalities and credit cards using technology to harvest supply is greatly overstated. And although secondary platforms profit hugely from having swept tickets listed on their sites, they can't understand why the government are going after them and not the promoters and primary sellers. "The concept that somebody is using industrial machinery to harvest [an] industrial [amount of] tickets is frowned upon, and it's very much a problem for the rights owners to solve," says Wheeler. "The only people that know who are buying from the seller are the people selling them in the first place."
Much is still unknown, as Stella Creasy, a key ally in the fight for reform, admits: "No one's saying this legislation is a magic bullet, but we are saying that transparency is crucial, not just in dealing with botnets and software, but because it will help identify what is going on. We just don't know at the moment and that's a major issue."
"This legislation isn't worded as I would have it in any way, shape or form, but the fact that there is a commitment that, within 12 months, we'll have a completed review is a big step forward," says Mike Weatherley, who has beaten cancer over the last two years and is standing down as an MP at the election. "I've been campaigning on this for four years and had doors slammed in my face at every turn. We've now got an acceptance that there is a problem, we've got points in legislation opposing touting and we have the review. Really, it's huge."
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