Written evidence submitted by Clive Spencer
This is part of a lengthier document that was produced by the Author to establish better understanding of the underlying causes of the ticketing industry within the UK and formation of the element of the industry referred to as “Secondary Ticketing”.
Author became interested in the subject while watching a “House of Commons” Committee Investigation on television regarding “Secondary Ticketing” December 2016.
Over a period six –ten months the author met with individuals and organisations from different parts of the Music & Live Entertainment Industry. It became evident that majority of people were reluctant to speak openly (public) about the issues regarding the ticketing.
People were found to agree to the authors findings, but reluctant to stand-up and admit it openly. Author gained a great insight of the ticketing industry from an Individual known as the super-tout (inventor of program known as “BOTS) “KEN LOWSON”.
Author attended meetings and engaged with lead organisations set-up to fight secondary ticketing, venue operators, program developers, touts, super-touts and ticket platform owners. The latter confirmed the technology could eradicate the scalping and touting problem, if the industry embraced the technology and implemented the relevant control measures.
Author – Clive Spencer, has no formal background in the Live Entertainment or Music Industry. But is a Health & Safety Professional, which has used his experience in investigation and analysing information to get a greater understanding giving him a true prospective “why and how” secondary ticketing was developed and continues to grow today.
Apologies for this document exceeding the maximum word count and too the exact layout. However, the author wished to give the readers a better understand of the ticketing industry and evolution of the secondary market.
Legislation alone will not bring change to this problem that continues to grow under the protection of the controllers of the Music / Live Entertainment Industry.
2017 and live entertainment sector is thriving across the globe and annually growing. In the UK, the value of live entertainment is valued at billion(s) of sterling. This growth has been fuelled by the technology advances and the changes brought to the music industry in the last decade.
Today, the artist / performers main revenue is via touring and live events. The old form of record sales has diminished with the digital age, which has changed the way people interact with music.
People use streaming sites to download music to their smart phones or computers, either by paying a minimum price or for free. These streaming sites are libraries of music that generate cent / pennies for the artist(s) work.
Although the Music Industry has changed and the artists must work more in the live entertainment sector as their main stream of income. This technology enables artist to interact directly with their followers with ease through the advances in technology. The old management sector (old guard) of the music industry is still in operation and continues to dominate the industry by monopolisation and control through various means.
Artist(s) are used by the old guard as a brand in today’s industry that are used and bled for whatever revenue can be achieved for the major organisations operating the monopolies. The old guard have turned in to corporates and not really interested in Artist Development and the fans of the artist(s) work.
Live events were once used by the artist(s) to build their brand and following to increase record sales, which in turn increased the revenue. The artist(s) needed management teams to manage and arrange the details of their career at the offset. So, they employed a manager (agent) to manage all aspects of their career, then a record label was brought in to promote the performers music / brand and invest time and money to get record sales. Once the artist(s) started to develop a foothold and following then they would undertake live events / concerts. They would employ a promoter, who became involved and arranged the bookings / tour dates and managed the liaison with venue owner, ticketing agency / box offices, promoted the concert, costings of venue etc. This system was developed in the time when there was no direct interaction with the followers and the artist(s) time.
On 3rd December 2001 this system would start to be challenged by the advances of technology and the introduction of streaming of music through the worldwide web. As technology became more advanced. The way that music industry was operating and created, which the old guard released could impede on their future. So, the business structure of the music industry was changed in the favour of the old guard and not the artist(s) or followers.
Venue owners and promoters became aware of the threat that the digital technology posed to their existence and saw an opportunity to evolve and become an integral part of the music industry future, as it was to rely upon the live entertainment sector, they released they were in a great position.
They started to evolve and diversify their businesses into other sector from artist(s) agents / management, promoters, ticketing organisations, merchandising etc. Where they could not evolve the business due to other competitors securing the area, they would enter a long-term contract to secure their future and become the preferred party. This caused a monopoly in the industry enabling it to manipulate pricing. This was a tactic well known and used effectively by Ticketmaster to secure the ticketing market decades earlier.
During this evolution within the industry the ticketing of live events changed dramatically with the technology advances. The old way of sales and touting had changed with the introduction of ticket sales available to everyone using the worldwide web.
The days of the Touting (Secondary Ticketing), a person who used to acquire premium tickets from the box office / ticketing agent / ticketing outlets (Primary Ticketing) and sell to third parties through national tabloid / face to face sales, who could not get the tickets due to demand had changed.
The technology advances changed the face of ticketing, enabling tickets to be bought across the web by anyone. They could then be touted openly across the web at an enhanced mark-up in price, especially those in demand. The ticketing market was revolutionised overnight to the joy of primary ticketing agent, venue owners and promoters, who could minimise the risk of loss of revenues, as many of the venues were sold out by the touts purchasing strategies.
