SUBMISSION FROM STUBHUB TO THE DJEI CONSULTATION ON

SUBMISSION FROM STUBHUB TO THE DJEI CONSULTATION ON TICKET RESALE

16 MARCH 2017

EXECUTIVE SUMMARY

• The key issue of importance in any review of policy on the resale of tickets for

entertainment and sporting events must be the protection of consumer interests and

not the preservation or protection of the business and commercial interests of event

organizers, promoters and primary ticket distributors. In fact, in many cases the

interests of consumers and these vested interests do not converge.

• Greater transparency is required as regards existing links between the primary and

secondary markets. Event organisers should be required to publish what percentage

of tickets for events are made available to the public and how many are channeled to

corporate sponsors, VIPs, and given by way of ticket allocations to secondary ticket

agents.

• There is an increasing industry problem of tickets being cancelled by event organisers

simply because they were offered for resale – in some cases without notification so

that buyers are turned away at the gate. We have seen an even greater number of

threat letters from event organisers, demanding that they cease and desist from selling

on StubHub or risk cancellation. We believe the law needs to be amended to provide

for tougher safeguards for consumers against cancellation and blacklisting.

• This goes to the heart of the issue on this matter – should consumers have rights over

goods that they have purchased, or is it appropriate and lawful that these rights can be

restricted by the sellers of the goods in a way that would not be canvassed or

countenanced for any other consumer good or service?

• If policymakers wish to promote access to sporting and cultural events, the only way

to achieve this is to reform the primary distribution model which is currently broken

and operating in a way that is not in the interests of consumers. Trying to control the

circulation of tickets once they have been made available to the public is likely to

prove ineffectual and counterproductive. For example, there is considerable academic

evidence from the US that demonstrates that price caps actually lead to higher prices.

We note that the UK government has recently explicitly rejected price caps.

• There is a significant public policy issue as to whether it is appropriate, necessary and

proportionate for the Irish State to seek to intervene in a competitive international

secondary marketplace and seek to limit how that market operates – could such

intervention be justified if it applied to a secondary market for other consumer goods,

including cars, houses, chattels and mementoes?

• It is important to be discerning when examining the market for the resale of tickets –

the consumer protection (and other compliance issues) that relate to street ticket touts

do not apply to a secondary marketplace such as StubHub which offers cast iron

guarantees to consumers.

• In particular there are a range of important benefits for consumers and for the events

industry from a well-functioning secondary market. A range of new business models

have emerged over the past five years which now offer consumers robust customer

protection guarantees. An objective of consumer protection policy should be to

encourage the use of such facilities in preference to street sales or other internet

channels which are less secure.

• Consumer research suggests a high degree of public support for the secondary ticket

market, with strong support for the right to resell tickets freely, clear opposition to

cancellation and blacklisting, as well as clear concern amongst consumers about

providing seat details in the light of such threats.

• The level of fraud on StubHub is incredibly low because of our ability to hold the

payment from the buyer to the seller until after the event. Despite this, fraud is an

acknowledged problem in the industry. However, we note that there is no shortage of

legislation to tackle fraud.

• There is considerable evidence that the secondary ticket market does not adversely

impact on access to sporting and cultural events and indeed enhances it. StubHub’s

figures demonstrate that only a small percentage of tickets are sold on its marketplace

for major events – typically less than 1% of all tickets even for major events – with

even smaller figures for less high profile events. Moreover, the secondary market

supports access for fans who would otherwise be unable to source tickets for sold out

events.

• We do recommend legislation to tackle the problem of botnets which are presenting

problems in how the primary distribution market functions.

• It is important that Ireland ensures that any commitments given to international

sporting bodies take account of the broader consumer protection issues involved in

the secondary ticket selling market and are not exclusively focused on the protection

of the business and corporate interests of the promoters of both tournaments.

INTRODUCTION

In addition to allowing for the resale of event tickets on almost all of its localised European sites, eBay

owns StubHub, a dedicated online ticket marketplace which currently serves customers in over 45

countries around the world including Ireland. eBay currently employs over 700 people in Ireland,

including around 40 servicing StubHub customers.

StubHub offers buyers a comprehensive FanProtect Guarantee which means that in the rare

instances where there is an issue with a ticket, StubHub will ensure that the buyer receives either a

comparable or even better replacement ticket or at the very least, a full refund. Similarly, buyers are

granted full refunds where an event is cancelled. Moreover, by intermediating both the payment and

the delivery of tickets between buyer and seller, StubHub is able to ensure a much safer and more

convenient resale experience for consumers who would otherwise be forced to buy their tickets from

street touts or parts of the internet where there is no consumer protection.

BENEFITS OF THE SECONDARY MARKET

Benefits for Consumers

There are many benefits associated with a well-functioning secondary ticket market.

Firstly, for all the discussion about prices in the secondary market, it should be noted that fans are

frequently able to secure resale tickets for less than the original primary ‘face value’ price, since the

price of tickets fluctuates according to demand, supply and the timing and profile of the event. As a

result, fans who would otherwise not be able to afford to attend sporting and cultural events are able

to attend such events.

This is particularly the case where fans are allowed to resell individual games from their season

tickets as in the US - e.g. for MLB, NFL, NBA, and NHL games. Indeed, the prevalence of tickets

being sold at below face value has actually led to teams imposing price floors in the secondary market

as a condition of partnerships with secondary ticket marketplaces. It is also common for tickets to be

made available at less than face value in knock-out sporting events.

Secondly, for many ordinary fans the only way they can get hold of a ticket to popular events is by

buying a ticket in the secondary market. This is because many events are routinely over-subscribed

with demand exceeding supply.

Our consumer research shows that fans struggle to source tickets through the primary distribution

mechanisms with the experience often being one of constantly engaged phone lines and websites

crashing due to excessive demand. As a result, fans are often forced to make multiple applications

for tickets on behalf of others and are left with spare tickets when they discover that their friends and

relatives cannot attend.

Thirdly, with restrictions placed on refunds, returns and transfers by event organisers, often the only

way fans can get rid of spare tickets and recoup some of their costs in buying those tickets is by

selling them through the secondary market. Opening up the resale of tickets also makes it more likely

that fans will be able to afford to purchase season tickets since they would be able to defray the

overall cost of selling tickets for games which they could not attend. By the same token, if a

consumer believed that when they bought a ticket they would have to occupy the seat or let it go

empty, it would dramatically reduce the advance demand for events, particularly for season tickets or

knock-out sporting events where tickets for future rounds are sold in advance.

It is also often asserted that ticket sales in the secondary market limit public access to sporting events

because of the premium attached to such tickets. However, by providing consumers with a means of

getting hold of scarce tickets, the secondary market actually enables access and provides a valuable

service to many consumers who may wish to purchase tickets at the last minute, for example if their

schedule changes or they are visiting a city on holiday and they want to see a show or a sporting

event. This is a very considerable benefit to consumers who greatly value the flexibility that the

secondary market provides. For example, it should be noted that 25% of ticket sales on StubHub for

the Rugby World Cup came within 3 days of a match.

It is perfectly reasonable for those providing such a service to make a profit – just as an event

promoter profits from staging a concert, and primary agents such as Ticketmaster make a profit by

charging processing and handling fees on top of the ticket face value, or venues make money from

charging facilities fees. The issue from a public policy standpoint is therefore whether it is necessary

or proportionate for the state to intervene in a competitive international marketplace to effectively set

parameters around how players in that marketplace function? Is it appropriate to regulate the level of

profit (or ban it altogether) in a competitive marketplace? We believe that such an approach is wrong

in principle.

We do, however, believe that fans should benefit from consumer protection – both in the form of Fan

Guarantees and other statutory protections – and that it is better that people should be able to buy

tickets in an environment which is open, safe, transparent and subject to consumer redress than be

forced to purchase a ticket from a tout on the street or leave themselves open to fraud by buying

elsewhere on the Internet. For example, there are real risks associated with buying tickets on the

street – aside from the fact that fans are passing large amounts of cash in areas which are unlikely to

be well policed, there is no consumer protection if there is a problem with the transaction (e.g. the

ticket turns out to be fake). And by the time a fan is placed in a position of buying from a street tout,

they are often more desperate, having travelled far to the venue. As a result, street touts are placed

in a much stronger bargaining position and are able to extract much higher prices from consumers

than if they had bought these tickets on a secondary ticket marketplace that offered robust customer

guarantees. There is also an added concern with street touts that they are essentially functioning as

part of the black economy and all aspects of their “”business operations” remain detached from the

law and without traceability.

