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Ticket Agents

I am delighted to have secured this debate on transparency and competition in charging by ticket agents. As a nation, we spend more than £1.5 billion a year on advance ticket sales—a figure that has risen by more than 150 per cent. since 1999—for pop and rock concerts, west end theatre or shows, opera, stand-up comedy and sporting events. Of that huge sum, more than a third was spent with ticket agents. Going to such events has become an increasingly popular leisure activity. The number of these events has increased. People have more disposable income and are able to purchase tickets easily via the internet. In most other markets, that demand would be met by greater supply, but in respect of pop concerts and, to a lesser extent, other top-end productions, it puts not only the acts but the ticket agents—through exclusive deals—in a powerful position. For example, Kylie Minogue’s come-back concert sold out in six minutes; if there had been as many tickets as punters willing to pay upwards of £50, several Wembley stadiums could have been filled. Given the massive discrepancy between supply and demand, it is paramount that we keep a careful check on those who—quite properly—seek to make commercial gain in that market. However, that is quite separate from the legitimate debate about the increase in size of the secondary market in the resale of tickets. I am concerned only with the primary market and I shall argue that, although ticket agents perform a perfectly useful role, we need to do much more to ensure that their pricing is transparent and fair, so that the punter can see exactly how much he or she will pay. In addition, given the sometimes high stakes involved, we should question whether the relationship between promoters and agents should not be further scrutinised. These days, it may be inevitable that people who decide to see a show or concert are charged at least one fee, if not two, on top of the ticket’s face value. However, although it may be inevitable it is not always expected. People quite legitimately budget on the basis of an advertised price. One might baulk at a £55 ticket for the Monty Python musical ““Spamalot”” but accept the fact that the show is obviously popular. What might cause more irritation would be to find out later in the transaction that a surcharge of £15 was to be added by the agents, as I understand has occurred. Although that may be a top-end example it is not uncommon to find companies charging in the region of £5 on top of the face value for the privilege of buying a ticket from a particular agency. Information is power, however. For many events, it becomes apparent only late in the transaction—crucially, perhaps after the decision to purchase—that there are to be added fees. As the Office of Fair Trading 2005 report, ““Ticket agents in the UK”” recommended, information should be provided on advertisements to indicate, if not to specify, the price range of the tickets to be sold, as well as the fact that there will be a booking fee. Welcome guidance issued by the Committee of Advertising Practice before the OFT report was published required advertisers not to mislead, for example by quoting only the lowest price or by not indicating clearly that a booking fee applies. However, that had the unintended consequence that, rather than display more information, advertisers simply removed it altogether—as they were perfectly entitled to do under the guidelines. I appreciate that booking fees vary between agents, which is a good reason to shop around, but if agents are primarily or completely in charge of selling tickets on behalf of the promoters of the concert or show, it is only right that the consumer should be fully aware that they will take their cut and, furthermore, that the amount of that cut is known at an early stage. The names given to fees are often confusing and sometimes downright misleading. Sometimes they are referred to as booking fees; at other times as service charges, processing fees or administration fees. Most of those descriptions give the impression that the fee is incurred to meet an expense involved in the processing of the transaction, but in reality it is simply how the agent makes their money. Why cannot that be made clear? If it is not made clear, the situation is similar to that for banks—albeit on a lesser scale—where the charges generally bear no relation to the actual costs incurred and are merely a way of making money. I acknowledge that ticket agencies are legitimate companies operating as useful intermediaries between promoters and customers, but we should be able to demand some honesty about their role. The same is true about their use of the phrase ““post and packaging””, which can cost very much more than the price of a first-class stamp. A corollary of the assumption implicit in labelling such charges administration fees, or whatever they may be called, is that the marginal cost of administering extra tickets for the same recipient should be small—in fact, so small as to be non-existent—but that is not the case. In the vast majority of instances, the same fee applies to each ticket, whether the purchase is of one or 100. Again, we come back to the misleading impression that fees are merely expenses being passed on to the customer. These days, it is becoming harder and harder to buy directly from a box office, and having agreements in place and clear information on the options is rare. To take one example, Ticketmaster