There were two types of touts that evolved from the ticketing revolution they are the optimist risk taker and advanced risk taker. One buys instinctively to make a little return and has no real idea of the play, while the other is experience and knowledge of the game and purchase an amount to vast return.
The latter evolved with the technology and introduced ways to purchase tickets. They had two unique tools to purchase tickets from primary ticketing agencies. Either by using their contacts or using technology known as IRC BOTS to gain large volume of tickets. Which they then sell through websites at inflated prices, which have become known as Secondary Ticketing Sites.
The use of IRC BOTS was introduced in the ticketing industry by a company based in Las Vegas known as “WISEGUY TICKETS”, which was established run by Ken Lowson, Kristofer Kirsch and Joel Stevenson.
These men operated Wiseguy Tickets, which made more than $25 million in profit from 2002 to 2009 by buying and reselling more than one million tickets to Bruce Springsteen concerts, playoff games at Yankee Stadium and other popular events. Ken today has become an advocate to bring change and stop secondary ticketing, he offered Ticketmaster a solution to stop IRC BOTS but was turned down as it was not in Ticketmaster interest.
In 2005, Ticketmaster launched fan to fan secondary ticket reselling site Ticket Exchange in November 2005. However, Stubhub who was formed in 2000 and sold to Ebay in 2007 for estimated US£350 million dollar was already ahead in the secondary ticketing field.
By 2008, there was a little battle raging in the ticketing world with ticketing companies looking to become the supreme secondary ticketing company. Although STUBHUB were main contender, they had the likes of Viagogo, Seatwave to compete with, while Ticketmaster was buying up the competition and establishing it secondary site. Although Ticketmaster were successful in securing contracts with several sports leagues to become its official re-sell partner, it was still lagging behind Stubhub.
In 2008, the people of the ticketing industry was seeing changes on the arisen with Live Nation (Concert Promoter), who were Ticketmaster's biggest client announced “it would begin selling its own tickets in 2009”. Live Nation accounted for about 15 percent of West Hollywood, Calif.-based Ticketmaster's roughly $1 billion in revenue in 2006.
However, what happened next nobody would have guessed, Live Nations and Ticketmaster began talks which lead to a merger / takeover. The two companies formed Live Nations Entertainment (LNE) after the merger was accepted by the US Supreme Court in 2010. LNE then used Ticketmaster to sell their tickets and focus on the enhancement as “No. 1 provider” to venues by securing long-term contracts with venue owners and increasing their revenue from the secondary ticketing. While Live Nation’s continued to expand the promotions side of the business with enhancement of their services by securing venues through purchase or facility management, management of artist(s) and sponsorship opportunities. This lead to them becoming the main player with ties with second player AEG, between both organisations they have monopolised the live entertainment in the music industry.
Ticketing for live events are put in allocations, for a concert with a capacity of 20,000 the amount of tickets for general sales is estimated 40 – 60% capacity of the venue, if lucky. The promoter allots / allocates the tickets to venue, sponsors, fans clubs, promoters, press / media, celebrity or others in the industry, artist(s), selected parties before the allocation is made for public sale. Majority of times the tickets go-on pre-sale before the public sale. This is where touts use the IRC BOTS to manipulate the ticketing market and purchase tickets at face-value. When the general sale is launched the whole event is found to be sold out within less than a minute. However, tickets purchased by the touts are found on the secondary ticketing sites i.e. Viagogo, getmein etc with enhanced prices of potential x 20 of face-value.
Secondary ticketing has been used by the primary ticketing organisations, artist(s) and allocation holders to dispose of their tickets and increase their revenue time and time again. Ticketmaster continue to support and aim to enhance its area of operation in the secondary ticketing market as highlighted in their quarterly and annual UK Tax Returns.
Remember there are two main players in the primary ticketing role that have interests in the secondary ticketing industry. Who spend a lot of time fighting each other?
There’s Ticketmaster, of course. And then there’s eBay-owned StubHub, once owned by AEG, the world’s largest secondary ticket marketplace.
By Ticketmaster’s view, StubHub encourages scalpers to buy in bulk and force fans to pay more.
By StubHub’s view, Ticketmaster is a shark mostly focused on killing competition.
The truth seems to lie in the one thing both sides agree on: The whole thing’s a mess. “Unlike most industries, this industry doesn’t price the product at the intersection of supply and demand,” says Ticketmaster’s North America president, Jared Smith. Instead, performers use prices as a tool–to trigger quick sell-outs, to steer fans toward the sections that are shown on TV, and so on–which causes events to make less money than they could and produces a second-hand marketplace that is ripe for abuse.
