Wishful thinking for some, industry wrecking ball for others, secondary ticketing became a primary topic in 2007…

Whether it's referred to as reselling or touting, the last 12 months have seen the secondary ticketing market develop alarmingly fast through the developed markets of Europe. What was once confined to the US is now established, accepted by many consumers and undoubtedly here to stay.

When IQ published its secondary ticketing report in April 2007 (issue 13), the UK’s Concert Promoters Association (CPA) was waiting for the government to decide whether or not to legislate against the reselling of tickets. It’s still waiting, but in the mean time, the industry has adopted the view that if it can’t beat them, it will have to join them.

After three failed court cases, Mojo Concerts in Holland has partnered with online marketplace Viagogo to offer a secure reselling service, while Live Nation’s forthcoming ticket service already includes a resale platform. In January, Ticketmaster drew flak from promoters when it bought GetMeIn! in the UK and TicketsNow in the US, and at the ILMC last month, the CPA agreed to back the Music Managers Forum’s Rights Resale Society (RRS) that follows a collection society model to repatriate some of the resale value to the industry.

“We’re about to become what we all used to call touts,” says Stuart Galbraith at Kilimanjaro.

Economies of Scale

Without accurate figures on the primary market, it’s hard to estimate the scale of the problem. The RRS estimates the UK reselling market at £200m (€254m) annually, while European estimates run into €billlions. Veteran promoter Harvey Goldsmith – still adamantly opposed to the sector – believes that while “touting levels” were an unassuming 0.1% for years, they now top 30%.

“We have become a very sophisticated market in the UK where we can literally sell out tickets in minutes as they can do in America,” he said at the ILMC. “When we got to the point where we could do that electronically, we created a generation of couch touts. Before, less than 30% of an audience took up a full allocation of tickets, now everybody is taking it and creating the market.”

In Germany, CTS Eventim launched Fansale.de in January 2007 as a response to a rapidly growing secondary sector, but not every European market has an issue. Denmark, France and Poland have all legislated against the reselling of tickets, and in many other countries, promoters are slightly bemused, scratching their heads and wishing it was a problem they had.

It’s an issue confined to unprotected markets where demand for tickets far outstrips supply. And it’s a problem that the industry has allowed to happen. Such is the scale of consumer demand for certain shows, that fans are willing to dig much deeper into their pockets to go. But while some factions of the industry are still fighting to have it outlawed, others believe they're forgetting the lesson learned by their record industry cousins in the fight against illegal downloading.

“The fan is participating and it’s what made the secondary market nuts,” said former Ticketmaster CEO Fred Rosen at ETT. “It’s like controlling drinking. Did prohibition work in the US? No. You’re not going to control tickets. It doesn’t work. It will never work because ultimately you’re asking to modify human behaviour.”

Vito Iaia, senior director of music services for Ticketmaster Europe has already been through it once in the US. “The issue with our industry is that everybody thinks we have one kind of consumer, but we don’t” he says. “We have ignored the consumer with disposable income and little free time who makes ticket buying decisions late. The secondary markets have thrived because they cater to this consumer.”

Partners in Crime

Partly stemming from the US, the last 12 months has seen a philosophical shift by many promoters towards the issue. Indeed, a now often-voiced prediction is that while secondary ticketing might currently be a divisive topic, it won’t remain so for long. Either publicly or quietly, deals are being struck to capture the additional income from sales and return it to the primary stakeholders.

On a number of tours in the US, AEG Live has begun selling the best 10% of the house – “the bubble” – on resale sites, the income from which can be equal to the other 90% of the house. Last month at the ILMC, AEG Live's president Randy Phillips said: “On one specific tour that we had out in North America, the lift in the tickets on that 10% of the house is going to be somewhere between $7m (€4.5m) and $9m (€5.7m), and 90% of that money is going back to the act.”

“All that [the likes of] Viagogo and StubHub are, are ways to get to those buyers.”

Viagogo is actively chasing such partnerships, and even though CEO Eric Baker won’t publicly admit that he is doing deals directly with promoters and agents for inventory, he will say that he’s keen to develop closer ties: “The music industry is waking up and they’re going to get involved, and if you can show that you can be a good partner to the music industry, we believe that you’re going to build a much bigger business. At Viagogo we work for the fan but we can also work with the industry.”

His sentiment, however, is not shared by promoter Marek Lieberberg who is currently uniting German promoters to take online reseller Seatwave to court (see news, page 4).

“Touting has become legalised via a lot of the secondary ticketing companies and they always claim it’s a forum for the fans and it’s democratic. It’s bullshit - it’s a smokescreen they put in front of the public,” he says.

Price Sensitivity

But aside from jumping into bed with an outsider, or filling lawyers’ pockets with their profits, do promoters have any other options? Plenty, according to some. In the next two years, Iaia predicts that Europe will see a dramatic increase in dynamic pricing, with the front few rows (which fuel the majority of the secondary market) priced closer to their true market value.

“You’ll start to see the house be more dynamically sold in Europe the first time around,” he says. “You’ll see more platinum and premium seating, where the artist takes some of the best seats that would normally be resold by touts, and prices them at their true market value.”

The concept of dynamic pricing – or ‘yield management’ – depending on your vocabulary, is not new, but agents and promoters complain that it’s not the first ten rows which are hard to sell, but the last ten. “The fact is that those seats are priced too high,” Iaia says. “If you’re getting the true market value of the seats upfront, you can bring the back seats down in price and make them competitive with going to a movie. Now you have a full house so the artist is happy the gross is high so the promoter is happy and the venue’s happy because it’s full of people buying beer.”

CTS Eventim’s Andreas Egger concurs, saying, “Dynamic pricing and the personalisation of the ticket are the two means to avoid an uncontrolled secondary market. We have the technology to control the market, so why isn’t something being done?”

There are many more technologies available, and in the US later this year Ticketmaster will launch a service which ties the ticket buyer to their credit card for entry. Mobile ticketing has long been lauded as a way to limit touting, and as long as ticket buying remains relatively hassle-free, the consumer is liable to remain unaffected.

“The money will end up going where it should go,” says Iaia, “into the gross of the show.”

Even monitoring the still secretive secondary market is becoming possible, and in the UK, data analysis service TixDaq (the brains behind the RRS proposal) is shortly launching a live feed service for promoters, as well as an online price checker for consumers.

“TixDaq is working hard to provide information and get some insight into this market,” says founder Will Muirhead.

For both artists and promoters, it’s never the case that one size fits all, but there are multiple options developing to either utilise or combat the secondary market. And whether acts adopt a fan-friendly, philosophical stance, or work directly with the established resellers, the previously lost secondary revenues are unlikely to remain so for much longer.


GREG PARMLEY

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