Benefits for the Primary Market

It is often asserted that performers or promoters lose out as a result of the secondary market because

they do not see the benefit of the full market value of the ticket. Yet ultimately both retain the right to

charge in the primary market whatever price they wish for events.

Indeed, the trend in the music industry has been one of increasing ticket prices as revenues from

record sales decline. And while dynamic pricing may not be appropriate for all event organisers, it is

increasingly a part of the industry, with the primary market routinely using secondary ticket

marketplaces to maximize their ticket revenues by selling tickets at market prices – most often those

tickets for the 8-10 rows nearest the stage (the so-called ‘Golden Circle’). As a result, we would

strongly encourage policymakers to explore the expanding use of dynamic pricing by event organisers

as part of the continuing evolution of the market.

However, it should be noted that, with artists increasingly selling tickets on platforms such as

Ticketmaster Platinum for hundreds of euros, the case for price caps appears even weaker. For

example, why is it any less fair for a ticket with a €25 face value to be sold for €50 on the secondary

market than it is for a ticket to be sold for hundreds of euros on the primary market. Why regulate

prices in the secondary market but not the primary market?

Where an individual has a spare ticket and is unable to attend, it is better that this ticket is re-allocated

rather than have the seat remain empty as was the case for many events in the London 2012

Olympics. Not only does someone else get to go to an event of their choice - the event promoter also

benefits from increased spend at the concert e.g. on merchandise, refreshments and other revenues.

Finally, from the promoter’s perspective, if a consumer believed that when they bought a ticket they

would have to occupy the seat or let it go empty, it would dramatically reduce the advance demand for

events, particularly for season tickets or knock-out sporting events where tickets for future rounds are

sold in advance.

Consumer Attitudes Towards The Secondary Ticket Market

While the issue of ticket prices is one which arouses strong views, it is far from clear that the public is

crying out for further regulation in this area. For example, a recent Opinium survey of 1,000 Irish

consumers found that:

• Two thirds of those surveyed (67%) had purchased tickets for live entertainment or sporting

events in the last 12 months. Almost half (48%) had bought these tickets online, a quarter

(24%) from a ticket broker and a fifth (18%) bought tickets in person.

• Over a third (37%) bought tickets for an event but discovered that they were later unable to

attend. Out of these non-attenders a third (33%) offered them to a friend or relative for free,

and a fifth (18%) offered free tickets to somebody else. Over a quarter (28%) of these adults

resold the unused tickets.

• Although over three quarters (78%) had never resold any tickets, 12% had sold tickets in

person to another individual, a tenth (10%) had sold through an online market place and 2%

to a broker.

• Two fifths (40%) had looked for alternative ways to buy tickets. The top alternative tactics

these adults employ to find tickets are to ask friends and family (55%); over half (52%) have

browsed online market places or classified websites have searched on social media; and 51%

via social networks

• Considering a ticket owners’ rights, 57% believe if they purchase a ticket, it is their personal

property and have full control over what they do with it. However, 22% disagree and think that

although they own the ticket the original issuer controls that ticket and can limit the owners’

actions. Two thirds (66%) think that they should not need to ask permission of the original

ticket seller when re selling tickets.

• Once a ticket is bought but the owner is no longer able to attend, two thirds (67%) believe that

it is up to the individual to choose how tickets are resold, but a fifth (21%) disagree and think

that the original ticket seller can determine how tickets are resold.

• Thinking about the price of re-sold tickets, over a third (37%) think that the ticket owner

should be free to determine the price. A smaller number, 29%, believe the original ticket

issuer should determine the resale price and only 22% think the government should

determine the price through legislation.

• Given that clubs and event promoters can now cancel tickets they find being sold outside of

pre-approved online platforms, over half (55%) would be less likely to buy and sell tickets

online to avoid this.

• Furthermore, 70% were not aware that some sports teams have cancelled fans’ tickets, and

their season ticket packages, because the fans were reselling tickets.

• Knowing that sports teams have cancelled tickets because of re-sold tickets, almost half

(47%), would not be comfortable having their name and seat location become available when

they re-sell their tickets online.

• When asked about whether there should be legislative safeguards preventing clubs and event

promoters from cancelling fans’ tickets that were bought and sold outside of pre-approved

platforms, 56% said they would support such safeguards compared to a fifth (20%) who

would be against this.

• A total of 41% said they thought it would be fair for event promoters to cancel fans tickets

because a supporter is re selling tickets, whereas 46% thought that this would be unfair.

ACCESS TO SPORTING AND CULTURAL EVENTS

Scale and Extent of the Secondary Ticket Market

It is often asserted that the internet or online marketplaces like StubHub have either created or

exacerbated the ‘problem’ of touting.

The reality, however, is that the secondary market existed long before the internet. What the internet

has done is make an existing market (a) more visible (b) more transparent and (c) more competitive.

As a result, consumers are far more aware of the going rate in the secondary market; competition and

supply has been increased; and this in turn has driven down prices throughout the secondary market,

including on the street. Since StubHub arrived in the UK in 2012, for example, the average re-sold

ticket price on our site has come down by nearly 25%.

While secondary ticket marketplaces have been the focus of much attention in this debate, it is worth

noting that there are an almost limitless number of alternative channels for people to buy and sell

tickets. Individuals and businesses alike are able to sell tickets in classifieds (online and offline),

individual websites, other online marketplaces, and are now able to drive traffic to such listings using

paid search through, for example, Google Adwords or Adsense.

We are not aware of any reliable published figures for the size of the secondary market. However, we

calculate that for the recent U2 dates at Croke Park that less than 1% of all tickets sold were sold on

StubHub. Similarly, only 0.13% of tickets for Ireland’s home games during the 2016 Six Nations

Rugby Tournament were sold on StubHub.

These figures suggest that the total size of the secondary ticket market is relatively small (even for

major events) and that public access to sporting and cultural events is not being adversely affected by

the secondary market. Indeed, given the potential benefits of the secondary market for consumers

and event promoters alike, we believe there is scope to expand resale opportunities still further.

While tickets are of course available on other ticket marketplaces, we would expect to see similar

figures elsewhere.

‘Holdbacks’ – The Real Problem

The real problem in terms of access to sporting and cultural events comes not from the very small

percentage of tickets which are sold on platforms like StubHub but from the much higher percentage

of tickets which the primary distributors/primary distributors never put on public sale.

For example, a recent report by the New York Attorney General found that on average less than half

(46%) of the tickets for New York events actually went on public sale and that 16% of the tickets were

going to industry insiders. Specifically, this found that:

“the majority of tickets for the most popular concerts are not reserved for the general public at

least in the first instance. Rather before a member of the public can buy a single ticket for a

major entertainment event, over half of the available tickets are either put on “hold” and

reserved for a variety of industry insiders including the venues, artists or promoters, or are

reserved for “pre-sale” events and made available to non-public groups, such as those who

carry particular credit cards.”

In some cases, the percentage of tickets held for industry insiders was as high as 29% for some

events, averaging 16% across the board.

Similarly, the table above (based on information from the Fan Freedom Project in the US) shows that

for some events, only 7% of tickets were made available to regular fans. And indeed some artists

make it a condition of their contracts with concert promoters that an allotment of tickets is held back

from general public sales so that it can be sold on the secondary market.

Obviously, these are US examples. However, they are indicative of a broader trend within the

industry globally and they illustrate the need for a legal transparency requirement to apply to the

primary market in respect of ticket allocations. For example, the information in the table above was

obtained only by submitting requests under the US Freedom of Information Act on venues that are

publicly owned or subsidized. It is currently not possible to obtain such legislation in other

jurisdictions in this way.

