Written evidence submitted by StubHub

Elizabeth Kanter

StubHub UK Head of Government Relations and Strategic Counsel

StubHub welcomes the opportunity to respond to the Committee’s inquiry. We are committed to working with Government and Parliament to implement the Waterson Review and create a regulatory environment that best serves the interest of fans by improving access to live events.

About StubHub

StubHub is the world’s largest online ticket marketplace. We harness the power of digital to transform the way consumers access their favourite artists and shows. StubHub has been part of the eBay group since 2007 and embraces an ethos of partnership to deliver benefits both to fans and the industry. StubHub does not own, purchase or price resale tickets for any events, instead operating as a ticket marketplace for buyers and sellers.

StubHub's Commitment to Fans

StubHub offers fans safe, easy and convenient access to tickets so they can see the artists and sports teams they love. Our aim is to give fans choice and control, enabling them to buy and sell tickets at a price they think is fair. Our free, open marketplace allows competition, meaning nearly 50% of all tickets on our site globally, and 40% in the UK, are sold at or below face value.

With StubHub, fans can buy tickets at the last minute, safe in the knowledge that they will get access to the event, protected from the fraud risk presented by the black market. Underpinning this is a commitment to safety. StubHub stands behind every transaction on its site and holds every seller in its marketplace accountable, with all purchases backed by StubHub’s market-leading FanProtect Guarantee.

The FanProtect Guarantee gives fans certainty that they will get the tickets they ordered, as advertised and in time for the event. In the rare instance where something goes wrong, StubHub will provide comparable or better replacement tickets or, at the very least, a full refund. Our customers’ satisfaction is of paramount importance to us and we work tirelessly to ensure our customers get the experience for which they have paid.

Our dedication to safety means that rates of seller fraud are extremely low. In 2017, our rate of seller fraud was less than 0.01%. Our fraud rate is so low because we undertake strict identity verification checks on each seller and because StubHub has the ability to hold payments to sellers until after the event has taken place. We also require a credit card from all sellers before they are able to list tickets for sale. This allows us to charge them if they do not fulfil their order as promised - a major deterrent to fraud.

This focus on access and safety led to StubHub becoming the only ticket resale platform to have been awarded Sharing Economy’s UK’s ‘TrustSeal’, the world’s first kitemark for the sharing economy. The TrustSeal is an independently awarded status that gives customers confidence that each platform upholds high standards to protect consumers online in key areas, including help and support, secure payments and data protection.

Resale platforms provide a valuable service to consumers who may either want to buy tickets at the last minute or sell unwanted or spare tickets if their schedule changes. The growth of the last minute economy means that consumers often delay purchasing decisions to fit around increasingly busy lifestyles and therefore buy tickets at the last minute.  For example, one in six of the tickets purchased on StubHub are bought in the last 72 hours before the event.  Similarly, tourists will often buy tickets at the last minute when travelling for business or leisure.  However, this customer demand is not currently well served by the primary market, with tickets typically being sold in a single tranche several months before the actual event. 

Scope of the Ticket Resale Market

It is often asserted that online marketplaces like StubHub prevent huge numbers of fans from accessing events. However, in reality, figures show that the total size of the ticket resale market is very small and that public access to cultural events is not being adversely affected by the resale market. Set out below are a cross-section of concerts, covering different artists performing across the UK and the percentage of tickets StubHub exchanged for each event.  The below illustrates the tiny percentage of tickets exchanged via StubHub.

These numbers contrast sharply with the much greater percentage of tickets which are often held back from public sale (see below).

Rather than impact access to cultural events, ticket resale platforms provide a much safer means of buying and selling tickets than existed previously through the ‘on street’ black market. This has made the resale market more visible, more transparent and more competitive. As a result, consumers are far more aware of the going rate in the resale market; competition has been increased; and this in turn has driven down resale prices.  Since StubHub commenced operations in the UK in 2011, the average re-sold ticket price on our site has come down by nearly 25%.

The Impact of Recent Legislative Changes

StubHub welcomes the Committee’s focus on the impact of recent legislative change.

Some of the measures set out below have been in place for some time and are starting to have some effect.  However, others have only just been recently introduced and have barely even entered into force.  We believe it is important that such measures are given time to work before considering further legislative change.