What has become evident is that Live Nation UK has people either trading tickets inside, as the registered personnel responsibly for the operation of the company. Have other businesses registered under their name, which is either done with the knowledge of the Executive Management Team in USA or behind their back.
In the last seven years the live entertainment in the UK has grown year on year with the younger generations between 14 – 55 years of age attending live events. The demand for tickets is out stripping the availability on general sale to public.
Live events today are promoted by the artist(s) and performers prior to the event and ticket sale, this is due to the multimedia platforms that enable the interaction with their followers. Majority of performers / artist(s) have large followings and demand for any opportunity presented.
Music industry is no different to any other live event apart from the ticketing operation and venue are either owned or have in place a long-term agreement with Ticketmaster / Live Nation regarding booking and ticket operations.
Ticket pricing is managed by the promoter and covers the costing of the live event, plus the profit incorporated for the promoter. Majority of the major live music events are managed by Live Nation, from promotor, ticketing, sponsorship, merchandise and in some circumstances artist(s) management and venue hire depending on situation.
In some circumstances, Live Nation has booking rights for and/or equity interests in a large number UK venue, if it is not under their ownership. Second largest entertainment and venue organisation following Live Nation is AEG Live, who have partnered with StubHub for the ticketing for their events / venues. However, when Live Nation use the venue owned by AEG Live, they use Ticketmaster, who they own, they also have booking rights on most of the venues.
This monopoly has been formed to enable a select group that work within the same circle to make the most revenue from the artist(s), who is only seen as a brand, and the followers. Tickets for live events are controlled and allocated to venue operators, artist(s), promoters, sponsors, other industry personnel, record label, music manager, brokers (other ticketing) and fan clubs. The allocation of tickets at face-value to public is only 20% to 40% the capacity of the venue on much of times and majority of the live events will sell out within seconds of the official release time. His meaning the live event is sold out, however, tickets soon start appearing on the “Secondary Ticketing” websites with inflated prices above face-value (sometimes x20) with inflated booking fees.
This continues to annoy the fans / followers, who wish to purchase tickets. There is no control over the management of sale of the ticket incorporated into ticketing platforms to prevent them being touted. The Primary Ticketing & Promoters continue to blame the IRC BOTS. However, allocation owners and promoters have been found selling their tickets on “Secondary Ticketing” websites at inflated prices this bring in extra revenue.
Of course, there is reasoning for this practise, it can be traced to artist(s) demanding the door (ticketing) 100% or even 110% as a performance fee or marking the price of the ticket at a lower cost of the concert. Which will indicate the promoter loses on the event, so practises to minimise loss have been introduced. One could say these practises opened up golden opportunities to create more revenue and hence the tickets being sold on the secondary ticketing platforms.
During a trail between Pearl Jam v Ticketmaster in 1994 / 95 an Anatomy of Concert Deal was produced to give an overview of the pricing structure etc. This was issued nearly two decades later by Live Nation Entertainment showing the breakdown cost of a ticket for an event.
Control measures have been introduced to minimise any tickets being touted on the secondary sites. However, the industry has no interest in removing the secondary sites or implementing the measures to stop this practise continuing.
Live Nation have supported the continue development of the secondary ticketing element of the businesses and has highlighted it as an aim in its quarterly / annual tax returns. It is easy to support the practises if the artist demands the door. This leaves opportunity for the practise to continue and reasons why the industry does not want change.
Live Nation Entertainment domination in global market is evident by the actions they take to bring down their competitors recently. Which are like the tactics taken in the 1990’s by Ticketmaster against any individuals or organisations that spoke out against their dominance or unethical practises to take out any type of competition.
Songkick an organisation that was formed in 2007 by Ian Hogarth, Michelle You and Pete Smith as part of the 2007 Y Combinator program, they launched their mobile application in 2011. Its initial business model, based on its concert discovery service, was based on referral fees from ticketing companies. Live Nation was their main client up until 2015. When Songkick merged with CrowdSurge, an artist ticketing services provider. CrowdSurge was founded by Matt Jones in 2008, and he and Hogarth have said they decided to merge the two companies to correct “a massive inefficiency in the market.” The company secured a patent for software that prevents known and suspected ticket scalpers and bots from accessing tickets. In 2016, Songkick found that tickets sold using this technology were 4x less likely to be listed on ticket resale sites.
During the pre-sales for Adele’s World Tour in 2015 and World Tour Finale in 2016, this program maintained that only 2% of the tickets sold through Songkick later appeared on resale sites (versus the estimated market average of 20%).