We would therefore strongly recommend that the Irish Government consider a statutory requirement

for event organisers to specify publicly the precise percentage of the overall ‘ticket manifest’ that is

actually made available to the public. Such a requirement would go a long way to ensuring that more

tickets are placed on public sale, rather than being reserved for industry insiders. It would also

represent an appropriate policy response by Government to controversy last year concerning the

allocation of tickets by the Olympic Council of Ireland where there were reports that families of

competitors were restricted in their capacity to acquire tickets, although significant numbers of tickets

were allocated by the OCI authorised reseller for corporate or other purposes

We note that other jurisdictions have legislated in this area. For example, the ticket resale statute of

the State of Victoria in Australia allows the Government to “provide that a specified minimum

proportion of tickets to an event must be made available for sale or distribution to the public

generally or to particular classes of persons.”

https://ag.ny.gov/pdfs/Ticket_Sales_Report.pdf

Similarly, some event organisers in the UK e.g. the English Rugby Football Union have provided

detailed public statements about their ticket allocations at Twickenham – specifying, for example, the

number of tickets reserved for corporates and VIPs, as well as those reserved for sporting bodies and

rugby clubs. We therefore see no reason why other event organisers should not be required to follow

suit.

More generally, we believe that greater transparency is required in relation to the links between the

primary and secondary markets. Clearly accessing this information will prove challenging, but we

would hope that the CPCC would be able to produce evidence on this aspect, using statutory powers

to acquire the information if required.

Prices

Much of the debate surrounding ticket resale has focused on the issue of ticket prices with media

attention frequently focusing on the most highly priced tickets available for sale on secondary ticket

marketplaces.

However, firstly it should be noted that just because a ticket is listed for sale at a particular price on a

ticket marketplace, that does not mean that the ticket will actually sell for that amount. Indeed, prices

change constantly on the secondary market in response to supply and demand. For example, we

witnessed a clear drop in prices for England v Uruguay Rugby World Cup tickets on our site after it

was clear that England could no longer progress beyond the group stages.

Moreover, a large number of tickets may sell for well below face value. This is particularly the case in

the US for Major League Baseball and National Football League tickets where a season ticket holder

may often struggle to recoup face value for a ticket if their team is underperforming. This has led

some sporting bodies in the US to insist on price floors in order to limit competition from low prices in

the secondary market.

We do not yet possess reliable figures for Ireland given the comparatively small size of the market.

However, in the UK, our research shows that, at any given time, up to 40% of tickets offered on

StubHub are priced at or below face value. In the US, where the market is more developed and

established, this figure is even higher at 50%.

We would argue that what should determine the price of a ticket is what someone is prepared to pay

for it. Moreover, as can be seen from the consumer research set out below, there is clear evidence of

consumer support for such a proposition. For example, the Opinium research mentioned above found

that over a third (37%) think that the ticket owner should be free to determine the price. A smaller

number, 29%, believe the original ticket issuer should determine the resale price and only 22% think

the government should determine the price through legislation.

It is often asserted that unfair prices in the secondary market foreclose access to the genuine fan.

But this begs two questions – firstly, what is a fair price to pay for a ticket? And secondly, what is a

genuine fan?

For example, we do not regulate the price at which people can resell their homes, despite the fact that

land and affordable homes are scarce. Why are tickets fundamentally any different?

Moreover, why is it any more ‘fair’ to pay €100 for a ticket in the primary market than it is to pay €50 in

the secondary market for a €25 face value ticket? This raises an even more fundamental question:

“why should ticket prices be regulated in the secondary market but not for the primary market or their

authorized resellers?”

For example, it is now common practice for artists themselves to sell tickets at full market prices in the

primary market via platforms such as Ticketmaster Platinum. Some examples can be seen in the

screenshots below with two tickets for a Phil Collins concert being advertised at €720 and other

tickets for Robbie Williams, Justin Bieber, Kings of Leon and Olly Murs being priced at hundreds of

euros:

It should be stressed that the above screengrabs are for tickets only. They are not for VIP packages

or hospitality or travel packages. Nor are they resale tickets. They are tickets being sold in the

primary market directly by the artist.

This is made clear on the Ticketmaster Platinum site which states:

“Platinum Tickets were not purchased initially and then posted for resale; they are being sold

for the first time through Ticketmaster Platinum. Ticketmaster Platinum enables market-based

pricing (adjusting prices according to supply and demand) for live event tickets, similar to how

airline tickets and hotel rooms are sold. The goal is to give the most passionate fans fair and

safe access to the best tickets, while enabling artists and other people involved in staging live

events to price tickets closer to their true value.”

The greater use of dynamic pricing makes the whole concept of capping resale prices at face value

(or face value plus 10%) even more flawed. Already, it is impossible for enforcers and marketplaces

to know what the correct face value is. Not only does it vary between events and between different

seats within a venue. Now the price of a ticket may fluctuate up and down, depending on when it is

sold. As such, the whole concept of face value becomes a meaningless one.

In relation to access, while we support the objectives of policymakers and event organisers to

promote fair access to sporting and cultural events, we are not sure that the concept of ‘the genuine

fan’ is a helpful one. For example, it is misleading and unfair to suggest that those who pay above

face value for a ticket are not somehow genuine fans. Indeed, the fact that they are prepared to pay a

premium to see the event clearly suggests that they are particularly passionate about the artist or

team.

http://platinum.ticketmaster.ie/help

It is also arbitrary and unfair to equate the method or a time that someone buys a ticket with being a

‘genuine fan’. A real fan might not be able to get hold of tickets in the first place because they are

either unaware of the tickets being put on sale or they are unsuccessful in applying for a ticket.

Similarly, a fan might not be able to attend an event but then wish to buy a ticket when their schedule

changes.

As is noted above, often the only place that genuine fans can get hold of tickets is through the

secondary ticket market. This is because the primary market distribution models do not work properly

for all fans in all circumstances, with tickets typically put on sale in a single block at times that are

inconvenient to fans, via phone lines that are constantly engaged or websites which routinely crash.

This is frequently the case in the concert sector where tickets are sold in a single block and sell out in

minutes. Promoters then use the publicity surrounding the sale of these tickets to sell tickets for the

next tour date, in many cases using examples of high prices in the secondary market to demonstrate

demand for the artist.

Such a model is clearly in the interests of promoters who understandably wish to limit costs

associated with ticket distribution and marketing but it does not serve either the interests of

consumers or the objectives of promoting access.

Again, we would argue that the only way to ensure fair access is to give fans a fair chance to get hold

of tickets in the first place. We have therefore set out below some suggestions for reforming the

primary market in the ‘Non Legislative Measures’ section below.

Links Between the Primary and the Secondary Markets

Another key development which is not properly understood by many commentators is the trend

towards greater integration between primary and secondary markets – for example, with

Ticketmaster’s acquisition of secondary ticket marketplaces in the UK and US (such as Tickets Now,

Get Me In and Seatwave) and their merger with Live Nation. In addition, we have increasingly seen

the primary market using online ticket marketplaces as a distribution channel.

What is much less visible to consumers is the extent to which the primary market actively funnels

tickets directly to the secondary market without these allocations ever being made available to the

public. This is now common industry practice, with event organisers selling tickets directly to a

network of authorised secondary ticket agents at well above face value and/or benefiting from a

revenue share of the resale proceeds.

For example, in 2012 the Channel Four Dispatches programme found that major promoters allocated

hundreds or even thousands of tickets to be sold through secondary market websites at well above

the face value, and that tickets for concerts and tours by Coldplay, Rihanna, Westlife, Take That, and

V Festival were found to have been allocated by the promoters in this way:

“Dispatches went undercover inside one of the UK's biggest ticket reselling websites -

Viagogo - and found that major promoters allocate hundreds or even thousands of tickets to

be sold through their website at well above the face value. Tickets for recent gigs and tours

by Coldplay, Rihanna, Westlife, Take That, and V Festival have been allocated by the

promoters in this way.

Dispatches has discovered that at least 29,000 tickets were allocated to viagogo for the 2011

Take That tour - promoted by SJM Concerts

4,500 tickets for the 2011 V Festival - promoted by SJM Concerts, Metropolis Music and MCD

Dispatches has also seen a document that shows that viagogo has been allocated nearly

50,000 tickets, for 50 well known acts, music events, sporting occasions mostly for 2012

including:

• 9,000 tickets for Coldplay's upcoming Stadium tour - promoted by SJM Concerts, and

Metropolis Music.