operates a ““box office”” service on behalf of a number of venues, in addition to those owned by Clear Channel, including, for example, the Manchester Evening News arena, the Metro Radio arena in Newcastle and the Brighton centre. Tickets are usually still available directly from those venues, but that fact is not advertised prominently on venues’ websites and the impression given is very much that using the agent is the sole means of obtaining tickets. When people phone the automated inquiries and booking line for the MEN arena, no mention is made of the fact that tickets can be purchased directly, without incurring a fee. Tickets to see Ricky Gervais, for example, have a face value of £25, but then there is a £4.95 booking fee per ticket, plus £2 for postage. That latter charge applies even when people pick up tickets at the box office. That means that a party of four would pay nearly £22 in additional charges, or a mark-up of 20 per cent., for the privilege. I do not seek to single out Ticketmaster in particular. When judged against the rest of the industry, it is as good or as bad as many others at providing information. However, given the money to be made, it is not surprising that its results for this quarter, which were announced only last week, were so healthy. The website of its parent company, IAC, boasts of Ticketmaster’s revenue worldwide jumping 44 per cent."““due primarily to increased revenue in the United Kingdom and Canada””." Tellingly, it adds that there was a 10 per cent. higher than average revenue per ticket. One can speculate on the causes of that, but it certainly does not seem to illustrate any downward pressure on margins. Although the Office of Fair Trading found no evidence of a lack of competition in the ticket agents market, it did uncover some potentially distorting arrangements between promoters and agents: for example, preferential contract rights in exchange for access to a proportion of the tickets allocated. That may take the form of some of the revenue from the sale of the tickets by agents being returned to the promoter, who may then pass it on to the artist or to his or her agent. Thus, as the OFT found, it is often directly in the interests of the promoter for additional fees to be charged. The OFT talks of competition operating at a level not visible to the customer: between agents competing to attract promoters by offering financial inducements in the form of higher fees. Surely that is not right. It could even sometimes be called a bung. In some circumstances, if an allocation of tickets is bought up completely by one agent, that may be regarded as a closed shop. It is not that these arrangements always necessarily disadvantage the consumer. The OFT points out—I think rather naively—that sources of income from booking fees"““can mean that face value ticket prices are lower than they would be otherwise.””" That may or may not be the case, but would it not be better to have a standard, transparent system so that everyone knows where they are? Most would agree that, given the unprecedented demand for tickets to rock and pop concerts, and perhaps to a lesser degree to west end shows, once an agency secures a large ticket allocation, in effect it has a licence to print money. It is not all doom and gloom. Plenty of theatres operate without the need for ticket agents and the associated hefty booking fees. As I am a Merseyside MP, I instance Liverpool’s Everyman and Playhouse theatres, as well as the Liverpool Philharmonic, which charge a fee only for internet transactions. Transactions made in person or by phone are free. In the first two examples, the fee is a flat rate, regardless of the number of tickets involved. As Liverpool is the European capital of culture next year, it might be fitting if, for example, the city’s new Kings Waterfront arena, which will no doubt host many big events, could take a lead which other similarly big venues may follow by keeping booking fees to a minimum or at least ensuring that the option to buy directly is fully advertised and that transparency rules. Ticket agents perform a useful role for people who have neither the time nor the inclination to buy directly from the venue, but many people resent charges being levied, especially when they pick up the tickets from the venue on the night. There are things that we should be doing to ensure greater transparency and competition. First, we should work to encourage venues and promoters to agree guidelines under which a proportion of tickets for each event would always be available directly, without fees applying, with that fact advertised prominently. That is less of a problem with west end shows than it is with pop concerts, but tickets for some of the more popular shows are available only through agents. Secondly, we need clear advertising of fees, so that people know what they are paying, or what they are likely to pay, both when they see the event advertised initially and when they inquire further. Thirdly, the industry should agree a standard wording for fees, so that it is made clear that people are paying not merely the expenses incurred but the profit of the intermediary. Fourthly, we should scrutinise more closely the relationship between promoters or venues and agents to ensure that there is no question of collusion either to inflate booking fees or to exclude non-agency sales from the equation. On all those aspects, it might be timely for the OFT to look again at its 2005 report and examine this important issue in depth.