Consumer Rights Act 2015

StubHub had a number of concerns regarding the provisions included within the Consumer Rights Act 2015 (CRA). In particular, and in contrast to all other major consumer protection legislation which have placed information obligations on traders, the ticketing provisions of the CRA place these on both consumers and businesses. This clearly represents a worrying shift towards regulating consumer to consumer (C2C) activity which has wider consequences for other areas of e-commerce including the sharing economy. 

Additionally, StubHub remains concerned that requirements for transparency around seat location data placed on consumers were designed to provide rights holders with the information needed to cancel tickets and blacklist genuine fans. StubHub supports changes to give consumers more information about the tickets they are purchasing, but only if fans are protected against unwarranted cancellations.

The most fundamental problem with the CRA is that the safeguards against cancellation and blacklisting provided by the legislation are entirely inadequate. The CRA expressly allows cancellation and blacklisting if there are terms and conditions attached to the original sale of the ticket which provide for this, and provided such terms are fair. StubHub believes that such terms and conditions are profoundly anti-consumer. We cannot think of a single example of where similar terms and conditions would be allowed for other goods.  

In summary, the CRA created a paradox whereby consumers who comply with the legislative requirements to ensure transparency then risk being unfairly penalised by event organisers. This is despite the Government’s stated aim to use the same legislation to protect fans from unwarranted cancellations.  

If the real aim of such legislation is transparency, rather than preventing resale, it should be amended to allow for alternative methods of displaying seat location data e.g. through virtual 2D or 3D views. Market research shows consumers are afforded a better understanding of the ticket they are purchasing from a seat view rather than a row or seat number which can be hard to position on a seat map or difficult to understand if the position of stage is not clear for a concert at a sporting stadium.

Digital Economy Act 2017

StubHub welcomes the banning of bots in the Digital Economy Act 2017 (DEA) and is committed to tackling the use of bots to mass purchase tickets. However, StubHub believes that legislation on its own is inadequate. Technological solutions are also required.  And while some primary market players (e.g. Ticketmaster) have invested heavily in this area, others have not. All ticket distributors need to invest in such measures and be constantly improving their processes and technology. 

StubHub believes that the requirement for a Unique Ticket Number (UTN) in the DEA has major flaws. The requirement to provide a UTN was justified by its proponents as a means of protecting against fraud.  However, in practice it risks having the opposite effect. 

At most, it simply confirms to a consumer that there is a ticket in circulation which has these details.  However, it provides no surety that the person listing the ticket actually has this ticket in their possession.  As such, it risks offering an entirely false sense of security to consumers.

The real motivation for this requirement is to provide event organisers with extra information so that they can then cancel tickets legally offered for resale and blacklist the seller. Regrettably, our experience is that event organisers are already increasingly using row and seat number information to cancel tickets in this way. Indeed, event organisers were entirely open about their desire to cancel tickets in testimony to the Culture Media and Sport Committee. For example, the concert promoter, Stuart Galbraith, made it clear that the provision of a booking reference number would enable event organisers to cancel tickets for non-seated events:

“The other problem with the Consumer Rights Act, even if it was complied with fully, is that when we come to standing tickets or golfing events or sporting events where you have general admission, you have no way of tracking that order. We believe that the Consumer Rights Act should have an amendment added to it that the ticket has the booking reference on it, which is a unique booking reference in the original primary sale. Then we can track that back to the source.

It is therefore clear that these proposals were designed to undermine the integrity of the resale market through cancellation and blacklisting. This is in direct contravention to stated Government policy, as Baroness Neville-Rolfe made clear when accepting the original ticketing provisions in the Consumer Rights Act 2015 that:

“Some comments made during our discussions have understandably raised concerns that event organisers would use the information provided to cancel tickets which are put up for resale, or blacklist the seller, preventing them from buying tickets in the future. This is definitely not what should happen. Our reading of these provisions, and the basis on which we accept them, is that cancelling tickets and blacklisting sellers is not fair or the right way to treat consumers.”

What Steps Should be Undertaken 

Before considering further legislation, policymakers should first allow reasonable time for new legislation to take effect and undertake a programme of post-legislative scrutiny. That is why StubHub welcomes this inquiry and hopes that the effectiveness of recent amendments on ticketing can be considered.

Once this post-legislative scrutiny is completed, the Government, Parliament and regulators should consider the root causes of the issues raised in this inquiry. This deeper consideration is vital because regulation and legislation will never be fit for purpose as long as it places its focus solely on the ticket resale market. Undoubtedly, there is a need for regulation and there has been no shortage of measures in recent years aimed at the resale market. However, it cannot be ignored that many of the issues raised by consumers regarding events and ticketing - shortage of supply at primary sale; the use of bots on primary platforms; and unwarranted cancellations of legitimate tickets - come as a result of the actions of primary sellers and rights holders.