• Over 3,000 for Westlife's 2012 tour - promoted by Live Nation

• 2,200 tickets for Rihanna's UK tour - promoted Live Nation

• 800 tickets for the live show of the BBC's Strictly Come Dancing - promoted by Phil

McIntyre Entertainment and Stage Entertainment UK

• 800 tickets for the live tour of the X Factor - promoted by 3A Entertainment

There is no indication that any of the artists involved were aware of these allocations.”

While such allocations are not illegal and may in some cases be used legitimately by event promoters

as a means of managing commercial risk, we believe that they should be subject to far greater

transparency than exists at present. Specifically, event organisers should be required to specify

publicly what percentage of the overall ticket allocation has been put on general sale, set aside for

corporate allocations and VIPs, or made available through fan clubs and debentures, or allocated to

secondary ticket agents. This increased level of information would be important in introducing

transparency into processes and practices which are currently concealed from consumers and policy

makers.

‘Authorised Resale’ Versus ‘Open Resale’

More fundamentally, we believe the close links between the primary and secondary market uncovered

by the Dispatches programme has shed new light on the true nature of the debate around the

secondary ticket market, which has less to do with a desire on the part of event organisers to promote

access to sporting and cultural events and more to do with an ambition to move towards a world of

‘authorised resale’ where event organisers are able to gain complete commercial control of the resale

market and thereby capture profits while depriving consumers of the benefits of open resale.

Indeed, the political debate around resale represents part of a much broader struggle between two

competing models of resale, namely restrictive or ‘authorised’ resale on the one hand, and ‘open

resale’ on the other. StubHub believes that an ‘open’, competitive resale model is the one which will

best serve consumers.

For example, over the past 5-10 years, the industry has seen legislative efforts by event organisers to

restrict resale to authorised resellers mirrored by attempts on the commercial side to consolidate

broker networks and enforce restrictive terms and conditions prohibiting resale and transfer (e.g.

through cancellation of tickets and blacklisting of sellers); and new technological means of restricting

resale through e-ticketing.

ONLINE TICKET FRAUD

As the DJEI will be aware, there has been a great deal of public commentary about the level of online

ticket fraud. We do not dispute that online ticket fraud is a serious issue which needs to be

addressed. However, we would question whether it makes sense to describe such fraud as occurring

in the secondary market. For example, the two main types of fraud are (1) counterfeit tickets and (2)

fraudsters selling tickets which are either non-existent or which they have no right to sell. There have

also been examples of websites purporting to be official when they are not, or claiming that tickets for

events are sold out when they are not. We would question whether such cases represent examples

of fraud in the primary market or the secondary market and indeed whether such a distinction is

meaningful. Moreover, we would note that fraud exists in all markets for goods and services and that

there is no shortage of laws designed to address such activity

We would strongly support measures to improve cooperation between all parts of the industry and law

enforcement to improve cooperation in tackling fraud. In addition, we would support a review of

existing laws relating to fraud to determine whether these need to be strengthened. For example, a

considerable number of tickets are purchased fraudulently on the primary market (e.g. with stolen

credit cards) and are then discovered and cancelled without any attempt by the primary seller to notify

the secondary industry, despite the fact that such information could be used to reduce buyer fraud

elsewhere.

Where fraud exists in a market, we would argue the correct public policy response is to tackle this

fraud, not to close the market. Indeed, further measures to restrict resale will do nothing to tackle

fraud and will simply push the trade in tickets away from legitimate sites like StubHub and onto the

streets or other parts of the Internet where there is no consumer protection.

Even where resale is restricted or banned in some jurisdictions, enforcement is necessarily weak,

given that law enforcement inevitably has higher priorities. As a result, bad actors are further

incentivised to engage in such behaviour since the restriction of supply on resale marketplaces only

pushes prices higher in the black market.

It should also be noted that marketplaces like StubHub offer potential market based solutions to the

problem of fraud in the market. For example, with only limited exceptions of specific sellers who have

been carefully vetted, we require that sellers are not paid until after the event. This acts as a powerful

disincentive for potential fraudsters to use our site.

As result, seller fraud is virtually non-existent on StubHub with a seller fraud rate at 0.01% and

counterfeits are even more rare. In 2016, for example, we did not see a single case of a counterfeit

ticket being sold successfully through our UK marketplace. This was thanks to our stringent security

measures which include the use of advanced metrics to detect and prevent fraud in real time.

Moreover, in the very rare cases where something goes wrong and we cannot find a replacement

ticket of comparable value, fans are backed by our Fan Protect Guarantee which entitles them to a full

refund.

It should also be noted that in order to provide payment intermediation services on our platform,

StubHub Europe S.a.r.l. is licensed as a payment institution and provides payment services to our

sellers which means that we identify and verify the identity of our sellers in accordance with applicable

Anti-Money-Laundering regulations.

Cases of buyer fraud (e.g. fraudsters attempting to buy tickets on our site and resell them elsewhere

using stolen credit card details) are generally detected immediately through our advanced range of

fraud tools. On rare occasions when fraudulent buyers are successful in transactions, StubHub would

still honour the payment to the seller.

In addition to the many laws on fraud, for example, there is also specific legislation in the form of the

EU Unfair Commercial Practices Directive which is designed to prevent misleading commercial

practices.

THE UK CONSUMER RIGHTS ACT

The DJEI consultation raises the possibility of legislative intervention along the lines of the UK

Consumer Rights Act (CRA) 2015. We therefore offer the following analysis of the shortcomings of

the CRA.

As the DJEI may be aware, the ticketing provisions in the Consumer Rights Act were the result of a

last minute compromise amendment agreed between the UK Government and various peers in the

UK House of Lords and were not the subject of any formal consultation with the industry. As a result

of this lack of consultation, we have seen a number of problems with the Consumer Rights Act.

Cancellation and Blacklisting

The most fundamental problem with the Consumer Rights Act is that the safeguards against

cancellation and blacklisting provided by the legislation are entirely inadequate. For example, the

CRA expressly allows cancellation and blacklisting if there were terms and conditions attached to the

original sale of the ticket which provided for this, and provided such terms are fair.

We find it astonishing that such profoundly anti-consumer terms should even be considered for

inclusion in any event organiser’s terms and conditions. We cannot think of a single example of

where similar terms and conditions would be allowed for other goods. By way of analogy, imagine a

DVD retailer telling a consumer that they could not resell a DVD that they no longer wanted, that they

would not be allowed a refund (except where the DVD was faulty), and that if the consumer tried to

resell the DVD (or tried to resell that DVD on a platform that was not authorised by the retailer), the

retailer would destroy the DVD rendering it worthless, without in any way compensating the buyer.

Such practices would not be allowed in respect of other items. So why should they be allowed in

respect of event tickets?

There are certainly strong grounds for considering terms allowing for cancellation and blacklisting to

be unfair under the EU Unfair Contract Terms Directive. For example, the UK Competition and

Markets Authority have issued guidance on Unfair Contract Terms and how they apply to the

Consumer Rights Act. Paragraph 5.33.4 of this guidance makes it clear that the CMA believes that

terms which undermine a consumer’s right to resell tickets risk being regarded as unfair. This states

specifically:

“The resale (assignment) of tickets bought online is the subject of separate provisions of the

Act. The re-selling of tickets remains permitted, but where it takes place online, certain

information must be provided. The [Consumer Rights] Act expressly requires that a term

which allows an event organiser, where a ticket is being resold or offered for resale, to cancel

it or blacklist the seller must meet the requirements of Part 2 of the Act. In other words, it

makes such terms subject to the usual tests of fairness and transparency. As indicated

above, it is the CMA’s view that a term which undermines a consumer’s right to sell what they

own is at risk of being regarded as unfair.

”

Ultimately, though, the law remains unclear on this point. And as the CMA has stated elsewhere, only

a court can decide whether such terms are fair or not under the Unfair Contract Terms Regulations

and there is an absence of established case law in this area. We believe it is extremely unlikely that a

consumer would possess the means to initiate legal action against an event organiser. Nor is it

possible for marketplaces such as ours to challenge these terms directly since we are not party to the

original contract between the event organiser and the purchaser of the ticket.