In 2015 Songkick filed its lawsuit against Ticketmaster in US, it asked a judge in the case for a preliminary injunction, arguing Ticketmaster was causing the company irreparable harm. In January 2018 Ticketmaster settled out of court for an estimated US$110 million and disclosed sum for the technology.
The ticketing industry was already monopolised by 90’s in the USA with Ticketmaster as evidence of Pearl Jam’s and others to bring change. However, today in 2017, it has dramatically changed and managed by the promoter / ticketing company, who have monopolised the music industry and took control of the way it operates, this has detrimental effects on new starts, artist(s) and fans. They generate revenue first and have no interest in the followers or artist(s).
Is registered with Companies House, Cardiff as a Limited company. There are five officer’s active and the main offices are registered at 2nd Floor, Regent Arcade House, 19-25 Argyll Street, London, W1F 7TS
What becomes during the research is the structure of Live Nation organisation in the UK and expands over an estimated >100 organisation. One could easy come to the assumption that the structure is formed to create dominance in the market place and allow inside trading of tickets to enhance the revenue.
Research into the registered personnel and positions in the industry soon becomes evidence that as most of the individuals are directors / influential positions in other businesses in the ticketing and live entertainment industry across the UK.
This is all entwine to form a monopoly to create more revenue either for individuals or Live Nation. There are links to other secondary ticketing agencies that have not been put in the public domain.
Each company has other personnel appointed as key individuals responsible for the operation of the company, these individuals may have additional business interest in the field of the Live Entertainment Industry.
There are persons operating companies for example: TicketBox, Ticketline, Eclipse Tickets, Twist of Lemon Ltd and the list goes on. Which would indicate Live Nations operations are not Transparent as they would like everyone to believe
Other Areas Restricting Change
During the research process it become evident that other organisations have become mini-monopolies in their own right and started to consolidate their network to enhance their revenue. But they are making out that they represent the consumer, who is not happy with this continuation of secondary ticketing fiasco.
Fanfair Alliance was formed to bring change to the “Secondary Ticketing” within the Music Industry. The founding partners were Music Managers Forum, Ian McAndrew, Adam Tudhope (Music Artist Managers) & Charles Nicholas Carne (Chartered Accountant). However, they became reluctant to bring change and became an investment partner to Twickets (Secondary Platform Ticket Exchange).
Charles Carne has potential to bring change to the industry with the connections that he has established and network.
Twickets has direct link to Music Manager Forum (MMF). Three nominated directors are Robert Davies, Anthony Wadsworth and Henry Magee. However, Anthony has nine other appointments, one company director for Brit School Limited, which is linked to Paul Jeffery Burger who in another company director that is nominated director of MMF.
There does seem to be reluctances to bring change for the consumers and another structure similar to the Live Nation Structure is being formed.
To adapt the ticketing technology with the relevant security measures to prevent IRC BOTS, Individuals and Organisations from purchasing the tickets and selling on to the secondary ticketing websites. This bringing control the life of the ticket and its intended use, enabling followers / fans to purchase tickets fairly at face-value prices. These controls are available in the Ticketing Platforms in use today, but are not used or enforced by the industry as they stand to lose too much revenue.
As the industry is controlled by a multi-billion-dollar business that has formed a monopoly in the music industry, especially the Live Entertainment sector.
Business cannot and will not bring change by setting up a ticketing business. As Live Nation / Ticketmaster control the venues, artists and allocations of ticketing to most of the events through agreements. As demonstrated by the court case between Songkick & Live Nation.
Unfortunately, artists have to continue to sit back and watch their followers being ripped off by secondary sites and people inside trading as they are tied in to these monopolies via contracts (360), which stop them taking physical action as it will affect their work.
Although there is an organisation known as STAR, that is a self-regulatory body for the entertainment ticketing industry across the United Kingdom, with many of the biggest names in ticketing as members.
STAR members include major UK ticket agencies as well as numerous venues and box offices in London and across the country. It became evident that organisation was not best placed to bring change as in the last 20years there has been effort to bring an end to this “secondary ticketing” fiasco.
There needs to be governing body setup from outside the Live Entertainment Industry similar to ACHILLIES “they run supplier pre-qualification programmes, validate data, carry out industry audits and mitigate risks”.
This will enable the processes within the industry to be reviewed on a six / twelve monthly basis. This will demonstrate through the third-party to auditing organisation set-up to represent the ticketing industry to ensure that any ticketing organisation is operated in an ethical way.
This should be a compulsory membership criterion for any ticketing organisation operating in the United Kingdom and should be audited externally over seven days every year. This to ensure they are operating in an ethical manner and they should be able to demonstrate pricing, sales ledger etc.
February 2018