As set out above, for most live music events only a tiny fraction of tickets are sold on StubHub, usually less than 1% of the total capacity of a venue. By contrast studies in other jurisdictions show that on average over 50% of tickets are never even put on public sale. Any holistic consideration of the ticketing ecosystem must therefore consider the impact of decisions made by ticket issuers and promoters in limiting supply and while raising customer expectations.

Shortage of supply at primary sale

The most common complaint from fans is the shortage of tickets at primary sale. Over the past five years, rights holders and music promoters have disingenuously sought to lay the blame for this shortage at the door of the ticket resale market. As we have already set out above, the scale of the ticket resale market isn’t big enough to impact, so significantly, a whole ticketing ecosystem.

What seems to be increasingly clear is that there is a significant disconnect between the expectation of how many tickets will be available at general sale and the actual number of tickets which are put up for general sale. When organising a live event around the world, it is common practice for ticket issuers to hold-back a significant portion of tickets for industry insiders, corporate and business partners and other VIPs. These hold-backs directly and negatively impact the supply of tickets available to fans.

StubHub supports transparency in the ticket resale market provided it works in the interest of consumers. At the same time, it is vital that fans are afforded transparency as to how many tickets are made available for public sale and how many are held back for industry insiders, sponsors, partners and other VIPs.

There is currently minimal information available regarding the number of tickets put forward for general sale for live music events across the UK. We would urge the Committee to work with the primary market and rights holders to submit evidence concerning a cross section of events from across the UK which sets out the level of supply available at general sale. Furthermore, the Committee should consider the need to require event organisers to be more transparent with consumers going forward – for example by requiring them to specify the percentage of tickets made available to the public for any given event.

Implementing the Waterson Report

In May 2016 Professor Waterson published his landmark report, which was the subject of significant investment by the Government. The report benefited from significant expertise and consideration and was a positive approach to evidence-based policy making. In March 2017, the Government published its response to the report, accepting the recommendations in full.

Since the publication of the report the vast majority of the recommendations have been implemented. Additionally, the Government has retained the option to consider further measures, should the industry not deliver on certain commitments. The section of the report which has seen the least progress are the sections dedicated to the actions and responsibilities of the primary market and rights holders. The relevant summarising section is set out below:

34. Many of the problems relate essentially to the primary market, and its interactions with the secondary ticketing market, particularly as regards music. Whilst the primary market is not the direct focus of the review as set out in the Terms of Reference, it is clear to me that measures taken in the primary market would significantly reduce problems arising in the secondary ticketing market that affect consumers. Moreover, without reform, some sectors of the primary market run the risk of reducing consumer confidence or confusing consumers with the result that consumers make decisions they would otherwise avoid. Therefore, I feel it necessary to set out some recommendations relating to the primary market for tickets.

35. For many events, there are several primary sellers. Event organisers should be more transparent as to whether this is the case, listing official primary sellers and cautioning against unauthorised primary sites that may be bogus. Otherwise consumers are likely to be confused regarding primary ticket sales and may end up paying more than they otherwise would need to.

36. Primary ticketing sellers also need to be more transparent about the extent to which a “general sale” is in fact a sale of the whole venue’s tickets. It is clear that in many cases, only a minority of tickets is actually available for purchase at the time of the general sale, leading many people to waste time in trying to access them, and possibly to panic buy. Presales, corporate tie-ups, priority booking, premium tickets and so on are commonly taken out of sale prior to the time of the general sale. If a large proportion of the desirable seats have already been sold, consumers’ time on the primary website may simply be wasted.

37. Transparency on the part of the primary market should also extend to simplification, clarification and standardisation of pricing and refund information.

These points supported Waterson’s 4th recommendation which challenged the primary industry to provide increased transparency and called on the Government to step in should they fail to do so. As set out above, it is right that fans know how many tickets are up for general sale, so they are aware of their chances of securing a ticket.

Before considering any further legislation we would urge the Government to work with the primary market and rights holders to ensure this best practice is delivered for the benefit of consumers. This will deliver on the Government’s commitment to implement Waterson in full to the benefit of fans and consumers.

February 2018