“Unfair Contract Terms: Guidance on the unfair terms provisions in the Consumer Rights Act 2015”,

Competition and Markets Authority, 31 July 2015, CMA37

As to whether general terms and conditions prohibiting resale and transfer of tickets (or mandating

that resale takes place on a single platform authorised by the event organiser) are fair, our firm view is

that they are not. Indeed, it should also be noted that the then Office of Fair Trading (OFT) – now the

CMA – said in its evidence to the Culture, Media and Sport Committee in 2007 that:

“The OFT believes that there is scope under the UTCCRs for a term prohibiting consumers from

reselling tickets for profit as being considered unfair. However, only a court can decide if a term is

unfair.”

We also question whether event organisers have the right to enforce terms and conditions against

consumers who have purchased resale tickets on our site but who were not party to the original

contract as between the event organiser and the original buyer. We think it is particularly instructive

that there is an absence of case law on this matter as it demonstrates an unwillingness on the part of

event organisers to test terms and conditions in court.

However, it is clear that the Unfair Contract Terms Regulations do not apply to B2B transactions. As

a result, secondary ticket agents are not protected at all by the Consumer Rights Act from

cancellation and blacklisting, despite the fact that they provide a valued service to consumers by

enabling them to buy last minute tickets to sold out events.

Since the passage of the UK CRA, we have seen an increasing number of tickets cancelled (e.g. for

the Ashes and the Rugby World Cup) – in some cases without notification so that buyers are turned

away at the gate. We have seen many more examples of threat letters from event organisers,

demanding that they cease and desist from selling on StubHub or risk cancellation. And we have

seen other event organisers such as the LTA threaten to cancel tickets for future events.

In addition, the Opinium Research shows that while most consumers were generally unaware of this

problem, almost half (46%) of those surveyed thought it was unfair for event organisers to cancel

fans’ tickets in this way.

We are concerned that the current trend towards cancellation and blacklisting, if left unchecked, will

seriously undermine legitimate ticket marketplaces like our own and push consumers into the hands

of street touts and fraudsters. It should also be noted that cancellation of tickets penalise unfairly

those marketplaces that offer consumer protection guarantees. For example, when a ticket is

cancelled after the ticket is sold on our marketplace, StubHub is obliged to compensate the buyer as

per our Fan Guarantee. This serves to undermine the legitimate secondary market still further.

We cannot envisage any circumstances whereby terms and conditions allowing for cancellation and

blacklisting could be regarded as fair, especially when consumers with spare tickets are in almost all

cases denied any guaranteed right of refund if they can no longer attend the event

and when the

same terms and conditions typically provide for cancellation without compensation. Moreover, we are

not aware of a single example of where similar terms and conditions would be allowed when it comes

to the sale of other items.

The following examples of terms and conditions from different event organisers are instructive as they

show that terms allowing for cancellation of resold tickets without compensation are now standard

practice:

“7.3 You may not resell or transfer your tickets if prohibited by law. In addition, Event Partners

may prohibit the resale or transfer of tickets for some events. Any resale or transfer (or

attempted resale or transfer) of a ticket in breach of the applicable law or any restrictions

Typically, refunds are reserved only for those instances where an event is cancelled entirely.

imposed by the Event Partner is grounds for seizure or cancellation of that ticket without

refund or other compensation.”

“The GAA reserves the right to render this ticket null and void for any action in breach of the

above rules. This may result in:

a. entry to the venue being refused to the ticket holder

b. a bar on future ticket purchases from the GAA by those involved in the prohibited

transaction

c. legal proceedings against the ticket holder and/or those involved in the prohibited

transaction.”

“Tickets you purchase are for personal use. Except as we may agree, you and your party

must not re-sell or transfer (or seek to re-sell or transfer) the tickets in breach of the

applicable terms. A breach of this condition will entitle SEE or the Promoter to cancel the

tickets without prior notification, refund, compensation or liability.” (See Tickets)

“Tickets may only be purchased from the IRFU or officially authorised agents of the

IRFU. Any ticket obtained from any other source (for example, unauthorised

intermediaries such as ticket brokers, internet auctions, internet ticket agents) will be

rendered void, and all rights of entry into the Stadium will be nullified. Any person

seeking to use such a ticket obtained through unauthorised sources will be refused entry into

the Stadium, ejected from the Stadium and/or will have their ticket seized by the

Management, in addition to other remedies available to the Management…Tickets are non-

transferable. In particular, it is prohibited to sell, advertise or offer to sell this ticket to any

person at a price in excess of its face value. Further, it is a breach of the Terms to advertise

the sale of this ticket in any forum, including placing the ticket for auction on any online

auction website. This ticket shall not be used as a prize in any lottery or competition or for any

promotional or advertising purpose or otherwise as part of a corporate package or hospitality

package unless expressly authorised in writing by the IRFU. Without the express consent of

the IRFU, such ticket shall be rendered void, and all rights of entry into the Stadium will be

nullified. Any such action may also result in legal proceedings against the ticket holder and/or

the advertiser or on-line auction website.”

It should also be noted that the threat of cancellation and blacklisting serves as a barrier to greater

transparency for consumers. For example, our consumer research shows that consumers are less

likely to provide row and seat number given the threat of cancellation and blacklisting. Knowing that

tickets had been cancelled, 47% of consumers in the Opinium research said that they would not feel

comfortable providing their seat location when reselling.

Legislation should be designed to incentivise good behaviour but the lack of adequate legislative

safeguards against cancellation and blacklisting does precisely the opposite. Tougher, clearer

legislative safeguards are therefore required to protect resellers’ right to resell tickets freely. These

should provide that terms providing for cancellation and blacklisting are not allowed under any

circumstances – whether for B2C sales or B2B sales.

The Opinium research found strong consumer support for such measures with 56% of Irish

consumers supporting tougher legislative safeguards to prevent event promoters from cancelling fans’

tickets that were bought and sold outside of pre-approved platforms with only 20% opposing.

http://www.ticketmaster.ie/legal/purchase.html?tm_link=tm_homeA_i_ourpolicy

http://www.gaa.ie/tickets/terms-and-conditions

http://www.seetickets.com/content/terms-and-conditions

http://www.irishrugby.ie/ireland/tickets/terms_and_conditions.php

C2C Sales

Secondly, whereas all other major consumer protection legislation has placed information obligations

on traders, the ticketing provisions of the Consumer Rights Act place these on both consumers and

businesses. This represents a worrying shift towards regulating C2C activity which has wider

consequences for other areas of e-commerce including the sharing economy.

Moreover, we believe it is wrong to criminalise consumers for failing to provide information, especially

when there is clear evidence that, in the vast majority of cases, consumers are completely unaware of

their responsibilities under the regulation.

Responsibility of Secondary Ticket Marketplaces

Thirdly, the Consumer Rights Act places the responsibility for providing key ticket information (such as

face value, row and seat number and relevant restrictions e.g. age, restricted views etc) on both the

seller and the marketplace, despite the fact that the latter do not have access to such information and

have no means of verifying it.

Whilst it is a condition of using our site that any seller listing a ticket for sale on our website must at all

times comply with applicable laws and regulations, and while we clearly prompt our users to provide

the information required under Section 90(2) of the CRA and more, we do not believe it is reasonable

or practical to expect online marketplaces to monitor their site to ensure that this information is

provided.

For example, StubHub does not sell any of the tickets listed on our Website. We therefore rely on our

sellers to provide complete and accurate information pertaining to their tickets in order to comply with

their legal obligations.

Similarly, we are not in a position to know whether the required information is available to each and

every seller selling a ticket on our website, nor whether any information that is provided is accurate

and complete. Moreover, requiring marketplaces to verify information provided by their sellers clearly

runs contrary to Article 15 of the EU E-Commerce Directive which prohibits Member States from

imposing general monitoring obligations on information society service providers.

For these reasons, we believe it is wrong to require marketplaces to provide information which they

do not have and to expose them to financial and legal liability for failure to do so. We believe the law

should place the obligation for complying with the law squarely on the seller. However, we are

committed to exploring constructively with the UK Government and law enforcement bodies what

more marketplaces can do to encourage sellers to comply fully with their obligations.

Compliance Issues

Some commentators have pointed to a lack of compliance by sellers in providing row and seat

number when listing on secondary ticket marketplaces. However, this ignores the fact that there are

many instances when a consumer simply may not be able to provide row and seat numbers.

o Firstly, it may not be applicable – for example, in cases where the ticket provides only for

general admission, or access to a festival.

o Secondly, the buyer may have purchased the ticket without even knowing their row and seat

number. For example, consumers buying Rugby World Cup tickets were only able to

purchase a price category of ticket and were only informed of their row and seat number

much closer to the event. Despite this, a seller is rightly allowed under law to resell their

ticket before they know where they will be seated. Moreover, the Rugby World Cup case

raises a fundamental question as to why it should be considered essential for the row and

seat number to be provided when tickets are resold in the secondary market but not when

they are first sold in the primary market, especially when other sporting events may follow the

example of the Rugby World Cup.

o Thirdly, and most importantly, it is common practice in the industry (especially in the music

sector) for the primary market to provide large allocations of tickets directly to secondary

ticket agents without necessarily informing them as to where these tickets will be located in a

venue. As such, a secondary ticket agent may well have a right to resell these tickets but still

be unable to specify the row and seat number.

In each of these cases, the law allows for non-provision of row and seat number on the grounds that

the information is either not applicable or that the seller was reliant on the information being provided

by another person as per Section 93(5)(a)(ii) of the Consumer Rights Act.

Moreover, as our consumer research clearly shows, consumers are entirely unaware of their legal

responsibilities in this area, and may well be fearful of cancellation and blacklisting. This further

underlines the need to amend the law to completely outlaw cancellation and blacklisting in all

circumstances. Consumers should not have to worry that transparency and compliance with the law

will lead to them being unfairly penalised by event organisers.

It should also be noted that there are alternative methods of ensuring transparency for consumers

when it comes to seat location. For example, StubHub has begun to roll out 2D and 3D views for

ticket listings which show the consumer the view they would have. This is far superior to providing

row and seat number and recent consumer research in the UK indicates that a virtual view was the

most helpful (41%) factor in making a decision to buy tickets. This was followed by a venue map

(37%), with block, row and seat number coming in last (16%). We would therefore strongly urge the

Irish government, if considering transparency requirements for seat location data to allow the

alternative option for secondary ticket marketplaces to offer 2D and 3D views (as opposed to requiring

the precise row and seat number). Such an option would greatly increase customer transparency

without creating the problems mentioned above in relation to cancellation and blacklisting.

An example of 2D views is set out below:

Business Seller Disclosures

As per EU law, businesses are legally required to declare themselves as such and it is an offence

under the Unfair Commercial Practices Directive to falsely declare oneself as a consumer. However,

it should be stressed that it is the responsibility of the seller to declare themselves properly.

As a marketplace, we enable our business sellers to comply with their disclosure duties. For

example, we have changed our UK site so that, when a seller declares themselves as a business and

provides us with their business details, we automatically populate all their listings with that information

(rather than leaving it to the seller to manually input these details on each listing). This is then

displayed to the buyer (as shown in the screengrab below).

We also force all sellers above a particular sales threshold to disclose themselves as businesses. But

again, it should be stressed, the ultimate responsibility for compliance rests with the seller, not the

marketplace. This is essential given that there is no clear statutory definition as to what constitutes a

business or trading activity as opposed to C2C activity.

OTHER POTENTIAL LEGISLATIVE OPTIONS

Price Caps

We believe it would be a retrograde step for the Irish Government to go down the path of regulating

prices in a competitive market. The law does not regulate the price at which people can resell their

car or their house. We see no compelling reason as to why tickets should be treated any differently.

While we understand the Irish Government’s desire to promote access to sporting and cultural events,

we believe that these objectives can only be achieved by reforming the primary market to make it

easier for fans to get hold of tickets in the first place. Trying to control the circulation of tickets once

they have been made publicly available is practically impossible.

We would also question why prices should be regulated in the secondary market but not in the

primary market. For example, price regulation pre-supposes that there is such a thing as an

acceptable price to pay for an event ticket. But what is this level? For example, why is it any more

fair to pay £100 for a ticket in the primary market than it is to pay £50 in the secondary market for a

£25 face value ticket.

More fundamentally, the entire concept of face value is increasingly meaningless in a world where the

primary market is moving towards dynamic or demand-based pricing and where consumers routinely

pay well above face value in the primary market because of various associated fees. It therefore

makes little sense to base price caps on such an arbitrary and uncertain concept.

It is entirely inconsistent to cap the resale price of one concert ticket at face value in the secondary

market, but leave event organisers free to charge hundreds of pounds for tickets in the primary

market. As noted above, as revenue from record sales decreases, we are seeing a clear trend

whereby artists are beginning to charge more and more for concerts to replace this lost revenue for

artists, yet no one would seriously suggest that prices in the primary market should be regulated.

Unintended Consequences

In addition to being wrong in principle, price caps are also unworkable in practice and have

unintended consequences. For example, we have seen attempts to set price caps in markets such as

Belgium at no more than 10% above the original price of the ticket. However, this does not allow

consumers to recoup the full costs associated with either the original purchase of the ticket – which

can include not just booking fees, but also credit card fees, shipping fees, and also parking charges

and now even ticket insurance (in case of cancellation of the event) – or the resale of the ticket –

which can include the costs of onward shipping to the new buyer and any fees associated with using

an online ticket marketplace.

More importantly, price caps have the effect of pushing the trade in tickets underground into the black

market – onto the streets or other parts of the internet which are not regulated and not subject to

consumer protection. As the academic evidence below demonstrates, this ultimately leads to higher

prices.

This is because regulation does nothing to alter the market clearing price of a ticket i.e. the price that

someone is prepared to pay for it. This is ultimately determined by supply and demand, neither of

which can be altered by regulation. Supply, for example, is determined by decisions taken by artists

and event organisers – for example, the size of the venue, the number of tour dates or games, the

number of tickets put on sale by the venue etc. Demand is merely a function of the popularity or

otherwise of the artist or team.

In addition, by pushing the resale of tickets underground, resale restrictions serve to reduce

competition and concentrate supply in the hands of a small number of determined sellers who are

then able to charge higher prices as a result, whilst at the same time reducing price transparency and

the use of safe online marketplaces with consumer protections like the Fan Protect Guarantee.

Academic Evidence Against Price Caps

Experience from the US is instructive in this regard, with various academic studies finding that anti-

scalping laws (preventing sales above face value) have actually led to increased prices in the

secondary market:

“By focusing on penalties for those who engage in prohibited transactions, anti-ticket scalping

regulations seem to lead to higher prices in the resale market. In states with resale

regulations, competition in the resale market is reduced and is pushed towards out-of-state

buyers whose costs of ticket acquisition are likely to be higher and are passed on to

consumers in the resale market. The end result of this reduction in supply is higher ticket

prices in the secondary market.”

A study from the University of Texas found that anti-scalping laws increased prices in the primary

market as well:

“Empirical analysis suggests that in cities with anti-scalping laws average per-game season

ticket prices are approximately $2 greater in baseball and $10 greater in football. Anti-

scalping laws actually increase team revenues, as the laws have no adverse effect on

attendance. Thus event promoters might have sufficient pecuniary incentive to tacitly or

explicitly support anti-scalping legislation.”

“Do Anti-Ticket Scalping Laws Make a Difference Online? Evidence from Internet Sales of NFL Tickets”, Dan

Elfenbein, September 2004, University of California, Berkeley

“Another Look at Anti-Scalping Laws: Theory and Evidence”, University of Texas, June 2006.

Other academic studies have also heavily called into question the wisdom of anti-ticket scalping laws

in the US

More recently, we note that the UK review into secondary ticketing by Professor Michael Waterson

explicitly rejected price caps and the UK government has accepted his recommendations in full.

Professor Waterson’s reasons for rejecting price caps are set out in full in Annex A of this submission.

Ticket Verification

Some commentators have suggested that a way of reducing online ticket fraud would be to require

that the booking reference number is provided in addition to the row and seat number.

Such a requirement would do nothing to reduce fraud since booking reference numbers could be

easily copied or made up without them being easily verified. Moreover, even where a booking

reference number could be verified, it would only serve to prove that a ticket with that booking

reference number existed. It would not tell a consumer whether or not the seller of the ticket actually

had the right to sell that ticket.

In cases where tickets with the same booking reference number appeared on multiple websites, it

would therefore not be possible for a consumer to tell which ticket was the real one (or indeed

whether both were genuine given that sellers frequently sell across multiple channels).

There are also good reasons to believe that providing booking reference numbers would increase

fraud, not reduce it. This is because such information could easily be used by fraudsters either to

have a ticket sent to a different address or for ID theft through social engineering.

The real reason for event organisers lobbying for such a requirement is that it would provide yet more

information in addition to row and seat number which could be used to cancel tickets and blacklist

sellers.

We note that, for many of the reasons set out above, both the Waterson Review and the UK

Government rejected this proposal outright and we would urge the Irish Government to do the same.

Botnets

We would endorse concerns within the industry about the use of botnets to bombard ticketing

websites and make multiple applications for tickets, thereby foreclosing access for ordinary fans.

StubHub has consistently advocated for legislation to tackle bot misuse in the US as well as in other

jurisdictions. There is now anti-bot legislation in force at federal level and in the following US states:

California, Florida, Indiana, Maryland, Minnsesota, New York, North Carolina, Oregon, Pennsylvania,

Tennessee, Vermont, and Washington (which also makes it illegal to sell bots for purchasing tickets –

in itself a lucrative trade).

We note that the UK government has also published tougher measures in this regard as part of the

new UK Digital Economy Bill and we would strongly recommend that the Irish government follow suit

as it would greatly increase the chances of fans being able to get hold of tickets in the first place.

It should be noted, however, that the botnet problem cannot be tackled by legislation alone. Firstly,

the primary market needs to do more to notify law enforcement of bot attacks. Secondly, event

organisers need to invest more in anti-bot technology. For example, Ticketmaster have invested

“The Folly of Anti-Scalping Laws”, Stephen K Happel and Marianne M Jennings, Arizona State University,

1996; “The Economics of Ticket Scalping”, James Atkinson, University of Notre Dame, May 2004

heavily in anti-bot technology (both in using up-to-date CAPTCHA technology and in back end

processes to detect multiple purchases from the same credit card or the same IP address) but others

have not. We believe that more could be done to spread best practice within the primary market.

Speculative Selling

Concern has been expressed by some consumer groups and others about speculative ticket selling.

Although such practices are not illegal, StubHub’s policies expressly prohibit speculative selling - i.e.

listing for sale tickets which have not been made available to the public through direct sales, fan

clubs, debentures or any other means.

It is important that such activity is distinguished from the perfectly legitimate practice of fans reselling

tickets which are not in their physical possession but which they have purchased, and that of

secondary ticket agents selling tickets which may have been allocated to them by an event organiser.

Where we are made aware of speculative selling on our site, we are committed to taking swift and

appropriate action. However, ultimately we are reliant upon reports from event organisers since we

cannot possibly know as a marketplace when tickets for events are made available and under what

terms. For example, certain sellers may have received an allocation or know that they will receive

tickets by different means e.g. hospitality or fan clubs. Finally, it should be noted that, in those

instances where tickets are speculatively listed, customers are ultimately protected by the StubHub

Fan Protect Guarantee.

While we would support tougher measures to tackle fraudulent selling, we would question whether

legislation banning speculative selling would be appropriate given that there are plenty of examples of

well-functioning ‘futures markets’ in other spheres. However, we would certainly welcome further

cooperation between the primary and secondary markets to address this issue.

ALTERNATIVES TO REGULATION

Technological Measures

In recent years, we have seen the growth of new technological measures to restrict resale and

transfer of tickets. These include the use of photo IDs, the increased use of personalised tickets, and

the growth of paperless or e-ticketing.

Photo IDs

Photo IDs have been used to restrict the resale of tickets for the Glastonbury Festival and have

succeeded in all but eliminating resale. However, our understanding is that most other event

organisers (and venues in particular) consider the broader use of photo IDs to be impractical and

therefore not capable of replication for other events. Moreover, we would caution against their

further use as they serve to restrict not just resale but also transfer of tickets.

Personalised Tickets

We would similarly caution against the greater use of personalised tickets unless some means can

be provided to enable consumers to easily change the names associated with tickets and thereby

allow open resale and transfer of tickets. One model exists with StubHub’s partnership with The

O2 Arena in London which allows for integration between our marketplace and the venue, and

which provides for new tickets to be reissued seamlessly in the name of the new buyer. We

believe that consumers would benefit if such a model were rolled out across the industry.

‘Paperless’ Tickets/E-Ticketing

The past few years have seen the growth of ‘paperless’ or e-ticketing whereby a buyer’s tickets

(and those of their guests) are stored electronically on their credit card, ID card or mobile device.

While paperless ticketing is currently more widespread in the US, it is becoming increasingly

common in Europe with artists such as Robbie Williams, Radiohead, Coldplay, Kate Bush and U2

starting to use it, and we expect it will grow over time. This raises a number of important policy

issues.

It should be stressed that StubHub is not opposed to digital ticketing as a technology, but we do

have serious concerns that e-ticketing could be used to restrict resale and transfer, resulting in

‘closed loop’ ticketing systems whereby consumers can only resell tickets through the same

operator that sold them the ticket in the first place. Such a development would be deeply anti-

competitive and unfair to consumers and inevitably lead to higher prices.

In line with the current debate at EU level on platform regulation, we believe that policymakers

should look to develop model framework conditions for ensuring open, fair and non-discriminatory

access to resale platforms – for example, by allowing other resale platforms to access event

promoters’ platforms via a secure API to effect transfer from the original buyer of the ticket to its

new owner. Given that such a model is possible in the airline industry, we see no reason why it

could not be applied in the ticketing sector. Another alternative would be a legislative solution

which guaranteed customers a freely transferable ticket alternative (e.g. the right to choose a

paper ticket).

We would therefore urge the Irish government (perhaps through the CPCC) to conduct a study into

the policy and competition issues surrounding paperless ticketing, including the feasibility of

allowing open access conditions to ticketing platforms, not least because it would serve as a useful

test case for some of the policy issues associated with the resale of other digital goods.

Reforming the Primary Market Distribution Mechanism

As noted above, we strongly believe that the best way of securing the Irish Government’s aim of

maximizing public access to sporting and cultural events is not to broaden existing regulation, but

instead to explore market-based solutions that make it easier for real fans to get hold of tickets in the

primary market.

For example, tickets are often sold in bulk at times which are inconvenient to ordinary fans. This

decreases their likelihood of being able to get hold of a ticket in the primary market. Alternatively,

tickets could be made available in successive tranches. Event organisers could do more to release

tickets at times which are more convenient to ordinary fans e.g. at lunchtime, or in the evenings or at

weekends.

We believe event organizers should do more to examine the balance of corporate allocations for

major events, thereby increasing the number of tickets available in both the primary and the

secondary markets. Primary market distributors frequently block off tens of thousands of tickets for

major sporting events for corporate sponsors, hospitality packages and VIPs. These do far more than

the secondary market to restrict supply. Even where these are used to subsidise lower ticket prices

for everyone else, this need not impact on revenues if event promoters simply charged more for fewer

corporate tickets.

The primary market could also be encouraged to offer better refunds. It is standard industry practice

not to offer guaranteed refunds. This makes it more likely that fans with unwanted tickets will look to

sell on the secondary market. However, in reality we think it unlikely that the primary market will move

towards offering refunds for unwanted tickets for the simple reason that they have no incentive to sell

the same ticket twice.

For the same reason, our experience has been that ‘official’ resale platforms are often extremely poor.

With the London 2012 Olympics, for example, consumers could not even offer a ticket for resale

within 7 days of the event (even though this is often the time when people may be forced to cancel

due to last minute changes in personal circumstances). Similarly, with the 2014 Commonwealth

Games in Glasgow, the resale website - the only authorised way for sports fans to sell

Commonwealth Games tickets they are no longer able to use - was opened only on June 13 and all

tickets for resale had to be returned by June 26 (i.e. less than 2 weeks notice).

In addition, the primary market could increase access through better matching of demand with supply.

For concerts, it is to some extent in the hands of artists and promoters which venues they choose to

play, how many dates they choose to perform etc. Yet increasingly, there is a trend in the music

industry for major artists to play smaller, more intimate venues, thereby restricting supply. If artists

instead chose to play extra tour dates, or play bigger venues, this would help to reduce prices.

We note that the Irish Government has made commitments to UEFA and World Rugby to introduce

legislation to ban the unauthorized sale of tickets for matches held as part of the Euro 2020 Soccer

Championship and the 2023 World Cup. We would encourage the Government to seek to give effect

to these commitments in a way that addresses the issues and concerns that we have raised, takes

account of relevant EU law on unfair contract terms and are generally implemented in a manner which

protects consumer rights and entitlements. More importantly, we note that the UK government has

consistently refused to extend restrictions which are required as a condition of hosting international

sporting events to other sporting and cultural events. We would urge the Irish government to follow

that example.

CONCLUSION

In conclusion, we welcome the opportunity to contribute to the DJEI’s review into the consumer

protection measures applying to ticket resale. Amidst the many issues raised as part of our response,

we believe the central issue facing policymakers is not whether the secondary ticket market should

exist. This market existed long before the Internet and the growth of ticket resale marketplaces, and

will continue to exist whether there is further regulation or not.

The real question in this debate is what sort of secondary ticket market we want. We can choose a

model of authorized resale which allows event organisers to completely control the ticket resale

market and to profit from allocating tickets without any transparency whatsoever to secondary ticket

agents whom they control, where the primary allocation mechanism remains broken, and where

prices are higher as a result.

Or we can choose a model where fans are able to get fair access to tickets through a reformed

primary market and a secondary market which is open, transparent, competitive and subject to

consumer protection. It is our firm view that the latter of these two models is the only way to deliver a

sustainable ticket market that works for consumers and we therefore commend it to the Irish

Government.

http://www.heraldscotland.com/news/13166599.Public__not_alerted__in_time_to_Commonwealth_

Games_ticket_resale_site/

ANNEX A - EXTRACTS FROM UK WATERSON REVIEW

Price Caps

6.35 Respondents to the Call for Evidence who were concerned about high prices made suggestions

for a percentage cap on mark-ups, or occasionally profits, with proposals ranging from 10 - 20% of

nominal face value. Those who supported a cap considered that it was necessary to avoid the

consumer being exploited by those with no interest in music or the artist, other than making an

excessive profit. Such respondents considered that a cap would reduce the prevalence of touts,

brokers, professional sellers in the market and particularly the incentive to invest in “bot” technology to

acquire the most lucrative seats at high demand events.

6.36 There have also been suggestions that ticket resale prices should include a percentage resale

right levy akin to "droit de suite", so that the live music industry shares in the proceeds of resold

tickets via a collecting society. I am not convinced of the arguments for such a right in relation to

ticketing, rather than performance, as artists already benefit from music copyright and royalties.

6.37 I am not convinced that a price capping is an appropriate solution at this time and I am not

therefore, recommending it. It is therefore incumbent on me to explain why I take this view.

Price Capping: Reason 1

6.38 My first reason for not capping is that the problem stems in part, in some cases in large part,

from the actions of participants in the primary ticketing market and therefore to impose a price cap

would be imposing a solution on one group of market players whilst ignoring the role of another group.

There needs to be a fundamental recognition, across all sectors of the primary ticketing market, that

pricing, distribution and enforcement are, as I say elsewhere in the report, intimately linked and that

controlling one of these is insufficient. Some sectors of the primary industry, both in sport and music,

recognise this and take steps to respond; others do not. When prices are set deliberately low, and this

is widely seen by other market operators, then these other operators will seek to buy up tickets to sell

on to other customers. Insiders in the industry may also recognise this and themselves move tickets

onto the secondary ticketing market.

6.39 As discussed previously, current steps taken by some sectors of the primary ticketing market are

not robust enough. Imposing a limit on numbers of tickets sold in one transaction is not proof against

such simple strategies as someone making purchases on a number of occasions, or making

purchases from a number of primary sellers. It is not imposing a meaningful limit at all. A

personalisation of a ticket (for example by printing a name on it) is not a meaningful personalisation, if

it is not subject to venue checks.

6.40 For a variety of reasons, both in sport and in music, as well as other areas, there are various

special groups who receive tickets under circumstances different from the general public, which may

include preferential pricing, but always involve preferential access to tickets. These include

participants in sporting clubs, fan club members, corporate sponsors of the event, companies that

have bought naming rights to a venue which give their customers preferential rights, debenture

holders, and so on. Some but not all of these are under a moral obligation not to sell their tickets on to

people who are not part of one of these groups. Their morals in this regard are a matter for

themselves or the group, and not, I would suggest, for general legislation.

6.41 Many primary websites do not impose burdensome restrictions on individuals using their sites.

Whilst some impose no checks, others use technologies such as Captcha. Most forms of Captcha are

known to be vulnerable to machine learning attacks. The general public appreciates this and

complaints about bots were evident from the Call for Evidence. Superior technologies exist and have

proven efficacy that require the individual purchasing the ticket to be registered as a known human

being (for example verified by means of a set of identity documents provided to the registration body).

Such technologies, together with enforced ticket limits, do provide much more secure systems at

relatively low cost and, if implemented, would improve matters considerably.

6.42 In summary, if the problem is that primary ticketing market tickets appear immediately to transfer

to the secondary ticketing market (at higher prices), I would argue that this is just as much a fault of

the primary ticketing market as the secondary ticketing market.

Price Capping: Reason 2

6.43 My second reason is that price caps applied against disparate sellers are likely to break down or

be subject to manipulation by various means. A price cap as imposed by an industry regulator

against, for example, National Grid in respect of its electricity transmission activities, or against a

water company in respect of its charges, can work reasonably well. There is a clear regulatory

authority, a clear body to be regulated, and a clear set of rules to be operated, together with

appropriate penalties. It works less well against bodies where only some of the prices are regulated,

such as rail franchise operators, because they can adjust the prices of unregulated fares. In the past

when many rents were regulated, it worked much less well against landlords, a disparate group, who

skimped on maintenance or resorted to extortion techniques to evict tenants in order to circumvent

the restrictions.

6.44 The landlord issue is somewhat melodramatic, but it does raise an important point that

constitutes my third reason.

Price Capping: Reason 3

6.45 Merely imposing a rule on pricing is clearly insufficient. Individuals need to complain to someone,

and actions then need to be taken. A full enforcement mechanism must be devised, it must be

decided whether this is a criminal or a civil offence, penalties must be determined and enforcement

would need to be funded and prioritised as against other activities carried out by the enforcement

agency. This is not costless, and it will inevitably be imperfect. If an individual of ample means wishes

to purchase a ticket for an event and can find a way of obtaining it, they are not going to complain if

the price is high. Such a purchase may take place outside the UK so authorities may not hear of it. If

the venue operator does not police who enters the event, they will not discover it. Unlike New York,

for example, ticket brokers in the United Kingdom are not licensed, so action cannot necessarily be

taken easily against an individual seller unless the primary site has full details as to their identity and

is willing to participate. Moreover, there are significant numbers of sales conducted through sites such

as Facebook and Twitter, where sellers’ identities may not be revealed, or sellers may not be who

they seem.

Price Capping: Reason 4

6.46 Finally, suppose a price limit were imposed at say 10% or 20% of the full face value ticket cost

including face value and fees. This is a substantial margin for any business, albeit less than the mark-

up on the current secondary ticketing sites. Imposing a mark-up limit in the absence of primary

ticketing market controls in effect legitimises through legislation the operator who makes multiple

purchases from the primary site in order to themselves to operate a secondary ticketing site charging

the full mark-up, plus whatever fees are allowed by the legislation. This would not alleviate the

concerns of an event organiser who opposes secondary ticketing sales on moral grounds. It would not

have a substantially different effect on the market from the case where a primary operator chooses a

particular secondary ticketing partner and imposes restrictions on it directly.